Blog Type, IPT Blog, Industry Sector, Digital, IPT | May 2016

What does the Digital Economy Mean for Businesses?

With 30bn devices worldwide all connected to the internet, the scope for a global digital services market is enormous, with more and more businesses taking steps into offering a digital alternative to traditional “analogue” services. 2015 was a landmark moment in the UK as digital and cashless transactions overtook cash purchases for the first time; with cash circulation expected to drop by 30% in the next 10 years, there are tremendous opportunities for businesses to move into the digital ecosystem.

A successful event in the Terrace Pavilion, with Hon Ed Vaizey MP, Minister of State for the Digital Economy,
Paul Clarke and Tracy De Goose.

Following an IPT event What does the Digital Economy Mean for Businesses? we look at how more businesses are breaking into the digital services industry, and how new and existing businesses can thrive in this growth sector.

The Right Conditions

There is a wealth of comment that exists already on the success of Silicon Valley and San Francisco, and the new innovative technology they have introduced to the world. The UK has managed to emulate that success with London’s “Tech City” and Cambridge’s “Silicon Fen” driving research and development (R&D) of technology at home. The UK made gains in creating a culture that encourages new tech firms, with R&D grants and tax credits helping new businesses grow. London is now second only to Silicon Valley across the world in offering an environment to foster success in technology, something that the UK can be proud of.

Businesses in the digital arena can be classified as either “start-up” or “turn-around” organisations, depending on whether they are entering or reforming into the digital market. In 2015 the number of new start-ups increased by 5% compared to 2014, and 15% of these were digital organisations. It is a growth area in the UK; the raw ingredients are there with talent, ideas and a steady stream of venture capital backers helping new businesses to get off the ground. With any start-up there are risks, and new technology firms increasingly looking to the Government to provide a “digital skeleton” of plans and future infrastructure investments to identify their place within the UK’s ecosystem. Government subsidiaries like Innovate UK help to identify growth areas and funding, but more could be done from Westminster and Whitehall to provide small businesses with a digital direction.

The Need for Skills

It might be ambitious or hyperbolic, but the idiom that 65% of today’s schoolchildren will be employed in jobs that are yet to be invented rings some truth in the digital sector. There are 1.5 million employed in a digital company already, with this due to increase to over 2 million by 2020 with no signs of slowing. The number of new technology jobs advertised rose by 28% in 2014, reflective of an economy that is embracing digital operations online, and now more commonly through digital applications for your phone.

For the digital market to be sustainable, the next generation of young people need to be actively engaged and well versed in data, code and computing more broadly. There are calls for a greater emphasis on “contextualised learning” to be placed on tech skills in schools in order for young people to understand the importance of tech, visualising commercial opportunities through data and tech profiling.

The Future?

Countries across the world are fast embracing the digital sphere, and the emergence of “smart cities” represents a global commitment to technology making our day-to-day lives easier, healthier and simpler. The UK is making steps in the development of driverless cars, autonomous drones and robotics; for these to exist the UK needs a smart infrastructure and a wealth of technicians and data scientists to fuel these innovations as “data is the food of machinery.”

For the UK to be future ready, it seems that we must continue making advances in technology and our digital infrastructure. As such, there needs to be a new generation of talent coming through schools, apprenticeship programmes and universities to help sustain our new digital ecosystem, with a digital vision from the Government to help craft the world of tomorrow.

With thanks to our guest speakers:Hon Ed Vaizey MP, Minister of State for the Digital Economy; Paul Clarke, Chief Technology Officer, Ocado; Tracy De Goose, Chief Executive Officer, Dentsu Aegis Network UK.

Words by Alex Smith.