The italian Information & Communications Technology (ICT) industry is in dire straits. On March 10, 2010, Assinform, the association of the bigger italian ICT companies, announced that their 2010 forecast includes an estimate of 8000 lost jobs, after the 16000 already lost in 2009. One of the solutions Assinform proposes to fight the crisis is what you may call a “cash for software clunkers” program: state-financed discounts for all companies that replace with newer applications obsolete software that isn’t working well anymore. At first sight, this looks like a dumb, or at least useless, idea, for the reasons explained below, but it could do well, after all, if implemented in the right way.

Cash for software clunkers does very little good…

According to several italian ICT portals (Punto Informatico, Pc Professionale and Nebenet) Paolo Angelucci, the Assinform president, explained that, since human contribution in software production is 2.5 times bigger than in automobile production:

"the positive impact on employment rates of every Euro of public financing to ICT is 2.5 times bigger than giving the same money to the automobile sector. In our case, financing would promote consumption not only of mere goods or services, but of human resources, with important positive effects on the employment rates and overall productivity of the whole sector."

Reading that human resources should be “consumed” like toilet paper or fast food really depresses me. Still, this is a precious quote since it’s a perfect picture of the brains of many managers in this and other sectors, that is one of the many reasons why there’s a crisis. But I digress, let’s go back to software clunkers. According to Angelucci, “financing the replacement of obsolete software with advanced applications made to order for the actual needs of the “Made in Italy” companies, would be a signal that we’re going in the right direction.”

Are we sure? Very often, the reason why companies or Public Administrations (PA), that is Assinform’s main customers, don’t buy software has nothing to do with lack of incentives or other state-financed discounts. The reason is simply that they don’t need any new software, since the one they already use already does everything they need. Or that they haven’t anything to do at all with any software because of the global crisis, which very seldom hit them directly… because they were using obsolete software! On top of that, which guarantees would Italy have that big software houses like most Assinform members would develop those “advanced applications” in Italy, hiring italian programmers? Offshoring software development is even cheaper than offshoring other industries, since once the product is ready you must only transfer some files over the Internet, not fill a container.

…unless…

Replacing a software program with its latest version, that is continuing to do the same things as before in a computer window with a different color, would do little to solve the italian ICT crisis. However, thinking about it, maybe there is a way to “dismiss software clunkers” that may bring lots of work to italian programmers and make their customers and all taxpayers save much more money than any other incentive program. What if the Government said “within 2 or 3 years all Public Administrations will cease to accept, produce, archive or distribute new digital documents in closed formats, since they create so many problems, and to use proprietary digital protocols”.

The italian Government already considers closed the formats of Microsoft Office and those of many other programs currently used by italian PAs. Therefore, probably this approach would not be loved by Assinform members like Microsoft: in 2007 Assinform had even stated in a press release that all technical standards on the market should be considered equally valid, without prejudices. This, however, is the same “file format neutrality” that Microsoft promotes without giving enough information.

Imposing certain obligations on the italian PAs is like imposing it on every organization or individual that must communicate with them. Sure, doing so would cause a sort of earthquake, but one that would have, at least in the medium/long term, beneficial consequences both for italian programmers and for the italian economy as a whole. Because the obligation to only use open formats and protocols would not just create a lot of real work. Due to their own nature, these technologies would make it possible for all ICT companies, regardless of their size, to compete on a fair ground, without paying royalties abroad. Open formats and protocols would also allow all public and private users to use the software they really need, not the one that somebody else wants them to buy. I’ll welcome a “cash for software clunkers” program, but only if cash will only be given to organizations that will commit to stop production of documents in proprietary formats.