Sunday Business Post - Computers in Business magazine - June 01 2008
Read this article online on the Sunday Business Post website by clicking here.
The open source method of software usage is making a strong claim to take over from the more traditional proprietary model among companies worldwide, writes Dermot Corrigan.
All Irish companies might not be aware of it, but there is a battle underway to determine how companies will pay for the software they use to run their business. The current champion is the proprietary model, where companies pay their software provider for a licence to purchase and use individual copies of office suites, e-mail systems, and accounts and enterprise packages.
The up-and-coming challenger is open source - an idea that software should be given away free to customers, and the source code that underpins it should be made freely available for anyone to see, alter and improve. The proprietary model has ruled the roost for the last 20 years or so, after gaining a hegemonic footing in the early 1980s, when desktop computers became widely available, according to Simon Phipps, chief open source officer with IT giant Sun Microsystems.
“As computers were becoming more common, the manufacturers stopped distributing the source code with the product,” said Phipps.” A decision was taken to restrict access to source code, but I would not say that prior to that all software had been free. It was described as unbundling, the software was no longer supplied automatically with the computer, and the source code was no longer supplied with the software.”
For years, the open source model was used by IT professionals to develop small applications that were generally only used within the techie community, according to Josep Mitja , board member of the Open Solutions Alliance, but the last decade has seen open source sail quietly to the forefront of the mainstream.
“Open source started with very technical things, it was mostly programmers were exchanging small pieces of code that were useful for them'' said Mitja. “Then came the operating systems like Linux, office tools like Open Office and browsers like Firefox. The last frontier for open source is enterprise applications, but these are also now appearing everywhere. Everything that is software will eventually become open source.”
Mitja said the main reason for the adoption of open source software into the everyday business world was its affordability.
“Open source is not necessarily always cheaper than proprietary software,” said Mitja. ”In theory it should be cheaper, as you do not pay licence fees, you just pay for services. It depends on how much customisation you require, but most of the time it works out around 40 per cent cheaper.”
Bill O'Brien, business group lead server with Microsoft Ireland, said Irish businesses did not care if their software was open source or proprietary, they just wanted their systems to work.
“In our experience, Irish SMEs are not concerned whether their IT is open source or proprietary,” said O'Brien. ”We find that their primary concerns are ensuring they have technology that meets the needs of their business, is easy to use, easy to manage, secure, works together and enables their people to get productive quickly. An Irish customer has never asked me for access to the source code for a solution.” Phipps said that a demand for better engineered software was also leading to the adoption of more open source software solutions.
“Open source software has bugs like al l software, but in the case of open source, everyone can fix the bugs,” he said.” Typically, that means fixes for popular open source software are available very fast. Often the quality of open source software rapidly increases, if it is popular, and innovation happens a lot faster.” Steve Harris, senior sales director for open source products with Novel l, said the support available for open source software was often just as good if not better than for proprietary competitors.
“Roughly speaking, services cost the same to support licenced software on multiple platforms as it does to support open source,” Harris said.” Open source software vendors often differentiate and distinguish themselves through the capability and availability of their support.” O'Brien rejected the idea that open source software was generally better value than proprietary products.
“For every piece of technology there is a total cost of ownership,” he said.
“While some products may be offered free of charge, the total cost of owning those products is very high through the need for extensive consulting services, support and maintenance.”
Widely-used
Linux is an open source operating system developed by a large number of enthusiasts around the world as a freely available alternative operating system to Microsoft Windows and Unix. Most Irish businesses use Linux to run aspects of their business, whether they know it or not, according to independent IT consultant Tom Raftery.
“The industry figures show that about 70 per cent of al l the websites in the world are hosted on Linux, so a lot of Irish companies are using open source software for hosting websites,” said Raftery. Novel l support the use of Linux in both web and non-web related tasks, according to Harris.
“The Irish community has historically adopted open source technology opportunistically in marginal application areas such as edge of network, web-server applications,” he said.” Over the past few years, the Lamp stack of open source software components - Linux; Apache Web server; MySQL database; and the coder's choice of PHP, Python or Perl - has moved beyond its position as a web developer's creative toolkit to become a major development platform for the enterprise.”
