Q&A: Microsoft Innovation Centers Fuel Growth of Local Software Economies

Editor’s Note, Dec. 12, 2005 —
This interview has been updated to remove incorrect references to the Microsoft Most Valuable Professionals Program.

REDMOND, Wash., Dec. 5, 2005 – The nearly 200 delegates who have gathered from around Asia for this week’s Microsoft Government Leaders Forum (GLF) in New Delhi, India share an enviable yet difficult challenge: Sustaining an economic engine that’s already in overdrive.

Sanjay Parthasarathy, Corporate Vice President, Microsoft Developer and Platform Evangelism Group

As a result of rapid economic growth in recent decades, Asia and surrounding Pacific nations will soon generate more than half of the world’s gross domestic profit (GDP). But economic trends indicate the “Asian Lion” may need some assistance to sustain its roar. In September, the International Monetary Fund reported that GDP growth in emerging Asian nations, as well investment growth, is slowing.

This week, at the annual Asia GLF, Microsoft announced the debut of a worldwide network of facilities designed to foster strong, self-sustaining local software industries. Microsoft and local government, academic and other software partners envision the Microsoft Innovation Centers (MICs) serving as economic spark plugs to help maintain growth in regions such as Asia, and generate jobs and economic opportunity elsewhere.

The company and partners in each region will jointly fund and run the facilities, which will provide training, software testing, business networking and other resources. Nearly 90 centers in 30 nations are planned.

To provide insight on the centers and the role the partners expect them to play in local economic development, PressPass spoke with Sanjay Parthasarathy, Microsoft corporate vice president of the Developer and Platform Evangelism Group, and Tim Chen, Microsoft corporate vice president and chief executive officer (CEO) for the Greater China Region,

The following government officials, software vendors and others who are already partnering with Microsoft in their regions also provided their insights:

Renato Rodrigues, Chief Technology Officer, Instituto Curitiba de Informática (Brazil)
  • Renato Rodrigues, chief technology officer (CTO) for Instituto Curitiba de Informática, a government sector partner that provides the facilities for the .NET Centre in Curitiba, the capital of Paraná state, in southern Brazil.

  • Andy Siew Voon Long, founder of iTECH Global Gateway. He was an intern at the .NET Technopreneur Development Centre (NTDC), which provides .NET development-related infrastructure, tools, services and facilities to promising technology entrepreneurs. The Multimedia Development Corporation (MDC), Microsoft (Malaysia) Sdn Bhd, the Multimedia University and Hewlett-Packard (M) Sdn Bhd sponsor the centre.

  • Geoff Rohrsheim, Managing Director for Strategic Data Management (SDM), a systems integrator (SI) based in southern Australia.

PressPass: What is Microsoft announcing this week?

Parthasarathy: We are teaming up with software venders, governments and academic institutions around the world to create a network of roughly 90 Microsoft Innovation Centers. Sixty are open today. Another 30 are slated to open in 2006. These centers will help build the infrastructure and market for commercial software by offering training, product testing facilities, networking and partnership opportunities and other resources.

Andy Siew Voon Long, Founder, iTECH Global Gateway (Malaysia)

PressPass: Why is Microsoft teaming up with local governments and other partners to introduce these new centers and offerings?

Parthasarathy: The centers are a vital component of Microsoft’s larger Local Software Economy (LSE) Initiative. This ongoing initiative is part of an effort to help our subsidiaries work closely with local policymakers, industry leaders, academic institutions, the venture capital community and others to build strong local commercial software industries.

Microsoft wants to play a hands-on role in helping countries and entire regions develop their knowledge-based economy, create jobs, spur growth and enable innovation. We can do this by helping our partners build robust local software economies.

Particularly in developing regions, commercial software can be an engine for long-term economic growth. India is a perfect example. As recently as 2002, the software industry contributed less than 1 percent of India’s gross domestic product (GDP), but it accounted for more than 10 percent of total GDP growth, according to a study by researchers Ashish Arora of Carnegie Mellon University and Suma Athreye of the Open University in the United Kingdom. By 2008, India’s software industry will employ 4 million people and will account for 8 percent of GDP and 30 percent of foreign exchange earnings, according to a study by the National Association of Software and Service Companies of India.

Geoff Rohrsheim, Managing Director, Strategic Data Management (Australia)

PressPass: How will the offerings at these centers be different from what’s now offered at the facilities now?

Parthasarathy: These centers will focus on providing a broad variety of resources designed to help our partners and others who use the centers to build intellectual capital, create partnerships and innovate on the Microsoft software platform.

