TECHNOLOGY investments and initiatives appear to be driving the engine for change in Northern Ireland where a fledgling information technology industry is keen to break into a sprint, but still dogged by the "nanny" structure of its past.

The home of engineering greats, Harry Ferguson, of Massey Ferguson fame, and John Boyd Dunlop, designer of the first pneumatic tyre, continues to produce technology heavyweights, including Prof John McCanny, internationally renowned for his contribution to the high growth digital signal processing (DSP) field.

Now he and a number of other academics are liaising closely with industry to establish Northern Ireland as an internationally accessible area for software and engineering expertise. They are supported in their efforts by the Northern Ireland Industrial Development Board (IDB), which is beginning to think in new ways about the opportunities the IT revolution presents.

Both the University of Ulster (UU) and Queens University are practically brimming over with graduates. UU's Faculty of Informatics in Jordanstown is the largest computing centre in the British Isles, with nearly 2,000 students in attendance at its two schools of computing and maths, and information and software.

Last November, under the guidance of Dean and Prof John Hughes, it started operating an "incubation centre" based on the US campus model, and already its initial aim to establish eight commercial ventures within the first year looks likely to be exceeded. The idea of the centre is to nurture and retain high quality graduates in the region by helping them establish new businesses based on their research.

Prof Hughes, who collaborated early on with the research team that went on to form Iona Technologies, holds a stake in a number of the projects. One of the potentially most successful ventures currently housed in the centre is a company called Minit (pronounced my-nit) which specialises in the murky and labyrinthian field of data mining.

This, crudely defined, is the process of extrapolating patterns from large volumes of data, and it is an area earmarked for rapid growth.

Founded last year, Minit currently derives its revenues from introducing companies to the new technology, and they are queuing up to learn more about their customers from data patterns. It is also working with Indigo Solutions in Britain on the algorithmic end of its Clementine data-mining product which has the advantage of an attractive user interface. Prof Hughes envisages employee numbers growing to 20 in its first year.

Other incubation companies include: Cinemon, a multimedia arts and informatics collaboration; a speech recognition company focusing on business applications; and Vocean, which is an example of a "spin-in" project. This is where a commercial entity can hive off some of its activity to the incubation centre as long as it represents an innovative business prospect. Vocean is developing secure software for the online tendering process for EU contracts.

Despite the level of activity at the centre, which is soon to be housed in a 3,000 sq ft facility in UU's Derry campus, it was established with just £1 million sterling (€1.48 million) from the Northern Ireland Department of Economic Development, and £750,000 from an anonymous Irish-American benefactor in the US.

Now the UU incubation centre is about to link jointly to its counterpart in the US at Carnegie-Mellon University in Pennsylvania. Operating out of one of the best US computer science units, the centre has produced 30 start-up companies in five years. The alliance will provide each unit with an access point into the other's market, and government support will facilitate joint projects.

According to Prof Hughes a number of factors have contributed to Northern Ireland's poor record for innovation in the past. Since 1994 the Republic has produced 600 start-up companies compared to just 60 in Northern Ireland.

Prof Hughes believes a poor focus on computer education in schools and universities, high dependency on the state for employment, and a preponderance of old family businesses in the region have contributed to an entrepreneurial shortfall.

"The troubles have affected the economy across the board. There's been a kind of nanny state in place for quite some time that didn't exist in the Republic. The local IDB has tended to concentrate much more on inward investment than indigenous industry," Prof Hughes says.

This sentiment was echoed by a number of key industry figures, including the heads of two highly successful indigenous companies. Mr Denis Murphy, chief executive of APiON, an offshoot of Logica Aldiscon, says the company located in Belfast on the back of the "feel-good factor" surrounding the peace process, but it hasn't been easy to fill the demand for software engineers. Now the company is establishing another facility in Drogheda.

"Northern Ireland has always had an exceptional reputation for engineering, but the troubles stopped the excellence. Now the Internet means new companies can be part of a vanguard coming up in Northern Ireland."

APiON has been first to market in developing gateway conversion technology which allows Internet and intranet content to be served to mobile phones. In just three years it has built the company to 150 employees, and has established a leading edge in the Wireless Application Protocol (WAP) battle with industry heavyweights like Ericsson, Nokia and Motorola.

Over at Integrated Silicon Systems, the company founded by Prof John McCanny and Dr James Doherty, expertise in the complex digital signal processing area means the company is earmarked for rapid growth as it expands in Silicon Valley this year.

According to Mr Bryan Keating, chairman of ISS: "Northern Ireland is just about on the edge of understanding we can develop our own companies and invest in our own intellectual property. There has been a lack of confidence among people to be global, so we need local companies to act as role models and prove their abilities to succeed without state intervention.".

Over the last four months the local software industry has been pressurising the IDB to come up with a long-term strategy for developing the sector, and meeting its skills requirements. Next month the Software Industry Federation will publish a report in association with the IDB, which looks at why the industry has not developed at the same rate as in the Republic and includes a five-year programme for substantial growth.

Mr Gary Burnett, head of the software unit of the IDB, says the report recommends a unified effort between government agencies, industry and academia. The IDB will be seeking the support of the new Northern Ireland assembly in implementing the measures which rather ambitiously project the creation of 15,000 software jobs within just three years.

The report will continue to encourage inward investment because Mr Burnett believes there must be a critical mass of software expertise in place before a start-up culture can develop. On the strategy of offering a low rate of corporation tax based on the Republic's experience, Mr Burnett appears to be adopting a wait-and-see approach.

"It would be nice to have a preferential tax rate, but we are working to the confines of the UK system. Maybe the guys in the new assembly will get their minds around that one."

Other IDB executives echoed this sentiment, saying the examples of the IDA in the Republic and the Scottish Enterprise Board have been extremely valuable. It is now keen to emulate some of these strategies but much of it will rely on the ability of the assembly to take responsibility for new initiatives at ministerial level. Only then can the Lagan Valley realistically become the "Cyber Valley" that is sometimes prematurely suggested.