Fund Republic's ambition to be leader in e-commerce

There seems to be a Government belief, which I agree with, that we deal with windfall money in a special way. Hence the use of part of this year's surplus to fund the State's residual pension liabilities in Telecom Eireann and An Post.

Hence also the concept of funding future, public-service pensions. Such uses for windfall cash have the added desirable characteristic that they do not add to overheating in the economy.

How should we use the remaining monies? There is no dearth of pressing concerns to swallow up the surplus many times over. They include upgrading the national physical infrastructure, relieving the emerging skills shortage, sharply increasing scientific and technological awareness by means such as inter-active science centres, restructuring health services to suit the needs of an ageing population and attacking the social exclusion that gets worse even as prosperity continues. But these are more properly addressed in the upcoming National Plan. There is, however, one national project that requires precisely the kind of support a windfall fund can give. Investment in it would provide high long-term returns, with minimum overheating now. The project is our objective of making the Republic a world leader in e-commerce. To its credit, the Government adopted this objective and is putting into effect a comprehensive strategy to make it happen. But, unfortunately, the strategy will fail.

This is because it is based on a timescale that is already out of date and becoming more irrelevant with each passing week. The irony is that having had the foresight to recognise the opportunity, we risk missing it because we fail to see that it demands a totally new kind of response.

We all know the pace of e-commerce development is very fast. But what we don't realise sufficiently, and what is certainly not impacting on public policy, is that the pace is not just fast in itself - it is also accelerating at an exponential rate.

So decisions we made last year were taken for a world that no longer exists. Even more frightening, decisions we made last month are not adequate either.

Public policy is faced with a dynamism it has never met before. Unless we realise this and develop new ways of response, we will lose the race for leadership.

Time is all-important because the really big potential benefits for Ireland in e-commerce are in areas where the winner takes all. In general terms, our aims are:

(1)To become the entry point to Europe's e-commerce market for non-European players, particularly from the US.

(2)To become the regional hub for all intra-European e-commerce, with much the same role Singapore is carving out in Asia/Pacific.

(3)To enhance marketing by Irish companies through the full use of e-commerce.

(4)To develop new global opportunities for Irish enterprise through e-commerce.

Of these, (3) and (4) are likely to be little problem. But they are not where the greatest economic advantage lies, which is in the transformation of the Republic into the European hub of e-commerce and the gateway into Europe for everyone else. In that race, there will be only one winner. No prizes for also-rans.

Last year the Government was galvanised into action by Microsoft's rejection of the Republic as a location for a major e-commerce project, due largely to our lack of broadband capacity. But despite massive changes put in train since then, only last week Intel made a similar decision. What should make us pause for thought is that Intel decided in the full knowledge of what we have in the pipeline. The conclusion can only be that they believe what we are planning will not be enough.

The singular nature of our challenge, springing from the unique nature of the e-commerce transformation, is that supposedly farsighted decisions become inadequate within months or even weeks. If we are to be the European winner we have no option but to devise a new method of policy response. The windfall money offers us the perfect mechanism for devising such a response.

With it we can:

ring-fence substantial resources (say £3 billion) in an e-commerce contingency fund;

empower a top-level Cabinet sub-committee (with advice from outside experts) to disburse that money on short notice as required between now and end-2000;

create a quick-response mechanism for monitoring competitive activity and our own progress, with the aim of updating e-commerce strategy every month;

aggressively lead European policy-making on e-commerce.

drastically shorten deadlines for accelerating IT-readiness, which is the essential foundation for e-commerce - from household penetration of telephones to broadband connectivity nationally and internationally; from universal Internet access in the classroom to superhighway interconnection for universities; from doing business electronically in the private sector to transforming the public service into a faster, more responsive and more efficient vehicle of administration.

A tiny indication of the shaking up of attitudes needed is in the latest Forfas e-commerce report, which is hardly off the presses. It reports Enterprise Ireland's strategy that all its clients will use email by 2001! Many believe that no firm should get support from the State unless it is on e-mail now. Such a strategy is not in the real world of e-commerce at all.

Dr Daniel O'Hare is president of Dublin City University. He retires on August 31st.