ICT R&D setbacks should not go unchecked

commentary Over the last few years we've made a few statements about the requirement for ICT to make it onto the national agenda as a foreign policy issue. Two clear areas stand out as worth exploring.

Let's recognise the wasted effort it will represent if we fail to plug the policy hole at the bottom of the ICT bucket before we try to fill it from the top again.

Firstly, as the world becomes increasingly digital, the source code of the major software used to enable the world will become the new fossil fuel. It will become as precious a resource as oil and consideration should be given by today's governments as to how national investments are made in the infrastructure to support this "natural resource".

They will happily build a coal port or terminal to prop up exports, but what about building campuses to support the evolution of application development languages, whether it be .NET or Java (increasingly manageable should IBM buy Sun), or should investments be made in a national flavour and brand of emerging open source languages?

Secondly and perhaps more tangibly in terms of how the business of ICT is governed (in the little "g" context), is an issue that continually goes unchecked by everyone from industry associations all the way to Federal Government: R&D centre closures.

The latest is CA's announcement last week that 30 per cent of its global R&D team based in Melbourne would be laid off (31 people in total). Most concerning about those layoffs were the senior heads that were culled.

You see, the various R&D labs around the world of the large multinationals operate largely as independent development shops that each lobby for the right to work on the best emerging products in the company.

When that lab first opened ... the government and industry groups were right there in the frame. But on exit, they were nowhere to be seen.

CA's Melbourne R&D team were very senior and influential in ensuring their operation won enough of the political battles at head office to ensure a steady stream of work and growth for the Australian outfit. It was world-regarded, world-class and a source of around 30 paid graduate jobs each year.

The official position for the closures was that CA's latest acquisitions did not align with the talent pool of the Melbourne lab and as such, they were nominated to go. It was a very tough political battle to lose, as no other R&D layoffs were noted at other CA global development locations.

Back when that lab first opened, as with all R&D stories, the government and industry groups were right there in the frame. But on exit, they were nowhere to be seen. Regardless of the economic times, and with no criticism of CA, the processes don't exist to ensure that this kind of industry loss goes through some kind of formal check and balance.

To put that in perspective, can you imagine if 30 senior managers from Melbourne's Toyota plant were made redundant? Would the unions be involved? Would the government be involved? Would the industry cry foul? The answer, of course, is "yes". Same goes for Melbourne and the Grand Prix, Gold Coast and the Indy, and the list goes on.

The most unfortunate part of this whole scenario is that this story repeats itself unchecked several times each year throughout Australia's ICT industry. We call them out when we see them, as we did when Websense bought SurfControl last year. As Sam pointed out at the time:

As a key onshore development initiative, it is curious that while the local ICT industry bemoans the ICT trade deficit, this merger of two non-Australian firms continues to be viewed as a remote transaction on the FTSE and NASDQ. To date there has been no publicised attempt by any of the major industry bodies, including the ACS, to obtain assurances that Australia will remain a principle location after the acquisition.

Australia is a significant operation for SurfControl, with US$10.3 million worth of onshore development activity. This acquisition is not an arm's-length overseas transaction. The reality is that SurfControl's significant onshore activity means it has a clear stake in Australia's ICT industry.

Therefore, the local ICT industry bodies, clients of SurfControl, as well as the New South Wales and Federal Government should seek some assurance from the foreign deal-makers that the local activities will continue. In particular they must ensure that the US$10.6 million baseline of local activity remains in the Australian operation.

Whether it be government-led, or industry association-led, this is an area requiring the focus of a working group whereby better solutions for the industry can be implemented beyond out-placement for skilled workers. The economic impact of CA's loss to the industry will go well beyond 30 empty desks and make recovery for the industry that much more protracted when the bottom of the market hits us head-on.

Just as sales organisations know that it is cheaper to sell to and retain an existing customer, when the economy does finally turn, ministers and trade delegations will once again be out in force to drum up business for Australia. Before that happens, let's recognise the wasted effort it will represent if we fail to plug the policy hole at the bottom of the ICT bucket before we try to fill it from the top again.

This article is by Peter Carr, managing director at Queensland-based ICT analyst firm Longhaus. It first appeared on his Naked Chief blog on the company's website and is published on ZDNet.com.au with Longhaus' permission.