German government doesn't want 'a vision'

Country's economics ministry hesitant to target singular IT goal, preferring instead to nurture diverse tech industry to better protect against crisis, says official.

BERLIN--The German government is unwilling to pin down a specific IT identity for the country because this singular focus will prove too narrow to safeguard the local economy, a government official says.

Some countries have set goals to become specialized hubs offering special skill sets that relevant to certain IT segments. Singapore, for example, sets it sights on becoming a regional games development hub, while Malaysia harbors ambitions of becoming a one-stop outsourcing center.

The German government, however, has yet to identify a specific IT area within which it wants to specialize.

Stephanie Kage, an official at the department of IT and media at Germany's Ministry of Economics, admitted the German government has been told it "lacks a vision...[and that] we need [to have] a vision". It is, however, hesitant to set one, Kage said, speaking to reporters here Thursday, as part of Software AG's international press day.

She explained that the local government wants to highlight areas it thinks are important and where there are growth markets.

"But, we don't want to have a plan and have the economy move toward a certain direction," she said. "What we want is a diverse economy structure, which we think will better protect us in an [economic] crisis. We think IT should be everywhere."

Pushing software's role
Not surprisingly, though, IT vendors such as Software AG, are keen for the German government to put more emphasis on the role software plays in driving the local economy.

Germany's second largest software vendor, Software AG believes software is integral to every country's economic development and should therefore be part of the national strategic and innovative economic policy, said Norbert Eder, the company's vice president of corporate communications.

Citing findings from the European Union (EU), Eder said 50 percent of the increases in productivity within EU nations were due to the use of IT, within which, software had the largest impact in driving the growth in productivity.

Despite its significance, however, software is hardly represented in Germany's economy, he said.

"Our industrial image still stands for traditional industries such as automotive. You wouldn't think about software [when you think of Germany], and neither do our politicians," he added, noting that this is "wrong" because 87 percent of the country's high-tech startups are software companies.

In fact, the local software industry created more than 60,000 new jobs between 2004 and 2007, he said.

Software, he noted, is also the main driver of innovation in traditional industries, where 50 percent of the value added in cars today, for instance, is IT embedded systems such as telematics. What that means is, the differentiator between automotive players is software, he said.

According to Eder, the importance of software in Germany is underestimated because while there is good innovation, local companies lack the ability to turn innovation into actual commercial success. "There's a lot of invention but the last step to bring that invention to the market is still missing today," he said.

He added that this issue is exacerbated because tech researchers are often financed by independent sources rather than the market, and therefore, may not face pressures to ensure their invention can be converted into commercial viability.

He pointed to an observation made by Viviane Reding, the EU's commissioner for information society and media, who said: "If we take into consideration that 50 percent of all productivity increase in the past 10 years came from IT, and if we see the importance of software for the traditional EU industry, then we have to admit that the EU software industry is under developed."

Eder noted that Software AG is lobbying for the government to drive software awareness and role in Germany's economic policy, where the focus is currently concentrated on telecommunications and broadband.

He said the software vendor next year plans to propose that the German government give the market segment more visibility and help promote local software startups.

He added that the government needs to help create venture capital funds for the software industry, particularly because software startups face difficulty securing funds as they do not have physical assets, owning only intellectual property which is difficult to assess.

The government should also set an example by being an early adopter of local software, and help lay the foundation for the education system to nurture relevant skill sets, he said.

Eileen Yu of ZDNet Asia reported from Software AG's international press day in Berlin, Germany.