Right now, many of these facilities are known as XML Centers, .NET Centers or Solutions Centers. Their resources are loosely but not formally aligned. This has lead to partners in some countries requesting resources offered at centers in other countries.

From now on, the centers will not only have a consistent name; they will also offer consistent resources. We’ve leveled the playing field and plan to provide the same experience at all of these centers, while maintaining the flexibility to meet the different needs of different countries. For example, centers in South Africa probably won’t offer a huge amount of resources for the Shared Source initiative or academic research. Instead, these centers and those in other areas with high unemployment will probably focus on job creation in the software industry.

PressPass: Can you speak more on the offerings at the MICs?

Parthasarathy: All will offer content and services in three specific areas. One area, intellectual capital, will include software development courses, training in the areas of business skills and market development and employment programs for students. Another area will foster industry partnerships by helping create industry clusters and software quality and certification programs. The other area is innovation; we plan to promote advances in 64-bit computing architecture, Microsoft Windows Vista development and other technologies through hands-on labs and other resources.

The centers will be staffed by experts in Microsoft technology solutions who work side by side with partners to rapidly find solutions to partners’ technology challenges. For the technical staff of partners and customers, the centers will offer courses such as multi-week workshops, during which they can work closely with our architects to develop proofs for customized solutions built on Microsoft technology.

PressPass: How do these centers mesh with Microsoft’s other partnerships and programs that attempt to narrow the digital divide in underserved nations?

Chen (Microsoft Greater China): We think these centers can play a vital role in leveling the technology playing field, particularly in the areas of training and education. The entire Asia-Pacific region has a right to be proud of its rapid economic growth in recent decades. However, much of this growth has been the result of labor-intensive industry. The key to further development of this region’s economy and others is developing the talent to create more service-based jobs and spur local innovation within our industries. The centers help regions do both.

Rodrigues (Brazil): Our center offers opportunities for training and engagement. For many students or younger devleopers, it’s their first professional experience in software project development. It didn’t take long before academic institutions woke up to the fact that, by counting on the support from the center, they could learn more about the leading technologies that they shoud address in their courses.

Parthasarathy: This existing center in Brazil has helped arrange or sponsor more than 100 scholarships for students to receive training at the center over the past years. Just over 80 percent of these students have moved on to jobs within the software market; the rest are engaged in academic research. We’ve also got roughly 1,900 students and more than 60 faculty members actively using extensible markup language (XML) and the Web services integration framework that we think will a foundational piece of the next generation of the Internet.

PressPass: Where will the Microsoft Innovation Centers be located? What factors will determine whether a region or country gets an MIC?

Parthasarathy: A large percentage will be in Latin America and Asia, including about nine in China and about one per country in other parts of Asia.

The biggest prerequisite in most regions will be eager, local stakeholders. Our name will be on all of these centers, but most will be jointly run and funded by local governments and organizations. In Sapporo, Japan, the city government owns the entire project. We simply deliver the offerings. This kind of local participation is vital to ensure these centers align with the needs and expectations within different nations.

In some developing countries, we realize we may not be able to find partners to split the cost or organization, so we plan to offer the training and other resources by ourselves. We feel it is our responsibility to help develop the commercial software markets in these nations.

PressPass: How has the current center in Malaysia helped you advance in the software industry?

Siew Voon Long (Malaysia): I received a four-month internship at the .NET Technopreneur Development Centre (NTDC). Before the internship, I gained a lot of experience and knowledge about programming and databases at the Multimedia University, Malaysia’s first e-learning and e-university. But the center provided me the opportunity to learn about Microsoft’s most powerful development tools, Microsoft Visual Studio .NET and Microsoft SQL Server 2005. I also got hands-on experience developing solutions with VB.Net, C#, and ASP.NET – something I didn’t get to do at university.

I also learned a lot from Nur Eliza, my supervisor and head of the NTDC lab. She always shared software industry marketing strategy and her insights on the demands of marketing. She also encouraged me and other trainees to become entrepreneurs. So in September, my friend and I started our entrepreneurship journey. We registered our first enterprise company. It’s called iTECH Global Gateway. Our first software product is an e-clinic management system and e-learning system for colleges and institutes.

PressPass: What role will the centers play in developed nations with mature software economies?

