The seminar on Nordic Leadership in ICT held at VINNOVA's, premises in Stockholm on 22 Sep. 2015, 09:30-12:00. The seminar ended a project the findings of which are available in: Giertz, E., Rickne, A., Rouvinen, P., , Ali-Yrkkö, J., Arvidsson, N., Broström, A., Gens, M., Johansson, F., Kotiranta, A., Lindmark, S., Lougui, M., Mattila, J., Pajarinen, M., Pon, B., Seppälä, T., Thorén, K., & Ylä-Anttila, P. (2015). Small and beautiful: The ICT success of Finland and Sweden. VINNOVA Analysis, VA 2015/06.
Aspirational Block Program Block Syaldey District - Almora
Nordic Leadership in ICT
1. Small & beautiful:The ICT success of Finland & Sweden
The seminar on Nordic Leadership in ICT
VINNOVA, Mäster Samuelsgatan 56, Stockholm
22 Sep. 2015, 09:30–12:00
Eric Giertz, Annika Rickne & Petri Rouvinen
Jyrki Ali-Yrkkö, Niklas Arvidsson, Anders Broström, Magnus Gens,
Fredrik Johansson, Annu Kotiranta, Sven Lindmark, Monia
Lougui, Juri Mattila, Mika Pajarinen, Bryan Pon, Timo
Seppälä, Kent Thorén & Pekka Ylä-Anttila
3. Towards the end of 1999...
Finland & Sweden on top of ICT – In hype & in reality
Presented by Petri Rouvinen at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
4. fdsaf
SEK 44238 m.
Nokia’s GDP
(value added)
in Finland,
Year 2000
SEK 42382 m.
Ericsson’s GDP
(value added)
in Sweden,
Year 2000
≈
2000 2000
Presented by Petri Rouvinen at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
5. 1.8
4.0
1.6
3.1
Ericsson of Swedish GDP Nokia of Finnish GDP
Direct impact
Indirect impact
(sub-contracting
& partnering)
% of GDP
in 2000
WORLD
RECORD!?
Presented by Petri Rouvinen at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
6. 38.2%
28.7
42.1
9.6
15.1
Swedish ICT Sector Finnish ICT Sector
Direct share
of Ericsson/Nokia
Share of ICT Sector Value Added in 2000, %
Other ICT
firms’
share
57.2%
61,8
42,8
Presented by Petri Rouvinen at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
8. ICT sector: 5–6% of GDP,
3–4% or working hours
Nokia/Ericsson: 0.5% of
GDP, 10% of ICT sectors
The highest economy-
wide share of ICT experts
Similarities
Swe FinLow ICT investment intensity
Smaller in absolute terms
Small ICT consulting: Below 10%
High ICT investment intensity
Bigger: 2× employees, 6× firms
Large ICT consulting: Over 25%
Presented by Petri Rouvinen at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
9. History of the Finnish ICT Sector
• 1880s: The Finnish Senate – a dispersed telecom infra
– Operation: PTO-regulator & hundreds of private telecom operators
– Equipment: International competition, little domestic
• Since 1970s: Digitalization in other sectors
– Banking & engineering (pulp & paper eq.)
– Demanding Soviet exports
– Electronics: TVs etc.
• NMT: Int’l provision of telecom equip.
