Start-ups the key for software industry

Start-ups are set to be crucial in reviving Australia’s flagging software sector, according to a senior industry figure.

Malcolm Fraser, CEO of the International Institute of Software Economics, Innovation and Entrepreneurship, says that software industry maturity is related to competiveness.

IISEIE is a not-for-profit organisation focused on driving applied research that both informs and aligns industry-based programs to develop local software economies.

Fraser’s comments come on the back of IISEIE’s release of the 2010 Local Software Economy Maturity Index, which shows the Australian software industry has fallen by one point since 2009.

The index is positively correlated to GDP growth and is closely linked to the Networked Readiness Index of the World Economic Forum, which measures the propensity for countries to exploit the opportunities offered by information and communications technology.

The NRI takes into account a country’s ICT environment, the readiness of individuals, businesses and governments to use ICT, and the usage of ICT.

The IISEIE’s report on this year’s index notes that ICT production contributes to output, employment, and export earnings while ICT use increases productivity, competitiveness and growth.

According to the report, Australia is ranked 31^st in the world for the maturity of its software industry, down from 30^th place in 2009. Switzerland has maintained its number one ranking while the United States has overtaken Israel by moving from third to second place.

Fraser says within the ICT industry, the software segment is the fastest-growing sector, which start-ups should respond to.

“For countries to continually increase the maturity of the software industry and increase economic growth, start-ups need to develop applications that are relevant to local companies and industry,” he says.

Fraser says there is an opportunity for start-ups to cater for the SME market, particularly around cost-effective cloud-based solutions such as online accounting and contracting systems.

“Start-ups don’t need to engage expensive market research companies [to determine what SMEs need]. All they have to do is put five dollars in their pocket, go down the road, find a business owner and ask them if they want a cup of coffee,” Fraser says.

“You’re not trying to sell them something – you’re just asking them what keeps them awake at night [with regard to their business].”

“If one SME has a particular issue, you then go and ask the same question to half a dozen other companies and very quickly you will be able to gauge demand.”