A Report Commissioned by Microsoft in Collaboration with BCS and Intellect
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A report commissioned by Microsoft in collaboration with BCS and Intellect December 2008 Developing the Future 2008 Contents Section 1 Skills: The Foundation of the UK Software Economy ....................... 5 Part 1.01 Graduates Entering the Software Industry ................................... 6 Part 1.02 cpSTEM Graduates employment trends ..................................... 15 Part 1.03 Who does the Software/IT sector want?.................................... 22 Part 1.04 Conclusions and Recommendations .......................................... 24 Section 2 Innovation, Entrepreneurship and Investment: Feeding the UK Software Economy ........................................................................................ 30 Part 2.01 Innovation in the UK ................................................................ 31 Part 2.02 Venture Capital Activity in the UK ............................................. 41 Part 2.03 Regional Distribution of UK VC-Backed Software Companies ....... 51 Part 2.04 University Research ................................................................. 59 Section 3 Building on the Strengths: The Growth of the UK Software Economy 70 Part 3.01 The UK Software Company Landscape ...................................... 71 Part 3.02 Outsourcing and Offshoring ...................................................... 74 Part 3.03 Digital Media ........................................................................... 88 Part 3.04 Video Games ........................................................................... 94 Section 4 Appendix I – Introducing the UK Software Economy Barometer ... 102 Part 4.01 Measuring the Health of the Software Industry ........................ 102 Part 4.02 The Software Economy Barometer .......................................... 102 Part 4.03 Quantitative Research ............................................................ 103 Part 4.04 Qualitative Analysis ................................................................ 104 Part 4.05 How the Barometer works ...................................................... 105 Section 5 Appendix II – Software Economy Barometer Indicators ............... 106 Part 5.01 Policy: Tax ............................................................................ 107 Part 5.02 Policy: Legal .......................................................................... 107 Part 5.03 Society: Quality of Life ........................................................... 108 Part 5.04 Economy: FTSE-100............................................................... 108 Part 5.05 Economy: GDP ...................................................................... 109 Part 5.06 Infrastructure: Networks ........................................................ 110 Part 5.07 Capacity: Tertiary Education ................................................... 111 Part 5.08 Capacity: Entrepreneurship .................................................... 112 Part 5.09 Capacity: Applicants ............................................................... 112 Part 5.10 Research/Universities: Departments ........................................ 113 2 Developing the Future 2008 Part 5.11 Research/Universities: Graduates............................................ 114 Part 5.12 Research/Universities: Employment ........................................ 115 Part 5.13 Research/Universities: Collaboration ....................................... 117 Part 5.14 Research/Universities: Software Licensing ............................... 118 Part 5.15 SME: Spin-outs ...................................................................... 119 Part 5.16 SME: Venture Capital Backed Companies ................................ 119 Part 5.17 Enterprise: Micro, SME, Private ............................................... 120 Part 5.18 Enterprise: Public................................................................... 120 Part 5.19 Enterprise: R&D..................................................................... 120 Part 5.20 International Corporations: European...................................... 120 Part 5.21 International Corporations: Global .......................................... 121 Section 6 Appendix III – Defining the Software Economy ........................... 122 Part 6.01 Defining the „software economy‟ ............................................. 122 Part 6.02 Company Landscape .............................................................. 124 Part 6.03 SME Sic Codes ....................................................................... 125 Part 6.04 Methodology ......................................................................... 125 Part 6.05 Data Collection ...................................................................... 126 Acknowledgements COMMENTARY: INTERVIEWS: RESEARCH, ANALYSIS AND WRITING: Richard Anton, British Venture Capital Charles Armstrong, Trampoline Association Systems Chris Coffman, Library House David Clarke, British Computer Society David Bailey, Short Fuze Martin Holi, Library Innovation Group Gordon Frazer, Microsoft UK Mark Bailey, SpeechlyBircham Alexander Jan, Library Innovation Ian Livingston, Entertainment & Amar Bhidé, Columbia University Group Leisure Software Publishers Mark Emanuelson, Cisco Systems Lars Lindstedt, Microsoft UK Association Patrick Farrant, Taylor Vinters Stephen Mounsey, Library House Gerry McAlister, Subject Centre for Information and Computer Sciences at Ian Hetherington, Realtime Worlds Rochana Wickramasinghe, Library the Higher Education Academy House Alastair Mitchell, Huddle Ian Robertson, National Council for EDITING: Yann Motte, WebJam Graduate Jane Bird, janebird.net Margaret Sambell, e-skills UK Entrepreneurship Siobhán Ní Chonaill, Library Kristian Segerstrale, Playfish Charles Ward, Intellect Innovation Group Ingrid Silver, Denton Wilde Sapte Simon Williams, SmithBayes Andrew Yates, Artesian Solutions 3 Developing the Future 2008 Summary Findings and Recommendations The Summary Findings and Recommendations document provides an overview of this report together with additional analysis, comments and recommendations and can be downloaded from: www.microsoft.com/uk/developingthefuture 4 Developing the Future 2008 Section 1 – Skills Section 1 Skills: The Foundation of the UK Software Economy Gerry McAlister Director, Higher Education Academy - Information and Computer Sciences Computing Science degree programs in Higher Education, in comparison to most other disciplines, are relatively new considering that they did not exist until the second half of the twentieth century. The academic perspective of the subject evolved from other disciplines such as electronic engineering, mathematics, aspects of business and other scientific based subjects. The early computing curriculum focused on machine and assembly language programming and other languages such as Algol, basic operating systems, study of compilers and assemblers and a mathematical approach to theory. These skills were deemed those necessary to apply the emerging technology to the then limited applications of largely mathematical calculation and data processing. Today we live in an entirely different technology world of internet, multimedia, web technologies, scripting languages, social networking, mobile and distributed computing and games devices. Computing is all pervasive and applied to practically every aspect of life, although often opaque. The curriculum has thus evolved beyond recognition to concentrate on Internet friendly and object oriented languages, network protocols, graphical user interface design, large and distributed database models and topics encroaching on current research work such as artificial intelligence. It is unlikely that any discipline has had to deal with such a dynamic change in curriculum in order to keep producing graduates with the appropriate skills for the modern age. However practically every university in the UK has a computing science department, approximately 120 in all, and the subject has had major significance in many. Additionally many enter the profession from sub degree routes and other subject area qualifications. Professionals in the discipline also very often require a mixture of technical and business skills, the degree of which depending on the business nature. Attracting more students to study the subject has been a matter of concern to the industry for some time1. From a high level of participation during the „dot com boom‟ of 2000/2001 there has been a steady decline in applications to higher education and indeed in the study of the subject at school level. This is in the light of increasing demand for skilled computing professionals. Many reports have speculated on the reasons and offshoring, image and aversion to the 1 Technology Counts IT & Telecoms Insights 2008 e-skills UK 5 Developing the Future 2008 Section 1 – Skills analytical nature of STEM (Science, Technology, Engineering and Mathematics) based subject disciplines have been postulated. In common with most STEM subjects the failure to attract more females into the discipline results in the sector missing out on a large proportion of the available talent pool. In addition to the skills emerging from more conventional routes from schools directly through the higher education system, up skilling of the workforce, as identified by the Leitch2 report, needs to play an ever more important role. More input from industry into the higher education system and accreditation for Work Based Learning by universities has an important role