Harris said larger organisations such as EBS and Beaumont Hospital were using Linux and open source technology for their data centres and mission critical applications.
“The challenge is often about overcoming perceptions and getting people to move away from the common proprietary solutions, simply because they are so prevalent in the industry and not because open source solutions are not up to the job,” he said. Phipps said that the spread of the open-source web browser Firefox, developed by Mozilla, which is used by an estimated 70 mil lion people worldwide, was a prime example of how open source software was more innovative than proprietary.
“Everyone should be using Mozilla Firefox,” he said. ”All of the key innovation in web browser technology over the last few years has happened in the open source community. For example, tabbed browsing happened in the open source community and then was copied by the proprietary browsers.” Mozilla also offers a free-to-download open source e-mail package called Thunderbird.
“There are so many email clients out there that are free,” said Raftery.
“There has to be a pretty compelling reason to pay for your e-mail software.” Harris said some Irish software development companies were offering open source solutions to Irish SMEs.
“The best example is Sugar CRM, many companies use this to manage their sales cycles and customer contacts, with a similar look and feel to SalesForce.com but no cost attributable to the acquisition of the software,” he said.
“Commercial support is available but not mandatory, and commercial extensions have grown up around it. Another good example is Turbocash. This provides everything an SME would require for accounting including invoicing without using commercially-licenced applications such as Oracle Financials or JD Edwards.”
Industry giant Sun Microsystems recently acquired open source database developer MySQL in a deal valued at approximately $1 billion. MySQL software is free, and the company charges for services such as training and support. Phipps said the MySQL purchase was an indication that Sun saw the open source model as an effective revenue generator for the company.
“MySQL does business by selling a subscription to an enterprise service around MySQL,” he said. ”If you are one of the hundreds of millions of MySQL users around the world, and you need high quality support or you need tools to optimise MySQL, you buy those from MySQL the company.
“The acquisition has had a big effect in changing the way Sun itself thinks about open source software,” Phipps said. ”I believe open source developed and maintained software will be dominant in the market within a very short space of time.” Harris said Novell was enthusiastically embracing open source technology.
“Novell has responded by embracing open source technology and sponsoring many of the prominent open source projects such as Mono, Open Office and XEN virtualisation,” he said. ”We have become a mixed source company where we see value in bringing the best, heterogeneous software technology to the market to simplify IT delivery and management of these mixed configurations.”
However, O'Brien said Microsoft had no plans to release the source code of any of its software products any time soon.
“We believe that the world of open source and the world of proprietary software will co-exist,” he said. ”By investing in research and development we can create products that do a better job of meeting a customer's needs than open source can.”
Office
Sun's Open Office software is a freely available and downloadable alternative to Microsoft's proprietary Office suite of applications. Phipps said Sun purchased the Open Office technology for its internal use, not as a potential commercial product. “Sun decided to acquire the office suite for use on Solaris, which is the desktop system mainly used inside Sun in 2000,” he said.
“Rather than developing the software alone, Sun decided to make it open source, with a view towards developing a community to work on that source code.” A large group of independent developers worked on improving the software, and then individuals and organisations started downloading it for personal and business use.
“It is in use by tens of millions of users around the world,” said Phipps. “Compared with the monopoly that the other product on the market has, that is quite a small number, but a lot of people are not aware that a fully functional office suite that will not cost them a penny to use exists.
“People assume there is a catch somewhere, because everyone has been programmed to pay for software, but in this case there is a completely free lunch.” Google has also recently launched a suite of office products that are free to use, but are not open source. Raftery said that Irish companies that used non-Microsoft office software generally discovered them on their own.
“The majority of non-technical workplaces that use Open Office know about it as they have a particularly savvy IT manager or administrator,” he said. “But it makes for massive savings.”
Phipps said Sun had not originally planned to offer for-pay services around Open Office, but had recently introduced some support packages in response to customer demands. “You can buy support on a per-incident basis or you can buy support packs through the Sun website,” he said. ”There are also other service providers who can deliver the same thing. A lot of companies have experts on staff who save them from the need to spend money on support, but the service is always available if they need it.”
