Research and development doesn't always happen in the obvious places. Anthony Doesburg profiles some of the companies getting taxpayer help to boost their innovation efforts.

Is the Government going soft in handing out R&D funding to an outfit that inhabits the fuzzy cultural realm, rather than the hard-edged commercial world?

Not a bit of it - Orchestral Developments is arty-farty in name only. As the second part of its moniker implies, it is firmly in the development world - but development of software, not music.

The company is the development arm of one of the country's biggest and fastest-growing information and communications technology companies, Orion Health, whose software products include Rhapsody and Symphonia.

"I don't know how we got this musical theme going, but we did," says Orion chief executive Ian McCrae.


It seems to have struck a chord. The $120 million company, which signed a new US customer with 195 health facilities late last year, has added 300 employees since October for a total headcount of more than 1000. It is opening a fifth development centre, adding to existing ones in New Zealand, Australia and Thailand.

McCrae says that in providing a company such as his with R&D funding, New Zealand is following the lead of other countries, all of which are eager to host development teams.

He says Orion's preference is to carry out development in New Zealand because of the quality of local software engineers. But he says multinational companies undertake their R&D in whichever country makes it most worth their while, and they don't have the same loyalty to New Zealand.

"We need to make New Zealand an attractive destination for R&D. We need to be competitive with other countries - that's just the way it is."

Orion's newest development hub is in Phoenix, Arizona, which McCrae says has the benefit of lower costs than San Francisco and Boston, and a supply of engineers from several world-class universities.

"That's what all organisations like us look at - labour rates, the pool of developers and the R&D environment." But New Zealand, with development centres in Auckland and Christchurch, is where most of the company's R&D takes place.

And to satisfy the terms of the Government's grant, which is just for work done here, projects relating to particular products are "carved out" and allocated to a single country.

"New Zealand is a great R&D destination," says McCrae. "The engineers here are great."

What: Software development
R&D spending: Enough to be at the upper end of $5 million a year grant maximum.