Software Development
Software Development
Overview
The total size of the Romanian computer
software market in 1999 was estimated at $400
million. Local companies
supply about 25 percent of the software used in Romania, providing
mainly special telecommunications
programs and programs for industrial surveillance, control,
and security. Imports cover
75 percent of the Romanian software market. About 75 percent of
all foreign software products
in Romania are American. Practically, all of the large U.S.
software companies are present,
with Microsoft and Oracle leading the import market. The
general trend of the market
is a positive one, a 20-25 percent annual growth being projected
for the period 1999-2002.
(12)
One of Romanias most impressive
achievements in recent years has been the rapid
development of a national
school of software engineering. Of the countrys more than 200
software development companies,
over 100 are already exporting their services to EU and
North American markets.
Best prospects include mainly
business solutions (enterprise resource planning, supply chain
management, management information
systems, and executive information systems). Two
major national IT projects
to be completed in the near term (computerization of the local public
administration of 2,800 localities,
and computerization of Romanias General Cadastre) will
also call for considerable
imports of software.
Data Table
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Software Development before 1989
In most economies, there is a division
between state-funded R&D institutions, and private sector software
development and implementation firms. Only the latter tend to be thought
of as "the software industry". In Romania, no such division existed and
the former therefore constituted its software industry.
The largest and most important
research institution located in Bucharest under the government's watchful
eye was the Institute of Calculus Techniques and Informatics (ICTI),
which employed around 3,000 IT specialists. It was divided into two parts:
1. The Calculus Techniques Institute
(CTI), founded in 1968, which focused on hardware components, boards, and
microprocessor operating systems. It had a set of CTI Regional Offices
representing it throughout the country.
2. The Central Institute for Informatics
(CII), founded in 1970, which focused on software production. In the main,
this was produced for major national projects, such as the running of the
Cernavoda nuclear power plant. There was also a very limited amount of
"export" work writing software for state institutions in other Warsaw pact
countries or in friendly nations such as China and India. The CII
also had responsibility for coordinating the work of 40 Electronic Calculus
Regional Centres (ECRCs) which were spread throughout Romania. They had
three main roles:
To design, construct, implement
and maintain information systems (IS) for factories and other state-owned
organizations (e.g. town halls) which lacked sufficient resources to develop
their own systems. These organizations collaborated with the ECRCs partly
because central directives instructed them to do so, and partly because
all the information systems work and equipment was
paid for from central funds funnelled
through the ECRCs.
To provide advice and assistance
for larger state-owned organizations, which could afford to purchase their
own hardware, but which needed help in setting up a data processing department
and/or help in writing the software to drive their applications. In many
cases, the ECRC would write and maintain the software, leaving the client
with only a few data processing clerical staff.
To provide a variety of training
courses for computer operators, analysts and programmers.
The ECRCs also had a fourth responsibility: that of coordinating the work of the Electronic Calculus Regional Offices (ECROs). Several of these came under each ECRC, each based in a small town within the particular ECRC's remit region. The ECROs were essentially computer bureaux running ECRC-written software on ECRC-owned hardware. The clients of these regional offices were the local factories and other state organizations that lacked the resources to install and run their own computers. They provided input data to the ECRO which would then produce required output reports. (13)
There were two further locations of IT expertise in Romania under Communism. The first were the computer departments of the very largest state enterprises, which could afford to set up an autonomous operation without the need to refer to their local ECRC. The second were "Calculus Centres", which specialised in servicing the needs of particular industrial sectors (e.g. the mining industry).
Where software was developed, then
in almost all cases applications were custom-built, representing the greatest
use of technological capabilities.The software developed covered all types,
from programming tools to operating systems to horizontal applications
(such as word processing) to vertical applications
that addressed a particular industrial
sector or particular organizational function. The degree of local innovation
within such software varied, since at least some of it was based on "reverse
functional engineering." This is the process by which Romanian software
developers unable to access the program source code of packages pirated
from the West relied on discovering what the software did (i.e.
what its functions were) and then
imitating these by writing their own programs.
Software Development after 1989
After the 1989 revolution, the leading IT R&D institution the Institute of Calculus Techniques and Informatics was split into three institutions:
The Calculus Techniques Institute
(CTI), which has been partially privatized, but which remains substantially
state-funded. CTI has found it hard to maintain its hardware R&D work
and is consequently struggling to extend its role into software development.