O'Brien said interoperability (the ability to transfer files and information easily between different software packages) was one reason why companies decided to stick with Microsoft's proprietary office suite.
“A primary consideration for SMEs is interoperability,” he said O'Brien. ”Does their software work with other applications and systems? Microsoft products are designed to adhere to industry standards and ensure open connections to other products and technologies.”
Raftery said the latest open source office suites did offer such interoperability and would inevitably take over from proprietary software as the market leader.
“Open Office and Google Docs can import and export files and documents to and from Microsoft Word so you can inter-use them within an office,” he said. ”The same is also the case for Microsoft Excel. In the next four or five years nobody will be paying for office software any more.”
ERP
Open source web browsers and office suites are relatively easier to develop than more complex business software products, such as enterprise resource processing (ERP) or customer relationship management (CRM) solutions. However, more of these are emerging all the time in open source formats. For instance, Openbravo is an open source, free-to-download, web-based ERP system.
“We are the largest open source ERP company in the world in terms of people using our software,” said Mitja, whose day job is chief operating officer of Openbravo. ”Every day, 1,500 people download the software.” Mitja said Openbravo had all the functionality of its proprietary rivals.
“Openbravo enables a company to plan all its operations,” he said. ”This can include things such as manufacturing, logistics, warehouse, sales, basically all the operations in a company.
“The accounting for each operation is automatically generated by the transactions and also you can get a lot of business intelligence where you can mine the data the company generates and with this you can get executive information on your sales, capacity and other options.”
Mitja said that, while anyone can go to www.openbravo.com and download a free version of the software, businesses generally needed specialists to help them roll it out.
“It is a complex piece of software that requires a software engineer to install it and an implementation project,” he said.
“With any ERP system the software is typically customised to the needs of the customer, as business processes are always slightly different from company to company. “If you have a large organisation we could train your IT people, but typically SMEs are served by companies that help with implementation projects or system integrators,” said Mitja.
“We partner with system integrators who know the local market and who can adopt to local conditions if required. Taxes, language, etc are different in every country, but because it is open source, it is easy to localise the software.” Mitja said Openbravo was typically better value than competing proprietary ERP systems, including SAP and Microsoft Dynamics.
“The smallest project you can buy from us would be about €15,000 and can go up to €200,000 depending on how customised the software needs to be,” he said. Mitja said Openbravo's customers were attracted by the open source model's ease of customisation.
“If a company wants to be able to adapt the software to their own requirements, our proposition is very attractive,” he said. “The client has no restrictions and can do whatever they want with the code. There is not always the case with proprietary software.”
Halfway house
Some software developers and vendors have chosen to offer software to their customers using both the open source and proprietary model, and let the customer choose which suited them best. One of these is business intelligence software vendor Jaspersoft, which serve the EMEA market from its operation in Dublin.
“Jaspersoft has been around about nine years, but it changed its business model just over three years ago to an open source model,” said Tom Cahill, senior director of EMEA sales with Jaspersoft Corporation. ”We are now able to deliver business intelligence tools for everyone, at a very low cost, that are easy to implement.” Jaspersoft offer two versions of its BI tool, one proprietary and the other open source, and available for free download from Jaspersoft.com.
“They can download and implement the open source version, or they can download the professional version, which is freely available for evaluation from our website,” he said. “Once they have evaluated that they can decide whether to just go with the open source version, or whether they need the professional version, which they can then buy from us.
“The two versions are at different stages of development,” said Cahill. ”As we develop and quality assure the professional version of the software there is functionality that gets into the professional product that may not be in the open source version. Ultimately these would flow months, or quarters, or in some cases years later, into the freely available version.” Jaspersoft has partnered with Irish company Enovation to provide training and support for its Irish customers.
“Either we would provide the training, or we would enable our partners to be able to train customers,” Cahill said. ”That can be in the open source or professional versions.” Cahill said Jaspersoft's BI products were now the most widely deployed business intelligence solutions in the world.
“We have over three million downloads of our products to date, we are exceeding 100,000 downloads per month at this point,” he said.”We have just over 90,000 production deployments globally, and over 9,000 paying customers. In EMEA we have been doubling our bookings revenue quarter on quarter.”
