The recovery of the European markets also means the emergence of new dynamics for the software industry. The development of new services and technologies will be the engine of growth for the sector. How will it impact the industry? Who are the winners and what are the possible scenarios? These are the questions that Pierre Audoin Consultants (PAC) and IDATE have tried to answer in a study published by the European Commission in October 2010. The conclusions were presented during an exclusive Breakfast Meet organized by LD&A, PAC, and IDATE on October 6, 2010.
PARIS | October 11th, 2010 – The study by PAC and IDATE on the software industry, conducted in collaboration with Fraunhofer ISI and London Economics for the European Commission, fits in the current context of the emergence of new services, developed around the internet.
The conclusions of the study were presented by the experts of PAC and IDATE during a Breakfast Meet, in the presence of Bertrand Finet, Director and member of the Executive Committee of Fonds Stratégique d’Investissement (FSI), Bruno Vanryb, Chairman of Avanquest Software and President of the Software Editors’ Club of Syntec, the French IT Industry Association, and Marc Jalabert, Chief marketing and operations Officer of Microsoft France.
The study noted the increasing role of the software industry in the economy and society in terms of value creation and improvement in the quality of life by analyzing the latest developments in technology – very high-speed internet, web semantics, cloud computing, etc. The study has formulated several recommendations to allow the European industry to seize the opportunity presented by these changes in the market to reinforce their competitiveness and their market share in face of the competition, especially American companies.
Introducing the study, Francis Lorentz, President of LD&A and IDATE said: “From the smartphone, our future digital limb, to the supply of energy to our cities by the smart grid, software pervades all domains, our private lives as much as society. The role of the software industry has become critical to our future, while the current fragmentation of this sector in Europe constitutes a major handicap/ liability.”
For his part, Bruno Vanryb observes: “The substantial changes occurring in the software industry, with the emergence of cloud computing and the spread of smartphones, are rich in opportunities without containing any real threats; in fact, this is the ideal time for software vendors to finally offer users complete convergence to be able to access their data wherever they are, and whichever their device – the dream has become reality! Looking at the French software industry, its main weakness versus global competition is of a cultural nature, but this weakness is of less and less importance with the arrival of a new generation born with the internet and new technologies.”
“The annual growth of the European software market by 2020 should be around 4.4 percent, or double the GDP growth. It should also lead to an annual employment growth rate of 2.5 percent in this sector,” said Arnold Aumasson, Director, PAC.
In this regard, Vincent Bonneau, Director of the Internet Business Unit at IDATE, reminded the gathering about the role of cloud computing which should see a growth of over 100 percent.
With regard to the financing of this industry, Bruno Vanryb remarks: “There is no lack of public funding for innovation, but what is done with it (beside the crucial research tax credit) is not always relevant. We therefore need to develop public-private partnerships exactly as the FSI (Fonds Stratégique d’Investissement) does to maximize return on investment on state funds."
All the participants agreed on recognizing the very positive role of the tax break on research or Crédit d’Impôt Recherche (CIR). “The software is a priority sector for the FSI. What is needed is for companies to agree to open up their capital in order to grow faster,” Bertrand Finet specified.
However, Marc Jalabert for his part observed that seed funding remains insufficient.
In a more general manner, he reminded the gathering that R&D teams were at the heart of the dynamism of the sector, and reinforcing them should be a priority for any public program.
Also in the recommendations of the study were to make the software industry a lead market initiative or a priority sector, benefitting from favorable measures and policies at the European level.
Eric Isabey concluded by saying that European companies suffered not only from the fragmentation of the market but also from problems related to the infrastructure and the lack of trained engineers.
But he reiterated, citing the study, “There is a sentiment of confidence about the future. The software industry presents a strategic opportunity and we must hunt in packs to benefit from it.”
You can find documents related to the study on the website of the European Commission: http://cordis.europa.eu/fp7/ict/ssai/study-sw-2009_en.html
About Pierre Audoin Consultants (PAC)
PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies, and investment firms by delivering analysis and advice to address a range of growth, technology, financial and operational issues.
For more information, please visit www.pac-online.com.
About IDATE
Founded in 1977, IDATE is one of Europe’s foremost market analysis and consulting firms, whose mission is to provide assistance in strategic decision-making for its clients in the Telecom, Internet and Media industries, through the following of two areas of activity: Consulting & Research (an independent consultancy and publication of a catalogue of market reports) and the DigiWorld Programme (a member-supported annual programme: DigiWorldClub, DigiWorld Summit, DigiWorld Yearbook Communications & Strategies…)
For more information, please visit www.idate.org.
