Public Policy and the Business of Software

The latest thinking about how technology-based economies prosper suggests that the success of great technology can only be achieved when packaged with the right delivery mechanisms.

New business models of technology delivery are evolving rapidly. In particular, open technology models that combine continuing innovation together with service and support, offer an emerging form of technology packaging that is proving successful in economies around the world.

“Governments influence the business of software through granting patent protections, enforcing procurement policies and more fundamentally through continuous investments in research and education.”

Governments wield a strong influence on the complex relationships between technology and markets. Public policy acts, at the macroeconomic level, as a business model enabler and is a vehicle that can help shape, for better or for worse, technology packaging and delivery.

In software, governmental practices and policies shape many facets of software development and delivery. For example, governments influence the business of software through granting patent protections, enforcing procurement policies and more fundamentally through continuous investments in research and education. To help build competitive software industries, government policy must promote not only the creation of good software, but also foster a framework that builds the market value of software based on good business practices. What will a policy look like that promotes innovation and openness and makes good business sense?

Patents

There is a growing appreciation of the long-held traditional wisdom that patent protection, when applied to bodies of abstract knowledge like mathematics and most, if not all, software, incorrectly empowers monopolies that inhibit rather than facilitate innovation and the useful application of knowledge. Many legal and economic observers feel that laws regarding patent protection for software should be eliminated or, at a minimum, overhauled. Evidence suggests that software patents can prevent the generation of wider economic value from new knowledge, when viewed across the entire economy.

But even if not eliminated, patents for software, and other abstract processes, should be awarded for much shorter periods of time. And they should be granted, if at all, for only truly novel and useful discoveries. Otherwise, trivial patents are used to block entire areas of innovation for long spans of time.

Procurements

To ensure cost-effective procurement of high-quality products and services, government purchasing should be designed, above all else, to establish a level playing field that promotes true competition. At the same time, it should reward excellence and innovation. True competition, excellence and innovation can only be assured when government purchasing policy demands delivery of open technologies based on open standards. Open technologies can accelerate knowledge creation and provide a strong basis for the reuse and remix of innovative solutions. As demonstrated by the development of the software and communications technologies that led to the Internet and the Web, informed government procurement policy can help open-style software, standards and technologies spread and become the cornerstones in building a healthy and competitive technology-based economy.

“To sustain a healthy knowledge economy, public policy must emphasize innovation, openness, collaboration and fair competition”

Research

Government funded research into the basic sciences, including computer science, has become increasingly important. Many national and multinational companies, focusing on short term shareholder value, have reduced investment in basic research. To ensure progress and foster leadership, governments have had to pick up the slack. Much of the research that produces advances in fundamental knowledge today is conducted in government labs or is sponsored by government grants to universities as well as various specialists in the research community.

Government policy in investing in basic research should strive to preserve openness and collaboration, which are the hallmarks of the academic method and are key to maintaining intellectual vitality. Unfortunately, too often, government policy allows privatization of publicly developed knowledge. Government policy can ensure that the results of research are generally available for the public benefit by adopting guidelines that favor collaboration and reuse. Two of the most successful examples of openness and collaboration in basic research involving open source software and computer science have been in geographic information systems and in supercomputer clustering.

Education

Many believe that learning about computers and computer science can best be accomplished by an educational policy that stresses concepts and not specific products, and furthermore, by educational practice that is project focused. Today, advanced curricula are being designed to foster participation in teamwork-based projects, like open source software projects, that are tied into the ongoing evolution of computing technologies across the globe. Educational objectives include inducing in students the excitement of engaging in a community of highly talented and motivated collaborators that use technology to solve urgent global issues. The opportunity to help solve problems like energy conservation and global warming (in which software that more efficiently manages ubiquitous mechanical devices and chemical processes has a significant role to play) can attract many new young engineers by providing a deeper, more rewarding and higher purpose in their lives.

Summary

As governments across the world recognize, public policy toward technology can accelerate or retard the growth of a knowledge-based economy. Four areas where an informed government policy is vital include patent laws, procurement practices, research investment, and educational goals and practices. When public policy emphasizes innovation, openness, collaboration and fair competition, knowledge in society is sustained and economic growth becomes inevitable.