Rise Of The Northern Plains States

Perhaps the most interesting finding from this year's CRN "Best States" analysis is the rise of North Dakota and other northern Plains states as a good place to start a solution provider business. With a roaring economy fed by the oil boom, North Dakota rocketed to No. 11 this year from No. 28 in 2013. South Dakota (No. 34 this year), Montana (No. 27) and Wyoming (No. 38) -- all in the bottom 10 states in last year's rankings -- all moved up by 10 or more spots this year.

Thanks to growth spurred by oil production in the Bakken shale formation in western North Dakota, the state recorded gross domestic product (GDP) growth of 9.7 percent last year and has the lowest unemployment rate (2.8 percent in July) in the country.

The CRN analysis ranked North Dakota, the Peace Garden State, at No. 15 for business opportunities. While the oil work is largely in the western half of the state, the economic spillover reaches across the entire state to places such as West Fargo where TrueIT, a solution provider offering a range of IT management, monitoring and consulting services, is based.

"The growth has been pretty good," said Zac Paulson, president of managed services at TrueIT, in an interview. He said the influx of people who support the oil industry, including engineers, architects and construction workers, has fueled the economy.

Founded in 2012, TrueIT has focused on providing managed services and cloud application development services to its growing customer base. Paulson attributes the company's steady growth to that business model, rather than focusing on break-fix services. Most clients are established businesses with between 25 and 250 employees, but only one or two IT people -- if any. The company recently moved to a bigger office with a capacity of 60 people.

"We're continuously adding clients, with that oil boom going on up there," said Bryan Waege, president of Connecting Point Computer Center, a Watertown, S.D.-based solution provider with additional operations in Sioux Falls, S.D., and Bismarck, N.D. The company provides both on-site and managed IT services -- including Microsoft's Office 365 -- in South Dakota, North Dakota and Minnesota. Waege, in fact, said his company is careful to keep its growth under control by only taking on customers that have staying power.

The downside of the oil boom is the rising labor costs. The CRN analysis ranked North Dakota No. 23 for overall labor and employment expenses.

"It's driving up labor costs significantly," Waege said of the oil boom. "It's been challenging from a labor hiring perspective. There are a lot of companies moving in and vying for the labor pool that's available. A lot of businesses can't keep their own IT staff." And that's pushing up costs in some areas such as Bismarck: He estimated that a new hire there can cost as much as 30 percent more than in South Dakota. "McDonald's pays $15 an hour to start," he said. "It's kind of crazy."

TrueIT's Paulson said living expenses in eastern North Dakota have stayed moderately low, however. And he noted that several colleges and universities in eastern North Dakota, including North Dakota State University in Fargo, combined with a large Microsoft campus in that city, provide hiring opportunities for solution providers.

Both Waege and Paulson praise the quality of life in the Dakotas -- except maybe in the winter when Waege said temperatures hit 20-below and some employees flee for warmer climates. "If you come here in January, you're likely to get a different idea of our quality of life than you'd get in the summer," he said.

PUBLISHED SEPT. 8, 2014

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