The Research Institute for Informatics
(RII), which remains state-owned under the National Commission for Informatics,
but which is financially autonomous and must win all its income through
contract bids.
The Informatics Perfection Centre
(IPC), which is partly state-funded and which is mainly involved in running
training courses in (foreign) computer applications such as Microsoft Office.
The ECROs were closed down while the ECRCs and Calculus Centres became independent commercial societies (Societies for Informatics Services: SIS). They are financially autonomous, are actively seeking foreign investors for future privatization purposes, and receive no subsidy from the state, but they are still seen as a responsibility of the National Commission for Informatics. The NCI provides them, for example, with journals, magazines and other material to help keep them up-to-date with the latest IT developments. Hardware-producing enterprises similarly became financially autonomous, but with close links to government for those that survive. Partly as a result of outflow of staff from the state organizations, there has been a rapid growth in the number of small software and hardware firms in Romania.
A number of user organizations especially within government are still running their existing applications on locally-produced hardware. However, where resources have been available and/or where client demand has forced it, information systems have been updated. AHDC (the Autonomous Headquarters of Deva Copper, a former Calculus Centre for the mining industry), for example, invested $400,000 in Romanian hardware shortly before the revolution but felt pressurised to replace this equipment with imported PCs soon afterwards. Fortunately, it was able to sell the Romanian computers.Unfortunately, it was only able to sell them as scrap, for $2 per kilogram. The existing software applications were no longer usable, and had to be re-written from scratch. As in AHDC, many applications have had to be completely re-written when new hardware has been imported. In other cases, though, existing programming code has been reused and the application migrated from the Romanian to the imported platform. In both situations, this has provided much-needed work for the former software R&D institutions. (14)
However, the most common option when old hardware is exchanged for new, or when an organization computerizes for the first time with imported IT is for the software used to be an imported package. There has been a major shift, therefore, from custom-built applications to customization of foreign packages.
The pattern of company size and
ownership throughout the software development industry is one of a
few, large state-owned organizations
and very many, small private-owned companies which typically employ only
one or two people. The state-owned firms are mainly those that were formerly
regarded as R&D institutions, which have now been pushed into financial
autonomy. The pattern of enterprise in the Romanian software industry
in 1998 is shown in the following table.
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Turnover for these firms has been relatively modest. The largest state producer, RII, had a turnover of US$2.8m in 1995. The former Calculus Centre, AHDC, turned over $80,000 in the same year and represents a typical mid-sized enterprise. The smallest firms turned over as little as $1000-2000. By contrast, for example, Timisoara's beer factory (one of forty large breweries in the country) had a $26million turnover, probably more than the entire Romanian software industry.
The one or two persons size companies are often set up by IT professionals who have left one of the R&D institutions, or by recent IT graduates. Their work ranges along a capability continuum:
from custom-building software
to meet the needs of PC users in the small but growing market of smaller
enterprises and home users,
through customising existing
software packages for the same market (building databases and spreadsheets,
using application programming languages like Visual Basic, and/or adding
a Romanian interface to the package),
to simply trading imported software
packages, which has been and is a growth market.
The Romanian language and the specific requirements of Romanian legal, government and business practices provide a continuing "natural protection" for the local software industry in a way that does not apply in hardware. Western packages cannot be transferred directly to work in most Romanian settings.The process of economic transition contributes to natural protection since it creates an ever-changing legislative environment in which benefits, tariffs, taxes, etc. keep altering. Information systems must therefore be constantly amended in order to keep up, and this requires continuing local input. Piracy also helps to reduce the incentives for software multinationals to establish a major presence.
Nevertheless, with the influx of
some software multinationals, growing awareness of foreign software standards
(largely driven through piracy), and a growth in the use of English, the
Romanian software market has undergone and continues to undergo a process
of commoditization. Where once the entire market was for custom-built
software, consumption is increasingly dominated by software packages
which, at best, have been customised
to some extent. The consequential outcome less dramatic than with
hardware, but present nonetheless has been a suppression of higher-level
local technological capabilities in favour of the foreign capabilities
incorporated into imported products. This is also
seen in the creation of software
packages by Romanian firms. Since the revolution, there has been no serious
development of operating systems, databases or complex applications as
there was before. Locally-produced packages now only exist in vertical
or niche markets, and trading or supporting imported packages is more profitable
and more attractive.
