For those of you who thought that Silicon Glen was a character from a Marvel comic, let us enlighten you. Scotland has been attempting to foster its own information technology industry for as long as most of us can remember. The country has earned itself a reputation for attracting successful foreign firms to its shores, recruiting such names as Hewlett-Packard Co, Conner Peripherals Inc, Digital Equipment Corp, Motorola Inc, Ing C Olivetti & Co SpA (through its Triumph Adler subsidiary), NEC Corp, Compaq Computer Corp, National Semiconductor Corp, SCI Systems Inc and Sun Micrsosystems Inc – the list goes on. On the software side, it houses Aldus Corp, BAe Sema Ltd and Oracle Corp to name just a few. The country’s government-funded Scottish Enterprise organisation has been instrumental in gearing up the land for information technology. It last year organised a forum for open systems in Scotland, designed to bring together information technology vendors and users.

Incubators

The organisation’s Software Group has also been working on a number of small business centres, under the Scottish Software Partner Centres initiative. These centres, set up in conjunction with local enterprise development authorities, are designed as incubators for small start-up companies – both indigenous ones and inward investors – in Scotland, providing them with floor space and conferencing facilities. Companies within the centres also have the advantage of being able to bounce around ideas and form relationships with other firms. There are three centres currently up and running in Scotland, with a further four in the pipeline for next year. They are being set up in conjunction with regional development agencies, and will eventually be linked together via a computer network to form Softnet, a Scottish Information Technology think tank. The three centres already in operation are based in Livingston, the Forth Valley and in Queensferry, near Edinburgh. The others are planned for East Kilbride, Glasgow, Renfrew and Aberdeen. The Queensferry plant is particularly interesting given that the site is owned by Hewlett-Packard, which has two members on a selection committee of seven people – the other committee members come from Scottish Enterprise and the local development authority, Lothian and Edinburgh Enterprise Ltd, each of which contributes annual funding of roughly ?10,000 to the centre according to the Queensferry site’s financial controller, Jim Rigby. Rigby says that the centre started when Hewlett-Packard realised it had built too much accomodation at its site and approached Scottish Enterprise to help it fund a software partner centre. With Scottish Enterprise’s help, it started to recruit Scottish start-up companies in need of a quick kick-start into business. Companies that would be considered include either small indigenous firms, or inward investors needing a stepping stone into Scotland. All went well for a while, but now concern has arisen among some residents of the plant about three companies that are technically start-ups in Scotland, but which also have massive backing from parent operations outside the country. The companies in question are Cray Electronics Holdings Plc, the UK publicly-quoted company, which turns over in excess of ?300m per annum, and the ASK Group Inc, US manufacturing software and database firm which did $426.2m of business in its last financial year. The final company is Admiral Group Plc, the software, services and training company that was established in the UK in 1979, and turned over ?36.7m in 1993.

By Danny Bradbury

Although everyone recognises the importance of attracting big business to local areas – it creates employment and fuels all sorts of auxilliary local businesses – other residents are asking whether is it fair to use a scheme originally designed to foster small Scottish start-up firms to provide floorspace for three multinationals with a joint turnover roughly equal to half a billion pounds? Rigby defends the move, saying that the government funding received by the three companies as a p

roportion of the whole is negligible. He also adds that the companies were crucial to Hewlett-Packard’s business interest they were either value-added resellers or OEM partners – and that the board was convinced of that fact. While justifiable from Hewlett-Packard’s viewpoint, this isn’t the ideal situation for a software partners centre that has a government interest. It does explain, though, why Cray Systems Scotland was headhunted for the centre, as the latter’s general manager James McClusky revealed. The normal selection process for companies involves them approaching a Scottish Enterprise committee with a business plan which is then rejected or accepted. They used us as a marketing attraction for other companies, added McCluskey, who believes that the inclusion of some of the larger firms will lend the centre credibility. A perceived benefit of having a large company in the midst of a collection of small, indigenous start-ups is that there is a lot of space for communication of ideas, he adds. We’ve always made ourselves available to smaller companies with a view to technology exchanges, he says, but admits that there haven’t been any actual technology exchanges. Other residents in the centre have criticised the inclusion of large firms, saying that it is in fact counter-productive to the centre’s think tank approach. One small, indigenous company within the Queensferry site said: ..there are some companies significantly larger than us and that impedes cross-fertilisation. We won’t be able to convince Ingres to take on our technology. The representative also criticised …these schemes that the Scottish office has to invite foriegn companies in. People seem to want to promote foreign products, and it pays for outside companies to try and sell their wares to a foreign base. Even Rigby acknowledges the emphasis that Scotland has on inward investment, but defends the residency of three large foreign companies by pointing out that there are still native firms on the site and that there is plenty of space for other native firms in other centres around Scotland. This doesn’t explain away the waiting list that exists for places at the much-coveted Queensferry site. More controversy was sparked off by the relocation of a small start-up company – NXYS Ltd – from Queensferry to the Livingston centre, which in contrast to Queensferry is not owned by an information technology company.

Arrogance

In defence of the move, a board member said that NXYS had an idea but didn’t have funding, although sources say that the firm was nonetheless paying rent at the time. NXYS is conducting revolutionary research into object-oriented graphical user interface work which even Rigby admits will be a big product when it happens, yet the firm was unable to get funding from Queensferry board members Scottish Enterprise or Lothian and Edinburgh Enterprise Ltd, and is having to go to the US to try and get research capital. One source said The Local Enterprise Councils just pass you from one part to another. Weeks and weeks later you get another story after hearing that the money is there. There’s a certain arrogance about them. Meanwhile Ask, Admiral and Cray are sitting pretty at Queensferry and because they have millions of pounds in the bank, the committee is all smiles. If NXYS makes it big in five years on US money it will be too late for Scotland to benefit, and no amount of floor-space at Livingston will make any difference. Maybe it would be more useful in the long term for the Scottish government to look out for the gold at its own end of the rainbow rather than constantly roaming overseas in search of a good prospect to fund.