ADDRESS BY MR NOEL TREACY T.D., MINISTER FOR SCIENCE, TECHNOLOGY & COMMERCE AT THE 1999 SOFTWARE INDUSTRY AWARDS THE ROYAL HOSPITAL, KILMAINHAM FRIDAY, 12th NOVEMBER 1999 AT 8PM

It is a great pleasure for me to be here this evening to present the 1999 Software Industry Awards on behalf of the Irish Software Association.

An occasion such as this is much more than just a social get-together. It is an opportunity for your industry to celebrate the achievement of excellence by all of your people. It is right and important that we should take the time to recognise and mark such achievements. The pursuit of excellence, which is at the heart of these awards, is, I believe, a key to success in the modern business world.

I believe that this committment to higher standards has been a critical factor in the ability of so many of our companies to compete successfully on world markets.

I salute all of the winners who are being honoured here tonight.

I am also delighted to have this opportunity to acknowledge the contribution which the Irish software sector has made to our current economic well-being. The software sector is one of the great success stories of the modern Ireland.

Your industry is at the heart of the quiet - almost silent - revolution which has been taking place in the global economic order. The digital revolution has been going on now for about a quarter of a century or so, but it is still probably in its infancy.

In the past, the successful company was very likely to be one which had an outstanding product or a unique process. Today, the factors which determine success are more likely to be grounded in information and knowledge, and on the capacity to process and exploit them.

This knowledge and information society which is emerging has been compared in its impact, by some observers, to the introduction of the steam engine, and, by others, to the invention of the automobile. Just as the motor car has been an instrument of great social and economic change in this century, so it is with the new technologies as we face into a new century. Not alone are they transforming the economic landscape, but they are also acting as a a catalyst for significant social change, by promoting profound changes in both work and leisure patterns. Daily, we are confronted by innovations which in the not-too-distant past would have existed only in the world of science-fiction.

We here in Ireland have been embracing these new technologies. Just this week, I attended the first meeting of the Telework Action Forum which I recently set up. Teleworking has the potential to make a huge contribution to lifestyles, and to impact in a variety of areas such as skills shortages, integration of minority groups, and traffic congestion.

Your industry has been one of the main engines driving developments such as this.

It is sometimes easy to overlook the enormity of the change which has taken place here in Ireland in a relatively short space of time. For instance, when I was a young man, the word 'hardware' meant things such as pots and pans and the like, and 'software', if such a word existed at all, wasn't commonly used.

Today, as well as a thriving hardware sector which is far removed from pots and pans, we also have a thriving software sector in Ireland.

To put the current performance and capabilities of Irish software in some context, it is, I think, worth bearing in mind the radical transformation and expansion in our industrial base which has accompanied the outstanding economic performance by Ireland in recent years. We have moved from being a producer of primarily agricultural commodities to one of the most vibrant export-led economies in the world with a portfolio of products from very diverse sectors, many of which did not even exist in this country ten or fifteen years ago.

As everybody here will be aware, the growth of Ireland's software sector has been phenomenal. And it has consolidated its position in 1999 as one of the leading sectors of our National economy. A growth rate in excess of 12% has been achieved annually since the beginning of this decade.

An occasion such as this is not one for a mass of statistics, but I think that some figures are worth highlighting.

The software sector now comprises of about 800 companies, 80% of which are Irish owned. Of those indigenous companies, more than 80% of them are active in overseas markets. Employment in the sector is about 22,000, split evenly between Irish and overseas companies.

Ireland now exports £5bn worth of software per annum, which accounts for approximately 10% of all exports from this country, and 60% of all packaged software sold in Europe originates here in Ireland.

While these figures have been made possible mainly through the presence of multinationals such as Microsoft, Oracle, Novell, Lotus and others, there is also a thriving indigenous sector producing a broad range of innovative products. The Irish software industry is in the forefront of developing innovative solutions to meet these new market requirements.

It is also worth mentioning the substantial contribution to the Irish economy and to job creation which Enterprise Ireland's client companies who are active in International Services continue to make. Sales and export figures for 1998 for this sector show a 16% increase on 1997. The resulting employment increase was 10%. Small, locally-owned Irish companies, particularly those that specialise in leading edge, niche technologies, are pioneering this growth.

The nature of these businesses demands a high commitment to research and development. Enterprise Ireland supported total investments of £68 million in 120 Irish owned internationally traded services companies, primarily in software during 1998. This will directly result in 1,760 new jobs over the next three years.

The software and international services sectors have proved to be key growth sectors of the Irish economy in recent years. Central to Enterprise Ireland's three year strategy is the further development and expansion of these sectors. This means growing Irish companies to the scale required to compete effectively in international markets. The challenge will be to strengthen management teams so as to better manage substantial growth, expand their marketing and sales capabilities and invest heavily in R&D on an ongoing basis.

In September last Enterprise Ireland launched a new guide entitled "Starting up in the USA" aimed at Irish companies who plan to establish a business in the USA. The guide is aimed primarily at technology companies and will focus on the two main geographic regions for technology companies - Silicon Valley and the New York/Boston corridor. The guide has been prepared by Enterprise Ireland with the support of Irish companies who have recently opened offices in the USA.

There are currently over 100 Enterprise Ireland client companies with offices in the USA and this is predicted to rise to 170 by 2001. The US is Ireland's fastest growing export market and Ireland's second largest export market for indigenous goods. For most Irish companies the US is the key market and the world region offering the greatest opportunities. It is the world's leading market for high tech products and this makes it a priority market for Ireland's fast growth high tech sector.

The tightening labour market in recent years has presented challenges to the software sector to retain and attract staff. The £250m Education Technology Investment fund which we put in place, has already led to new places in Third Level Institutes to address specific skill needs, while initiatives such as Opportunity Ireland - a joint initiative between our Department of Enterprise, Trade and Employment and Enterprise Ireland - directly targets software and electronics professionals to return home to work in Irish hi-tech companies.

In its recent survey of 50 Irish software and electronics companies, Opportunity Ireland has identified at least 113 Irish and non-Irish nationals who have relocated through the programme. Their web site, which is currently advertising 460 jobs in 87 companies, has had over 1.5million hits and 1,100 people have registered with Opportunity Ireland through the website.

The future prospects for the Irish software industry are very promising. The software market will continue to be characterised by rapid and dynamic change. We can already see important trends in the making. These include an increased number of strategic alliances to provide critical mass; closer working with telecoms companies; supplier consolidation by end users; a need for globally-oriented suppliers who can fully support multinational customers as well as software companies who are strong in local markets. The Irish software industry is already anticipating these new developments and is well positioned to further strengthen its international position in the exciting millenium ahead.