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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

2. Historical perspective

The advent of information technology in Ireland coincided with a shift in emphasis in industrial policy. In the post-Independence decades, and most particularly from the 1930s to the 1950s, the emphasis was on promoting import-substituting native industries by the use of tariffs and controls on foreign investment through the Control of Manufacturers Acts (1932, 1934), which were not repealed until 1958.

By the 1960s this policy was altered to (a) actively promoting export growth and (b) attracting direct foreign investment by the availability of capital grants and tax concessions. This significant change in emphasis was due to the lack of sustained growth in Irish industry, a rising balance of payments deficit, and high levels of unemployment and emigration.6 The introduction of grant support (which continues to operate) and tax holidays (which have since been altered to take account of EC regulations on competition) were seen as the main mechanisms for supporting infant export industries. As this report illustrates, industrial policy has been the major tool through which the government has influenced and encouraged IT development in Ireland. It is also important in understanding the environment in which IT innovation has occurred.

Table 1.1. Survey of computer usage in Ireland, 1986/87


Technology users

Industrial sector

CPU in 1986

Plan to in 1987

Plan beyond 1987

Bureau only

None

Total

(Total bureaus)

1. Energy & Water

8

-

-

-

1

9


2. Extraction & Processing of Non-Energy Metals

32

1

2

-

5

40

(6)

3. Metal Manufacturing Mechanical, Electrical & Instrument Engineering









- Data processing Machine Mfg

9

1

-

-

-

10



- Other

54

1

2

1

12

70

(12)

4. Other Manufacturing

81

5

-

1

10

97

(12)

5. Building & Civil Engineering

15

1

2

-

8

26

(-)

6. Distributive Trades, Hotels, Catering & Repairs









- Wholesale

61

6

5

2

34

108

(11)


- Retail

15

1

2

-

9

27

( 3)


- Hotels & Catering

8

-

-

-

8

16

( 1)


- Other

10

-

-


8

18

( 2)

7. Transport & Communication

37

1

3

1

21

63

( 7)

8. Banking & Finance, Insurance, Business Services









- Banking

8

-

_

_

1

9

( 1)


- Insurance

10

-

-

-

4

14

( 1)


- Other

86

8

5

2

20

121

(11)

9. Other Services incl. Government Education & Medical









- Public Admin.

8

1

1

-

-

10

( 1)


- Education

21

-

-

-

5

26

( 2)


- Medical

5

-

1

-

18

24

( 2)


- Other

10

-

-

-

8

18

( 2)

Totals

478

26

23

7

172

706

(74)

Percentage

68%

4%

3%

1%

24%

100%

(10%)

Source: Ref. 8.

Growth of Computer Usage in Ireland

By the end of 1969 it was estimated that there were 59 computers installed in Ireland "of a size likely to have a significant impact on an organization."7

In 1986/87, the National Software Centre (NSC) undertook a survey of computer usage in Ireland, the results of which are shown in table 1.1. Approximately 4,000 business units were sampled, which yielded an 18 per cent response. The results of the survey of 706 respondents indicate that less than one-quarter (24 per cent) of firms had no use for IT. Over two-thirds (68 per cent) had their own computer, whilst a further 7 per cent planned to use a computer after 1986.8 Depending on the representativeness of these responses, the data suggest a fairly significant level of current IT usage in Irish business units. The patterns of use and applications by these companies will be dealt with in later sections of this report.

Milestones in IT. Innovation

Installation of Computer Hardware

Electronic data processing in Ireland originated in the early 1920s with the punch card service operation. A company known as the British Tabulating Machine Company was founded in 1907 and by 1920 it had formed the punch card bureaus registered as Calculating and Statistical Services, based in Pearse Street, Dublin, and in Belfast. It had the agency for both Hollerith and Comptometer equipment for Ireland. In the 1930s another company, Power Samas, entered the market for service bureau operations. Major customers of these companies were the Electricity Supply Board (ESB), Civil Service departments, and the larger state-sponsored bodies.9

The first electronic computer to be used in Ireland was from International Computers and Tabulators (ICT 1201), a company formed by the merger of Hollerith and Power Samas. This punch card machine, with a printer speed of 100 lines a minute, was installed by the Sugar Company in Thurles, Co. Tipperary. According to Donovan, the early introduction of electronic processing in Ireland, only two years after the first commercial installation in the United States, was facilitated by the already established punch card bureau services.

