Export sales of software jump by 28% in 2001

The software sector reported a 28 per cent rise in export sales growth in 2001, five times the rate of gross net profit (GNP), …

The software sector reported a 28 per cent rise in export sales growth in 2001, five times the rate of gross net profit (GNP), the chief executive of Enterprise Ireland said yesterday.

Addressing the Irish Software Association's conference Selling Software and Making Money, Mr Dan Flinter said exports by Irish software firms had grown to €1.3 billion.

The Americas is still the strongest export market for software, with two out of every five exports going to the US, according to Mr Flinter. Exports last year to the region rose by 44 per cent to €536 million.

Despite the depressed US economy, Irish firms continue to target the region. "It has not stopped Irish companies remaining aggressively in the market," said Mr Flinter. "There has been sustained marketing effort in the US market and it's important to continue to do so in order that we are well positioned to capture opportunities when the market changes."

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Last year also saw a re-emergence of interest in the UK market.

"Software exports to the UK amounted to €355 million, up 46 per cent, indicating a slight shift in focus as some computer companies found it more cost effective to target UK purchasers," said Mr Flinter.

Software exports to Europe rose marginally by 0.9 per cent to €206 million, while exports to the rest of the world, including Asia and Japan in particular, rose by 7 per cent to €235 million.

But he said the significant challenge facing companies in the software sector was to show a return in investment in a much shorter time period. Software firms would also have to marry the two skillsets of product development and market penetration. "The challenge is to convert investment in product development into sales and, therefore, the bottom-line results," he said.

Nevertheless, Mr Flinter said Enterprise Ireland had seen venture capitalists re-entering the market in the past three months. "But there may be some pain in terms of re-pricing of funds in the venture capital marketplace," he said.

Mr Flinter urged the venture capital community to stick with the software sector.

"The time to invest is now. With the right mix of finance, product development and market penetration skills, the future for the Irish software sector is very positve," he said.

The pipeline of inquiries to Enterprise Ireland from emerging companies was strong, running at about 20 every month, said Mr Flinter.

"In the past 12 months we have committed €10 million in early-stage seed funding to 23 new start-ups," he said.

Last year, Enterprise Ireland invested €12 million in 18 company expansions, while €7 million was committed to support R&D projects in 35 companies, he said.

"We injected €95 million into the venture capital market to create a range of new funds with a focus on the technology sector," he said.