Parthasarathy: Many of the centers will be in countries with mature software economies. In fact, 20 will be in Europe. These centers will in many cases focus on generating additional growth and innovation, rather than on creating the software ecosystem. In Spain, the United Kingdom, France and Germany, we are pairing the Microsoft Innovation Centers with our existing Microsoft Technology Centers, where we already offer resources for our business customers. By locating these centers together, we hope to create bonds between our ISV community and our business customers. Everyone in the software ecosystem will have a place to gather and interact.

PressPass: Geoff, how have you used your local center?

Rohrsheim (Australia): SDM is a pretty small company. With around 60 staff, we were able to use the center to design, build and test solutions for government agencies in South Australia, based on the Microsoft platform. The center gave us access to Microsoft technology experts, access to government subject matter experts and use of the facilities and resources required to build and test our solutions. The solutions could then be reviewed and trialed by end user employees in a “close-to-real” environment.

Before the center was available, we had to do all of the testing on our premises. This proved to be a challenge. We had to create mock-up systems to try and simulate the different government IT environments. As we all know, there is a limit to how close to reality you can get. The center has access to the government network, so it offers a much better testing environment.

PressPass: Renato, how has your center contributed to the development of a strong commercial software economy in Curitiba?

Rodrigues (Brazil): Since the center opened in 2001, it has established partnership agreements with seven universities and one government agency, ICI. The 12 technical staff members have helped partners develop proof of concept (POC) prototypes that have even been used as production applications. Private companies are now aware that by developing POCs at the center, they will receive high-quality solutions and good technical support.

In addition to the POCs, the center has offered more than 60 seminars for more about 2,700 participants since May 2002. Also, more than 50 university professors have provided their valuable insights on how and where to direct technical expertise at the center.

PressPass: How important are partnerships and collaboration when building software industries?

Parthasarathy: It’s vital. These centers allow software vendors, academics and government agencies to come together to determine where IT pain points exist, and how new or existing software and solutions can help ease the pain. We call these groupings industry clusters.

By helping bring the best ideas and resources together, we can help regions create an extremely powerful tool for economic development.

PressPass: How do these clusters work?

Parthasarathy: Victoria.NET in Australia is a great example. A bunch of local ISVs and other industry stakeholders came together, with support from the state government of Victoria, Microsoft and Intel, to co-operatively develop opportunities for the entire information and communications industry in Victoria. The members of this cluster have used the Microsoft brand to raise their profile and showcase their work with potential clients. They now also have a united voice within the industry, as well as a point of contact and place to consult with others in the industry. They can network and partner with like-minded organizations and can attend trade shows and exhibitions as part of a larger entity.

Similarly, a cluster in India launched an initiative earlier this year to create a baseline of quality for software applications developed by local ISVs. The partners agreed on a basic level of skills certification for all developers and application testing for new software. This is a world class thing that came out of India that had never been seen before.

The power of clusters extends to funding. Outside the United States, there’s less seed-stage capital available from the venture-capital or the private-equity communities. One reason is VCs are not able to find good investment opportunities to their attention. Now venture capitalists can come to these centers to review business proposals from technopreneurs who might not otherwise have access to this type of funding. Venture capitalists know they are reviewing quality proposals because they know we are running good companies through our facilities.

PressPass: How have you benefited from this cross-pollination of thinking and ideas at your centers?

Siew Voon Long (Malaysia): The working environment is comfortable for entrepreneurs to start their product development. I’ve had a chance to meet with other entrepreneurs at the center who have shared their views and experiences.

Rohrsheim (Australia): Our center has helped SDM and other small companies with limited marketing resources to get the attention of government agencies and show them we can meet their needs. One way the centers do this is by hosting showcase sessions where we can market our capabilities to IT decision makers from throughout South Australia government.

Government customers now account for 40 percent of our South Australian revenue. We’ve also been able to commercialize some of the products we have developed through the center. We have grown our revenue quickly and more than doubled the size of our staff, from 26 employees a couple of years ago to around 60 today.

PressPass: How important is it for companies such as Microsoft to work with government and other organizations in these types of efforts? Why should local governments consider taking part in these centers?

Chen (Microsoft China): For Microsoft, these centers are a good platform for communication and engagement with local governments, partners and customers. Particularly in China, these centers expand our efforts and long-term commitment to support China’s software industry. We think Microsoft can benefit from a growing the IT and software industry in China.

These centers also help Microsoft better understand the local IT needs, including those of local governments. Knowledge such as this is one of the keys to creating the right products, solutions and technical support for our customers.

Governments ask Microsoft to invest in the development of their local software economy. These centers are our answer. They provide developed business management models, developed technology, training resources and good services. Local governments can put the resources of a multinational company, Microsoft, to work to build their software economy.

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