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International Intellectual Property Institute (IIPI)
Conference

Strategies for Building
Software Industries in Developing Countries

East-West Center
University of Hawai’i at Manoa
May 19-21, 2004
Software Park Thailand: A Case Study

by Rom Hiranpruk
Director, Software Park Thailand
National Science and Technology Development Agency
Ministry of Science and Technology, Thailand
Introduction

Software Park Thailand is a semi-government operation under the National Science and Technology Development Agency (NSTDA) within the Ministry of Science and Technology. It was approved by the government in 1997 and became fully operational in 2000 with the aim to promote the growth of the Thai software industry by attracting local and international partners to form a cluster of software-related businesses supported by worldclass infrastructure and technologies.

Vision: To become a first-rate learning organization that supports entrepreneurs to create a strong world-class software industry, making software an enabler for competitiveness of the Thai economy.

The main missions of Software Park Thailand are to:
  • Improve quality standards of local software companies to international level -through software process improvement frameworks (such as CMM).
  • Promote transfer of relevant technologies for the software industry - directed at professionals and management levels.
  • Promote capability building for mature companies and incubation of new start-ups software entrepreneurs.
  • Promote new market opportunities for local software businesses at domestic and international levels, including business match-making, finding new market channels as well as funding sources.
  • Promote use of IT, especially through use of appropriate software, to all sectors of the economy to help increase productivity and competitiveness.
Some of the missions resulted from studies done in 1996 by the National IT Committee to find ways to create strong viable software industry. The last one was added on after a study by the National Economic and Social Development Board in 2000 (McKinsey) on
productivity of Thai industries which showed most industries to be using too little IT, and in 2003 (Harvard Business School) on five strategic industries: food, fashion, automotive, Software Park Thailand 2 27/5/2004 tourism, and software – showing the need to have software as an enabler for all economic sectors).

These missions are served by operational units within Software Park Thailand, i.e.  Technology Transfer, Business Development and Market Enabling, Incubation Center, IT Center for Industry and specialized programs set up with our technology and business partners, for example: E-Services Bazaar, Center of Excellence for Computer Security, Database Technology Competency Center, etc. Also provided is the facilitation of technical and business infrastructure and some office space. 

Software Park Thailand maintains very close interactions with the private sector directly to the software companies as well as to the industry associations. Its Steering Committee consists primarily of private sector representatives. It also operates a few centers of excellence that bridge business corporations with academic institutions in order to organize collaborative activities that enhance a rapid movement toward international best practices and subsequently enable the entire Thai software industry to proudly have its place in the world software community. 

Although its role is limited to that of an experimental station for the Thai government due to budget limitations, it has the demonstration effects for different private sector groups to set up a number of software parks and technology parks in various parts of Thailand. These
include:

  • IT park in Bangkok (operational in 2002);
  • E-Saan Software Park in Khon Kaen, capital of the northeast (operational in December 2003);
  • Samui IT Complex in Samui - a famous resort island (operational in October 2003),
  • Phuket Software Park in the South (in progress); and
  • ICT Knowledge Park in Chiangmai (in progress), to name a few.
The Government of Thailand named Software Park Thailand as one of the three major ICT success cases for Thailand at the World Summit on Information Society (WSIS) conference in Geneva in 2003.

As of April 2004 Software Park Thailand:
  • houses 50 mature software companies (ranging from a few people to about 30 people - totaling about 550 IT professionals)
  • incubates another 32 start-up software companies and free-lancers in its Incubation Center (for one year)
  • partners and cooperates with more than 350 software companies in the rest of the country (mostly in Bangkok)
Overall activities of Software Park Thailand are in the following areas:
  • Software process improvement – software quality standards
  • Market enabling: visits, networking functions, missions (domestic and abroad)
  • Business match-making (domestic and abroad)
  • Funding coordination (through venture capital investor, angel investors, banks, etc. )
  • Business and legal information service
  • Software start-up incubation
  • Formal training (technical and non-technical)
  • Seminars/conference/workshops
  • Exhibition/trade events (domestic and abroad)
  • Office space facilitation and business support
  • Excellence/competency centers operation (with technology vendors, e.g. Mobile E-services Bazaar, M-Lab, Center of Excellence for Computer Security-CeCOS, Database Competency Center)
  • Technology community events (e.g. Thai Java User Group-ThaiJUG, Security Forum, Linux Community, ThaiXML Group)
Partnerships with Other Agencies

