Minister Martin addresses the Annual Conference of the Irish Software Association.

Address by Mr. Micheál Martin TD,Minister for Enterprise, Trade and Employment, on the Occasion of the Annual Conference of the Irish Software Association, on Thursday 18th May, 2006 in the Mansion House, Dublin

I am delighted to have this opportunity to address your annual conference. The theme of this year’s conference, ‘ New Models – New Approaches for Tomorrow’s Success’ – is an apt one, as the future development of the High-Technology Industry, through innovation and internationalisation, is a key priority for me as Minister for Enterprise, Trade and Employment.

I am proud to say that the Irish Software Sector has contributed significantly to Ireland’s economic success over the past decade. The sector accounted for over €15 billion in exports in 2005, €1.6 billion of which is attributable to indigenous companies. The Irish Software Sector, as a whole, employs over 25,000 high quality graduates. I understand that over 15,000 of these are employed in more than 600 Irish companies.

Not only is the indigenous Software Sector characterised by a strong export focus, in that over 80% of its revenues come from export sales, but also by a strong culture of investment in Research & Development and, an innovative approach to the creation of products and services for the global marketplace. There is a strong partnership culture among Irish software companies and there are significant clusters of these addressing key markets including Financial Services, eLearning, the Public Sector, Telecommunications and Digital Media. The key export markets for the indigenous software industry are the USA, which accounts for 33% of our software exports; the UK, 27%; Rest of the EU, 15% and Rest of the World, 25%. This is an achievement we should be proud of and I extend my congratulations to all concerned.

I was encouraged to learn that indigenous industry has shown sustained growth over the past 10 years. Between 1994 and 2004, employment grew at an average of 24% per annum, sales by an average of 35% per annum and exports by an average of 45% per annum.

Nevertheless, we cannot afford to be complacent. Given the realities of globalisation and increased global competition and, taking into account that Ireland is no longer a low cost economy, Irish software companies must operate at the high end of the value chain. This means we must increasingly compete through both market-led and technology-driven innovation. In my view, the Irish Software Association is playing a crucial role here in helping our indigenous software companies to realise their maximum potential. I know that the ISA, in partnership with Enterprise Ireland, is in the advanced stages of developing a world-class leadership development programme to continue to build these capabilities.

I understand that the key focus of your organisation is to develop an industry base in Ireland, which will include a number of companies with global scale. I firmly believe that developing Irish owned companies of scale, that is to say, large multinational corporations in their own right, is crucially important for the next stage of development of the industry here. This is a priority as far as the Government is concerned and I was pleased to learn that it is a priority shared by the ISA.

For future success, we will need to see substantially increased levels of applied research in Irish firms and we must foster an environment where there exists a close working relationship between companies and Third Level colleges. The achievement of a 2.5% spend on R&D, in line with the Lisbon Target, is of vital importance. Government investment in Third Level research, particularly through R & D funded by Science Foundation Ireland, provides an invaluable resource that is there to support industry going forward. Enterprise Ireland also plays a key role through the provision of funding for applied research in both Third Level institutions and companies and through the support that it provides for the commercialisation of research.

In addition to technical innovation, the future growth and prosperity of the indigenous business sector is vitally dependent on its capacity to win sales in export markets. Innovation and clearly differentiated products, services and customer solutions are key factors in winning business in international markets. Enterprise Ireland supports this through its extensive network of overseas offices and an aggressive programme of events, trade missions and by bringing potential buyers to Ireland. I would like to encourage all exporting companies to consider Enterprise Ireland as their development partner in harnessing the opportunity offered by global markets.

In his address to your conference last year, my colleague, Minister of State Michael Ahern TD, made the point that as an export market driven nation, Irish companies need to continually develop and improve skills in sales and marketing. I am pleased to say that the very successful ‘Sales STAR’ programme, which is a joint initiative of Enterprise Ireland, FÁS and the Irish Software Association and, which is focussed on the development of the sales capability within growing software companies, continues to be an example of what can be achieved when we work together to achieve a common objective.

