Web innovation goes all spontaneous

NET RESULTS: 'BLOGGING IS not mainstream." This is not the saying of some highly-paid newspaper columnist dreading the relentless democratisation of media. It was, in fact, a casual comment from an experienced Irish technology executive at the Irish Software Association's (ISA) annual conference, writes John Collins.

At the same conference, Anthony Williams, author of the surprise hit business book Wikinomics, which advocates using the latest web technologies for ad-hoc outsourcing and other efficiencies, flashed up a slide which showed that there are now almost 100 million blogs on the web.

What's more, Google's blogging platform Blogger.com now generates more traffic than CNN.com - proof, according to Williams, that "people want to be part of the dialogue" around the news.

The new paradigm laid bare at the conference by Williams and fellow keynote speaker Guy Kawasaki is that innovation almost instantaneously happens on the web. The sub-text from both speakers was that the old model of a couple of techies coming up with a good idea, raising some investment and then locking themselves and a team of programmers in a room for a year or two to develop a product, are now ancient history.

Kawasaki in particular urged attendees to fly in the face of conventional wisdom and release quickly new products or services in which they believe.

For ISA stalwarts that might not be the most palatable message. The traditional model of venture capital-backed software development pioneered in Silicon Valley has served the indigenous software industry well. However, in the era of Google, YouTube and Facebook, investors are far less keen to invest millions of euro in a company before they see tangible results. The model now is to get a product released on the web.

In fact, many significant international venture capitalists are not even considering investing in traditional enterprise software plays. Where once innovation happened in technology developed for business and trickled down to consumers, that's no longer the case.

Social networking, blogging and collaborative wiki tools grew up on the web and were initially embraced by consumers and small businesses. Now large businesses are trying to figure out how to harness the knowledge and information-sharing paradigms that these tools have made commonplace.

IBM, in particular, is embracing the concepts of social networking internally, so that its 355,766 staff can easily find others who have knowledge and experience relevant to their current projects.

Anecdotally, IT managers report that when Generation Bebo turns up for work they rebel against the locked-down corporate computing environment and end up using web-based tools to collaborate and communicate.

As a result, the smart investors are putting their money into consumer-facing start-ups or companies that are trying to bring the advantages of Web 2.0 to the corporate world. Not that this is necessarily a good investment strategy to pursue. Looking for the next Facebook or YouTube may well be as flawed a business model as that employed by music industry talent-spotters who used to flock to Dublin's Baggot Inn in the 1980s to find "the next U2".

The local software industry has always had a fraught relationship with consumer web services. Even during the dotcom boom, web pure plays in Ireland were a rarity, as the Irish industry focused on providing corporate services or consultancy around the web.

To use a gold rush analogy, Irish techies liked to think they were providing the picks and shovels which allowed others to go and prospect for gold. That did not protect us from the general downturn in sentiment that hit the wider tech sector with a vengeance in 2001. As one prominent financier said to me recently: "It's amazing we haven't had many consumer internet businesses in Ireland considering how creative we are and able to spin the bulls**t."

Speak to entrepreneurs and they will say that the financiers have not been willing to back consumer web services and prefer the enterprise model with which they are more familiar.

The new web companies can also be set up far cheaper than the traditional software companies.

While first-round financing of €1-2 million is par for the course for a traditional tech start-up, Web 2.0 firms often employ one or two staff and want €50,000 to produce a beta which will demonstrate there is demand for their service.

Venture capitalists, who manage funds of €100 million and above, simply do not have the bandwidth to manage investments of that size.

The radically different business models present a challenge for everyone in the industry, but it's not as if Ireland Inc has not been in similar situations before.

Research from Frank Barry in Trinity College Dublin and Chris Van Egeraat in NUI Maynooth, which the ESRI publishes today, discusses the decline of the computer hardware industry in Ireland and how the local economy adjusted.

As recently as the late 1990s, about a third of all PCs sold in Europe were manufactured or assembled in Ireland. We accounted for 6 per cent of the world's exports of electronic components. Rising costs in Ireland conspiring with a maelstrom of other factors - including the already mentioned dotcom fall-out - meant that most of those manufacturers either pulled out of Ireland altogether or transitioned their operations to handle things like supply chain, sales or support.

While the public perception of the spate of closures in the early years of this decade is of relentless job losses, Barry and Van Egeraat found there was hardly any impact on unemployment levels.

Staff from hardware manufacturing were successfully able to transfer into the computer services industry that now makes up the bulk of foreign direct investment in our technology sector.

Those who still believe blogs aren't mainstream yet may want to consider seeking gainful employment in another sector. If, however, they want to remain successful in technology, they should acquaint themselves with Barry and Van Egeraat's article.

It illustrates that while change may be constant in the computer industry, it provides valuable and rewarding employment for those who can adapt to changing needs.