ICT Policy Level:

Over the past decade much work has been done in the ICT policy making, including the National ICT Master Plan (ICT 2010) was handled through the National Electronics and Computer Technology Center (NECTEC) under the National Science and Technology Agency (NSTDA). Software Park Thailand was established as part of NECTEC’s national project before becoming a separate unit under NSTDA in 1999.

However, in October 2002, a new Ministry of Information and Communication Technology was established as part of the government bureaucracy reform, which transferred almost all of NECTEC’s role in ICT policy making.

The present government has adopted five national strategic industries; food, fashion, tourism, automotive, and software as part of the National Competitiveness Program under the National Economic and Social Development Board (NESDB) programs for the next five years. In November 2003 the Software Industry Promotion Agency (SIPA) was set up under the Ministry of ICT with the mandate to help promote software industry at the policy and macro-economic level. This was part the ICT Master Plan of Thailand (ICT2010 Plan), which was approved by the government in 2001. The role of Software Park Thailand under the Ministry of Science and Technology then became more focused as the operator for promotional activities at micro-economic (company) level in line with SIPA’s national policy.

Operational Level:

Since the beginning of Software Park Thailand in 1998, there have been many activities and co-operations with the Secretariat Office of the Board of Investment in the promotion of software industry investment from abroad with incentives on par with neighboring countries. The collaboration with the Ministry of Commerce has also been strong; especially with the Department of Intellectual Propery in various activities regarding intellectual property protection; and the Department of Export Promotion in the activities regarding export of software products and services.

From 2001 onward, close collaboration with the Department of Industry Promotion, Ministry of Industry took place in the area of software start-up companies incubation. This was done as part of the Small and Medium Entrepreneurs (SMEs) promotion activities which is a major government policy.

Close collaborations have also been established with industry associations such as the Association of Thai Computer Industry (ATCI) and the Association of Thai Software Industry (ATSI), the Federation of Thai Industries (FTI), the various chambers of commerce, and commercial sections of many embassies.

International Partnerships

Software Park Thailand worked with many counterpart organizations in various countries to create potential markets for each other’s software businesses. For example:
  • Software Technology Parks India (STPI): India
  • Electronics and Computer Software Export Promotion Council (ESC): India
  • Korea IT Promotion Agency (KIPA): Korea
  • Multimedia Super Corridor: Malaysia
  • Myanmar ICT Park: Myanmar
  • Quangtrung Software Park: Vietnam
  • Australia Technology Park (ATP): Australia
  • Hannover Fair (CeBIT): Germany
  • Infocomm Development Agency (IDA): Singapore
  • E-Silkroad: City of Sapporo: Japan
Note: The partial list of some of the contacts for these international counterparts are shown in the appendix.

Exchange programs have been arranged with some of these counterparts to allow for easy access into each other’s market opportunities

Intellectual Property Issues

Many local and international bodies have been working with Software Park Thailand on various fronts to help create greater awareness on: policy, regulations, rights, and threats of ICT for the individuals and the public. Critical issues such as intellectual property rights and protection have been worked on with the Business Software Alliance (BSA) and various international vendors. However, the local piracy rate for home-use software (at about 75-80%) is comparatively lower than the overall Southeast Asia region (at about 80-85%, BSA figure) but still much higher than the global rate (at about 40%). This domestic rate of home-use software (in PCs and games) is much higher than the corporate rate since violations in corporations and large offices are much lower. Software Park Thailand played a direct role in promoting awareness and concern about the rights of software developers.