The second ICT installation was by the Revenue Commissioners in June 1963 with an ICT 1301 computer. In the absence of any assembler language, all programmes were written in machine code. The first applications were for income tax, followed by turnover tax and corporation profits tax. In 1960, the ESB installed an IBM 650, and the Post Office introduced an IBM 604 programmed calculator for Savings Bank transactions.9

A substantial rise in the number of installations occurred in 1964 when 13 organizations had computers installed. By 1969 the total number in Ireland was 50. Some of these were replacements of existing computers by more up to-date and/or larger models. In addition to the computer installations, by 1969 a further 250 organizations were using bureau facilities, the most significant growth having occurred in the three-year period 1966-1969.

The reliance on external commercial bureau facilities was an important feature in the early use of electronic data processing. By 1970, only 1 in 6 users of computer services had a computer installed. The remainder used bureau services.7 According to the NSC survey in 1986/87, only 1 in 10 of organizations with electronic data-processing requirements were using bureau services.8

Another significant development in computer installations, which was to have unforeseen consequences, was the introduction of IBM computers in Aer Lingus, during the early 1960s. An IBM 1410 (and subsequently IBM 7070) was installed, supplemented by a second-hand Bunker-Ramo on-line system to store information on reservations and seat sales. The IBM 1440 was introduced to hold records of non-numerical data. It was followed by a second 1440 for accounting purposes. These three early machines were ultimately replaced by the IBM 360, using the IPARS package for reservation applications. The installation went live in 1968/69.9

In 1969, Aer Lingus set up a separate computer department. The objective of this was to generate revenue by utilizing excess capacity on its in-house computers, following the installation of a second mainframe to provide backup to the reservations system. The new department was staffed from the parent company and was subsequently established as Cara Data Processing Ltd. In 1972, Aer Lingus took over another successful computer bureau, Irish Computer Bureau Services Ltd (ICBS), which was merged with Cara. The subsequent company, CARA/ICBS, holds in excess of 60 per cent of the Irish market for computer bureau services.10

Apart from the Revenue Commissioners, the first use of computers in the Irish public service was by the Central Data Processing Services, with an IBM 370, in January 1973. A feature of the installation was the high volume of batch work that was processed over telecommunication lines. Four high-speed terminals were installed within months in the Department of Education, the Central Statistics Office, and the Health Boards. This remote operation was rapidly expanded to provide services to almost 20 sites, including a link to the Department of Social Welfare, which had installed two Honeywell minicomputers.9

At university level, the first computer was installed in Trinity College, Dublin (TCD), in 1962, an IBM 1620, within the Engineering School. It was replaced in 1966/67 by an IBM 1130, and in 1968 by a System 360 model 44. University College, Cork (UCC), installed an IBM 1620 in 1964 to be replaced in 1969 by an IBM 1130. An IBM 1620 was also installed in University College, Dublin (UCD), in 1965, and replaced by an IBM 3650 in 1970. In University College, Galway (UCG), an IBM 1800 series machine was installed in 1967. It was replaced in 1977 by a DEC 2060.

In banking, the introduction of decimalization was a great impetus to conversion from electro-mechanical to electronic computers in Irish banks. The four associated banks were among the first to introduce computers on a large scale, commencing in 1969/70 with the installation of an ICL 1900, subsequently replaced by the ICL 2900. The Bank of Ireland used optical character reading for scanning vouchers from all the branches at the Computer Centre in Dublin. Allied Irish Banks (AIB) commenced computer operations in 1973, using floppy disks to record branch transactions and for transmission of data between branches and its Computer Centre. AIB was the first of the banks to introduce intelligent terminals at each branch.

