A Debate – ‘How to Encourage Innovative SME’s in ICT’?

The following is a collation reflecting a summary on my notes, my presentation to the audience and my responses to questions at a European Internet Foundation debate held in the European Parliament Brussels on the 25^th May 2011.

I spoke as I often do with more than one voice, drawing on and taking the opportunity to communicate the views, feedback and war stories from many members of the IAMCP (International Association of Microsoft Channel Partners) .

I have the privilege of sitting on the UK and International Boards of the International Association of Microsoft Channel Partners, an International Business network made up of approximately 5,000 member organisations. IAMCP represent the independent voice of the Microsoft ecosystem, embracing all those who engage with the Microsoft channel. I draw on this rich relationship to address today’s theme on ‘How to Encourage Innovative SME’s in ICT’.

There are many factors that come to mind, but in the time I had available I focused on three headline issues.

Intellectual Property (IP)

IP is the asset value that entrepreneurs seek to create and or expand in our businesses, a tangible value essential to attracting investment. Martin Luther in the 16^th Century said ‘Freely I have received and freely I have given’; he was referring to the more material property of his day. How things have changed but also how we can learn from lessons of the past.

IP in ICT today is a fundamental contributor to the wealth and economic fates of countries as property was in Luther’s day. We challenge ourselves here in Europe with the lack of a Google, Amazon, eBay or Microsoft. I have no doubt the potential exists we must get the incentives right.

Europe is a minefield for an SME (Small Medium Enterprise) to secure IP. The varied legislative and regulatory challenges to getting a patent are just the first hurdle, and then there is the defending of that patent across the same spectrum of complexity.

Is it any wonder that the advice is to go to the US first and develop the momentum in a singular regulatory regime? Not what we want to hear for our economic wealth generation here in Europe.

The European Patent Scheme is a step in the right direction, but lacks any comparable dispute resolution which can be more expensive than the patents themselves.

Furthermore the international patent ‘superhighways’ whilst offering the potential of creator international alignment and co-operation globally seem to be erring on the side of the lowest common denominator when it comes to standards which does not bode well for quality patents.

The other side of the IP coin is the concept of ‘Patent Thickets’. The term “patent thicket” originates from a litigation case in the 1970s regarding Xerox’s dominance of a portion of the photocopier. The economist Carl Shapiro defines a patent thicket as: ’A dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.’

This is a big challenge, and many start-ups can spend much of their hard won investor capital inadvertently snaring them in a patent thicket. It is hard enough selling good ideas without having to sell investors the line that thousands of pounds must be spent on lawyers checking patents first!

And things are not getting better, the speed of patenting by companies like Apple actively bar competition, whether patents are used or not. The weight of legal firepower available to such organisations is not worth even stepping up to.

A chick of light in this comes from an unsuspecting sector. Microsoft has its Microsoft IP Ventures program which in summary recognises that all it could never actively engage all the R&D ideas that are created and patented from its Billions of dollars of research over the years. So it has opened up its IP ‘warehouse’ and anyone can take advantage of this and Microsoft provides some technology transfer support, including training! Yes there are licensing agreements and terms to be negotiated but these are mutually rewarding and an encouraging and practical sign of market support in this area.

Skills

With the speed of evolution in the ICT industry I don’t know the skills I am going to need in 18 months’ time let alone 5 years. The current employment law does not recognise the need for organisations to be able to turn staff over in response to the market demands on their business.

My own attitude towards skills has shifted to one of ‘Mindset’. If I can get an individual with the right mind-set then the skills tend to take care of themselves, and where I have to invest in training the value extrapolation is magnified. A trustworthy mind-set underpinned by commitment in an adaptable individual who is open to full accountability.

In Europe we have some of, if not the pre-eminent learning and research institutions win the world. We do not have structure issue with developing and communicating those skills to our workforce. In my experience, and this is generalised with respect to some exceptions, we have a culture friction that is generationally embedded in the European psyche that manifesting in a low level of motivation, an attitude in many individuals that jobs are for life. The worst example of this is the public sector which.

Reflecting on global experience, the USA provides a prime example of how a less protective employment market fosters greater commitment, creativity and drive in the workforce. Individuals have to maintain their marketability to maintain their job. Hard but honest, and mutually rewarding beyond their own and employers prospects as the momentum is carried across the economy.

Commercial Software

Software is the bits and bytes of technology. The creative and structural medium technology businesses manifest their value through the development of product and or delivery of services.

Until recently the EU had a very hostile attitude towards commercial software and in some fields still does. This hostility magnifies the challenges iterated in the point on IP. Commercial software is often closed for good reason. That does not mean it is not interoperable or ‘open’ in all practical senses as to its functional harmony or potential harmony with other systems. In fact today the essence in developing commercially viable software is in making it interoperable. Cloud computing is a testament to that.

It is encouraging to see the commission now openly supporting the level playing field and advocating that solutions and product must stand on its own merits Quote: ‘The Commission is technologically neutral and does not require European Union member states to prefer a particular category of software or business model over another’. Reference the recent article in the New York Times.

We will have to see if this is more than lip service, but what we cannot have is the equivalent of a Software Apartheid’ where Open Source or Closed source software is artificially propped up in the market.

Artificial markets do little more than build walls around themselves, whether that is at an industry or international level. Reflecting on a previous career in my capacity as a Chartered Surveyor working with farms I was always saddened by the acreages laid out to doing nothing. A sad bye product from years of tinkering with a support system; its distorted rewards creating economic conditions that few politicians would have the will to reverse. We cannot head in such a direction with ICT, at a technology or support level. Remember the saying ‘Teach a man to fish and he will never go hungry, give the man food and foster a depended’.

ICT in Europe can develop on its own merits. Any will by Central Governments to spend taxpayers money should go into:

1. Research that can help communicate benefits clearly and in accessible terms the benefits to SME’s.

2. Grant aid channelled through the Banks in the form of loan guarantees, encouraging a business like engagement and exchange for funds that many grant systems side channel. Get the banks to drive these initiatives and provide the support infrastructure not isolate grant organisations. The by-product of using the banks as a conduit is to also stimulate the Banks to communicate with SME’s and to actually do business with them rather than take taxpayers bail outs and fail miserably, by placing hostile conditions in the way, to uphold their commitment to inject liquidity back into the economy through small business loans.

3. Government at all its level’s to engage Cloud Computing and help foster best practice and communicate good experience with a technology that has the potential of rejuvenating much tied up capital in the SME marketplace.

Europe I have no doubt has the potential to father and mother the next great ICT Global household name(s). Unless we can create the investment incentives, the will in our workforce and the opportunities that open market optimism manifests then our potential will forever be that of a sleeping giant.