The open source model allows Jaspersoft to develop and innovate its product much more efficiently than if it had stuck to the proprietary model, Cahill said. “The Jaspersoft organisation is a relatively small company, but we have over 65,000 developers developing Jaspersoft products in the open source community,” he said.
“Some would be employed in IT departments, some would be employed in smaller companies, and some would be self-employed or doing this on the side. The developer community is very active and dedicated. This is what a lot of people do in their spare time.”
Tuesday 3 June 2008
Open up to a new source
Sunday 25 May 2008
Pfizer to move 'up the value chain'
Sunday Business Post - Cork 2008 Supplement - May 25 2008
Pfizer's €190 million facility will create a multitude of jobs as well as improving the quality of work done by the firm in Cork, writes Dermot Corrigan
The world's largest pharmaceutical company, Pfizer, is investing €190 million in a new biologics facility in Cork. The Shanbally plant is expected to create approximately 100 high skilled jobs over three years.
It will be used for manufacturing and research base and will be located on a 30 acre site adjacent to Pfizer’s existing facility in Ringaskiddy. Work has already begun on the site, which is expected to be fully commissioned by the end of next year.
Paul Duffy, vice president of patent protected products operations with Pfizer, said the new plant would move the company's Cork based activities "up the value chain".
"The new facility is a different type of manufacturing than what we are currently doing in Cork," he said. "It is moving up the value chain of activity. The work will be in the early development phase - the clinical study phase - working very closely with research."
"We are manufacturing products, but it is not your routine manufacturing activity. It is more of a research and development type activity, with products entering into phase two and three clinical trials."
It is envisaged that biotherapeutic treatments for oncology, chronic pain, diabetes and auto-immune diseases will be developed and manufactured at the new Cork facility. Biologics or biotherapeutics are large-molecule medicines based on proteins, peptides and antibodies that primarily come from molecular biology developments.
They must be manufactured in highly specialised and sophisticated processing plants, adhering to strict production processes.
Duffy said the company had already begun hiring for research and manufacturing positions at the plant. He said the jobs would be filled by candidates already working in the biotechnology sector in Cork, as well as graduates.
"We are on a very short timeline," he said. "We are looking to have the facility producing material by the end of 2009, so there is a very aggressive timeline to get people in, and get them trained and ready. It means trying to hire people who have the skills already. They are high technical skilled jobs, which will require people with a technical background."
The investment will also result in the creation of up to 500 construction and service jobs during the peak of building activity, Duffy added.
He said the new plant would complement work carried out at the company's existing Biotherapeutics and Bioinnovation Centre (BBC) division, which opened in Ringaskiddy late last year, and would also have close links with Pfizer's other sites around Ireland.
"The biologics facility is a separate site, which will be run as a separate site, but we will leverage the benefits we have in Cork, for example links with local supply companies," he said.
Pfizer's successful history in Cork made the Shanabally site the ideal location for the new facility, which could have gone elsewhere, Duffy said.
"When you are making an investment like this there are a number of things that you look at," he said. "You look at the quality of the people available. Do you have people to construct it, do you have guaranteed suppliers et cetera? There are alternatives, and Pfizer could invest in other countries around the world. But what we have proven in Cork over the years is that we can deliver. So the company has a high level of confidence in Cork. That all feeds into decisions like this."
Ffizer first established an operation in Cork in 1970, and opened its main Ringaskiddy plant in 1972. Since then it has invested over €1 billion in Ireland and now employs almost 2,300 people at its different business units in Ireland, including five manufacturing plants, sales and marketing, a global shared service business and a treasury operation in the Irish Financial Services Centre (IFSC) in Dublin. Its manufacturing operations in Loughbeg and Little Island in Cork, as well as in Dun Laoghaire, Co. Dublin, produce successful products including Viagra and Lipitor.
In February 2007, Pfizer announced plans to cut 545 jobs, closing two production plants in Cork.
"We are actively selling the two plants in Cork," Duffy said. "That is a challenge and it is due to the ups and down of business. The sale of the two sites is very difficult for the people on those sites, who are doing a good job in a difficult environment, but that is the nature of business and the nature of business we have in Cork is changing. The latest biotechnology announcement is great because it is positive and new."
