Opting for Intelligence

IT technologies are able to make Russia dominant and respectable once more

The state has become more concerned with the creation of a knowledgeable society and the development of intelligent solutions. Some ad-hoc programs have been adopted and re-worked, and 18 billion rubles were allocated from the budget for this purpose up until 2010. Great expectations have been imposed upon IT technologies. The issues concerning their potential and development were touched upon at the round table discussion «Problems and prospects of IT development in Russia» led by Sergei Mironov, Head of the Federation Council, at the «Intelligent Russia» forum.

The share of Russian manufacturers in the structure of IT production consumption is just 11%.

Source: CBOSS Association

Despite the abundance of companies and «development programs», the industry hasn't yet developed any clear concept of strategy, conditions, or state regulations that could help the IT business achieve this task.

• The yearly growth rate of the Russian IT market is about 25%.
• A forecast for 2010: investments will total about $17 billion.

A business plan can help in achieving this task. It should start with a comprehensive analysis, define the task and conditions, determine the technologies used to achieve the task, give the itemization of costs, and state the expected results.

The business will contribute to achievement of this goal by:

• introducing unique experience into the national program of IT development
• engaging the tools of intelligent business (i.e., knowledge, technologies, personnel)
• efficiently using the program to reach the specified goal.

There presently exists a real chance of exporting two types of IT facilities: the labor and the end product.

Labor sale is the sale of working hours (raw material, actually). Results are the customer's property, while the main price formation factor is the prime cost. The cost-effectiveness of work is always limited.

+ Simpler production, easier retail sales.

— Intelligent capital is not stored. The main characteristic of intelligent property — it's «non-consumability in the course of usage» — is not used; the market profit margin is less that of the profit on sales.

Product sale is the sale of an end product; the results are the customer's property. Repeat sales are possible. The principle price formation factors (i.e., replicability, prime cost, profit margin) can be much higher.

+ It accumulates the intellectual capital; intellectual property is not consumed by usage; the profit margin is higher than that of labor sale.

— Painstaking development of popular software solutions, their promotion and marketing.

What is better: to accelerate the exploitation of the home market, or invest in export potential? To support the outsourcing and offshore software, or to focus on the end product promotion? What should be regulated by the government and what should develop in compliance with market mechanisms? There have been several viewpoints expressed, which at times were completely different.

Everyone agreed on a single point: the Russian IT business is ready to contribute to the development of the economy of the Russian intelligent society.

The participants of the round table discussion decided to continue working and summon a special committee to create a unified program for the industry development. This should be a clear and concise document specifying the consolidated viewpoint of the industry representatives as regards the goals, tasks and anticipated results, as well as the actions, tools and success criteria.

This document can thus help to state the actions that IT expects from the government; specify the set of laws to be established or amended; and launch a campaign promoting the «Made in Russia» brand on international markets.

The state's initiative is always welcome. The export of raw resources to the world markets can be reduced through reforms in science and education, growth of the society's innovational potential, and development of intelligent products and IT technologies. Even more so as Russian antivirus software and recognition systems, cryptography, biometry and some multimedia products are popular abroad.

The best intentions, however, turn into meaningless mottos if the goals and actions for their accomplishment haven't been decided on. The IT business has in its turn acknowledged its willingness to assist the state and specified its available potential. But the state ought to clearly point out what it expects from the industry and develop the corresponding «game rules».

IT share in GDP

• Russia — 1.2%.
• USA and Canada — 4%.
• Western Europe — 2.5%.
• Forecast: provided that the IT industry and Russian economy will keep this development tendency, the IT share will achieve 2% in 2009.

Source: ELVIS PLUS

Suggestions regarding the state's support of IT industry:

• shape the home demand for IT production and prevent discrimination of Russian technologies
• allow credits for the purchase of Russian production
• create a state enterprise acting as a mediator in external economic contacts
• implement the market mechanisms of investment into IT staff training
• use trade promotion offices for IT production
• participate in international exhibitions with national stands («Made in Russia») and share the participation fee with Russian companies
• create the environment for building and development of corporate technoparks
• increase the cost of ownership for foreign solutions the analogues of which are produced in Russia
• advertise the «Made in Russia» brand.

The total potential of the Russian IT security market

• There are 45,000 -65,000 highly-skilled specialists of this field in Russia today
• Potential investments are $4.5 — 6.5 billion
• Expected investments are $1.7- 2.1 billion.
• Only 32 — 38% of the potential of Russian specialists in the field of information security is presently utilized and, unless they find employment in the country soon, a dramatic «brain drain» is highly possible.

Source: ELVIS PLUS

Work out a business plan and act!

Andrei Morozov, CEO of CBOSS Association:

-IT technologies are the motive power for various branches of the economy, as well as for social and even political development of the country. The companies developing Intelligent products act as customers for the educational system. Accumulation of intelligence and knowledge is the main task the solution to which will enable a breakthrough of Intelligent production.

The Intelligent technologies serve as a catalyst for economy and industry; they ensure a powerful synergetic effect that can be used to create IT products.

It's not about additional investments into the industry, but rather about creating an environment for its development that will launch the internal investment mechanisms.

This is the last chance for us to solve the tasks of developing and promoting our own IT products on the international markets. And the «Made in Russia» brand can be of great help.

The Russian IT companies are experienced in creating competitive products within the country and abroad, and in interacting with educational establishments and foreign partners. They need support from the state and a positive image of the country.

A breakthrough in the IT field can only be based on the comprehensive approach to this issue. The goals are set, the tasks are defined; we merely need to work out a business plan and act.

We are ready to back up the state

Alexander Sokolov, Ph.D., CEO of ELVIS PLUS:

-The IT business is extremely interested in the creation of a national intelligent solution, as well as its reasonable protection on the national market and expansion to the external market. IT companies can allocate some resources now in order to get their share of revenue in the future, provided that the state undertakes to deal with this product for the sake of all concerned.

The state in the person of the president, the speaker of the Federation Council, and the heads of some departments are considering the possibility of forming a part of the country's budget based on IT development and export of intelligent products to the world markets.

But first, the state ought to express its viewpoint, to define and lay down the concept of the Russian intelligent product and how it is to be developed, used and protected; to determine the rules of play and ensure their observation. If there's no contradiction between the state's and IT's business goals, the IT companies will eagerly back up the state's initiatives and contribute to development of the legislative base and creation of the business environment.

The country needs a positive image

Andrei Masalovich, CEO of Inforus consortium:

— The first technopark was created in the 1950's at the Stanford University, US. Nowadays it has been transformed into the famous Silicon Valley.

The first Indian technopark opened in 1986 in Bangalore. The present export of IT services exceeds $5 billion (which is 10 times more than our export total).

The first Russian Tomsky technopark appeared in the USSR in 1990. Fifteen years have elapsed, and today the president announced the launch of a «program for the creation, development and support of technoparks»…

It turns out that through all these years the Russian IT industry has been dragging behind the rest of the world, in spite of the formal presence of technoparks and other tools of business development. As a result, today's export of IT services in Russia is 15 times less than that in India; Russian IT products are, with very few exceptions, absent on the world market, while the «Made in Russia» brand is hardly appreciated anywhere, but on the weapon's market.

For a breakthrough in the IT sphere, we need to settle the export issues for Russian software, services, technologies, and intellectual property; to create a positively friendly environment for the state and IT business. But what we sorely need is a positive image of Russia, which can be achieved with the added help of politicians.

Our IT technologies, as well as our weapons, are able to and must strengthen the country's position in international politics.