A development strategy for the Philippine Computer software industry

Objective The objective of this paper is to formulate a strategy for developing sustainable competitive advantage for the Philippine Computer Software industry while utilizing these advantages to help a software company gain competitive strength. Environment The world economy is expected to post solid growth for the next few years. In emerging markets, the IT market is expected to grow even faster. Technological advances in computer technology, the Internet, and the Year 2000 problem are expected to further push up demand for IT services. Worlwide forums such as the GATT and APEC help by accelerating the integration of the global economy. Industry Analysis The Diamond framework introduced by author and consultant Michael Porter was used to analyze the industry according to factor conditions, demand conditions, related industries, and firm strategy, structure, and rivalry. The local industry is found to be highly dependent on low cost manpower and sorely lacking in capitalization. Home demand is too small to be globally significant yet too backyard to nurture the development of advanced technology. The recent liberalization of related industries such as telecommunications is only now starting to benefit the IT industry. Firm rivalry for the export market is almost nonexistent since the market is so big and the players so few. The present government has been playing an important role in boosting acceptance of IT software and services. Overall, the IT industry is relatively weak, and there is a need for a unified development strategy to fully tap existing strengths and upgrade the industry to world class standards. Development Strategy The development strategy follows what management consultant Kenichi Ohmae calls a strategy based on key success factors. The strategy involves segmenting the market and identifying which segment to focus on and invest resources. The segment identified is data collection, analysis, and transformation, to be package as InfoBase systems and services. It takes data entry into the realm of information processing and analysis, while it takes software programming into the area of systems design and development. In order to be globally successful in this segment, the Key Success Factors identified were knowledge, market size and potential, infrastructure, and promotion. Knowledge focuses on the development of a highly skilled manpower pool. Market size and potential focuses on the development of critical mass in order to attract even more investment into this segment. Infrastructure refers to means of transporting people and information within and outside the country. Promotion seeks more recognition for the industrys capabilities and capacities. These factors are addressed by opening up the local market to global competition and by developing promoting a single brand for the local IT industry