Note: In 2003, the Ministry of ICT introduced the “Low Cost PC” project which create large low-end market of about one hundred thousand PCs at about US$250 each. With these fast growing numbers of PC users (at about 7 million PCs in 2004) the number of first-time PCs who may not be aware of the rights and IP issues will create more protections concerns.

Open Source Software

The ICT Master Plan set some domestic and government target to increase more open source software uses. Software Park Thailand has the policy of treating open source software as simply another category of software platform. However, it should be noted that the first Thai language Open-Source Office software was initiated and developed at a local company (Algorithms Co., Ltd.) within Software Park Thailand in 2001. This was the collaboration of Sun Microsystems and local software developers to produce an alternative desktop products to those of Microsoft’s.

Later on, NECTEC produced its own version of Office Thai Language Edition (Office TLE) as well as Linux TLE. With two standards present in the same market, use of open source is increasing, although it would have been more effective if there were just one unified effort. Today, there are a number of small companies who are working on Linux-based desk top applications and back-end office applications that are targeting users who want to be legitimate and do not wish to pay on the per-user basis. There has not been a direct
Software Park Thailand 5 27/5/2004 government announcement on the promotion of open source software as had been for many countries.

Key Roles within Software Park Thailand

The following discussion focuses on just a few of the more ground-breaking activities for Thailand and may be viewed as a role model for the other operations of similar types.

Incubation Center

The incubator facility provides help to nurture technology ideas into commercial successes. Software Incubation Center is an integral part of Software Park Thailand’s mission to provide the most enabling environment for start-up companies or individuals who have growth potential in software development to create a successful business. Part of the Center’s funding comes from other government agencies such as the Department of Industry Promotion.

Software Park Thailand provides workspace, constructive and supportive environments to software entrepreneurs at start-up and during the early stages of their businesses at no charge for a period of one year. Entrepreneurs will continue to be supported for another two years outside of the incubator. The strength of this program comes from the tremendous support given by successful business people who act as mentors, judges, instructors, etc. to help new start-ups.

Individuals and start-up companies that meet the following qualifications can apply for entry into the program:
  • Have know-how in software development
  • Have been an entrepreneur for no more than 2 years
  • Have a viable business plan
  • Have potential growth in revenue and employment
  • Participate in provided training, business networking and other events
  • Ready to commit to a one year incubation program
  • Willing to work in a cooperative environment with other entrepreneurs and incubatorpersonnel
Incubation Process
  • The initial training in business plan writing is given free of charge about one month prior to application due date.
  • The applicant submits the business plan to a panel of software business experts, business executives, technologists, and representatives from funding sources. The selectioncriteria are strict but based most importantly on their potential for business success.
  • The selected entrepreneurs (participants) then begin their period of incubation with anassigned mentor (most of whom are successful managing directors in IT businesses).These mentors volunteer their time once a month to advise the incubating entrepreneurs. Each month, a progress report is required from each participant to the incubator’s management.
  • During this period a number of practical courses are offered to the participant in areas such as project management, marketing techniques, negotiation techniques, sale tips, presentation skills, legal and business practices, software process improvement overview,etc.
  • In the first year, participants are invited to exhibitions, trade shows, site visits to successful companies, special seminars, and all events participated by Software Park Thailand.
  • Media coverage of the products and services and other marketing efforts to help getting their product and services to the market are also supported.
  • Matchmaking with other businesses and funding sources (including venture capital investor and angel investor) are also organized for the participants.
Business Development and Market Enabling

Through the Business Development and Market Enabling arm, Software Park Thailand creates an environment conducive to growing and to networking of businesses. This helps strengthen local software industry by:

1. Activating and expanding market channels for Thai software businesses both domestically and internationally.
2. Highlighting Thai ICT advantage.
3. Sharpening skills needed for successful businesses of local software entrepreneurs.
4. Creating business linkages between domestic and international software entrepreneurs.
5. Providing and maintaining the information database of IT software and services in Thailand.
6. Funding coordination for small-and medium-sized software companies with local and international venture capital investors, angel investors and other financial resources.

