Germany is the world's third biggest IT market yet it has been relatively neglected by Irish software companies in favour of the English-speaking world, according to Enterprise Ireland which is encouraging clients to penetrate this £47 million (€60 billion) market.

Including Austria and Switzerland, there is an IT market worth £68 billion, which is growing at 8 per cent annually, while the ebusiness market is expected to have 40 per cent growth next year.

The development agency believes that, for companies, diverting more resources to marketing niche solutions can bring rich rewards.

"Our expertise is getting the companies up to partner stage. We have a good knowledge of market conditions and the available partners and their skills and areas of expertise," says Mr Robert Bushnell, Enterprise Ireland's software business development adviser on Germany who is based in Dusseldorf.

He says there has been a natural tendency to sell into Britain and the US because of language and cultural ties, and, often, because of contacts.

But Germany alone has a £47 billion IT market and is a growth area for Web-enabled and customer management solutions. Unlike the Benelux and Scandanavian countries, where business can be done "almost exclusively through English", Mr Bushnell says Germans expect the product to be localised and to be marketed in their language.

"It's a big enough block to look for solutions internally. You have to have a presence here to have credibility."

At higher management levels, English is sufficient, he believes, but once prospective clients start to examine the product, they expect to have explained to them through German.

"It is simple laws of marketing. You are supposed to be able to get to know your customer, not the other way around."

Many software solutions are quite critical, especially as telecoms companies and banks are big growth sectors. Banks, in particular, are under pressure from electronic banking and are seeking drastic cost reductions. "If a bank is buying a big solution for Internet banking that is a very critical decision."

He says inability to communicate in German to technical staff immediately gives them an excuse to reject the solution. Having somebody on stand by with the language is "a simple commitment to lowering the risk of the buyer".

Among the Irish companies with established offices in Germany and whose sales "will accelerate a lot quicker" are Baltimore Technologies, Trintech, Intuition Publishing and Flexicom.

But for companies trying to make the initial bridgehead, Enterprise Ireland, for a fee, provides sales leads into the German-speaking market.

The agency has set itself the target of increasing software sales by Irish indigenous companies from the 1997 level of £27 million to £47 million by 2001. Increased sales of about £20 million will come from probably not more than 10 companies.

"We are basically marketing," Mr Bushnell says. "We examine the product benefits, we examine the potential customers in the market. We will draw up the most promising looking target customer list. And we will try to get a meeting to show a product."

Such a meeting may lead to a partnership arrangement, increasingly important within the field of e-business.

"A company with a product needs sales and marketing force, and an implementation force. Partners provide that," Mr Bushnell says.

With many of IT service companies looking for products to service their customers, he believes Irish software companies have been short-sighted in ignoring German-speaking Europe. "A company with a resellable product, one that is not customised, should begin looking," he says.

He points to a damaging perception that Germans are bureaucratic. "That is really a perception, it is not really true at all." If decisions take longer, it is because they are more informed. Doing business is more straightforward.

"If they say, `Yes', it means they are interested. It's a more difficult market to crack but once you crack it, it is going to be more lucrative than other markets. Once you have a reference, it is more easier to get other customers."

Mr Bushnell also believes venture capital companies should look east as well as west, and apply capital for marketing investment. "If they believe in their product, they should be flogging it everywhere. Because there is enough money there in venture capital."