CoMMIt '07 Symposium
17 September 2007
Programme Director
Chairman of Dimension Data
Members of the Information and Communications Technology (ICT) fraternity
Ladies and gentlemen
It is a pleasure to be here today and be part of this exciting development
in the Software Engineering sub-sector.
The past decade has seen many companies in the highly developed economies of
Europe and North America developing mutually beneficial relationships with
emerging nations such as India and China. An increasing number of these
relationships involve the outsourcing of the design, development and support of
computer software and other high-tech products and services. These high-value
outsourcing arrangements have played a significant role in the creation of jobs
and economic growth in India and elsewhere.
What is the potential for South Africa to become a significant developer of
software and other high-tech products and services for the international
market? It is important to begin the answer to this question by noting that
South Africa already has a well established track record in several niche areas
as an international player in software development and other high technology
products and services. The key question is whether South Africa can sustain its
position and can grow in this area of activity?
There are a number of critical success factor that have been identified as
requirements for countries wishing to compete in the lucrative international
outsourcing market. These include a strong domestic demand for these products
and services, the necessary supply of appropriate skills, a supportive
environment including financial services and telecommunications infrastructure,
and adherence to acceptable international quality standards.
This Symposium, CoMMIt '07, deals with the last of these success factors.
The "Capability Maturity Model Integration" (CMMI), has become accepted in many
parts of the world as a benchmark that measures the processes employed by
organisations in the software development and systems engineering sectors. In
the United States of America and elsewhere clients seeking to enter into
outsourcing agreements insist that the supplier has a CMMI maturity rating.
The aim of the Symposium is to inform both the users and suppliers of
software and system development services of the benefits of CMMI, how it has
been adopted in other parts of the world, and to discuss whether is has the
potential to assist growth and development in South Africa and Africa.
The Department of Trade and Industry has had a long relationship with the
software engineering sub-sector. In 2004 the Electro-technical Unit within the
department conducted research to determine what were the barriers and
challenges facing the sub-sector, and what interventions were necessary to make
South African companies playing in this space, globally competitive. It was
whilst going through this rigorous process that CMMI was identified as a
critical intervention and a 'pre-requisite' for our companies wanting to access
export markets.
The South African Information and Communication Technology industry may well
look rather impressive within the global context with pockets of excellence in
areas such as electronic banking and financial services applications, fraud
prevention systems and pre-payment for example. However, the software
development industry is lagging considerably behind countries which are setting
the benchmark. We all know how India has positioned itself as the leading
global provider of highly skilled Information Technology professionals at low
cost. To put it all into perspective, we have a handful of companies at CMMI
level three and four, compared to India which has well over 75 companies that
have reached CMMI maturity level five.
At the department we acknowledge that the software engineering component of
the ICT sector is significant and will become an increasingly valuable
crosscutting input driving the growth of our economy in the domestic market. We
estimate that the South African Software Industry was valued at R13 billion in
2006 and expect it to grow at a CAGR of 11% over the next three years. The
export component is valued at just over R500 million or about six percent of
the domestic software market. The software industry is strongly pyramidal in
structure regarding revenue concentration, with the five largest software
vendors controlling approximately 40% of the software revenue and the ten
largest controlling 50% of the revenue. As the department we identified the low
volume of exports as an opportunity and CMMI as a critical success factor to
achieving this goal.
In global markets, international companies that seek to outsource their
business demand the assurance that the contractor has the ability and capacity
to guarantee the quality of the process in software development and therefore
manage the associated risk. Therefore we have to create the environment that
will enable South African companies to achieve CMMI levels four and five, as
this is becoming a major factor in the pre-qualifying criteria for tenders as
it guarantees the quality and competitiveness of software engineering
firms.
The principle of CMMI proficiency is used across numerous sub-sectors, as it
was initially employed by the United States Defence to ensure high standards of
product development and project implementation. We see the deployment of this
thinking as critical to the future development of Medium and Advanced
Technology sectors as outlined in the National Industrial Policy. The policy
highlights specific areas of the economy that are targeted for fast-tracking
development to help us achieve the desired economic growth rate of six percent
by 2010.
The main objective of the Industrial Policy is to map out government's
approach to industrial development over both the short and medium-term. It aims
to provide strategic direction especially since situational analyses have
indicated losses of employment in the traditional commodity sectors, which have
not been offset in non-traditional tradable sectors such as the ICT sector.
These sectors are critical for the transformation of our country into a
knowledge and value-adding economy in the future. Therefore for the industrial
economy to operate optimally and policy to be successful, four main areas need
to be prioritised:
* a stable and supportive macroeconomic and regulatory environment
* traditional and modern infrastructure
* skills and education for industrialisation
* innovation and technology
It is the last two factors that we target through programmes such as
bringing CMMI to South Africa. The process of industrialisation involves a
shift from using the most current technologies to increase innovation and
develop new indigenous technologies. However, we know that South Africa has
some world-class offerings in the ICT space; however as government we must
level the playing fields and create access for our domestic companies to
participate in foreign markets. This will allow South African ICT companies to
become increasingly competitive in global markets.
With a capital contribution of R1,5 million, the Department of Trade and
Industry has stepped up to assist and partner the Johannesburg Centre for
Software Engineering to bolster the poor state of the local industry. The major
problem for the local firms has been the costly process of attaining CMMI
certification. Candidates have in the past had to be either sent to Europe or
the US for training or trainers have to be flown to South Africa at a huge
cost.
By investing in the programme, the Department of Trade and Industry has
helped towards training South African individuals earmarked to present the CMMI
training and assessment programme. This has been a significant success in
itself. An introductory CMMI course that would cost R30 000 in the United
Nationas, excluding travelling and accommodation costs, is now offered by the
Johannesburg Centre for Software Engineering (JCSE) for R7 900. It is my
understanding that over 130 people have attended the course so far.
In conclusion, events aimed at raising the profile of CMMI in South Africa
are crucial. Educating our software companies on the dynamics of global markets
requirements is necessary if we want our ICT companies to become more
recognised and seek Dollar and Euro based contracts in foreign markets,
especially since the domestic market only offers limited opportunities.
We want to applaud Dimension Data, and specifically the Chairman, Mr Andile
Ngcaba, for organising and hosting the symposium in collaboration with the
Johannesburg Centre for Software Engineering, and the Department of Trade and
Industry we will continue to support and drive this initiative to raise the
profile of the South African software engineers in global markets.
Thank you
Issued by: Department of Trade and Industry
17 September 2007
Source: Department of Trade and Industry (http://www.dti.gov.za)