Key Activities include:
  • Brand Thailand and promote Thai companies to foreign clients through participations of Thai software companies in the domestic and international trade events and international ICT conferences such as APEC Investment Mart (Thailand), SoftExpo (Korea), CeBIT (Australia), IndiaSoft (India), Hong Kong ICT Trade Exhibition, e-Silk Road Convention, ASOCIO Meetings, etc.
  • Conduct IT business seminars and business-oriented trainings in topics such as marketing techniques, business law and legal tips, intellectual property rights protection, government policy updates, new market opportunities, etc.
  • Act as the domestic market place where software companies can meet with potential buyers from other industries.
  • Form strategic alliances with international public and private organizations such as KIPA (Korea), AusTrade (Australia), GTCC (Germany), ESC (India), etc.; to formulate strategic business networking and exchange business intelligence.
  • Organize business missions to visit potential markets. This is done in collaboration with various counterparts in many countries as well as by partnering with Thai government agencies such as the Department of Export Promotion.
  • Provide forum for overseas and domestic companies to explore potentials for joint ventures, strategic and marketing alliance, outsourcing opportunities, etc.
  • Provide information on IT companies and software products in Thailand. This is done via website www.swpark.or.th and yearly publication of software company profiles in CD-ROM format.
  • Network with the venture capital investors and link them with the Thai software companies.
  • Link with software parks (or IT parks, technology parks, or similar counterparts) in other cities within Thailand as well as those abroad to create closer ties, exchange of best practices, and business opportunities.
  • Create English language legal contract templates for various business situations. This helps small companies with limited resources. It also helps standardizing some contract features for this industry. (This work also involves the government agencies such as the Department of Intellectual Property and the Department of Business Promotion.)
IT Center for Industry (ICI)

This unit handles industrial/business process fusion within the IT environment. We learned that many local industries over the past decade have been slow in utilizing IT tools and as a result has become less competitive. The old assumption that once the entrepreneurs became more educated they will themselves introduce the use of more productive processes and tools has not proved to be correct. Therefore, a  more proactive role of IT and business process fusion has been adopted by Software Park Thailand in conjunction with many institutions representing various industries to identify and create pool of people with both IT skills (especially in software technology) and specific business domain expertise. IT Center for Industry was set up as an extension of Market Enabling to:

1. Enhance competitiveness of all other manufacturing and service industries through the use of software, which enables the business to grow as well as contributes to the wealth of the nation.
2. Form special interest clusters for software businesses that support interactions and transfer of practical knowledge and best practices among themselves and across clusters.

Technology Transfer

The Technology Transfer Unit aims to strengthen the capability of local professionals.  It acts as a center for technology transfer by way of formal and informal training, seminars, workshops, discussion groups, and community forums to facilitate information sharing among IT professionals in the technical as well as management areas. The work is done both through in-house staff and with knowledge partners from outside. Areas of knowledge transfer range from software technologies, software engineering process, to IT management.  The primary emphasis is on practical aspects of industry and user needs. Most of the courses are designed for either practitioners or for training of the trainers.
  • Software Technologies – provide knowledge and skills necessary for IT professionals responding to present-day needs of the software industry. The courses mostly focus on practical and hands-on experience, the majority of these classes lead to technology specific professional certifications. The focus is at the level of vendor specific specialization and certification programs (such as: Sun, Microsoft, Red Hat Linux, Cisco, SAP). Specific topics of great need such as IT security are also organized as a special training track.
  • Software Engineering Process – involves systematic approaches into the software development life-cycle (analysis, design, programming, testing, and deployment) and quality management. Best practices for developing and improving software development process. The classes include: SDLC process design, requirement analysis, software configuration management, software quality assurance, etc.
  • IT Management – helps organizations to make the most of IT utilization by proper management of IT resources. The courses are designed for IT professionals, IT and non-IT managers and executives (CIOs, CEOs) on how to plan and manage IT more effectively as well as how to manage effectively by using IT. Classes include: strategic IT planning, IT architecture, project management (both IT and general projects), etc.
  • Other Activities- besides regular scheduled training, series of seminars and events are organized to keep abreast with rapid advances in IT. Community forums to provide updates and sharing of information are run on monthly basis such as Thai JUG (Java User Group), Thai Linux Community, IT Security Forum, and Thai XML Group.

