While complete Software (SW) Industry Promotion Act amendment has been pending within the National Assembly for a year, South Korea’s SW industry is pleading that a healthy ecosystem will be established once the amendment is passed quickly. The point of the part of SW Industry Promotion Act that talks about developing public SW projects is to improve unfair and illogical practices that have been raised as chronic issues. It is expected that SW Industry Promotion Act will resolve chronic issues such as weakened profitability of SW companies and weakened working environment for developers.
◊SW Industry Promotion Act mainly talks about developing public SW projects
The reason why the SW industry is pushing hard to have SW Industry Promotion Act pass quickly is because the act includes ways to develop public SW projects. Since the act was implemented in 2000, it has become ragged as it had gone through 20 revisions in just 19 years. This complete amendment sets up many ways to improve public SW projects that have been pointed out by the industry for 20 years.
The amendment has added a standard for fair contract in order to root out a practice of unfair transactions. It invalidates conditions for unfair contract and it supports fair contract by providing standardized contract.
Whenever an order for public SW project is placed, one needs to write requirements for the corresponding project in detail and place orders for analysis section and design section separately. As of now, one needs to prepare and provides standards for analyzing and applying requirements of a SW project to Ministry of Science and ICT (MSIT). Although detailed requirements need to be made public when an order for public SW project is placed, there are still different views between a bidder and an ordering body due to insufficient amount of requirements listed.
The amendment requires government institutions to discuss about how detailed requirements are listed and appropriateness of how project period is calculated with bidders in advance whenever government institutions are looking to place an order for project. It is expected that the amendment will also help vitalize the SaaS (Service as a Software) market as it has established materials about promoting using commercialized SW.
Both bidders and ordering bodies expect that there will be many positive effects if the step-by-step separate order system that is included into the amendment is implemented. After Korea SW Industry Association (KOSA) conducted a survey on public ordering bodies (256) and SW companies (267), ordering bodies (41%) responded that effects from improved analysis on requirements and quality of specifications through participation of design companies will be huge when the separate order system is implemented. SW companies also responded that there will be positive effects from calculation of appropriate cost through accurate requirements of a project (29.2%), reduced project period through reduced time required for analyzing requirements (22.5%), and reduced number of changed tasks and additional tasks that can occur during a project (19.9%).
“Both ordering bodies and bidders expect that quality of SW projects will be generally improved through participation of design companies.” said a representative for KOSA. “Profitability will also be improved as both parties will be able to come up with the reasonable cost of a project.”
◊Amendment also pushes for private investment-based public SW project
The amendment has established grounds to push for public SW project based on private investment that the industry has been requesting for consistently. Public SW project based on private investment is highly needed from aspects of vitalizing the SW market and enhancing nationwide services. Major departments such as MSIT and Ministry of the Interior Safety (MOIS) also agree on a need for public SW project based on private investment and they are currently pushing for it while adjusting relevant systems. It is expected that public SW project based on private investment will gain momentum when the complete SW Industry Promotion Act amendment is passed.
Both bidders and ordering bodies have high expectations on public SW project based on private investment. When KOSA was conducting its survey, SW companies (270) responded that it would become possible to specialize and enlarge public SW project when private investment-based public SW project is vitalized. Major projects that have not been possible with limited budget for public SW project are expected when private investment-based public SW project becomes possible. SW companies believe that there will be positive effects such as vitalization and growth of the entire SW industry (54.8%), vitalization of R&D on ICT (30.4%), and improved trust from the public towards the SW industry (31.9%) throughout the industry by having private investments support public SW projects.
Public ordering bodies (259) have shown expectations towards improved quality of services and introduction of new technologies (44.4%). They believe that the public market will be able to grow along with the private sector through improved efficiency of project and reduced cost (20.5%) and flexible responses towards changes in the market (20.8%). They chose welfare and health (55.6%), public administration (39%), safety and public security (35.9%), and traffic (33.2%) as areas that will need private investment-based public SW projects.
“SW companies have had huge expectations that private investment-based public SW projects will vitalize the SW industry.” said a representative for KOSA. “Ordering bodies will be able to introduce new technologies and improve quality of services that have not been done due to limited budget and manpower through private investments.”
This representative also added that the complete SW Industry Promotion Act amendment will have huge impact on both bidders and ordering bodies as it was confirmed through KOSA’s surveys and that the industry wants the amendment to pass as soon as possible since the bill is necessary to strengthen competitive edge of the industry and the nation in addition to SW companies.
Staff Reporter Kim, Jiseon | river@etnews.com