• 1990s: Facilitating factors
– Global
• Analog Digital
• GSM (standardization process; Nokia; Tekes)
• Worldwide liberalization of telecom markets
– Domestic
• From a semi-closed to an open economy (reality & mindset)
• Relaxed constraints: Abundant supply of capital & labor
Presented by Petri Rouvinen at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
11. Sweden: A belated but fast industrialization
1844–1866: A new foundation is put in place
– Liberal reforms
– free trade
– Infra service providers
– Banks
– A new parliament
1860–1920: Industrialization
– Entrepreneurship
– Domestic industries
– Export industries
– 400 private tele associations (Ericsson 1876)
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
12. From consolidation to welfare state 1920–1970
• Engineering industry goes bankrupt
– Concentration of ownership (financial spheres)
– Engineers hired as CEOs
– Restructuring & rationalization
• Social democratic government 1932
– Takes over infra service providers
– Close cooperation with private industry
– Focus on productivity growth, not on new ventures
• Supportive labor unions
– Higher productivity is promoted
– The Saltsjöbaden agreement
– Compulsory work & motion studies
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
13. Source: Giertz, Marionettens död, Ekerlids förlag
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
14. ”Developing Couples”
Four parties plan from acorns to oak trees
KTH
ASEA
Vattenfall
Ericsson
Televerket
Saab
Defence
ASEA
SJ (rail)
Private Companies
Public Partners
Government
E
X
P
O
R
T
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
15. Close Government–Industry Cooperation
A Swedish computer industry is born
– 1948 The public agency MMN is established at KTH
– BESK is completed in 1953 (the US, France, Britain and Sweden)
– SARA in 1957 (Saab) – D21 in 1962
– Facit leaves computers in 1963
– A new development couple 12,000 main frame computers (failed)
Ericsson + Televerket = A very tight couple
– 1970 Ellemtel – a joint venture is established
– Joint development of electronic and automated switching
– 1976 Televerket puts AXE in operation in Södertälje
– 1978 Ellemtel transfers AXE competence to Ericsson
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
16. From stagnation to bankruptcies &
emergency measures in 1970–1990
Nils G. Åslings
Industriakut
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
17. The end of close gov’t–industry cooperation
A new generation of social democrats in in the cabinet
– SSU holds a congress in 1967
– A new position as Minister of Industry 1969
– Sveriges Investeringsbank 1967, Statsföretag AB 1969
– STU 1969, SUAB 1969, SIND 1973
– LO convention proposed Wage earner funds in 1971
Sweden: In good health … and then to an emergency room
– 1976 A new liberal-conservative government
– government becomes sole owner in many industries
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
18. Gov’t is involved in ICT restructuring
Datasaab is established
– Stansaab established 1971 (SRT, Saab Scania, SUAB)
– Alfaskop is a huge success
– SRT leaves in 1973
– 1978 Stansaab & Saab Scania computer division = Datasaab
A state-owned PC industry is born
– January 1978 – a meeting in Linköping
– August 1978 ABC 80 is introduced
– 1979 Government takes over
Ericsson and Nokia takes over
NMT & GSM opens world market for Ericsson
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
19. Hunting for global growth in 1990–2005
• Televerket & Ericsson are divorced
– Liberalization in 1993
– Ericsson takes over Teli (1994) and Ellemtel (1995)
– Telia AB makes IPO 2000
– Telia acquires Sonera in 2002
• Ericsson survived when bubble burst
– Ericsson outsourcing late 1990s
– Ericsson on top March 2000
– Ericsson hit by 3G licensees
– Leaves handsets to Sony Ericsson
– Saved by new issued shares in July 2002
– Employment in Sweden from 43,000 to 21,000 in four years
• A diversified ICT Sector is born
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
21. Software and services Hardware
Products and
systems
IT Operations,
Application
Mngnt and
Maintenance
Software and
net services
IT Consultants Components
The Swedish ICT Sector of Today
Commercial
Software
Net services
Repair &
Maintenance
Operations R&D
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
22. Number of employees in ICT industry in Sweden
117,011
129,458
130,221
127,560
132,142
105,000
110,000
115,000
120,000
125,000
130,000
135,000
2007 2008 2009 2010 2011
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
23. Number of employees in different business logics
Software
Net Services
Service and Maintenance of ICT systems
ICT operations
ICT consultancy firms (Commercial systems)
ICT consultancy firms (R&D related)
Hardware (Components)
Hardware (Complete products and systems)
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
24. Number of employees in Hardware companies
Hardware
(Complete products
and systems)
Hardware
(Components)
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
25. No of employees in Software & Net services
Net services
Software
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
27. Internet-related business models
• Proof of Concepts
• Industrial exits
• Loved by Business angels & VCs
• Employ rather few people
• Great importance for the use of
ICT in other sectors of industry
• Technology based B2B-companies serve
many customers in consolidated industries
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
28. No of empl. in Maintenance & IT operations
ICT operations
Service &
Maintenance
of ICT systems
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
29. No of empl. in ICT-consultancy firms in Sweden
R&D-related:
12 397 employees
492 work places
363 companies
Administration:
25 633 employees
1 118 work places
766 companies
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
31. Mergers & acq. as enablers of industry dynamics
0
20
40
60
80
100
120
0
500
1000
1500
2000
2500
3000
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Valueoftransactionsinbil.USD
Numberoftransactions
Announced Mergers & Acquisitions in the IT Consulting & Services
Number of transactions Value of transactions
• In general, mergers and acquisitions (M&A) may create
consolidation, productivity, mobility, etc.
