The Tanaiste and Enterprise Ireland have unveiled a new strategy for the Irish software sector ‘The New Software Economy’, which focuses on new models emerging from cloud computing that could grow the local sector to €2.5bn in revenues by 2013.
The strategy document recognises that the indigenous industry which employs close to 10,000 people and has annual revenues of €1.6bn. Exports from the sector represent 73pc of sales, above average compared to other industries in Ireland which typically export 45pc of sales.
In terms of start-ups, the sector is creating 28 new businesses a year and Enterprise Ireland’s software client base consists of 500 companies, 20 of which are on the road to significantly scaling up their businesses.
‘The New Software Economy’ plan aims to capitalise on the changing shape of the global software industry where new delivery models such as cloud computing, software as a service (SaaS) and internet-delivery of services are transforming the industry.
The plan aims to make strong use of the presence of some of the world’s largest ICT firms, including Microsoft, Oracle, Intel, HP, IBM, Google and Dell to leverage growth as well as make use of the strong diaspora of well-connected Irish executives around the world. According to Fortune magazine, 45pc of Fortune 500 CEOs have Irish surnames. By 2020 it is envisaged that 70pc of Irish exports will be services-led.
The strategy will pivot on making use of the internet and changes in the software value chain by fielding and growing businesses that are flexible and globally-focused. The new business models of the new software economy will favour internet-focused SMEs with a 24×7 business ethos.
The strategy will also focus on the development of strong software clusters, particularly high-growth areas such as financial software, telecoms software and e-learning software. A key facet of the strategy will be branding the clusters to increase their global impact.
The strategy also involves a ‘Best Connected’ focus that makes use of the strong multinational sector in Ireland, the substantial Government investment in R&D through Science Foundation Ireland, specialist clusters, a young and skilled workforce and influential members of the Irish diaspora.
I put it to the Tanaiste that because of the nature of the internet cloud and the software as a services model that the need to ensure digital infrastructure is available to companies whether they are based in Killarney or Glenties to build viable businesses.
“It is important to us that the companies across the sector have access to the best connectivity, it is fundamental to operating in the new economy,” she told siliconrepublic.com. “We have examples of the companies that are already trading globally in this fashion – Realex, Globogift, EZtop and CarTrawler – that have emerged in recent years.
“Yes, the infrastructure is important. I am working with the Department of Communications to make sure that access is available to companies, irrespective of where they are based. The opportunity is to scale these companies up to operate outside of Ireland.
“Phase 2 of the MANs has been signed off by the Minister for Communications Eamon Ryan and that will help. I am still hearing from companies that we still don’t have the connectivity. That is changing and coverage is expanding significantly. We started investing in broadband from a low base.
“We have invested heavily in broadband, but there are still challenges, particularly in more isolated areas. The access picture will improve and there needs to be faster services. Investment in dark fibre will be very important,” the Minister said.
The manager of Enterprise Ireland’s software division, Jennifer Condon, said that because of the global nature of cloud computing Irish software companies will need to expand their export focus beyond the US and UK to include opportunities in the Middle East, the Far East and the rising BRIC (Brazil, Russia, India and China) markets.
“We’ve revised our strategy for the Irish software industry to ensure that it is fit-for-purpose for the new software economy. We’ve moved from the exuberance of 10 years ago, we’ve learned the lessons of the dotcom era and we’ve learned that Irish software companies have been resilient, flexible and customer-focused, making them ideal for the new shape of software that will be services-based.
“We believe the sector has the ability to come out of this recession stronger than ever, but only if we react to strategic issues such as software-as-a-service and the shift from the licenced model, grow our companies to scale and make good use of our market connections from multinationals in Ireland to well-placed Irish people overseas.
“It is also important that companies in the sector have access to the best connectivity – this is fundamental to operating in the new software economy.”
Present at the briefing was Aidan Dillon, chief executive of telecoms software firm Accuris which today announced 27 new jobs as part of a €1.5m investment.
Dillon explained the changing environment: “As we move from a licensed model to a services model, the infrastructure to provide instant services globally will be fundamental. We’re good at software and technology, but hosting and online delivery are new areas that we need to strike partnerships in if we are to succeed in the evolving software marketplace.”
Access to venture capital funding has been an issue that has dogged the development of the software industry in Ireland from its inception. Minister Coughlan said that a new innovation-led VC fund being put together by the Government and the VC industry still hasn’t been finalised.
“We are working towards this. The CEOs of all the development agencies agree that the immediate issue is sustainability of companies and most of our efforts over the past few months have gone into the Enterprise Stabilisation Fund. But we have had significant interactions with the VC industry and on that basis we’re putting together a proposal and package that will be finalised quite soon.”
Jennifer Condon said that the indigenous software industry represents one of Ireland’s best hopes for coming out of the recession in fighting form. “We’re looking for something revolutionary to happen. We’re trying to bring engagement with clusters to a new level and resource the companies in a more systemic way.
“We’ve had the multinationals here for 20-odd years and yet there has been very little interaction between multinationals and the indigenous sector. But now, particularly with companies like Intel and Microsoft, we are seeing that interaction increase because they see working with Irish software companies as a great route to innovation. They are forging very proactive relationships with young Irish software start-ups,” Condon added.
By John Kennedy
Caption: Pictured at the launch of Enterprise Ireland’s strategy for development of the indigenous software industry 2009-2013 are Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan, TD; with Aidan Dillon, CEO of Accuris; and Jennifer Condon, manager of Enterprise Ireland’s Software Division