Software Process Improvement Center (SPIC)

This Center provides competitive advantage to software producing units in the area of software process improvement. The mission is to serve the software industry as a knowledge center to increase productivity and quality of software companies to achieve business excellence through software process improvement and management services. This is done through consulting, training, assessments, seminars and Software Process Improvement Network (SPIN).

Consulting

SPIC offers consulting service in not only software process improvement but also implementing and institutionalizing the international well-recognized frameworks such as SW-CMM® (Capability Maturity Model for Software), CMMI® (CMM Integration), ISO 15504 (Known as SPICE–Software Process Improvement and Capability dEtermination) and other compliance standards. 

The consulting team members are equipped with experience in the areas of software process improvement (SPI), software engineering, and quality management. Moreover, SPIC has an innovative and systematic unified process to ensure practical ready-to-use solutions for all aspects of SPI.

Training

SPIC provides a suite of on-site public and customized training programs in software process improvement, software engineering and management. (SPIC has trained over 1,500 IT professionals since 1999 in the Introduction to SW-CMM® by authorized SW-CMM® instructors, Software Quality Management, Software Project Management, Software Testing, Software Estimations, Process and Template Writing and so on. In the near future, there will be more training on other SPI standard/frameworks to the industry.)

Assessments/Appraisals

Software Park Thailand was the first organization to offer commercial SW-CMM® Assessments and CMMI Appraisals in Thailand by authorized SW-CMM® Lead Assessors and CMMI Lead Appraiser. It is also designated as an accredited coordinator for SEI in Thailand. Besides formal assessment, mini-assessments to diagnose the organization’s readiness for the formal Assessment are also conducted.

Seminars

SPIC provides a forum for exchanging and sharing knowledge and best practices through bi-monthly Software Improvement Process Network (SPIN) meeting. SPIC also co-organizes with QAI India to arrange the Annual SEPG (Software Engineering Process Group)
Conference in Asia.

Note: Through working with Software Engineering Institute (SEI), Carnegie Mellon University, the core group for this activity was built using strong public-private partnership model of collaboration between technical staff of Software Park Thailand and a group of local private sector specialists. Since 1999, a group of Thai software specialists were sponsored by Software Park Thailand to be trained and certified as SW-CMM instructors.

Resulting in 5 certified SW-CMM instructors, 7 SW-CMM Lead Assessors, and 1 CMMI Lead Appraiser. Now the transition is being prepared for transition toward CMMI. Software Park Thailand supported private sector individuals to be certified as instructors and assessors. This group has help local Thai companies to achieve SW-CMM since 2000.

Using the model of knowledge sharing, Software Park Thailand has worked with private sector partners to get more software companies to become aware of the necessity of the process improvement standards (such as ISO9000, CMM, etc.). The need is not just to make them stronger and better as an organization but also to get them recognized at the international level in order to get into the global market. The plan is to get more of the small size companies to create their internal processes within the CMM framework as early in their business life as possible.

By April 2004, through the collaboration of Software Park Thailand and local software companies over a number of years, some very encouraging results can be seen:
  • SW-CMM: 12 companies at level 2, 1 company at level 4
  • CMMI: 1 company at level 5.
  • There are also about a dozen software companies with ISO9001 and ISO9000:2000.