• Cyclic patterns of M&A – as linked to industry cycles
• Focus: ICT software and services sector
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
32. Enablers for ind. dyn.: M&A in the Swedish economy
Swedish ICT software & service sector, 2000–2008: 9 341 firms
– 28% have been acquired (2 657 firms) (4 001 M&A)
– 1 % acquired by foreign owned companies
& still operate in Sweden (131 firms)
– So 5% of the acquired firms got a foreign owner
– Acquired firm in average 25 employees
Intensive M&A activity in Sweden
Above all small firms that are acquired
Motifs: Investment in tech capacity & int’l customer base
acquisitions to pursue growth strategies
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
33. Enablers for ind. dyn.: M&A for industrial transformation
• Larger actors – to compete on global markets
– But did not lead to new Swedish based multinationals
• Efficiency through synergy & scale
• New firm formation
– Larger firms abandon niche markets => open up for new entry
– New impulses and opportunities for entrepreneurship
– M&As increase the frequency of spin-out by 33% two years after the event
• Technology and competence diffusion
– Learning between acquired and owner firm
– Stimulated between-firm job mobility of key persons in the sector
– Increased managerial turnover
• Possibility for exit through M&As
– Motivation for entrepreneurs
• Private wealth – to potentially reinvest
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
34. Enablers for industry dynamics:
Entrepreneurial Hotspots: Sweden & Stockholm
• International reputation as highly ICT productive
environment, especially Stockholm
• Goodwill builds on long history
• Software & hardware development, highly educated
& experienced, work efficiently at high standards
• Flat organization, consensus models Speed
• Attract foreign capital
• Pride & rationale in staying Swedish
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
36. Enablers for industry dynamics:
Entrepreneurial Hotspots: Silicon Valley
• Scale: firms, investors & customers
• Role models & peers
• Competent, connected & operational
investors with large pockets
• Speed
• Experienced in growth management
• A portal to the customers – consumers + B2B
• A portal to the US market
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
37. Enablers for industry dynamics:
Entrepreneurial Hotspots: Potential for Sweden
• Remain as a leading hotspot
• Renew flow of engineers & designers from educ.
• Shortage of engineers + low mobility:
Has to be solved!
• Increase mobility between business & academia
• Retain experienced managers & engineers
• Facilitate angel & VC investment + management
involvement through legal arrangements
• Demanding, competent & early customers
• Tap into hotspots, e.g., Silicon Valley - Pave the way!
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
39. Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
40. Nordic gaming: Historic development
• Commercial video games initiated
in the US & Japan in early 1970s
• Nordic (early attempts in 1980s, but) more
sustainable companies started around 1990
Industry formation
• Conditions
– Rewritable storage media
– Home computers (PC games)
– Multimedia skills from “demo” groups
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
41. Overview: Early Hits
Sweden Norway Denmark Finland
DICE (Pinball,
Rally games)
atod (Edge, The
Lawnmower man)
Funcom
(Pocahontas, The
Longest Jorney)
IO Interactive
(Hitman)
Housemarque
(Supreme
Snowboarding)
Development patterns
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
42. Finland vs Sweden: Part I
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2009 2010 2011 2012 2013 2014
Finland
Sweden
TurnoverMEuro
• Dramatic shift!
