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close this bookInformation Technology in Selected Countries (UNU, 1994, 148 pages)
close this folder1: Development of information technology in Ireland
View the document(introductory text...)
View the document1. Introduction
View the document2. Historical perspective
View the document3. Government policy and the role of key institutions
View the document4. Development of the electronics industry
View the document5. Development of the software industry
View the document6. The telecommunications infrastructure for it
View the document7. Manufacturing applications of information technology
View the document8. IT applications in the service sector
View the document9. The impact of IT on employment
View the document10. Education and training in information technology
View the document11. Summary and implications for developing countries
View the documentAppendix A: IT-related courses in tertiary-level institutions in 1987/88
View the documentAppendix B: EOLAS innovation support programmes
View the documentReferences

11. Summary and implications for developing countries

Summary

(1) The main instrument that has been used in Ireland to promote IT innovation and development has been industrial policy.

(2) There has been no coordinating body established to oversee employment creation, research into IT products and processes, education and training needs for the IT sector, and other aspects of IT development in Ireland. Responsibility for these functions has rested with individual state-sponsored institutions, e.g. the IDA, EOLAS, and FAS.

(3) The IDA has been relatively successful to date in attracting overseas investment, within the electronics sector, to Ireland. The main attraction for overseas companies (such as GEC, DEC, Wang) has been the package of incentives available, including grant aid and tax concessions, access to the European market (for non-EC countries like the United States and Canada), and a well-educated and skilled labour force. It is unlikely that these successes in attracting mobile investment could be replicated in most developing countries. (The estimated average cost of creating one new job in new industry was IR£21,080 over the period 1979-1985.)

(4) Irish experience with the electronics industry has been mainly positive. Exports of computers and related equipment accounted for 19 per cent of total Irish exports in 1987/88. Apart from the 16,000 jobs created, the sector has made a significant contribution to economic growth and development in Ireland. However, industrial performance in the industry has been vulnerable to international market fluctuations.

(5) Criticisms have been levelled about the limited range of manufacturing activities performed in Irish electronics plants. Internationally, it is recognized that "off-shore" IT assembly industries contribute much less in terms of value-added, skill development, and employment growth potential than more advanced processes. Conscious of these criticisms, the IDA has focused on attracting "international services," including computer-based services, with export potential to locate in Ireland. This resulted in the very rapid growth in the establishment of foreign and Irish-owned software and computer service companies during the 1980s.

(6) The computer services industry employed some 2,800 people in 1987 in software development, bureau services, consultancy, and training activities. The sector experienced a turnover of IR£160 million. It is growing at an annual rate of 13 per cent. Irish software exports were IR£100 million, and this figure was expected to double within five years.

(7) The restructuring of the Irish telecommunications system has been critical to IT development in Ireland. An investment of IR£800 million was required to provide digital switching and transmission. This has produced an infrastructure, through EIRPAC, to support access to international packet switching networks and many services such as data transfer, electronic funds transfer, electronic mailing, and videotext services.

(8) To date, computer-based manufacturing applications are relatively underutilized in Irish companies. More extensive use is being made of business management (e.g. accounting-based) and office procedure (e.g. word-processing) applications compared with design-based (CAD) and manufacture sphere applications. It is anticipated that the use of manufacturing applications, such as bill of material processing, process control, and numerical control, will continue to grow in Irish manufacturing companies.

(9) The service sector has also been slow to adopt IT even in subsectors such as banking where there are clear international trends in IT use. Government departments have been amongst the earliest adopters of IT, and the manner in which individual departments are adopting IT is changing. The trend is away from an early centralized approach through the Central Data Processing Services to decentralized decisions concerning IT, in accordance with IT Planning Guidelines.

(10) Other services in which IT has been slow to diffuse are retailing and libraries. Only educational and research libraries have automated their holdings and virtually no computers are used in public libraries. This situation can be altered only if adequate resources are made available for hardware/software. In retailing there is a reluctance to adopt point-of-sale equipment and links with the banking system. This is likely to change as scanning, electronic funds transfer, and shopping from home terminals become features of Irish retailing.

