Inovacijama do ICT izvoza

by: David Jakelić, CEO of Swing Software Ltd, winner of the Prime minister web award 2006

What a large company might see as a negligible profit and an unnecessary movement away from the basic business activity, a small company can experience as a firm support for steady growth

Investors' interest in start-up companies involved with technologies is a good indicator of the current expectations and trends. in the first 6 months of this year the US private software companies (those not quoted on the Stock Exchange) attracted $ 2,8 billion of investment capital, which surpasses any other sector. Much of those funds has already been put into research and development schemes, as well as into technology and business innovations. Innovations are the engine of the expected growth in software industry and the ICT in general. By investing into start-up growing companies, not only do investors expect these new 'players' to take away a part of the existing market from the large companies, but also to expand rapidly in market segments which have emerged only recently.

Production-oriented supply

From Croatia's standpoint, it is only natural to ask whether it is possible for our companies to be competent on foreign markets, and in what way we can achieve that. What do we lack the most – is it capital, or pooling our own forces, or is it something else? I would say what we need is a larger number of companies developing products aimed at broader markets. As long as the Croatian ICT sector is mainly service-oriented, it will be limited both by the size of Croatian (or regional) market, and by the lack of human resources (because IT services belong to labour-intensive activities, their growth being conditioned by the growth in labour). Only by a production-oriented supply – by moving from services to standardized solutions, especially software packages or online services – can Croatian companies pursue their opportunity to grow on the global market, only thus can they establish channels of distribution, and gain profit from the economy of scale on such a large market.


Only, how does one develop innovative products able to compete on the world market? Is it not a little too daring, if not unreasonable, to expect small companies to be as innovative as the ones that R&D spend billions of dollars on every year? It is daring, but it is not impossible. The first logical choice for a company to be floated on foreign markets is to specialize in niche markets. A few Croatian companies have taken that path. Secondly, underestimated market segments can prove to be an even better choice for small companies. In an industry where new market segments keep emerging, and the existing ones are redefined almost every year, real opportunities lie in innovations which often provoke comments such as: 'there is no market for that!'. As long as 'there is no market', or the market is too small for large competitors to be interested in it, a small company can grow and expand along with the new market. For a small company, every new user is important, and every new sale brings not only profit but also energy and enthusiasm. What a large company might see as a negligible profit and an unnecessary movement away from the basic business activity, a small company can experience as a firm support for steady growth. ording to the existing criteria, a small company can simply ignore the needs of the biggest and most demanding users (which are out of their reach anyway), and concentrate on the innovations by which they will make products simpler and more accessible to a new category of users. Large companies cannot afford such moves, so they make compromises which result in their products become overdimensioned, ungainly, and too expensive to use. Sounds too simple? Just remember how the changed the CRM software market or how the wiki solutions silently made their way into big companies. It is obvious that the market rewards innovations, and this does not refer only to the most advanced technology innovations. Innovation can refer to design, look-and-feel, package, service, business model, a new way of distribution...Most successful are the innovations that keep up with the pace of change in the contemporary users' habits.


Croatian ICT companies that are becoming increasingly export-oriented face many other challenges. How to overcome the credibility gap and be given initial references? How to establish channels of distribution? And how to attract attention on such a huge and overcrowded market in the first place? Of course, there is no single answer to these questions. The path that a company will choose will depend primarily on the target market, business model, category of prices, and the ratio between products and services they offer. Today, the advantage of those with large marketing budget at their disposal is less significant than ever. The size of ads, the size of stalls, even the number of local offices and sales representatives are no longer crucial assets. The product itself is what matters most - an innovative product, which stands out from the heaps of similar products, which is a pleasure to use and is worth recommending to friends or colleagues. In this era of blogs, a good reference and a word-of-mouth today have gained a whole new value. If you have an extraordinary product, people will find out about it.

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Considering the number and quality of the entries to Vidi e-novation contest, there is no doubt that there are much more thing Croatia has to offer to the world rather than only beutifull natural landscapes


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