Conclusion:

Software Park Thailand is a center providing appropriate facilities for software businesses (office space and technical infrastructures). With its five main missions mandated by the Thai government, Software Park Thailand’s role has grown to become much more than an industrial estate operation that many people initially understood it to be. Some of the lessons learned over the past few years can be summarized as follows:
  • The apparent success of Software Park Thailand is due to the private sector’s (both entrepreneurs and vendors) continuing support of its operations. The fact that many private sector and some public-private software park projects have been developed in various locations of Thailand where there are possibilities for software businesses to grow are perhaps the best proof that something was done right to convince private sector replication of Software Park Thailand’s effort. The future will soon show if the overall economic impact to the country in software industry as well as in other sector of the economy are actually worth the effort.
  • It should be noted that Software Park Thailand is the forerunner of “Thailand Science Park” (also under NSTDA), which is a much bigger government supported project for science and technology. Some of the roles played by Software Park Thailand are really the initial experiences for the Thai government in getting directly involved with hightech niche areas of IT industry. Since starting in 2000, there has not been sufficient time for complete evaluation to measure the performance of its many roles in fulfilling its missions. However, the various indications from industry feed back and private sector participation have been very positive for its continuing and evolving operations.
  • Another distinction from some of the other industry promotion policy is the fact that the direction of Software Park Thailand is not focused just in the export of software but in getting software to become the enabler of other local businesses, industries, and agriculture. To this end the overall benefit to the country has to be measured not just within the software industry but has to include the extra value added to the competitiveness of other economic sectors when IT (especially software) has been utilized.
  • The major drawback for Software Park Thailand operation has been the limitation of government support – not just in funding. This is due to a misunderstanding of what Software Park Thailand is supposed to do. Also the lack of proper integration of activities among many government agencies has led to unnecessary duplication of efforts. The National ICT Master Plan was not adhered to at the time of the formation of the Ministry of ICT, which makes ICT resources split among many agencies.
  • One of the major successes of the project has been the formation of the national software industry cluster which has the impact of getting software businesses involved and moving faster in becoming a major player in raising the competitiveness of the other business sectors.
  • Another significant lesson learned over the past five years is the necessity for close collaboration with business partners and to listen carefully at the needs and to come up with the appropriate response in a timely fashion.

Partial list of Software Parks and Software Industry Organizations Thailand

1. Software Park Thailand
National Science and Technology Development Agency
Dr. Rom Hiranpruk
Software Park Building, 4th Floor
99 Chaengwattana Road, Pakkred,
Nontaburi 11120, Thailand
Tel: +662-583-9992
Fax: +662-583-2884
E-mail: rom@swpark.or.th
URL: www.swpark.or.th

2. IT Park
Internet Thailand Public Co.Ltd.
Mr. Paramentra Ruckwong, Project Manager
1768 IFCT Tower, 10th-12th and IT Floor
New Petchburi Road, Huay Khwang
Bangkok 10320, Thailand
Tel: +662-257-7075
Fax: +662-257-7222
E-mail: ruckwong@inet.co.th
URL: www.inet.co.th

3. E-Saan Software Park
Khon Kaen University
Dr. Arom Tattawasart, Chairman
Academic Building, 4th Floor, Khon Kaen University
Mittrapharb Road, Khon Kaen 40002, Thailand
Tel: +6643-202-007
Fax: +6643-202-07
E-mail: arotat@kku.ac.th
URL: www.esswpark.ku.ac.th

4. Samui IT Complex
Web Sawadee Co.,Ltd
Mr.Roland Schetter, CEO
142/17 M.4, Maret Road, Samui,
Suratthani, Thailand
Tel.: 0-7745 8000
Fax: 0-7741 8528
E-mail: itc@isamui.com
URL: www.isamui.com

5. Phuket Software Park (in progress)
Dr.Kongkiat Kespechara, Managing Director
Open Source Technology Co.Ltd.
75/34 Phuket Garden Ville
Phuket 83000, Thailand
Tel: +6676-254-980
Fax: +6676-254-979
E-mail: kongkiat@thai.com
URL: www.hospital-os.com

6. Software Industry Promotion Agency (SIPA)
Ministry of Information and Communication
Technology
Mr.Manoo Oradeedolchest, President
89/2 ToT Corporation Pub.Co.Ltd.
Buidling 9, 11th Floor
Chaengwattana Road, Laksi 10210, Thailand
Tel: +662-238-5444..5
Fax: +662-568-2563



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