Speech by the Minister for Enterprise, Trade and Innovation, Batt O'Keeffe TD, at the annual networking event of it@cork.ie

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I am delighted to have the opportunity to address your annual networking event this evening.

Over the past 30 years, Ireland has built an international reputation as a centre of software excellence.

We are recognised as highly innovative, technically expert and commercially adept.

This success is due in no small part to Ireland’s software landscape which comprises two complementary elements - a strong cohort of international market-leaders and a larger number of Irish firms successful in world markets.

I see a number of other unique features that differentiate Ireland from some of our competitors.

These include substantial Government investment in research and development through the Programme for Research in Third-Level Institutions funding for the higher education sector, Science Foundation Ireland, Enterprise Ireland and other agencies, together with a well-placed diaspora with influential positions in industry and technology worldwide.

Ireland’s indigenous software industry has over 500 companies employing more than 10,000 workers with combined sales of €1.5 billion.

The vast majority of these are exports.

The indigenous software industry is important for the economy in terms of potential export revenues, employment, and corporate and personal taxation.

It also acts as a marker in terms of the attractiveness and competitiveness of Ireland as a knowledge-driven economy.

Nationally, a strong position in software is a key enabler, underpinning our ability to compete in many areas of the economy besides the main software markets - for example, clean-tech, environment, the process industries and international services.

With this in mind, Enterprise Ireland launched its ‘Best Connected’ strategy last July which aims to double the size of the indigenous Irish software industry by 2015 - from revenues of €1.5 billion to revenues of €3 billion.

This will require a doubling of the number of scaling companies and the evolution of a number of these companies into significant international players.

Building Ireland’s ‘smart’ economy is about establishing ourselves as an innovation hub.

It involves building the innovation or ‘ideas’ component of the Irish economy and developing a high-value research-intensive multinational community alongside a thriving set of innovative Irish companies.

The Government recognises that the availability of smart capital is crucial for starting, growing and transforming enterprises.

The Business Angel Partnership recently reached its 50th investment deal raising €18 million in funding.

Twelve of the deals were done in Cork.

But we know we need to do more.

We are committed to transforming the venture capital environment in Ireland and I am looking at how we can move quickly to implement the recommendations for an Innovation Fund, increased Business Angel Funds and a new Seed Capital Scheme recommended in the Innovation Taskforce Report.

This will allow more innovative ideas to become commercial realities - something I know will strike a chord with many of you here this evening.

I am also working with the development agencies to ensure that they are optimally organised to deliver the supports required by innovative high-potential software companies.

Enterprise Ireland is working with the banks to make sure that lenders understand the nature of new business opportunities and that credit can flow appropriately.

I have also made it clear to the banks that viable businesses must have access to credit and I will be monitoring the situation closely over the coming months.

As well as increased start-up activity, the transformation of the Irish economy has been greatly influenced by the scale and quality of information communications technology-related multinational investments over the past number of years.

Many firms, both large and small, started operations in Ireland with single mandate manufacturing or a services function.

They transformed over time to take on new responsibilities in other areas such as complex high-end manufacturing and higher value services including research and development and technical support functions.

Having the multinational sector in Ireland has resulted in significant productivity gains and spill-over effects through their innovative practices, technological development, process innovation and management expertise.

IDA Ireland’s information communications technology (ICT) portfolio now spans the entire ICT industry from semiconductor design and advanced manufacturing to telecommunications software to information technology services from many of the world’s leading companies and thought-leaders.

In the past five years, many have established research and development activities.

Since the beginning of 2007, IDA Ireland has seen significant wins across the ICT sector with 115 investments approved of which 51 were research and development investments and 30 were new-name firms.

Some 44,000 people are employed in about 200 IDA Ireland-sponsored firms which amounts to almost 32pc of total foreign direct investment-related employment here.

I would like now to turn briefly to the digital economy.

We in Government have moved to put the digital economy centre-stage in our strategy for economic growth, recovery and job creation.

In realising the potential to seize the opportunity, Ireland will require a world-class telecommunications infrastructure - next generation networks (NGNs).

Next generation networks will be required for Ireland to win market share in high-value activities to achieve the productivity necessary to sustain high-level incomes and to improve access to healthcare, education, social networking and entertainment.

The impact of next generation communication services will be particularly dramatic in the traded services sector and in regional locations.

In my view, the particular importance of traded services to the economy, especially those services that are structured around electronic transactions and information flows, makes it essential that Ireland has a highly efficient and reliable communications system.

The Economic and Social Research Institute predicts that over 70pc of our exports will be traded services by 2025.

The main sectors that drive growth, financial, business and software services will increasingly rely on a high-performance communications network to support business activities.

NGNs and the advanced communications services they enable can foster the development of new sectors and industries.

In this regard, NGNs will provide the basis for a new range of information-intensive service industries.

They will also provide a test-bed for new technological developments in software and equipment.

For example, video developers in California are able to contact, contract with and develop remote services for customers worldwide through a new fibre-enabled communications network in Palo Alto.

In continuing to attract overseas foreign direct investment, ICT-intensive firms drive a majority of new investments in Ireland in digital media, financial services, ICT, and research and development.

I do not think any of us here today can have failed to notice that the ability to work from home and to communicate electronically with Irish and overseas offices is increasingly regarded as essential.

For Ireland to remain competitive in attracting foreign direct investment in these information-intensive industries, the timely availability of NGNs will be essential.

We all know that the export of highly specialised software products by companies like Google and Microsoft in Ireland are enabled through use of ICT systems, including broadband at next generation speeds.

In recent years, Ireland has become a relatively high-cost location and the need to restore competitiveness places a huge premium on the productivity improvements which next generation networks can enable.

Applications that exploit next generation networks, like advanced video conferencing and remote working, telemedicine, security or learning applications, will significantly change the way Irish businesses operate, providing huge potential for both service improvements and cost reduction.

The benefit of next generation infrastructure is that vital cost-saving services, such as Voice-over Internet Protocol and video teleconferencing, are available at bundled costs, thereby further reducing business overhead.

As regards developing new technology, Science Foundation Ireland is directly supporting world-leading research and development work in the telecoms sector with direct and immediate relevance for next generation broadband.

This advanced research is leading to spin-out firms and it is contributing directly to inward investment.

Our infrastructure must match our ambitions in this field.

That is why I have put this issue on my shortlist of areas for action in the short term and as a result my Department and agencies are engaged in detailed discussions with all the relevant players.

In growing small businesses, effective use of ICT by small businesses allows them to compete more effectively with their counterparts in other markets - for example, by reducing costs and improving the quality of services to their customer base.

In summary, our whole economy and its competitiveness are underpinned by the digital economy as we can see from the success of the software sector.

I believe that investment in digital infrastructure and services is vital and it is a priority for this Government.

Digital infrastructure and services has formed the bedrock on which all other sectors have been developed over the past decade.

I would like to conclude by thanking you for inviting me to speak to you today and I extend my best wishes to you all for a successful networking event.

ENDS\ETI2234

For further information please contact:

Bernard Mallee, Press Adviser to Minister Batt O'Keeffe, Department of Enterprise, Trade and Innovation, on Tel: +353 1 631 3944, Mobile: +353 87 9173022, Email: bernard.mallee@deti.ie