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Why Britain Won't Spawn a Software Giant


The UK will never create a software giant to rival the likes of Microsoft (MSFT), Google (GOOG), or Oracle (ORCL).

That's the sobering conclusion of the silicon.com CIO Jury which voted 10 to two against, when asked whether the UK could create a global software business to rival the technology industry's most powerful companies.

However, while it may not be able to turn out the next Google in the jury's view, the UK software industry is alive and kicking.

A recent report by research firm TechMarketView found that the UK software industry is in a healthy state, but warned that more needs to be done to help young software companies.

The analysts said improvements to the teaching of science, technology, engineering and maths need to be made in order to create the next generation of software developers, while better tax incentives for investment, corporate venturing, R&D support and so on could all help young software companies flourish in the UK - sentiments echoed by the CIO Jury.

David Supple, head of IT and creative services at Ecotec Research & Consulting, said the UK won't turn out the next software powerhouse "until the government puts a more supportive framework in place to help our creative industries compete on a global stage".

Mike Roberts, IT director at the London Clinic, believes teaching is also a factor.

"The UK does not have the right economic or educational environment to support the growth of this type of skill. Development costs are too high and staff retention is very difficult," he said.

Graeme Martin, director of IT at GMAC-RFC, added that the UK's attempts to create a new software juggernaut are hamstrung by lack of know-how in other fields.

"The UK is intellectually more than capable of producing a global software giant, but I am not sure if they have the management and marketing expertise to exploit that capability to the extent necessary," he said.

Other members of the jury had different reasons for ruling out a homegrown software company making the big time.

Spire Healthcare IM&T director Marc O'Brien said the UK does not applaud success and doesn't respect the entrepreneurial spirit in the way the US does, warning: "I can see a future where the ideas and initial launches are UK based but they will be swallowed up by the 'big boys' either to spoil the market or to take the offering global.

"I believe that a core UK strength is organisation and delivery capability, and while I think we will always have a role to play it will generally be a secondary one on the global stage."

Jeff Roberts, director of information technology at Norton Rose, said that even if a UK start-up came up with the idea, US investors are still very powerful: "It could well start out in the UK but experience shows that any successful technology companies get swiftly taken over by companies and investors based in the US where they have a less risk averse approach to technology. So by the time it gets large enough to be really noticed it will look like a US company."

But even if the companies themselves aren't from the UK, their brains often are. According to the TechMarketView report, there are around 40,000 UK nationals now working in the US software industry, and Alastair Behenna, CIO at Harvey Nash, suggested that given the global nature of big business, UK talent provides a "significant chunk of the intellectual muscle" that makes software giants successful.

But some members of the jury questioned whether the idea of creating a software giant is even relevant any more. Mark Beattie, CIO at LondonWaste, said: "I doubt we will see the rise of huge mega-corporations in IT again." Small niche producers of world-beating software is what the UK needs, along with genuine support to export that software to the rest of the world, he added.

Similarly Nicholas Bellenberg, IT director at publisher Hachette Filipacchi, said: "Oracle and Microsoft are old-world software giants, who grew their businesses and profitability by having products that became de facto standards at a time that the world was prepared to invest in them. The rules are changing all the time.

"The world has changed and the rules have changed. But if you can still produce innovative software products that deliver, the internet means that they can be marketed worldwide. Whether they will become the business behemoths of tomorrow is another question. But does the world need another SAP (SAP), Siebel or Oracle?"

However, some IT chiefs remain enthusiastic about the future of the UK software industry, including Andrew Wayland, CIO at Michael Page.

"I totally believe we have the talent, the drive and the creativity at the embryonic stage to build software companies with the potential to become a Google or Microsoft. I think it's how we take these software companies onwards to build a vision that evolves to a global stage that's the challenge," he said.

This week's CIO Jury was:

• Mark Beattie, CIO, LondonWaste • Alastair Behenna, CIO, Harvey Nash • Nicholas Bellenberg, IT director, Hachette Filipacchi • Steve Gediking, head of IT & facilities, Independent Police Complaints Commission • John Keeling, CIO, John Lewis • Graeme Martin, director of IT, GMAC-RFC • Marc O'Brien, IM&T director, Spire Healthcare • Jeff Roberts, director of information technology, Norton Rose • Mike Roberts, IT director, The London Clinic • Richard Storey, head of IT, Guys & St Thomas Hospital • David Supple, head of IT and creative services, Ecotec Research & Consulting Limited • Andrew Wayland, CIO, Michael Page International

Driving Business Through Technology

Steve Ranger of Silicon.com reported from London.

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