(11) Skill levels in the Irish electronics sector are lower than those prevailing in plants in the United States. However, compared with the levels within Irish manufacturing industry, the electronics sector employs a higher percentage of professional and technical staff. Women workers comprise 45 per cent of the Irish electronics workforce. Very few of them are engaged in professional or technical occupations.

(12) IT-related courses in computer studies/science and electronics are widely available within tertiary-level colleges in Ireland. They can be studied at National Certificate, National Diploma, and degree levels. The number of certificate, diploma, and degree students grew considerably in the 1980s, particularly with the introduction of IT courses in Regional Technical Colleges. Hence the education of engineers, computer scientists, and IT technicians is well provided for in Irish institutions.

(13) Virtually all secondary schools have computer facilities in Ireland and students can take computer studies as an option. However, it is not yet an examination subject at secondary level. Only 25 per cent of primary schools have a computer, and there is no policy for the use of computers in the primary curriculum.

(14) IT-related training forms only a small percentage of training places in FAS centres and external training courses. No IT apprenticeships are available. Women trainees have been poorly represented on courses other than electronic assembly, particularly in those run by external agencies.

(15) More attention and resources are being devoted to the promotion of education/industry linkages as a means of promoting IT innovation. It is increasingly recognized that tertiary-level educational institutions have a key role to play in conducting research and providing consultancy services and other forms of cooperation with industry in the application of information technology.

Implications for Developing Countries

Networking

Ireland has experienced a major shift, in terms of hardware, from a reliance on large expensive mainframe computers in the 1960s and early 1970s to the mini and microcomputers. In common with many other countries, mainframes have been maintained by bureaus and many large state and private organizations for use in processing large volumes of data, e.g. payroll, personnel records, invoicing, reservations.

With the advent of cheaper and more powerful microcomputers, individuals, rather than departments, have availed themselves of computing power, often for use in a stand-alone capacity. The next anticipated trend, which has already commenced, is towards "networking" of existing hardware. Within universities and larger state institutions this will enable micros to be used as dumb terminals linked to the organization's mainframe or minicomputer. Thus users will have the capacity to tap the more powerful resources of the mainframe in addition to their own micro-based software applications.

It is clearly recognized that in many developing countries there has been a near proliferation of micros. Often these have been purchased out of aid funds for one-off projects. The potential to utilize such hardware, linked into Local Area Networks (LANs) and Wide Area Networks (WANs), is therefore very important, particularly where resources for additional software and hardware are scarce.

Telecommunications Infrastructure to Support IT

Irish experience also reinforces the OECD emphasis on the importance attached to the telecommunications infrastructure for IT innovation. Allied to the networking concept, an underlying trend is emerging towards the use of packet switching networks and leased lines for data transfer. This is already an established facet of banking in Ireland, and will be increasingly used in linking banking (and other financial services) with retailing. The importance of good communications is also critical to obtaining access to international data banks, particularly for developing countries. Such access has been sought and used by the Irish Department of Industry and Commerce and other state agencies.

"End-User" Computing

Allied to the dual developments of miniaturization and networking, the range of personnel in Irish organizations who have been involved in IT has been extended considerably. As in many developing countries, the initial adoption of computers tended to occur with the use of "turnkey" operations, followed, in larger organizations, by the creation and/or extension of a data-processing (DP) department. This had two negative effects in the early stages of organizational adoption:

(1) IT was identified as being the exclusive property of the DP experts;
(2) IT created an additional and costly tier of personnel.

This underwent a complete change in Ireland during the 1980s so that IT has permeated organizations through the use of accounting, spreadsheet, and word-processing software. The current emphasis is on involving the end-user and in minimizing the "exclusive" role of computer specialists. The manner in which IT was adopted in the Department of Industry and Commerce was novel and illustrates the advantages of an end-user-driven IT initiative, based on a networked microcomputer-based system.