Duffy said that, while Cork had worked hard over the years to position itself as a globally renowned pharmaceuticals hub, the region faced a more challenging foreign direct investment environment in the future.
"Cork faces similar challenges to the rest of the country," he said. "You have to look at the whole cost structure. Ireland is not a cheap location to manufacture material. We have to try and manage our costs as best we can. We will never be a low cost location, because we have moved beyond that."
"We need to be as efficient and cost effective as we can be. Our pay rates have to be moderate and we have to have competitive service charges and energy costs. We also have to make sure we have the qualified people."
It was important that the Irish government and workforce realised that other countries throughout the world are working hard to become attractive locations for investment from multinationals such as Pfizer, Duffy said.
"Ireland is seen as a centre for biotechnology around the world, but we have to continue to work on attracting companies," he said. "It is a very competitive and small world now. You look around the world at countries like Singapore which are very focused on attracting industry. Are we that focused? Unless we are hungry for it, we could drop down the pecking order very quickly."
Plans evolving for €500 million merged hospital
Sunday Business Post - Cork 2008 Supplement - May 25 2008
New healthcare facility would mean people would no longer have to travel from Cork to Dublin for care, writes Dermot Corrigan
Management at Cork’s two voluntary hospitals, Mercy University Hospital (MUH) and South Infirmary Victoria University Hospital (SIVUH), are pressing ahead with plans for a new €500 million merged hospital for Cork city.
SIVUH chief executive Ger O’Callaghan said the two hospitals had met with a number of developers to discuss the possibility of building the new hospital under a public-private partnership, with a site in Cork’s Docklands zone put forward as one possibility.
"Over the last two years the chief executive of the Mercy, Pat Madden, and myself have met with various developers and talks are ongoing," said O'Callaghan. "We are particularly interested in the Docklands development and there are some suggestions there. If tax breaks were available it might go up a lot quicker there."
O'Callaghan said a public-private partnership arrangement was one possibility under consideration.
"We are working on a proposal that might be acceptable to the HSE (Health Service Executive) and would satisfy all parties," he said.
Madden stressed that preserving the voluntary traditions of healthcare provision in Cork was a primary aim in all exploratory discussions.
"This year is the 150th anniversary of the Mercy Hospital in Cork, and there is a proud tradition there of employment and service,” he said. “We want to preserve and protect that ethos, and if there is to be a new hospital we would like it to be based on the voluntary ethos, rather than any other type of model."
The planned 450 bed hospital, first announced last October, will cost €500 million. It will cater for 200,000-plus patients annually, drawn from Cork city, county and the province of Munster.
Madden and O'Callaghan said the venture had the full backing of both hospital's boards, as well as medical staff. They said the new hospital would be a world-class centre of excellence for acute care and be built on core specialties worked by multi disciplinary teams and benchmarked against best international practice.
The new hospital will have fewer beds than the 646 in use in the Mercy and South Infirmary. Madden said this was in line with modern patient care requirements.
"The whole trend is towards shorter times of stay,” he said. “It is now becoming the norm for people to undergo a procedure in the morning and go home that evening. New technology is allowing us to do that."
O’Callaghan said he hoped the capability would exist to treat some patients closer to home in the future.
"There are people coming to acute hospitals that could be looked after in the community," he said. "It would be possible to develop a smaller, learner hospital going forward along with a realignment of services."
He said that facilities at both the Mercy and South Infirmary needed to be upgraded.
"The infrastructure of both hospitals is a problem at the moment, given their ages," he said. "Part of the South Infirmary were built in 1761 and the Mercy Hospital goes back to 1858. While we have state of the art facilities in the hospitals, it is still very difficult to operate in the 21st century in such an environment."
Madden said that the new hospital should mean that people would no longer have to travel from Cork to Dublin to access any type of care.
"The aim would be to bring to the region services which people currently have to travel outside the region to access,” he said. “The south region, including Cork, Kerry, Waterford and Limerick could then be self sufficient in terms of services."
