A lot is still to be done

IT made in Poland

The largest companies that originated in Poland distribute IT products. The market is still fragmented and distributors with well-organized logistics systems can still earn a lot. As far as developers of IT products and services are concerned, two major players on the Polish market should be mentioned - Prokom Software and ComputerLand.

Poles usually associate the name of Prokom with sports and IT systems for the government. The Gdynia-based company is one of the most generous sponsors of sporting events and teams, and the major beneficiary of lucrative government contracts. Prokom implements IT systems in governement agencies and companies with shares still owned by the state. Since 1997 Prokom has been developing an information system for the Social Security Institution (Zakład Ubezpieczeń Społecznych). The company's involvement in consolidation processes on the Polish market, e.g. the acquisition of Softbank shares, has brought many benefits, such as numerous contracts concluded and executed by subsidiaries. Prokom is the only Polish company quoted on the London Stock Exchange. With its annual revenue of EUR 200 million, Prokom is the largest IT company from Poland. Prokom's consolidated revenue amounted to approx. EUR 325 million in 2003.

Operation of ComputerLand is similar to that of Prokom, but the Warsaw-based company is successful in segments other than those of its competitor. ComputerLand focuses on the financial and energy sector. According to last year's Computerworld TOP 200 report, ComputerLand was the largest software developer in Poland.

Theoretically, the potential of Prokom and ComputerLand allows them to implement virtually any IT project in Poland. Before Poland's accession to the European Union, some representatives of the IT sector speculated that only those two large IT system integration companies would stand the chance of competing with the EU companies that would soon get interested in our market. However, Polish integration experts have prepared themselves very well for the accession by initiating consolidation processes. Within the last two years, Prokom and ComputerLand have acquired niche companies and expanded their competencies in solutions for the government, the banking industry and the billing systems. Prokom Group employs approx. 3,000 people (the number is over 4,500 if we include the Czech PVT, acquired by Prokom in 2003); ComputerLand employs approx. 1,500 persons.

From the IT user's perspective

A lot is still to be done

The biggest IT companies in Poland in 2002 (in euro thousands)

Yet another method for analyzing the market is to evaluate the stage of information technology adoption in individual branches of the economy.

Industry as a whole is dominated by ERP solutions. SAP and Oracle are the leaders of the large enterprise market, although their technology is usually implemented by their local partners. But there's still much to be done in this sector in the fields of IT support for sales and marketing or quality control. Every year, the Polish edition of Computerworld is organizing an event entitled "Lider Informatyki" (IT Leader) to promote companies and institutions that gain maximum business or organizational advantage from their IT systems. Most of the awarded companies are those, that were privatized and sold to the big multinationals, or resulted from direct green-field investments in Poland.

Banking and insurance sectors have a large degree of information technology adoption and plenty of financial resources, at least in comparison to the rest of the economy. Prokom and ComputerLand are the largest competitors here.

Small and medium IT businesses specialize in the trade and services sector. There is a wide offering of Polish IT products for extended accounting support targeted at small businesses. Polish IT companies have captured almost 100 percent of this market segment, with several obvious leaders (Softlab, Macrosoft, CDN, Insert, and others).

Undoubtedly, the public sector is still the source of the largest potential contracts in terms of units. Some such contracts will have to be carried out because of Poland's accession to the European Union. This is where the pot of gold is buried, and this is what the largest players are fighting for.

Such contracts are funded from several sources. The first involves state and local government budgets. These funds are usually so limited that they need assistance from other sources, also related to Public-Private Partnership. This is how the development of the Central Register of Vehicles and Drivers (CEPiK) is financed - a registry that will help foil car thieves. Secondly, money will come from offset contracts related to the purchase of forty-eight US F-16 military airplanes. This money will be used to build the following systems: the Medical Service Registry (approx. EUR 50 million), the TETRA dedicated communications system (approx. EUR 500 million), and supervision systems for the police forces in all major cities (approx. EUR 250 billion.) The third source involves funds related to EU accession, such as PHARE, and the structural funds. They will be used to develop an integrated cadastral system. This last source is the best opportunity for European companies who have not decided to invest in Poland yet.

History Lesson

In 1965 the communist government created electronic computing technology centers (ZETO) in several major cities in Poland. The centers processed data for public institutions and factories. Today we would call their operation outsourcing or ASP. Remember that nobody even thought about computer networks then - enterprises simply sent messengers with documentation on paper. Only France and Finland had created such centers before.

At first, the centers calculated payrolls on Soviet machines - very unreliable and technologically obsolete. This was when Polish engineers from Wrocław (formerly Breslau) built the Odra 1000 computer. A UK company, ICL - the only IT enterprise from behind the Iron Curtain with an office in Poland - provided software for this new computer. The ZETO centers migrated to Odra computers.

At that point, technology in Poland was as advanced as in other countries, as evinced by the creation of one of world's first minicomputers, K-202. It processed 1 million operations per second, and was built by a visionary design engineer Jacek Karpiński. If Poland's economy hadn't been firmly under the heel of communist doctrine, and if the government had approved mass production of the machine (which evoked significant interest in the West), the future of Polish computer industry might have been different. Unfortunately, the Communists, obedient to Moscow's decisions, blocked the development of Karpiński's solution. Karpiński lost his position at Mathematics Machines Institute in the Polish Academy for Sciences, and was barred from his field. Left without means to support himself, he had to start raising pigs.

Polish machines were replaced by Soviet copies of IBM 360 mainframe systems - nobody cared about copyright. Pirated software was used wherever a dictatorship had destroyed the free market. But the paths of fate can be twisted. By the end of the 70s, IBM Corporation was very interested in getting into the markets of the so-called People's Republic. That included Poland, with its engineers skilled in ICL and IBM technologies learned from Soviet copies. The Americans started supporting the Soviet computer industry, unofficially at first, in order to gain access to Warsaw, Prague or Budapest. But in the mid-1980s, the importing of PC computers to Poland had started. Computer imports, assembly of parts from Asia Pacific vendors, and software development gave rise to such tycoons of Poland's IT market as Prokom Software, Optimus, ComputerLand, Softbank, Techmex. After some time, the industry gained such levels of professionalism that few remember the early times of "home-built" systems, the struggle for lifting COCOM limits, or the first successes of IT companies on the Warsaw Stock Exchange. These are leading-edge, capitalist enterprises, the avant-garde of knowledge-based economy. And the ZETO centers? After the communist regime was overthrown in Poland by "Solidarność" trade union and free-market economy was introduced, the centers were privatized. They still process data on contract, but now they are using state-of-the-art technologies from IBM and other global vendors, including the recent ZET Series mainframe systems. As you can see, the veterans are coping well enough, too.

Cooperation: Przemysław Gamdzyk and Sławomir Kosieliński


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