Rate of IT Innovation in Ireland

The level of IT usage in Irish manufacturing and service industries is relatively low, representing the lag period prior to full adoption, as represented on the innovation continuum on page 9. The relatively early and enthusiastic take-up of IT in Irish organizations occurred in the coordination sphere. This includes office automation and business management applications.

Viewed in the context of the benefit/beneficiary matrix (fig. 1.6), the commonly used applications of word processing, spreadsheets, accounts receivable/payable, and general ledger represent the achievement of efficiency and effectiveness at the level of the functional unit and by individuals. The full potential for IT use as a strategic resource encompassing the whole organization is not yet evident in most Irish institutions. Recent and proposed developments in banking and retailing, and design applications currently used by some professional companies, are examples of the potential shift towards service enhancement (e.g. ATMs in banking) and product innovation (e.g. shopping from home terminals) that could transform the nature of IT use in innovative organizations. It appears that these stages of early, middle, and later adoption represent IT adoption within the three benefit/beneficiary matrix domains (Fig. 1.6). Irish organizations have tended to follow the predicted pattern, and this may provide an insight for many developing countries into the likely tasks, units, and levels of impact that IT can be expected to influence.

Barriers to IT Innovation

In terms of developing the IT sector within a country, Guy and Arnold have identified three major barriers to participation:

- economic entry barriers;
- technological experience barriers;
- market characteristic barriers.53

To some degree Ireland has been faced with each of these. The economic entry barriers are those that determine the cost of entering the IT race in the international market. Government policy in Ireland has operated to provide financial inducements, in the form of direct grant aid, tax incentives, and training/infrastructural support, to potential electronics and software companies. Even ignoring the tax revenues forgone, the cost of creating IT-related jobs has been high. In the light of growing criticism, the IDA's grant structure has been altered to relate to actual jobs created rather than those projected. Such costs could not be borne by most developing countries.

BENEFIT/BENEFICIARY MATRIX


Beneficiary

Benefit

Individual

Functional Unit

Organization

Efficiency

Task Mechanization

Process Automation

Boundary Extension

Effectiveness

Work Improvement

Functional Enhancement

Service Enhancement

Transformation

Role Expansion

Functional Redefinition

Product Innovation

Fig. 1.6. Benefit/beneficiary matrix (Source: Index Indicators, vol. 2, no. 5, Index Systems Inc., July 1985)

In terms of technological barriers, Ireland has faced a similar situation to that confronting most developing countries today. Added to that is the problem that it is now harder to identify, segregate, and capture single-product niches than had been the case in the 1970s and early 1980s. The trend is towards a concentration of production in larger firms, usually multinationals, which possess the necessary range of technological experience. Developing countries face a dual conflict:

(1) economic entry barriers that support the need for specialization;

(2) technological barriers that indicate that the development of a broad technological base, similar to Ireland's approach, may be advantageous.

There is evidence that firms in lead nations (e.g. the United States and Japan) are becoming less willing to facilitate outward technology transfer to firms in less advantaged nations. Many US companies are retracting even from "offshore" assembly operations owing to the reduction in the percentage of total factor costs accounted for by labour. Such retrenchment may be temporized through government intervention by adjusting tariff barriers as a compensation for information technology transfer.53

Ireland has also experienced the influence of market barriers and used its position as a member of the European Community to attract IT investment from outside Europe. Stability and size are important. For many individual developing countries, the indigenous market would be too small and susceptible to import penetration.

All of these barriers point to the need for appropriate government intervention in developing countries to support R&D activities, to encourage indigenous firms, and to initiate collaboration across industries and between industries and the university sector. The value of the tertiary-level sector to the IT industry is well established in the United States and is a model that is currently being adopted in Ireland. In terms of markets, there may also be a need for government intervention to support home markets and to work towards some form of protected South-South trading relationships and market unity. It is unlikely that Ireland could have succeeded in its current level of IT innovation in the absence of:

- a wider, though protected, market in the European Community,
- state support for the promotion of the IT sector, and
- provision of the necessary infrastructure.