Minister of Trade and Industry, Mandisi Mpahlwa, addresses CoMMIt '07 Symposium

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