Business Irish

Thursday 26 April 2018

Following our storm, 'cloud' is a silver lining for the future

Embracing new technology would put Ireland at the forefront of a revolution that is about to explode globally . By Donal O'Donovan

Paul Rellis: 'With Government support Ireland can make a case to any US start-up that they should come here and will be able to access good broadband, great people and help with the tools to get their product to market'
Paul Rellis: 'With Government support Ireland can make a case to any US start-up that they should come here and will be able to access good broadband, great people and help with the tools to get their product to market'

MICROSOFT'S Paul Rellis is a man with a mission. As Irish head of the global multinational the Limerick man has emerged in the vanguard of efforts to make Ireland a player in the developing of 'cloud computing'.

The IBEC board member is also emerging as a key personality in the new generation of Irish business leaders.

Rellis's efforts on cloud computing are starting to pay off, and today sees the launch of a joint initiative by Microsoft and the IDA aimed at attracting US cloud computing companies to set up in Ireland.

It's the kind of initiative he thinks gives Ireland critical "first mover advantage" in an area where location and previous track record count for little.

First things first though, what is the cloud, and why does it matter to Microsoft, or indeed the IDA?

Cloud computing is the IT equivalent of a power grid. Instead of buying their own IT systems, companies, Governments, or households will pay companies like Microsoft to provide IT services ranging from basic capacity to securely managed databases.

Services will be accessible from anywhere and on everything from PCs to smart phones. The user pays-as-they-go for IT, cutting out the cost of everyone installing their own system.

Rellis says it's a huge leveller, akin to the change that saw Irish farms able to build electric milking parlours without having to build their own generators.

Embracing change

Microsoft is embracing the change, spending hundreds of millions on technology. It is increasingly moving away from its model of selling licences to use products to a model of billing customers for services.

Rellis sees cloud as an opportunity not only for the company but for his country.

Ireland can be a leader in the field, but only by committing early and with the full backing of the State, he says.

"We don't have a divine right to wealth and success but we have good chance to succeed if we're prepared to go after it," he said.

Moves like the IDA initiative are one thing but Rellis says the biggest boost the Government can give the sector is by becoming an active user of what is still early stage technology.

He thinks that kind of high profile adoption could be a game changer for the sector in Ireland.

Irish business leaders are vociferous critics of loose public spending, so is looking for Government money for these projects not a bit much?

"It's a fair question. My answer, I suppose, is this will happen anyway and the question for Ireland is whether, as a country, we can capture a disproportionate share of the market," said Rellis.

The alternatives as he sees it are to sit back and allow the technology evolve elsewhere, or take a calculated risk in order to reap the benefits that are potentially out there.

The technology is in place but the cloud industry is underdeveloped. It means the opportunity is there but Singapore, India, the US, even new competitors in the Gulf States want to take advantage if we hold back, he said.

Though he is an accountant by background, Microsoft's tech culture has seeped deep under Rellis' skin.

As a bit of a tech geek he sports the latest Windows smart phone. Informal and accessible, Rellis is very obviously and comfortably, a company man. It's a contrast to the generation of charismatic company founders that have dominated business leadership in Ireland.

At a human level he is convinced that the cloud will be positive for citizens as well as companies and the exchequer.

Securely stored data available in the cloud will give citizens greater access than ever to their own information, he said.

Health and education could see huge boosts too.

"Imagine a situation where the 4,000 schools in Ireland could plug into the same level of IT service, where today the different ability of schools to raise cash makes such a huge difference," he said.

For Rellis the opportunities for the state far outweigh the risk and right now he appears to be winning the argument.

Taoiseach Enda Kenny focused attention on 'cloud' during the General Election.

The Programme for Government includes a strongly supportive statement.

Today's IDA announcement is aimed at attracting a plethora of companies to locate in Ireland in the early stages of the new technology. It fits with Microsoft's own BizSpark programme of mentoring high potential start ups to develop a richer ecology of tech firms, not just in Ireland but globally.

Rellis reckons that in time such companies and the hundreds of tech firms already in Ireland could lead to a new wave of wealth creation.

That wealth will come for companies that can design technologies to make the power of the cloud relevant to users.

It is work that can be done anywhere but Rellis argues that if Ireland can create a successful hub effect we will grab more than our share of the business.

With Government support Ireland can make a case to any US start-up that they should come here and will be able to access good broadband, great people and help with the tools to get their product to market.

"It's not a get rich quick scheme, but it is something with the potential to drive wealth creation in this country," he said.

12.5pc corporate tax rate

The mission to bring companies to Dublin makes Rellis highly conscious of the importance of regaining lost competitiveness and retaining the advantages we do have, such as the 12.5pc corporate tax rate.

"Changes to the corporate tax rate is not just something multinationals are concerned about. It's a key part of the competitiveness equation and if we lose it we have to make up for it somewhere else.

"Companies look globally and there are lower rates available in the likes of Switzerland and Singapore, that's where the competition is," he said.

Tax issue

The tax issue matters now more than in previous years because as a country we have fallen so far behind in other areas.

"If we lose this then the challenge we already face on competitiveness will be more difficult," said Rellis.

Competitiveness is a concern for Rellis and the tax rate is just one more element of an equation that came under enormous pressure during the economic boom.

"Ten years ago Microsoft found it a third cheaper to employ a worker in Ireland than in the US. Today it costs about the same. We have lost that cost advantage," he says.

Simply put, the cost of doing business here is too high, he said.

It means the business case for being in Ireland has to be made around productivity.

The fact that wage discipline in the IT sector is being undermined by skills shortages when dole queues are lengthening brings Rellis to his other hobby horse of education.

Smart Schools

"Everyone, businesses or citizens, is diminished by failure in the education area and everything from basic numeracy and literacy to getting technology into classrooms has to be a long term concern."

Not afraid to roll up his own sleeves on the issue Rellis is working with the Department of Education on its Smart Schools Programme and on a strategic review of the third level sector.

Rellis delivers his concerns about aspects of the economy with a genial and generally upbeat tone but asked if he's an optimist by nature he hesitates.

"I'd say I'm pragmatically optimistic. As a country I think we have to tackle our competitiveness issues and really take on technology as a value. I do think we will succeed."

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