The ‘Sales STAR’ programme aims to enhance the international sales and marketing capabilities of CEOs in the Irish Software Industry, which I believe is of critical importance. The programme uses leading international speakers who are complemented by the experiences of successful practitioners and case studies. Very importantly, in my view, the programme facilitates maximum opportunities for networking with fellow CEOs.

Participation in the programme costs each CEO €3,500 which covers 50% of the programme costs. In my view, this is a very modest outlay for a much greater return. When you consider that the balance of funding is provided by Enterprise Ireland from its Human Resource Development budget, subject to the participating companies being eligible EI clients, it represents good value for money. I understand that the need for the Programme was highlighted in 2003 by a report, commissioned by the ISA and Enterprise Ireland, which found that 80% of Irish Software CEOs believed developing international sales skills was critical to the future development of their business. The programme was designed around the results of this research.

While Enterprise Ireland, on behalf of the Government, undertakes a number of specific initiatives with the Irish Software Association, the ‘Sales STAR’ programme, now in its fourth year, is EI’s principal collaborative project with the ISA. Participation on ‘Sales STAR for CEOs’ is targeted at 25 per year and is open only to CEOs. To date, 67 CEOs have completed the programmes over the past three years and, 27 CEOs have signed up for the 2006 programme, which commenced last February. This is encouraging news indeed. I have no doubt that the participants will derive great benefit from the programme and, I look forward to hearing of an equally enthusiastic take-up in future programmes.

I would like to speak to you briefly about the Science Technology Innovation Strategy that I intend to publish shortly. The objective of the STI Strategy is to make a quantum leap forward in the area of R&D and to move Ireland from a position of impressive latecomer to acknowledged leader in this critical area. Success will be marked by demonstrable achievements in a number of areas. These include increased participation in the sciences by young people, increased numbers with advanced qualifications in Science and Engineering and, enhanced contribution of research to economic and social development. Other objectives in the Strategy include transformational change in the quality and quantity of research undertaken by enterprise, increased output of economically relevant knowledge, enhanced productivity and an established profile for Ireland.

The Strategy has been prepared in a ‘whole of Government’ manner with a long-term perspective to 2013, involving a step-change in actions and related expenditure. The information provided in the Strategy will allow the Government to take informed decisions on funding priorities. Significant policy initiatives, requiring substantial investment over the long term, will fall to my Department and its agencies, in terms of the key targets to encourage and promote a substantial increase in both Enterprise R&D and Collaborative R&D, and to ensure that publicly funded research is commercialised.

The Inter Departmental Committee responsible has finalised the ’Strategy for STI 2006-2013’ and it was presented to the appropriate Cabinet Subcommittee on 12 April last. I intend presenting the Strategy to Government in the near future.

Turning for a moment to Foreign Direct Investment, I would like to mention that since your annual conference, this time last year, several high profile investments have been announced in the Software Industry. The areas of Internet Technology and Digital Media have also continued to do well. Google’s announcement last December, of an expansion of its HQ in Dublin, bringing in 600 high level, multilingual jobs, is a case in point. These successes show that the Government’s policy of marketing Ireland as an attractive location for Foreign Direct Investment is working, enhancing Ireland’s already excellent reputation as a strategic location for IT services to support business throughout Europe.

Before I finish, I would like to say that I know that ISA has extended invitations to this conference to software companies from Northern Ireland, and I welcome their attendance here today. Economic co-operation between Ireland and Northern Ireland is increasing and many enterprises have realised the benefits of an all-island approach in growing their business. As ever, the Software Industry is taking a lead, as evidenced by the recent establishment of the All-Island Software Network, an all-island partnership formed by ISA, Momentum – ISA’s counterpart in Northern Ireland- and Inter Trade Ireland, the all-island trade and business development body.

Finally, I would like to thank you for inviting me to address you this morning and I wish you all every success for the year ahead.

ENDS

ETE 1571