National Software Strategy for Scotland : The Way Forward : Internationalisation

Initiative 6; Commercial Region-to-Region Linkages: Colorado and Israel

In addition to extending the international reach of Scotland’s product development, the industry must develop more sophisticated ways of dealing financially with firms in other countries over and above straightforward trade. Again, this initiative is vital to our thrust on internationalisation.

This initiative would promote linkages between Scottish software firms and the subjects of our exemplar studies; Israel and Colorado, led and implemented by the firms involved. Crucially, these linkages would be private sector to private sector with a view to setting up deals that might involve reciprocal market access, direct routes to the US market, and might include finance and equity exchange. Transactions of this nature are common in the global software industry but almost unknown in the Scottish case.

The initiative would comprise the identification of priority target regions and direct introductions between known firms in those regions with specific Scottish software companies. Our exemplar studies confirmed that there is strong interest in both Israel and Colorado. It is opportunistic, and leverages contacts developed and the research effort.

We believe that this initiative would be highly beneficial because market channels - especially those involving US firms - are the key to success and growth in the software industry. At present, only a handful of Scottish firms have a truly international presence and those that have high levels of exports do so through close, strategic relationships with US firms. Wider engagement in this form of activity would enable faster growth in the Scottish industry as a whole.

This initiative is especially pertinent to the Scottish case. The current lack of large firms within the Scottish software infrastructure means that use of large firms for market access - demonstrated as key in the exemplar studies - is not a local option for Scottish firms.

Table 4.1: Examples of Strong Scottish Software Exporters

Source: Ernst & Young

Whilst some promotion of this initiative would be necessary, our face to face interviews revealed that the logic of creating these commercial linkages is self evident to the majority of Scottish software firms; especially those in product development. This initiative would be particularly successful if the “quick win” could become part of Scottish software folklore, thereby attracting broader interest.