Q&A: Microsoft Hosts SME Day to Foster Support and Dialogue for Europe’s Small and Medium-Sized Enterprises
President of Microsoft International Jean-Philippe Courtois explains how the company and its partners are supporting Europe’s small and medium-sized businesses by helping nurture innovation and an entrepreneurial spirit.
BRUSSELS — 6 June 2006 — The European Union has rightly identified the small and medium-sized enterprise (SME) sector as the “growth gene” of the European economy. There are 22 million SMEs in Europe, employing close to 120 million people, and as such they form the bedrock of the economy, contributing 57 per cent of the EU’s GDP.
Political and business leaders at all levels have recognised the unique importance of the SME sector and are united in believing that for Europe to remain globally competitive, SMEs must have the right environment and partnerships to prosper, form a skilled workforce and drive economic growth. If SMEs can be stimulated into adopting new technologies more rapidly, and creating innovative products more competitively, then Europe can be assured of its place as a leading player in the global economy.
The EMEA Press Centre spoke with Jean-Philippe Courtois, president of Microsoft International, who explains how the company and its partners are supporting Europe’s small and medium-sized businesses by helping nurture innovation and an entrepreneurial spirit.
EMEA Press Centre: What is SME Day?
Jean-Philippe Courtois: SME Day is a Microsoft-enabled event to promote debate about Europe’s small and medium-sized enterprises, helping to create the right business and regulatory environment for them — and therefore Europe — to prosper. It will bring together small business innovators, venture capitalists, entrepreneurs and governments from across Europe to discuss the continent’s key drivers for economic competitiveness. The event is meant to provide a forum for Europe’s policy-makers and entrepreneurs to discuss how to improve innovation and growth among small and medium-sized businesses, paying particular attention to the IT sector.
Most importantly, Microsoft is involved in this event to show that the private sector has its part to play in driving SME growth. While policy-makers provide a framework for spurring innovation, Microsoft wishes to stress the importance of partnering SMEs in supplying investment, venture capital and support for this vital sector. This is coupled with a range of practical and collaborative programmes with industry, financial sector, academic and government partners to produce technologies that serve society, business and the technology industry.
EPC: Why does Microsoft care about SMEs?
JPC: The answer is simple: the SME sector is the engine of the economy, and that is where we all need to invest in order to drive growth and benefit everyone. Ninety-nine out of 100 European businesses are SMEs. Almost 120 million Europeans work in an SME. That is a huge market, so it’s obvious that we should care about SMEs. What is good for SMEs is good for the European economy, and at the end of the day, for Microsoft. We take the EU’s growth and jobs agenda very seriously, and for that reason the SME sector is also one of our top priorities. We are increasing our own investments and partnerships in Europe to help galvanise deeper partnerships between governments, industry and small businesses. In short, SMEs are the heart and the lifeblood of the European economy and we all have a contribution to make to ensure that heart is healthy and beats strongly.
EPC: What is Europe's strategic agenda for SMEs and how can MSFT help move that agenda?
JPC: The European Union has rightly identified the small and medium-sized enterprise sector as the “backbone” and “growth gene” of the European economy and has launched a series of measures in favour of SMEs. But private companies, like Microsoft, also have a role to play in supporting SME growth and innovation.
To unlock the economic potential of the SMEs of Europe, we suggest four concrete steps:
| • | reform key markets as envisaged in the EU’s Jobs and Growth agenda |
| • | reward risk-taking through rational IP protection |
| • | stimulate start-ups by helping them access funding opportunities, be they private Venture Capital or public EU funds through the EU Grants Advisor (EUGA) programme |
| • | encourage SMEs to increase their productivity and grow through the use of affordable technology |
EPC: What role does the IT sector play in Europe’s SME sector?
JPC: Information and communication technology (ICT) has the potential to generate a step change among Europe’s SMEs and make them more competitive, innovative and generate growth. This is the story we want to tell at SME Day alongside many other innovative companies. A new study on trends in Europe’s computer technology to be released at SME Day by IDC shows that the ICT and software sectors are a key source of innovation and employment in Europe. These are the fastest growing sectors of the European economy, and are likely to remain so for the foreseeable future.
Almost 55 per cent of IT spending in the region is by SMEs. Even though there are dozens of billion-dollar corporations in the IT industry, like Microsoft, serving SMEs, the bulk of IT organisations are SMEs themselves. Around 70 per cent of the total IT industry employees work in SMEs and except for some large hardware OEMs and international consulting and software firms, most of the companies in the Microsoft ecosystem are SMEs.