These milestones in the development of hardware installations indicate how the gradual build-up in electronic data-processing capacity occurred:

- starting with bureau services, followed by
- the purchase of (often rapidly obsolete) large mainframe computers,
- the more widespread adoption of minicomputers (such as the VAX 11/780),
- data transmission across telecommunication links, and
- direct on-line access to data from remote terminals.

As the remainder of the report illustrates, the trend towards miniaturization has continued, with the advent of a growing micro market.

Telecommunication links and the emergence of a demand for networking have been important. A shift in emphasis has also occurred from a preoccupation with hardware to a recognition of the need for development of software applications to meet varied end-user needs. In parallel with a continued reliance on bureau services for some routine functions (such as payroll and transaction processing), most Irish firms are now convinced that the purchase of their own computer hardware is justified.

Software Development

Since 1977 the software industry has undergone rapid expansion. Estimates for that year suggest that employment in the software business was about 300 in about 30 companies. The industry is currently estimated to have some 3,000 employees, with another 1,500 in the software departments of hardware companies.11

According to one commentator, "Ireland had a 'computer services industry' in 1977 rather than a software business and the notion that products could be developed here and sold abroad was radical and new." In terms of how it has evolved in the decade since 1977, he goes on to state: "unlike the hardware industry, foreign-owned ventures have never dominated its evolution.... It has been the native companies that have created this industry, even though their progress has been fitful and erratic over the decade."12

Software development was a logical spin-off development from the preexisting bureau services and data preparation companies in Ireland. In 1977 approximately 200 jobs existed, in addition to those in the limited number of software firms. They concentrated on providing a service that involved coding in advance of batch processing. Most software work was undertaken on a custom contract basis. One major source of projects was in the large data-processing installations, which farmed out programming tasks for peak development requirements or to augment the in-house software specialist skills. Other work was assigned by smaller establishments that lacked their own software staff and wanted customized applications. Cara, already mentioned, and System Dynamics were the leading software companies in 1977. Smaller firms like AMS (now Insight Software) and Memory were emerging in this fast-growing sector.

The employment and development potential from a growing software industry was recognized by the Industrial Development Authority (IDA), and meetings began in 1977 to explore the possibility of exporting Irish software. The debates that followed, to try and extend to software companies the entitlements to grant aid and tax incentives, highlighted an important obstacle to the full development of the software industry. Through companies like the Irish Sugar Company, ESB, and Aer Lingus, and government departments, the state sector had taken a lead over manufacturing and finance companies in installing computer hardware. It therefore remained an important market for software expansion and development. Unlike other countries where the industry developed through government contracts, Irish installations were reluctant to farm out software development work to outside organizations. According to Matt Crotty of AMS, trade unions were imposing impossible restrictions on the use of outside staff in the big installations, and he criticized the government for importing foreign consultancy services instead of tapping local computer expertise. Arguably, this may have retarded the growth of individual Irish software companies and their ability to compete for international sales.12

By the end of the 1970s the IDA was operating a policy of attracting foreign software companies to set up projects in Ireland. Altogether, 500 jobs were approved in foreign-owned US, Canadian, British, and Dutch software companies such as Zeus-Hermes, Samson Infocom, Comtech, and Altergo. Few of them got beyond the start-up phase, although some, like Altergo, provided a grounding for indigenous skilled personnel. 12

The emergence of packaged software as a marketable product in the late 1970s heralded a new era for software development in Ireland. This was orchestrated by a different type of company, often headed by former computer users, who believed that they could design better ways of handling specific applications. The new direction and growth in the software sector are covered in section 5.

This review of the milestones in the adoption of IT within Irish institutions illustrates how state institutions (particularly commercially traded companies such as Aer Lingus and ESB) were at the forefront of early adoption. The next section examines government policy and the role of state institutions in IT development.