O’Callaghan said full rehabilitation services had been flagged as a valuable addition to the new hospital.
"The area of rehabilitation is a topical area that needs to be developed in the southern region and it may or may not be part of a new development," he said.
Madden and O’Callaghan said they were in regular contact with the HSE regarding the new project.
"We approached the HSE and they have been supportive up till this point," said O'Callaghan. "They have asked Teamwork to look at the region and compile a report. That report is ongoing. But we hope to develop as we feel we should develop, rather than waiting for the report to come out."
O’Callaghan said that some HSE capital funding would be required, regardless of whether the new hospital is run on a voluntary or public / private basis.
"We would need the support of the HSE, given the type of money that would be involved, but we would be confident that this will happen," he said.
Madden said he was confident the project would go through, but declined to give an expected completion date, citing the delays affecting the new National Maternity Hospital project in Dublin.
"You are seeing in Dublin the hoops that people have to go through there," he said.
Tuesday 6 May 2008
Funding technology start-ups
Sunday Business Post - Computers in Business - May 04 2008
Read this story on the SBP website by clicking here.
Securing capital for a new business is still possible with the right team and the right idea, writes Dermot Corrigan.
Despite the turmoil global financial markets, Irish entrepreneurs looking for funding support to turn technology ideas into viable businesses have plenty of options.
Late last year, Enterprise Ireland announced that up to €1billion was being made available to Irish entrepreneurs with suitable business ideas in its Enterprise Ireland's (EI) Seed and Venture Capital Scheme 2007-2012. Last year alone, EI supported the establishment of 79 new export-focused high potential startup companies (HPSUs).
The Irish venture capital community is also in the process of launching the next round of their funding cycles. Maurice Roche, partner with venture capitalists Delta Partners, said the credit crunch has not had a major affect on the level of funding available to Irish start-ups.
“The amount of money available from the VC [venture capitalist] community has not dried up,” Roche said. “We have money to invest.”
All of the main banks now have dedicated business start-up packages in place that offer finance to new companies. Damian Young, head of small business segments at Bank of Ireland, said that banks were eager to help entrepreneurs get started with their businesses.
“We ourselves have a developing business loan fund, which we set up just under two years ago,” he said. “Going forward, the market is good for the right businesses.”
Who to approach
Enterprise Ireland is often the first port of call for a technology entrepreneur looking for advice. Tom Hayes, director of the high potential start-ups division, Enterprise Ireland, said that EI welcomed approaches from anyone with an idea.
“We get well over a thousand enquiries a year,” he said. “We will certainly talk to anybody who has the germ of an idea that can develop into something with the potential to sell domestically and internationally. We will provide them with some initial guidance, in terms of how they can secure some early stage funding, and support from ourselves. We will point them in the right direction at a very early stage.”
Incubation and innovation centres are also a useful resource for technology entrepreneurs unsure of where and how to get funding for their idea. The Dublin Business Innovation Centre (DBIC) is a public private partnership, including Dublin Chamber of Commerce, Dublin City Council, Enterprise Ireland and AIB established in 1987, to provide business start-up advice, incubation and access to seed funds.
“We can talk to people over the phone, or face to face,” said John McInerney, project manager with DBIC.
“We have a process that helps to identify the relevance of the entrepreneur, his or her background, the business idea, how far they have got with it so far, and there is a feasibility stage. If the idea qualifies for County Enterprise Board or Enterprise Ireland funding, we would help them put in the application.”
Roche said that venture capital companies were open to approaches from all entrepreneurs.
“It is never too early to talk to a potential funder,” he said. “Even if they say no, you will learn something from them. We operate on the basis that even when we are saying no to businesses, we give them some constructive points to build on.”
Young said banks were also happy to hold early stage negotiations with potential new customers, who were close to bringing their product or service to the market.
“If the company is seeking funding to grow the business, and has secured some contracts, or established a customer base, then bank debt or similar funding would be appropriate,” he said.
“With bank debt, the company does not relinquish a share in the company, and can benefit from support and advice from their relationship manager in their branch. We have relationship managers with particular expertise in technology businesses, so they can get a high level of advice from them.”
