A tale of two worlds as digital economy in danger of vanishing in a rear-view mirror

11 Mar 2010

It’s the best of times for the digital age but worst of times for Ireland if we don’t grab our chance.

Did you know that last week the 10 billionth tweet was sent on Twitter? Did you know that the statistic ‘If Facebook were a country it would be the sixth-largest nation on earth’ is already out of date?

As I surveyed O’Reilly Hall at University College Dublin (UCD) last week where hundreds of people had gathered for the Digital Landscapes conference, eager to get a grip on the digital economy, my ears were still ringing with the endless debate on the radio around the banking crisis, NAMA and public-sector trade unions.

Looking back on the earnest faces of former UCD Michael Smurfit Graduate Business School students in the hall, who deserve better than the economy they’ve inherited, hearing about possible opportunities, a realisation struck – while we wrestle in the mud of the gutter of recrimination, the rest of the world is moving on.

A new, digital world

The world entered the 20th century horse-drawn; it ended it by entering cyberspace. In the 21st century expect innovation to occur 1,000 times faster. Not only does Ireland need a root and branch reform of its public bodies and political system, it needs to embrace this new digital world and be an exemplar if its industries are to recover and thrive.

At the Digital Landscapes event that day, Martin Murphy of Hewlett-Packard said Ireland still has a massive role to play – he revealed 60 new technology jobs at its Global Solutions Centre, Belfield. Murphy warned, however: “Ireland needs to get super-competitive if we are to compete with the future nations of the earth.”

Paul Haran, chairman of the advisory board of UCD Michael Smurfit Graduate Business School, said the digital economy is Ireland’s opportunity to fix the things.

“We now have the capacity to deliver from anywhere in the world high-value-add services with zero marginal costs. But realising these opportunities presents a big challenge,” he said, pointing out obvious flaws in the country’s digital make-up, such as the absence of a GPS-based postcode system.

Communications Minister Eamon Ryan TD admitted that people are “jaded” by terms such as the smart economy because it doesn’t answer banking and budgetary questions, but at the same time there is a recognition that the future of the country depends on trading with the rest of the world and becoming more efficient.

“Technology, people and culture – we need to develop new creative industries that will be the main employers of tomorrow. Broadband is the crucial piece of infrastructure – networks and bandwidth will be more important than any other piece of infrastructure – it is the transport system for data that we are going to need to be ahead of the curve.”

He said that the search is still on for a Government chief information officer (CIO).

“What is needed is a good CIO who will be responsible for how public services procure IT. But not only that, we also need a co-ordinated, strategic sense of direction around how we ourselves use ICT.”

Ryan admitted that IT disasters such as the e-voting machines have dinted the public sector’s willingness to be brave and imaginative.

A need to be brave

Bravery, however, is the stuff of the digital economy and a ruthless approach to trying new things was demonstrated by Google’s European boss, John Herlihy, who not only predicted that the desktop computer will be irrelevant in three years, but also said that success in the 21st century is about trying, failing and moving on.

“The digital world is fundamentally different to the traditional business world. It’s not good enough to apply normal management disciplines – we think that scarcity breeds clarity. If, for example, we have enough resources invested in something, we halve it and eliminate overheads.

“When we build something we strive for ubiquity in usage and adoption. That helps us understand how customers react and then we build a revenue model,” said Herlihy.

An example of an evolving business model is that of Facebook, which, like Google, has decided to put a European HQ in Dublin. Colm Long, head of online operations at Facebook, explained that the social networking giant now has 400 million subscribers worldwide, including 1.4 million Irish subscribers. “Irish people log on at a rate of 700,000 a day.”

Long said that Facebook’s business model until now has been around ads but it is apparent that gaming and virtual currencies may be bigger opportunities. “Think about the idea of virtual currency – billions of dollars are being exchanged on virtual goods. People are buying virtual tractors on FarmVille like you would not believe.

“Think about the potential. Today, we are building a payment ecosystem. We want to build a currency that drives liquidity across the Facebook platform. If you make money from growing corn on FarmVille, you can take that currency and buy a virtual or physical gift on any part of the platform. Facebook will take a cut. This has the potential to be bigger than our ads business over time.”

Adaptation and adoption to thrive in a digital world

If Ireland is to thrive in the digital world, entrepreneurs who can build nimble, fast start-ups that adapt and adopt will be critical, says Dylan Collins of JOLT Online. He should know. Three years ago, he sold his Dublin-based technology company, DemonWare, to the world’s biggest computer-game firm, Activision, for $15 million. Collins has built up JOLT to be one of the most pioneering free-to-play browser games firms on the planet.

He said Ireland’s attitude to business failure and its punishing bankruptcy rules needs to change. “We have to learn from our mistakes. In the digital business if you don’t have a consistent level of mistake-making then you’re probably doing something wrong.”

Cork blogger Damien Mulley backed Collins up: “People should be encouraged to start up companies and see how they go. The Irish mentality of shame of failure needs to change. The question after something goes wrong should be ‘what are you going to do next?’ ”

But where next is indeed something Irish society is transfixed on. Cisco Ireland managing director Kim Majerus revealed that already the ‘Your Country, Your Call’ campaign website has received 42,000 hits, with people suggesting ways Ireland can innovate its way out of recession.

“What’s changed?,” she asked. “Enablement, opportunity and reach. Connectivity is no longer a nice to have, now it’s a need to have. Five years ago, people in this country struggled to get connected to the internet, now we’re in an era where everything you need is right in front of you. This allows every individual and every organisation to reach out beyond traditional markets.”

To view the highlights of Digital Landscapes, go to its website.

By John Kennedy

Photo: While the digital economy unfolds globally, is Ireland keeping up? At the Digital Landscapes conference at UCD last week were Cisco’s Kim Majerus, Google’s John Herlihy, Facebook’s Colm Long, Communications Minister Eamon Ryan TD and HP’s Martin Murphy

www.digital21.ieDigital 21 is a campaign to highlight the imperative of creating an action programme to secure the digital infrastructure and services upon which the success of our economy depends.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years