• Finland mobile success
– Nokia’s pioneering efforts –
supplying game industry with
talent by down sourcing
– Support from Tekes
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
43. Finland vs Sweden: Part II
2008 2010 2012 2014
SuperCell
Rovio
Fingersoft
Other Companies
Finland Sweden
Mobile focus vs Broad footprint
Super concentrated vs Concentrated
Finland Sweden
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
45. Sweden: Overview of Development
• PC Games
• AAA games on PC and Console (PS, xBox)
• Facebook games (King)
• Mobile games (King, Toca Boca, Mediocre etc)
• PC Games? (Indie developers via Steam etc)
• VR?
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
46. Backpacker Pan Vision/Aniware Minecraft Mojang
Battlefield DICE Mirrors edge DICE
Bioniuc Commando Grin Motorhead DICE
Candy crush saga King Need for Speed Ghost
Chronicles of Riddick Starbreeze/Tigon Payday Overkill/Starbreeze
Entropia Universe MindArk Pinball DICE
Europa Universalis Paradox RalliSport Challenge DICE
Far Cry 3 Massive Renegade Ops Avalanche
Goat Simulator Coffee Stain Smash hit Mediocre
Hotline Miami Dennaton Snactum Coffee Stain
Ignition Unique Development Sprinkle Mediocre
Just Cause Avalanche Stardoll Stardoll
Labyrinth 2 Illusion Labs Starstable Pizel Tales
Mad Skills Motocross Turborilla Syndicate Starbreeze
Magicka Arrowhead/Paradox Unravel Coldwood
ManagerZone Power Challenge Word Brain MAG Interactive
Midtown Madness DICE World in Conflict Massive
Major Releases 2015/6: Star Wars Battlefront (DICE), Magicka 2 (Paradox Interactive),
Mirrors Edge Catalyst (DICE), Need for Speed – Rivals (Ghost), Just Cause 3 (Avalanche),
Tom Clancy’s The Division (Massive), Mad Max (Avalanche), Wolfenstein: The New Order
(Machine Games), Minecraft on Hololens, Warhammer Vermintid (FatShark)
Examples
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
47. Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
48. Launch of First
Game
Developing
Second Game
Developing First
Game
Drop off forming a
Company
Launch of First
Game
Forming a
Company
Informal Group
Enters Game
Competitions
Major StudioGame Education
Project
Developing
Second Game
Consulting
or
employment
Consulting
Typical Patterns
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
49. Key Success Factors
Making really
good games
Penetrating
Challenge
Bypassing
Reaching through
market noise
Virality
Emotion
Gameplay
Novelty
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
50. Key Success Factors
Beneficial Circumstances
Competence
Making really
good games
Reaching through
market noise
IT Competence
Quality culture
Creativity
Design
Business Culture
Game Competence
Team orientation
Previous Success
*
Sharing Culture
Reputation
Contacts
Courage
Cross-firm support
Flat org.
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
51. Key Findings
• Success on all platforms
• Games of high quality – international reputation
• The industry is the source of its own competitive
advantage, thanks to culture of sharing & helping?
• Education-incubator combinations Regional clusters
• Capital difficult to get
• No targeted public support
Presented by Kent Thorén at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
52. ICT in Other Sectors
Annika Rickne & Eric Giertz
53. ICT in Other Sectors
• ICT technology, products & knowledge permeates many sectors
– ICT in tech & competence platforms, development processes, process
equipment, internal administration, decentralization processes,
communications, global networks, service offerings, customer
communication, access to global markets, etc.
– Increases work productivity: Sweden above OECD average
– Spurs innovation
– Retail, health care, media, etc.
