Plan will change shape of govt-ICT industry relations

A plan to bring local and multinational IT organisations and government closer together will mark a major change in the way the industry operates, says IT Association (ITANZ) head Jim O'Neill.

A plan to bring local and multinational IT organisations and government closer together will mark a major change in the way the industry operates, says IT Association (ITANZ) head Jim O’Neill (pictured right).

The plan, bolstered by the creation of a Centre for Advanced Government Applications, can almost be called a marked shift in government economic policy, he agrees — were it not for the government’s IT taskforce and ICTX, an informal forum of buyers and sellers looking at possible reforms in government procurement, already heading in a similar direction.

The basic idea, outlined in an ITANZ report by researcher Joseph Rousseau (pictured left) that was released last week, is to turn around the thinking of government — a large part of the IT market — from a risk-averse culture which moves largely in incremental steps to one which is willing to take a punt on uses of new technologies which could be exportable.

The centre could act as the industry’s interface with government. Centre personnel could approach a government agency with an idea or, vice versa, the agency approach the centre with a problem to be solved, and the sorting out of which individual company provides what part of the solution can be done within the centre.

With the proposed industry-wide scheme, the centre would play the existing role of the consultant, but representing the whole industry rather than just the companies a consultant knows about. “We’re trying to say [to government agencies and the consultants they employ] ‘You don’t know what you don’t know’.”

The aim is not only to fulfil the client agencies’ needs, but to edge towards advanced technology which will be attractive to overseas governments facing the same problem. A solution with potential export value will bring royalty revenue back to the vendors involved and further work in support and enhancement of the product.

The link on the export side will, as expected, be the existing marketing networks of multinational companies. These companies would thereby be encouraged to have a greater presence in New Zealand, an investment which has been weakening for some years.

As to whether the scheme represents a risky export incentive scheme, O’Neill admits there will probably be “a bit of extra up-front cost”.

One of the philosophes of the scheme is that industry and client share the risk of a development, so it may not come at a noticeably higher price to the user company than a “normal” development.

The plan necessitates marked change in government procurement policies, something ICTX is already looking at. Itanz’s report on the proposed scheme suggests that ICTX could be a good foundation for the formation of the centre.

The centre is seen as a “not-for-profit” organisation. It will derive its income from levies on member organisations and royalties payable mainly by multinational members selling New Zealand-made applications. An initial model envisages royalties will be 0.5% of the contract value in the first year, later rising to 3%.

The centre could also be eligible for government industry-growth grants. Projections suggest a total revenue growth for the New Zealand ICT industry of $535.5 million by the end of five years, comprising $157.5 million in domestic earnings and $378 million in export revenue.

The next step is to convince the various decisionmakers in government of the value of the idea, says O’Neill. These include ministers, the State Services Commission and the Ministry of Research, Science and Technology to pertinent operational agencies like NZ Trade and Enterprise.

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