Roche said that technology ideas that required a good deal of research and development before a revenue stream was established, tended to take the venture capital route.
“Often with technology businesses first round funding for concepts, prototypes, at a pre-commercial stage, often equity or grant is the route taken,” he said. “Banks will look for a capacity to service the debt.”
Shane Dempsey, director, Irish Software Association, said technology entrepreneurs should talk to as many people as possible before deciding which funding route to take.
“With an increasing number of institutions such as VCs, banks and state agencies, it is important to get impartial objective advice at an early stage,” said Dempsey. “Contacting some other technology entrepreneurs is a good idea. There are many successful serial entrepreneurs in the tech sector who bear the scars of getting funding wrong and will advise you accordingly.”
How to approach
Although it is never too early to make an initial approach, Young said that potential funders wanted entrepreneurs to have clearly thought through their business idea before they considered handing over any cash.
“A business plan is vital,” he said. “It is the road map, but it is also the document that will help you secure investors. Depending on whether it is for a bank or a VC, they might tailor the style of the business plan. The bank will be looking at what this company is going to generate, the VC's perspective is what will it be worth in one year or five years.”
“However, the fundamentals of the business plans would be consistent, including the state of the technology, the management team, the stage the business is at, the market it is focused on, the unique selling proposition, market structure, future projections and so on,” Young said.
A business plan should concentrate on the business potential of the idea, rather than the technological jargon, McInerney said.
“Sometimes a technology business plan can have 60 pages, but 40 of those pages might be explaining the product, and there might be no emphasis on the business concepts,” he said.
“You have to be able to explain the technology in simple terms and you need to have a strong marketing focus, and not recognising that early enough can cause difficulties.”
Hayes said that VCs were more concerned with the size of the market for the product or service than the practical workings of the actual technology.
“You are looking for an opportunity, is there an addressable market of some size or scale,” he said. “Most important of all is the value proposition, what is in it for the customer, whether that customer is an individual consumer or a corporate. What will attract them and make them decide to buy the product or service.”
Technology companies looking for large-scale funding need to be eyeing up international markets, according to Roche.
“The most important thing for us, when we are looking at an opportunity, is the size of the market or how big the market can become,” he said. “You would want to be looking at markets that are at least a couple of hundred mil lion dollars in size and growing aggressively - at 50 to 100 per cent per annum.
“An international focus is vital. You might get your first or second reference country in Ireland, but you need to be selling into international markets shortly after start-up.”
Roche said that while it was a good idea for tech people to get advice from people with more business experience when putting their plan together, the entrepreneur should still write the plan himself.
“You have to put your ideas down on paper and you have to be sure of who owns the plan,” he said.
“Some people will try to put other language around their idea to make it more sellable but, in my view, entrepreneurs need to put down their own points on paper, and they need to own it and believe in what they can do.”
Support
Hayes said many different types of people approach EI for advice on starting a new tech business.
“The kind of people we get can vary enormously, from a very sophisticated team of two or three people with lots of experience of business development, to somebody coming out of a college or a research centre with very little business experience,” he said.
Inventing a groundbreaking new technology product or service and commercialising are two quite different skills. Therefore, potential funders look very carefully at the management team in place in a start-up that approaches them, according to Roche.
“Our ideal management team at the start would be someone who has very specific domain knowledge, in terms of the product, and someone who has very good domain knowledge from a sales and marketing point of view,” he said.
“The technical person can concentrate on building a team to develop the product, while the sales and marketing person will know the market and know how to sell to customers and make business partnerships along the way.”
Many of the different business sources of funding, including EI, the VCs and the banks, will offer business advice or structures to help a technology entrepreneur succeed. One example is the Business Angel Partnership, a joint initiative between Enterprise Ireland, InterTrade Ireland and the Irish Business and Innovation Centres. McInerney, who is programme manager for the Business Angels Partnership, said the scheme gives a technology person access to management expertise and funding, while al lowing them to keep control of their idea.
“The business angel partnership is a combination of business skills and money,” he said. “What you do is build skillsets around the entrepreneur and the idea, adding different skills depending on the stage of development.”