– A sharing economy
• Recent trends: Big data, cloud computing, Internet of Things
• Evidence from how various sectors in Finland uses ICT
– 1/3 has software development (mostly by contracting)
– 1/3 sees digitalization as enhancing their products
– 1/3 expects Big Data to have large impact in the next 3 years
– 43% expects Internet of Things to have large impact in the next 3 years
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
54. ICT permeates many sectors
Three aspects in focus here:
– ICT consultants as drivers of change
– Embedded systems in engineering
– Towards cash-less banking
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
55. The importance of R&D-related Consultancy
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
56. R&D related ICT Consultancy firms
Typical customers:
Engineering Corporations making
complex & assembled products
• Developing software components
(embedded systems) in costumer
products & systems
• Developing software & systems
for production processes
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
57. R&D related ICT Consultancy firms
• A handful dominating larger companies
(~1000 employees)
• Domestic owners
• Mainly domestic market but some
customers in other Nordic countries
• Differs a lot from ICT-consultancy firms
working with commercial systems
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
58. Ericsson
Firm XX
Atlas CopcoDeLaval
Saab
Firm XX
Kockum
HusqvarnaViking
Saab Automobile
Ericsson
Ericsson
Saab
Saab
Hemocue
Autoliv
Ericsson Mobile
Firm XX
Saab
Volvo
Atlas Copco
Volvo
Kapsch
Firm XX
Firm XX
Firm XX ABB
Presented by Eric Giertz at the Nordic
Leadership in ICT Seminar, 22.9.2015
59. To be discussed
• Does Sweden differ from other
industrial nations?
• Can externalization of ICT-related
R&D partly explain why large
Swedish engineering firms have
survived radical tech shifts when
foreign competitors have failed?
Presented by Eric Giertz at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
60. Emergence of an ICT-based disruptive
mobile payment service
• Long cooperation b/w Swedish banks in infrastructure & services
• Involvement of regulatory actors
Harmony between reg. frameworks & business operations
• The corporate society 2.0
• Emergence of mobile payment services: Swish
– Societal interest in reducing cash payments
– Pressures from ICT-skilled competitors (telecom)
– Potential new entrants in the payment service industry
– Tech advances (processing of transactions,
real time handling, access Internet via smart phones)
– Disrupting the cash infrastructure & also the card infrastructure
Presented by Annika Rickne at the Nordic Leadership in ICT Seminar, 22 Sep. 2015
Apps & net based services
Relation to ISIC 4
Principer för kategorisering
Utgångspunkt i företagens affärsmodell
Flytande gräns för IKT-företag
Etablerade större företag tillhör flera kategorier
Skilda affärsmodeller i samma kategori
Mycket handpåläggning för tjänsteföretag
(We don’t have data on firms acquired by foreign owned companies and subsequently moved out from Sweden)
Standardavikelsen är ca 101 anställda och medianen är 7 anställda, så dom flesta företagen är små företag.
No direct negative implications for the sector found
Did not threat the competitive nature of the industry
Layoffs at M&A balanced by growth in other firms
Conclusion: Renewal and growth of the IT industry at large
Location in a cluster/hotspot:
Access to otherwise unattainable resources: ideas, discussions, human capital, financing, partnerships, intellectual property, customers, market knowledge, distribution channels, etc.
Location in a cluster/hotspot:
Access to otherwise unattainable resources: ideas, discussions, human capital, financing, partnerships, intellectual property, customers, market knowledge, distribution channels, etc.
Location in a cluster/hotspot:
Access to otherwise unattainable resources: ideas, discussions, human capital, financing, partnerships, intellectual property, customers, market knowledge, distribution channels, etc.
Nordic region is globally recognized as leaders in video game development. Very high quality games are the norm. Lots of success, prizes and awards.
An extremely fast growing game development sector, particularly in Sweden and Finland.
Swedish music industry – not the largest number of artists but many of the great ones
In scandinavia “demo scenes” – finland “assembly” events
Pre 2000
Finland had a dramatic growth – from 50% of Sweden
Sweden:
Foregin: King 15 B Sek
Publisher owned: Dice probably 10 B sek, Massive ?
Mojang!? 2 B Sek in 2013...
Tekes – What and when?
Finland had a dramatic growth – from 50% of Sweden
Sweden:
Foregin: King 15 B Sek
Publisher owned: Dice probably 10 B sek, Massive ?
Mojang!? 2 B Sek in 2013...
Tekes – What and when?