Enterprise Ireland's report is upbeat on growing IT sales but warns of increasing business scepticism, writes Jamie Smyth

Enterprise Ireland is forecasting strong sales growth at its client firms in the information and communications technology sector in 2002 despite the sharp downturn in the global technology industry.

But the agency has warned its board about the "challenging" economic environment, and says businesses and consumers have become sceptical of certain types of technologies, such as wireless, according to internal review documents seen by The Irish Times.

The latest IT sectoral review prepared for the board of Enterprise Ireland in May indicates Enterprise Ireland is forecasting sales at its client firms will increase 17 per cent to €350 million in 2002. Exports will increase even faster, by 23 per cent to €200 million.

Currently Enterprise Ireland is targeting 115 client companies with growth potential in the ICT sector.

These firms employ 4,563 people and have combined annual exports of about €162 million.

In the review, Enterprise Ireland highlights niche areas such as billing, location-based services and mobility platforms, where client firms can achieve significant export growth. But the report also issues a warning about the impact of the deteriorating economic environment in the US and the growing scepticism shown by firms for new and emerging technologies.

Enterprise Ireland pinpoints mobile technologies as a problem sector, with wireless application protocol (WAP), third-generation technology and personal digital assistants identified as problem areas.

"Consumers, and business in general, initially had high hopes of mobile information... however, disillusionment quickly followed with the failure of the first generation of WAP and Bluetooth devices and high prices of services."

The review describes the wireless information phenomena as "more hype than reality" and says the complexity of mobile and wireless applications will continue to hinder growth. The lack of sufficiently useful and usable applications would be the biggest barrier to "always on" consumer acceptance.

Many businesses have customer-relationship management implementations that failed to meet expectations. Privacy-related concerns for employers will require businesses to rethink how information is gathered and how customers can access and control data, it says.

The review also warned that the slowdown of the global (IT-led) economy and the recession in the US had administered a further blow to expectations.

The venture capital community was also reeling from a "horrific year" during 2001 and was now largely focused on getting a return on its recent IT investments, most of which were not reaching their revenue targets, and many of which were in serious difficulty.

However, the review concludes that Enterprise Ireland's own venture capital investments programme should act as a catalyst to encourage external investment during 2002 in its clients.

The review shows 28 per cent of exports by client firms are to the US, making it the second biggest market for these firms.

However, this US export figure is dominated by a very small number of Irish firms, including Openet, Visatech and by IT Design.

In reality, Britain and mainland Europe are the priority markets for most of Enterprise Ireland's clients, says the report.