Changes of SI as a means of avoidance, stopping the growth of SW
Stuck on original prices, concerns of falling back
60% of business expenses, including the U.S.
"New deliberation committee..."Desperat
In June, the Ministry of Science and ICT announced innovation strategies for commercial SW-oriented ecosystems such as the preferential purchase of commercial software (SW) at a meeting for inspection and coordination of state affairs. It was a willingness to transform the SI-oriented industrial structure into a high value-added commercial SW. The policy base is SW separate order (direct purchase). If the number of orders for separate commercial SW increases, it can be expected to have a virtuous cycle effect such as improving quality, discovering excellent SWs, and strengthening domestic SW competitiveness by securing profits through technology competition among SW companies.
◇Reasons SW companies want to improve the system
The ratio of commercial SW purchases in public SW projects is 10.7%. Even part of this is ordered as an integrated purchase, not a separate order. SW companies continued to make suggestions to increase the ratio of separate orders in the public sector. If the SW business is integrated, it will be difficult for commercial SW companies to receive a reasonable price. The information service business is a competition for information technology (IT) service companies, and business costs are reduced to the scheduled price. It has no choice but to give a share to SW companies. It is explained that the larger the budget and more profitable server-based software, the higher the rate of integrated orders, not separate orders. Separately ordering is mainly based on client-based software with a small amount of money such as word processors.
SW companies were concerned that replacing them with forms would increase the integrated order ratio and worsen the profitability of SW companies if the ratio of items subject to direct purchase exclusion was less than 50/100. It is argued that there is ample room to be used as a means of avoiding separate orders. The Ministry of Science and ICT explained that there was no problem because it was required to explain through submission of the form. On the other hand, SW companies responded that the introduction rate of separate orders has decreased, leading to favorable results only for SI companies.
◇ To increase the commercial SW, separate orders should be increased
Developed countries such as the U.S. allocate 40% of their business expenses to development (SI) and 60% to the introduction of commercial SW. Compared to Korea, where service development accounts for 90%, there is a wide difference in perspective on commercial SW. The larger the domestic SW business, the higher the proportion of integrated orders. Even if commercial SW companies have excellent products, they must supply them at the lowest price. Even if innovative products are developed, in principle, it is difficult to supply them through technological competition.
Commercial SW has a higher added value compared to SI development. SW companies with global competitiveness can also emerge only when the foundation for commercial SW support is strengthened. This is why the Ministry of Science and ICT is promoting various policies and projects aimed at innovating the SW industry centered on commercial SW. This is possible only when separate orders are expanded, and commercial SW companies increase their profit competitiveness.
Poong-yeon Cho, Chairman of the Korea SW·ICT Federation, said on the 20th, "A separate order review committee should be established so that reasonable separate orders can be made, and illegal order reporting centers should be established and operated to eradicate unreasonable separate order avoidance practices." Chairman Cho said, "Without the mandatory system for separate orders of commercial SW, the domestic SW market would have only existed in the service market," adding, "Because commercial SW such as cloud and subscription models can grow to the next level, policy support is urgently needed."
By Staff Reporter Ho-cheon An (hcan@etnews.com)