The Bilbao-based European Software Institute was set up with financial support from the European Commission and the Basque regional government in 1993, with the aim of increasing the competitiveness of European businesses by improving software development processes. In a recent interview with El Pais, the Institute’s director Gunter Koch explained that his quest lies in trying to bring home the fundamental importance of software to businesses. He is extremely concerned that only 6% of European managers recognize just how essential software is; Koch claimed that software was every bit as necessary as energy a day without software would provoke total chaos, he said. There are few activities and services that do not depend on software, even agriculture requires it. It is hard to imagine the processes of planning, storage, distribution and transport without recourse to software. In Koch’s opinion we are moving away from industrial activity that produces tangible endproducts, such as cars, steel and textiles, for example, towards the preparation of less tangible products software, information, the value of which is difficult to establish. Koch refers to this tendency as the virtualization of industry. But even an industry that produces physical products, such as the car industry, is increasing the proportion of software in its production processes, while inside the car, it is software that controls the engine and provides the information that appears on the dashboard displays, said Koch. With respect to the role of the European Software Institute, Koch explained that it is not a production center, but a center of knowledge and information. Members of the Institute will go out to a business, analyze its software and propose any changes they consider to be necessary. According to Koch, the greatest challenge lies in persuading the managers of businesses to commit themselves to a period of, say, two years in order to enable a re-engineering project to bear fruit. Koch said that businesses that were not prepared to take the plunge would inevitably be left behind. So how much does a company need to invest in software in order to optimize its business? Koch conceded that it is very difficult to compare sectors as diverse as transport, telecommunications, fashion, distribution and so on, but he put forward a figure of approximately $1,100 per man day, or 1% to 2% of a company’s annual personnel budget. Finally, the director provided an update of the European Software Institute’s progress in China, where it has been awarded a contract by the European Commission to spearhead initiatives aimed at opening up the software market there to European businesses (CI No 2,850). The first phase of the project will take the form of a study of the Chinese market and the European companies already working there, he explained. The Chinese do not wish to rely on one single supplier, namely the US. There’s already some good software to be found there in research and development centers, but there are deficiencies in many other areas. Pirating is rife, due to the lack of copyright laws. We know that there’s one American company giving its products away there. The European Software Institute’s task will be to set up a network of contacts both here in Europe and in China to give European software companies the market openings that we believe are available, Koch concluded.