EPC: How much does Microsoft invest in SMEs in Europe?
JPC: There is a broad ecosystem that operates around our business, an entire network of over 250,000 partners who have built their success on the Microsoft platform. Every time we make an investment, we are investing in them as well. Of course, all companies work with partners, but the depth and breadth of Microsoft’s ecosystem is unique. One in three of the jobs in Europe’s ICT sector are directly related to the Microsoft platform. These are companies developing, servicing or selling Microsoft software and which benefit from Microsoft’s business model. For every dollar of Microsoft revenue generate in Europe, other European companies make 7.8 dollars. This illustrates the interdependence between Microsoft and European SMEs. By comparison with the business model of other companies (eg IBM), the Microsoft ecosystem encourages much more SME start-ups and business growth.
The impact of what we do on Europe’s economy is even bigger than those numbers suggest. Many of our partners have developed software which has dramatically increased productivity in the legal and financial professions. At macro level, ICT drives 25 per cent of the EU’s GDP growth and 40 per cent of productivity growth, according to European Commission data.
EPC: Isn’t one of the biggest problems not their entrepreneurial spirit, but rather the access to finance which can bring products to the market?
JPC: One of the principal problems facing SMEs is indeed how to finance their innovations. Money is available for SMEs, but it is often difficult to access because of cumbersome procedures — only 1 per cent of SMEs are successful in getting these funds. And it is for that reason that one year ago Microsoft together with HP and Intel invested in an IT service to make it much easier for SMEs to identify funding opportunities and present good investment projects. The initiative called EUGA (the European Union Grants Advisor) is a program developed by Microsoft and others in response to the European Union’s Growth and Jobs Agenda. Through EUGA, SMEs are able to increase their awareness and understanding of EU funds, as well as take advantage of a facilitated application process should they wish to apply for funds for which they are eligible.
This joint initiative aimed is something Microsoft is proud to be a key member of, as it is an integral part of our commitment to support increased innovation, competitiveness and inclusion in Europe. Just one year after launching, EUGA has already helped SMEs in Europe identify more than 10,000 funding opportunities and has benefited over 114,000 SMEs. Of the €117billion of EU funding available, €383 million has been leveraged a result of EUGA. Already, 613 jobs have been generated and over 93,000 people are being trained in Europe as a result of better access to EU funding for SMEs.
Microsoft also engages with the venture capital community in Europe to focus on accelerating technical and commercial partnerships between VCs and technology start-ups. Microsoft does not itself act as a VC or invest directly in VC funds as it is not our core business. But we contribute to the investing in innovation by engaging with our Emerging Businesses programme with approximately 300 VC-backed businesses in Europe and providing inexpensive licensing of Microsoft technology to start-ups, through our Empower programme, which has over 6,500 partners.
EPC: What role does intellectual property play in European innovation?
JPC: Europeans have always been creators and innovators. This tradition is reflected today in Europe’s strength in many strategic industries — pharmaceuticals, biotechnology, and mobile phone telephony, to name a few — all industries that rely on intellectual property. To survive and grow, local IT industries must also be able to protect their innovations and reap the benefits from widespread use of their technologies. Microsoft helps support the development of local IT industries by respecting their rights as well as paying for the privilege of using their innovations. Microsoft spent US $1.4 billion on licensing patents from companies across the sector last year.
In August 2005, we also announced the Microsoft IP Ventures programme which enables small companies, backed by venture capital, to bring products to market based on Microsoft innovations — quickly and with less risk. Microsoft IP Ventures licenses and spins out these leading-edge technologies to entrepreneurs, start-ups, and corporations as a way to both recoup a portion of Microsoft’s R&D investment and to encourage new business investments and economic development.
EPC: Has this programme brought any real results?
JPC: Some of these investments are yielding benefits today with software breakthroughs in critical areas such as security and reliability. Others will transform the way we use computers years from now. But they all stem from our optimism about the future of computing and our commitment to helping our SME partners grow and prosper.
At SME Day, Microsoft is proud to announce that it just signed agreements with two new companies, Skinkers in the UK and Vimio in Ireland, who will bring drastic innovations to the market through the use of Microsoft’s IP. These are the first IP Ventures with technologies developed in Europe at MSF Cambridge. These agreements mark a further step in Microsoft’s commitment to open up its IP treasure chest to Europe’s SMEs.
