In Silicon Valley Europe things aren’t in clover

DUBLIN – Conflicts over IT procurement, commercialization challenges, spotty broadband coverage. It sounds like Canada, but Ireland is going through similar growing pains as its industry tries to keep up with the big companies setting up shop around them.

Thanks in part to tax-friendly business policies and government investment in higher education, Ireland has become known as the “Celtic tiger” in the last 10 years, with Dublin, its capital city, called the Silicon Valley of Europe.

Google’s European headquarters is here, as is Microsoft’s European operations centre. This past summer, IBM marked its 50th anniversary in the country with a promise to create 300 new jobs by expanding its software lab here. More recently, Ottawa’s Cryptologic said it will move its headquarters to Dublin.

The next step, according to local industry watchers, is to match Ireland’s reputation as a home for high-tech heavyweights with some more home-grown success stories.

“They’re not really scaling up, really going international,” said Michelle Quinn, director of the Irish Software Association (ISA), which promotes and supports local application developers much like the Canadian Advanced Technology Alliance (CATA) or the Information Technology Association of Canada (CATA). “They also face the challenge of getting the requisite amount of funding without signing away half of the company.”

Much like ITAC and Canada, the ISA earlier this year formed a partnership with India’s largest IT trade group, the National Association of Software and Service Companies, to learn best practices.

Quinn hopes to do the same thing with a group in Washington D.C. ISA has also launched a new program helping Irish software CEOs to attend a corporate leadership program at California’s Stanford University.

But even the best-run companies can have a hard time getting exposure to one of Ireland’s biggest IT customers: the government. Quinn said that unlike Canada, there is little centralization of technology purchasing. Instead, decision-making tends to happen at the departmental level, where local Irish software companies often don’t make the cut, she said.

“One of the long-term strategies is to try and change the mind-set of that culture by showing that these companies have had great success selling to other governments like the ‘States, Australia or the Netherlands,” she said.

Ireland last year went through an IT spending scandal when a public health payroll system’s costs spiralled out of control, reaching 150 million euros before the plug was pulled. The project, which involved IBM, SAP and Deloitte, was an Irish example of scope creep, Quinn said, and might have been avoided if the government procured technology products and services differently.

The government has managed to transcend the stovepipe mentality in its efforts to do more online, said Maeve Kneafsey, managing director of Dublin-based Web strategy consulting group Elucidate. While Canada’s Government On-Line project has been led by Citizenship and Immigration Canada, Ireland’s e-government efforts have mostly been managed through the Secretary General’s office, she said.

The government also set up Reach, an organization mandated to procure and build an integrated set of processes, systems and procedures that will provide a standard means of access to public services electronically.

“We’ve seen it in the commercial sector as well – organizations had all these little Web sites here and there, and now they want to figure out overall what they’re doing,” she said. “They realize they need to do it, and especially in the government’s case, it’s not something you want to do in a haphazard way.”

E-government and business Web strategies won’t have a full impact, however, unless Ireland does a better job at expanding broadband to rural areas, Kneafsey, said. “It’s a bit of a joke,” she said. “Even in parts of Dublin it’s not that great.”

Kneafsey, who is also a board member of the Irish Internet Association, said part of the problem may be traced to the market dominance of Eircom. “It’s a monopoly,” she said. “You’ll see the ads saying, ‘Sign up for this service,’ and people will, and then (Eircom) will tell them, ‘Oh, sorry, we don’t service that area.’”

The situation wasn’t helped when Smart Telecom, one of Eircom’s few competitors, went through such dire financial troubles that the company was sold last year to a single investor for a symbolic one euro, Kneafsey added.

Quinn said a number of ISA members are developing Web-based products offerings, including software as a service, but she said another source of potential growth for local firms is through the commercialization of academic research.

Lucent partnership

So far, at least one major effort is underway at the University of Dublin’s Trinity College, which has partnered with Lucent Technology’s Bell Labs on a five-year, 69-million euro program to create a Centre for Telecommunications Value-Chain Research (CTVR).

Professor Donal O’Mahoney, the CTVR’s director, said the facility is being used to create technologies in photonics, wireless and emerging networks. If any of the fruits of the researcher’s work makes its way into Lucent’s product portfolio, the intellectual property is shared 50-50.

“Bell Labs doesn’t control what we do, but they sort of inspire it,” he said. “What it does it put all these people in the same room. Before, there wasn’t a lot of dialogue between the device (makers) and the physicists.”

O’Mahoney hopes to double the CTVR’s size within 10 years.

The program could also create a steady stream of radio frequency engineers, which are highly in demand, he added.

“Whether they’ll remain in Ireland – now that’s another matter.”

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