The CBI has analysed a recent research report by IBM has revealed that there is a growing divide between “Pioneer” companies and the rest in the UK. There is some good news in the report in that Britain leads the way ranking first for e-commerce and fifth place for the availability of technology. This latter is presumably because the UK is often the first and easiest landing place in Europe for US firms because of the language. The problem starts to be revealed when looking at the company level adoption of digital technology which is where the UK ranked only 14th.
While the pioneer businesses (55%) are adopting digital technologies the rest seem to be unable or reluctant to do so. This is of concern to the CBI as they feel that those businesses that don’t digitise will struggle in years to come. Carolyn Fairbairn, CBI Director-General commented: “Businesses globally are in the throes of an extraordinary digital revolution that is transforming productivity and creating a new generation of winning companies. But in the UK, too many firms are being left behind. While pioneering firms are seizing digital opportunities, nearly half are struggling – a growing digital divide that is threatening UK competitiveness.”
This lack of adoption of technology was also seen in another recent report by GTNexus and Capgemini. That report looked at the state of the digital supply chain that found some equally worrying figures around the lethargy of UK businesses to adopt digital transformation in the supply chain. The inference from the press release is that there were two reasons that hindered the adoption of technology and two excuses.
The first reason, which was also highlighted by the Capgemini/GTNexus study, was the lack of skills inside the business. The second is an unclear return on investment (ROI) for the projects. If digitisation projects are not fully understood within the business then it will be difficult to understand accurately what the ROI will be.
The excuses (our words) were around the mix of connectivity challenges and security concerns. Both of these are barriers that can generally be overcome. Though it should be said that the availability of high speed internet across the rural United Kingdom is not that extensive yet and there is rarely choice. Costs of connectivity in some locations are still high for some businesses. The security landscape for buyers is also complex at times and its integration with risk misunderstood.
Three CBI recommendations
The CBI has issued three recommendations that it wants businesses across the country to consider:
- Appoint a Chief Digital or Technology officer (CDO/CTO) to the senior executive team to drive digital strategy and execution
Fairbairn commented: “It’s vital that businesses in all sectors – from manufacturing to retail – truly understand digital technology’s potential, from the boardroom to the shop or factory floor. Giving digital a human face by appointing a Chief Technology Officer will help businesses build the long-term digital strategies that will be critical to their futures.“
The question that remains is where are these individuals going to come from? Is this a relabelled CIO, or even a rebadged Chief Marketing Officer (CMO) masquerading as the CDO? Do the IT Leaders in place have enough knowledge of the business and technology to fill these roles and probably more accurately does the business trust them? There is no doubt that there is a need for these leaders but the CBI doesn’t clarify where they will come from and CEO’s need to understand what skills sets they will need before appointing them.
- Increase the age and skills diversity of boards and board advisers, drawing on the expertise of a new generation of ‘digital natives’.
Fairbairn believes in this adding: “And by harnessing the expertise of the generation at the heart of the digital revolution, firms will be better able to make the right investments for their digital future.” It will be interesting to see how quickly this happens. There is no doubt that accelerated management tracks work, but in organisations with many layers of management it is difficult sometimes to see how quickly people can rise up.
That is not to say this isn’t a good idea but the “digital natives” will need to be carefully selected or the wrong decisions can be made. We would postulate that more board members need to understand and appreciate the new technology and its capabilities as well appoint the “new kids on the block”.
- For businesses work more closely with each other to share ideas. For example, more digitally advanced and proficient firms could run digital clinics and offer coaching for those companies struggling to get started.
This is interesting but it is a shame that the CBI cannot lead that initiative as part of the press release. As the representative of over 190,000 different businesses one might expect that it could galvanise it members to deliver something along these lines. It may even be able to draw in additional members to its fold and increase its lobbying power both with the government and on behalf of British industry overseas.
Beyond digitisation is cognitive computing.
David Stokes, Chief Executive of IBM UK and Ireland, commenting on the state of industry said: “Unlike previous technology shifts, digital is impacting the way we work, play and go about our daily lives. It also presents both a challenge and opportunity for every business – across all sizes and sectors.
“Digital offers not only the opportunity for much needed productivity gains alongside a new canvas upon which organisations can innovate to drive new levels of growth.
“As one of the leading digital economies in the world, the UK finds itself with a tremendous opportunity and responsibility for business leaders to sustain and grow our leadership in the world. This is an opportunity that we in the business community should be hugely excited to face together.”
IBM are already working on the next phase of the digital economy. A recent announcement in the USA saw that its cognitive computer Watson will soon be working at Illinois University to pass graduate level exams. In the UK more than a quarter (28%) of pioneer business have already investing in advanced artificial intelligence (AI) and cognitive technologies over the last year but only 9% of those struggling to adopt the digital economy have done so.
This doesn’t bode well for the future. Businesses will need to look beyond their digital transformation soon and consider the cognitive transformation that might be next. Delivering AI and cognitive computing into businesses is no longer science fiction, and although it may not be happening widely today it could easily be the next major change that business needs to cope with, understand and harness for the future.
The CBI is not scare mongering on digitisation and while IBM are already looking at the next evolutionary stage of technology businesses cannot afford to ignore the current one. While the CBI recommendations are laudable some companies may find them difficult to implement or understand. The problem is that the rate of change is increasing and new business ventures may well rip up the business plans of well established companies with disruptive businesses that completely change the landscape they operate in.
There is no doubt that many companies need to change and the CBI is laudable in highlighting this. What will be interesting is what the CBI and the government can, and will do about it.