Irish software industry plans for next 25 years

29 Dec 2003

Ireland must launch a series of Government-supported projects to drive innovation and investment in the same way as the IFSC was created in order to guarantee the future of the Irish software industry over the next 25 years, the ISA has warned.

At its recent Business Leaders’ Forum, attended by senior executives from leading Irish software companies established over the past 25 years, the ISA said that the indigenous industry must avoid a return to cottage industry status by evolving rapidly, despite an international environment of collapsing sales, changing business models and entrenchment of industry giants offering complete IT solutions.

Additionally, domestic issues such as a chronic lack of funding for early-stage companies and a severe lack of managerial, sales and marketing skills prevail. However, the ISA noted that the Irish software companies that have survived three very difficult years are stronger and much more competitive with a purer strain of entrepreneurs and companies emerging.

ISA chairman Cathal Friel commented: “The Irish software industry is at a critical juncture in its evolution. We must take a series of bold, politically backed ‘Man on the Moon’ projects to ensure that this important industry not only survives but thrives as we go forward. The failure to implement these initiatives presents the real risk that the software industry could revert to cottage industry status as it was in 1978.

“Today, Ireland has a radically different cost structure and operates as a high-cost economy. While our young, highly skilled workforce and low-cost corporate taxation policies are attractive, we are increasingly losing our competitive edge. Ireland must attempt to replicate California’s success of operating within a high-cost environment as a high-cost economy. Ireland can become the California of Europe but much remains to be done. Locations such as Cambridge in the UK and Israel, despite their high cost bases, have built sustainable, world-class success stories. Israel’s focus on technical and engineering training as a result of compulsory military service and Cambridge’s exceptionally high level of PhDs and commercial university research have both created perfect environments for innovation and research.”

Among the many suggestions garnered at the conference, it was suggested that Ireland could follow its IFSC success in funds management by establishing itself as a European centre for the patenting and licensing of intellectual property (IP). Friel said that the removal of stamp duty on IP in the recent Budget was a step in the right direction.

It was suggested that research commercialisation programmes in universities could launch a new wave of innovation and advancement. “The fostering of closer links between industry and the universities should be encouraged in the area of research projects. Our universities need to hire research commercialisation personnel as universities do not understand the process by which commercial ideas can be extracted from high-level research projects and software companies do not understand universities’ structures and cultures,” Friel said.

The ISA said that it is vital that the Government plays a stronger role in the evolution of the industry to the next stage in its role as a technology innovator and purchaser. Specifically, it should establish a target to buy 25pc of its technology in value terms from SMEs. This, the ISA said, will produce a double return of high quality software and small enterprise development.

The ISA added that Ireland should seek to position itself as a European/Global centre for the teaching and advancement of sales and marketing skills specific to the technology industries located here by creating a European Centre of Technology Sales and Marketing Excellence in Ireland. This would substantially increase the calibre of top market researchers as well as sales and marketing experts in Ireland and this initiative would complement the work of Science Foundation Ireland, which, as part of its brief, is attracting high-level R&D teams to Ireland.

Another suggestion at the Business Leaders Form was that the Government should be encouraged to establish the first European location to licence the CDMA 800 mobile standard and encourage our software providers to develop the resulting applications. Already well established in Japan and North America, CDMA 800 has been identified as potentially the new rail tracks for mobile telecommunication services. Irish software companies could thus hedge bets against the possibility that the European-centric UTMS/ GMS mobile standard could be overtaken by this lower cost and more flexible technology.

By John Kennedy