Ireland’s economy is undergoing a correction, a readjustment, or the beginning of a full-blown recession, depending on the disposition of the economist you’re reading, which further underlines Ireland’s need to develop a knowledge economy where companies create value through innovation in products and services, says Shane Dempsey, director, Irish Software Association.
The software sector currently demonstrates these knowledge-intensive characteristics and is eminently placed to drive Irish economic growth. Opportunities are increasing in the sector, driven by huge technological advances such as the emergence of Web 2.0 and with its collaborative and consumer-driven dynamic and software-as-a-service which is expected to grow to €11.5bn in 2011.
Software is increasingly becoming the lingua franca of business. The shift from individual websites and devices to groupings of computers, devices and services that work together to give people control over how, when and what information is delivered to them has seen many software companies spring up to capitalise on these new opportunities.
Ireland has three key components that have the potential to increase innovation exponentially if they interact correctly: a healthy, innovative and flexible cadre of software SMEs/entrepreneurs; huge government investment in driving research in the third-level academic sector; and a large multinational corporate (MNC) presence.
These three factors are greater than the sum of their parts in terms of innovation. MNCs have vast amounts of non-core specific research and massive route-to-market competence. Academics have huge research competence and resources. SMEs and entrepreneurs have the flexibility and commercial focus to bring this research to market.
With these three ingredients in place you might expect Ireland to produce large amounts of commercialised innovations like in Silicon Valley or Israel. However, these three players are failing to collaborate at a deep enough level to release economic potential. Why?
Many SMEs are working in a very tight market and don’t have the budget or resources to carry out high-quality research. MNCs tend to remain focused on core activities and much research remains undeveloped, while a good deal of academic research is carried out with no commercial consideration.
The Irish Software Association (ISA) believes the serial entrepreneur or SME owner that usually drives tech start-ups can bring both academic and MNC research to market in a collaborative model. They generally have successes and failures under their belts so they can select research with market applications, they have the knowledge of the system and, of course, they have a personal stake in the outcome that makes them likely to succeed.
Government policy should incentivise collaborative processes that draw together the innovative powers of these three players. Inter-firm collaboration must be recognised as a critical success factor in the innovation process. Government should aim to mould Ireland along the lines of Silicon Valley where collaboration freely occurs between SMEs, venture capitalists and MNCs.
The Government’s Strategy for Science, Technology and Innovation, (SSTI) commits €8.2bn to increase levels of R&D and expand our science base. This is admirable but there is a disconnect between the objective and the policy it is pursuing. This money is being focused primarily on the academic sector to increase our research competence, but how much of this research is commercialised is not a significant consideration. Making commercialisation a key performance indicator of government spending will ensure that more research is applied and less will be left to gather dust on academic bookshelves.
Incentivising collaboration between academia, SME and MNC would yield much greater returns to the Irish economy and develop scientific and research competence in areas most valuable to the economy. There are many examples of the value arising from collaboration such as Dublin City University’s Research and Commercialisation centre, Invent and LERO, the Irish Software Engineering Research Centre. They represent a compelling argument for more SSTI funding to be allocated to similar collaborative ventures.
More money should also be funnelled into the Centres for Science, Engineering & Technology that help link scientists and engineers in partnerships across academia and industry.
Technology Transfer Offices such as those in UCC and NUI Galway also seek to encourage collaboration between local industry and academia. Both initiatives should receive more funding to expand their ability to facilitate more businesses in carrying out commercially focused research.
Thankfully there is evidence that state agencies are recognising collaboration’s importance. Enterprise Ireland is funding several initiatives based on collaboration such as its Industry-led Networks and Competence Centres. Both of these have attracted solid interest and offer a framework where ‘trust’ issues such as those around IP are taken out of the equation.
The ISA is also seeking to increase collaboration between the three key players. In addition to encouraging software companies to engage with MNCs and academia, we have engaged with the heads of third-level institutions’ technology transfer officers in creating an agreed ‘route to commercialisation’ engagement process that encourages SME/academic collaboration. We have analysed how academics and SMEs have created successful ventures previously. These case studies have shaped this process of engagement and we are ready to begin promoting the process amongst these groups.
A caveat: the collaboration tripod of SME, MNCs and academics will only remain stable if it has a regular supply of well-educated science, technology and maths graduates. The Department of Education and Science must ensure the €252m set aside for ICT in schools is used to encourage the uptake of these subjects.
To maximise the return on the Government’s SSTI investment, successful commercialisation must become a primary metric. With this in mind, collaboration between SMEs, academia and MNCs should be financially incentivised as it represents Ireland’s most effective path towards a viable knowledge economy.
By Shane Dempsey, director, Irish Software Association
The 2008 ISA annual conference, Software: Driving Global Business Opportunity, will be held on 28 February at 8:30am in O’Reilly Hall, UCD. Speakers include: Guy Kawasaki, founder and managing director of Garage Technology Ventures, and author of The Art of the Start and Anthony D Williams, author of Wikinomics, and VP of consultancy firm, New Paradigm. To register, please visit www.cpregistrations.com/ISA2008