Vertical market applications, such as accounting or medical or manufacturing information systems, have the natural protections described above. They are likely to survive for some time. However, it will become increasingly attractive for multinational producers of vertical applications to collaborate with a local partner who can customize the foreign package to local needs and practices. Romanian niche market products include anti-virus and communications packages. Apart from their interface, these are not Romania-specific and foreign analogues exist which can potentially compete. In earlier days, markets and profits were seen as too small to attract foreign products. However, as the overall IT market grows, such niches come to the attention of Romanian entrepreneurs who seek to find an imported product that will fill the niche, and for which they can act as the distributor. Although new niches may continually emerge, the larger ones will increasingly be filled by imported products.
The vast majority of Romanian software
firms are focused on the domestic market. A few, however, address the global
software market. One such is Siveco (Romania), which began operations
in 1992 and now employs around 50 people. It is a joint venture owned 10%
by a group of Romanian
businessmen and 90% by Siveco (France).
Siveco (France) is, in turn, a subsidiary of
the global Siveco Group together
with Siveco (UK) and Siveco (Switzerland). 85% of the Romanian subsidiary's
US$200,000 turnover (1995) consists of export work. This work is contracted
from other members of the Siveco Group and includes custom-building, customization
and conversion work. It has focused on computer-aided maintenance systems
running on PCs.
Software Technology Park Project
The National Association of Romanian
Exporters and Importers, the Romanian Association of Electronics and Computer
Software, as well as the Romanian National Association of Computer Software
Producers recently decided to create the first computer software science
park in Romania. The park will produce part of the software for the Romanian
computer users and try to become a provider of export. Once created, the
park will strengthen Romania's capacity to join the family of software
exporting countries, and for the beginning, it is expected to generate
annual export revenues of about USD 40 million.
Romanian specialists are expected
to come up with high performance computer programs, taking into account
that many of the Romanian computer science graduates made a good impression
with foreign companies and won international recognition. The sponsors
of the science park estimate that Romania will cash in about USD 600 million
as a result of software exports.
Project Description
The Software Technology Park is one of the objectives included in the "National Strategy for Informatisation and Fast Implementation of the Information Society in Romania", approved by the Romanian Government in January 1998. The project aims to promote software industry development for the Romanian market and for export.
Expected results
expand the domestic software market;
restrict brain drain among software professionals;
increase the number of SMEs working in the field of software production
for export.
The Software Park will provide the necessary physical and logical capabilities, accessible via computer network, to help train local engineers, to facilitate technology transfer and to manage a center for software development. The Software Technology Park is an area with a special status, which offers financial, administrative and organisational facilities to the export-oriented software companies:
1. duty free imports, if made for the park's own need.
2. exploitation and management of such infrastructure resources as: telecommunications
facilities, common hardware / software platforms, buildings, common
utilities, etc.
3. public services delivered on the 'unique desk' principle (import licenses,
project and contract validation, customs, etc.).
4. technological support for market analysis and sharing.
5. training in software engineering.
6. co-operation with higher education institutions.
Project Sponsors:
National Commission of Informatics
Ministry for Research and Technology
Research Institute for Informatics
Software firms Associations
Project Cost: 50 million $
Implementing Agency: National Commission of Informatics
Implementation Period: 1998 - 1999
Equipment and Services Demand
1. high technology infrastructure: high performance telecommunications
network,
hardware/software platforms for
software development, conference/training facilities, exhibition areas.
2. technical assistance for feasibility studies and project management, orientation visits.
Existing Suppliers and Contact Information: IBM, Sun Microsystems, Hewlett-Packard, Microsoft, Oracle.
Software Development Companies
Profile
AGNOR
HIGH TECH
Algoritma
SRL
Cinor
Crescendo
International
S.C.
DEUROCONSULT SRL
ECSO
& EXO
FINSIEL
ROMANIA SRL
GeCAD
HAMOR
Soft SRL
Research
Institute for IT
Institute
for Computers
JVM
TECHNOLOGIC
ROMSYS
SA
S&T
SALIENT
Romania
Silva
Soft
Strategic
Information Technology IMPEX SRL
SIVECO
Romania SA
SoftNet
SOFTWIN
SUNSoft
Simbolic
SRL
TCinf
TOTALSOFT
SA
