[Defense Commentary] How to Revitalize Software Defense Industry Companies

[Shinyongdae, Secretary General of the Defense Small and Medium Venture Business Association] IT (Information Technology) refers to all technologies in the information age. However, while advanced countries treat IT as the domain of software, South Korea considers advanced electronic devices such as smartphones, smart TVs, and communication equipment as part of the IT concept.

The reason is simple. Since most of South Korea's industry is composed of manufacturing, even as we move beyond the internet era into the Fourth Industrial Revolution, the hardware industry culture is still being followed. The hardware industry measures quantity and volume, and production costs such as manufacturing facilities and material costs are calculated as cost price. Workers' labor is viewed as manpower, and labor costs are calculated accordingly. Because this hardware culture is directly applied to the IT industry, differences with advanced countries are inevitable.

For South Korea's IT industry to be recognized as a software industry, a virtuous cycle investment environment, development technology level, engineer training, and standardization of the software research and development process are necessary. In particular, an IT industry culture that pays for the value of work must exist.

However, the reality is different. Most manufacturing companies transitioning to the Fourth Industrial Revolution stage import and apply IT technology from overseas, and the domestic software industry is neglected, surviving only as a market providing IT development labor. Even domestic large corporations maintain IT subsidiaries, but by applying manufacturing industry culture, they have rather created a distorted software labor culture.

The defense sector is no different. Although the proportion of software in advanced weapons is increasing, the characteristics of manufacturing remain unchanged. Because of this situation, software SMEs in the defense industry that were prominent just ten years ago are gradually going bankrupt or leaving the market.

The reasons can be easily found in bureaucrats who fail to recognize the value of software purchases as payment for value rather than labor, government agency officials who have never understood or considered the characteristics of the software industry, and prejudices such as assuming that IT products from large corporations are superior to those from SMEs even before bidding.

Moreover, as large corporations enter the defense IT industry, SMEs are losing even opportunities. Looking at overseas defense large corporations, none directly produce training simulators. They have SMEs manufacture them and even handle sales. We must understand this reason and learn from it.

Training simulators have a higher level of technological maturity in SMEs compared to large corporations. They are easier to apply practically than weapon system software or command and communication system software.

Considering these points, the simulator business should be designated as a defense SME item, and the enforcement decree related to fostering defense software should be revised to nurture SMEs. This could yield triple benefits: fostering domestic innovative SMEs, acquiring innovative products, and boosting defense exports.

Government agencies responsible for defense policy must face reality and urgently apply tailored software development policies for weapon systems according to their characteristics to foster defense SMEs.