When to begin
McInerney said that, while there was some doom and gloom around the Irish economy at present, this was not necessarily a bad time to start a tech business.
“People would obviously prefer to start a business in a more buoyant economy, and in expanding global market conditions, but Irish start-up businesses tend to be in niche areas which can be less affected by big global events,” he said.
“There is never necessarily a bad time to start a business. Over a five- or seven-year cycle, there will always be ups and downs.” Hayes said technologies that helped large organisations to cut their costs were especially attractive at present.
“Technologies that can provide companies with better efficiencies, or management, or information are attractive to al l enterprises,” he said. “In the current environment all companies, whether they are medium or large, will be looking for these solutions as cost pressures come to bear.”
Roche said new technology ideas with high business potential were always sought after by funders.
“We look at companies right across the technology spectrum - software, hardware, business services, Web 2.0, software-as-a-service companies, telecoms, financial services, enterprise software and media deals,” he said.
Following the latest tech fashion was not a good idea for wannabe technology entrepreneurs, according to Roche.
“Web 2.0 and social networking sites like Facebook and Bebo have been al l the rage, but you have to be there at the point in time,” he said. “The opportunities to create another MySpace are now very limited.”
Roche said that Irish government focus on ‘information economy', in particular into universities and research institutes, should lead to more new technology start-ups going forward.
“We have seen some proposals coming from incubation facilities, and we would expect over the next couple of years to see some more businesses coming through,” he said. “Science Foundation Ireland have spent a lot of money funding research and we would expect over the next couple of years to see business ideas coming forward.”
Hayes said that good technology ideas would always find the money to back them. “There is always scope for entrepreneurship, and there are always resources there for the right idea,” he said.
Graham builds €10m eco-friendly HQ
Sunday Business Post - Done Deal - April 27 2008
Read this story on the SBP website by clicking here.
Northern Ireland construction company Graham is to invest £10 million in a new eco-friendly headquarters building in Hillsborough, Co. Down.
The project-team for the new Graham site also includes architects Building Design Partnership (BDP), planning consultants White Young Green and public relations consultants Strategic Planning.
The building work is expected to be completed within two years, and the project will create approximately 200 jobs. Graham executive chairman Michael Graham said the new facility would highlight the company’s wide range of building, engineering and management capabilities.
‘‘It gives us an opportunity to use the experience we have, not only in design and construction, but also in the management of these type of facilities,” said Graham. ‘‘It allows us to demonstrate all of the things that we do to our clients.”
Graham said the 3,000 square metre, three-storey, glass-fronted building will showcase Graham’s ‘green’ design and construction techniques, including natural air circulation, biomass woodchip burner and sustainable urban drainage system.
‘‘The centre of the building has a full height atrium, that helps with natural ventilation and spreads daylight throughout the building,” he said. ‘‘All the building materials are sourced locally from sustainable sources. We will have computerised co-ordination of all the various systems, to make sure that everything is managed to keep the building at the right temperature and light levels.”
Graham said that the company’s present base, at Dromore, County Down, was now too small.
‘‘We have been in the current location in Dromore for well over a hundred years, and we have just outgrown our facilities,” he said. ‘‘This allows us to create a modern working environment and bring the efficiencies that modern methods can bring, and also improve the working environment for our staff.”
Graham was established in Dromore in 1878, and now employs close to 1,000 employees, with an annual turnover of €290 million. It has interests and projects under way throughout Ireland and Britain, and Graham said it was important for the company to have an all-island presence.
Last March, Graham secured a €45 million contract, in partnership with Co Tyrone-based PT McWilliams, to construct an 8.6-mile dual carriageway bypass around Tullamore, Co Offaly. It is also undertaking the €27.5m Macken Street Bridge project.
Its accomplishments also include the new Football Association of Ireland headquarters at Abbotstown, Dublin 15, and the Dargan Luas bridge in Dundrum.
‘‘We have been working fairly consistently in the Republic since 1997,” Graham said. ‘‘It is a very important market for ourselves, and we have €100m at work on the ground in the Republic. We are very keen to grow, not just in the civil engineering side, but also in construction. Also. we have just secured our first facilities management contracts in Dublin.”
