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UK economy faces digital divide, CBI warns

A report from the Confederation of British Industry and tech giant IBM paints a bleak picture of UK businesses' adoption (or not) of digital technologies

The Confederation of British Industry (CBI) has warned the government the UK is facing a digital divide, which is set to severely impact the economy as many firms fail to adopt new and advanced technologies. 

According to the Embracing digital in every sector report from the CBI and IBM, over half (55%) of “pioneer” firms are adopting digital technologies and processes, while the other half (45%) are falling behind.

The CBI and IBM highlighted the World Economic Forum’s Global Competitiveness report (WEF GCR) 2015-16, which found that while the UK ranks fifth out of 140 on availability of technology, it is only 14th when based on a company’s level of adoption.

Nearly all firms believe digital technology has the ability to revolutionise the business landscape, driving productivity (94%), growth and job creation, and almost three-quarters (73%) see improved customer satisfaction and experience as its biggest benefit, the CBI/IBM report found.

But businesses are hindered by a lack of appropriate skills inside their organisations (42% of firms) and an unclear return on investment (33%).

The report found that 70% of the technology sector classify themselves as pioneers, compared with only 17% of manufacturers and only 19% of those in financial and professional service sectors.

Carolyn Fairbairn, CBI director-general, said: “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."

The report stated businesses that are furthest along their digital journey tend to have the right people in leadership with a range of digital know-how in the workforce.

Basic building blocks needed to get started in digital business include fast and reliable internet connections, online platforms to take their product to market, and the right cyber security products, tools and processes, according to the report.

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The report found that just under a third of businesses invested in the internet of things (IoT) in 2015 (29%), and just under a fifth invested in cognitive or artificial intelligence technologies (16%), both of which thrive on data to drive productivity and efficiency.

The report recommended businesses diversify their talent pipeline and urged the government to ensure that the approach to in-work skills and digital education in schools supports building this pipeline.

“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,” said Fairbairn.

“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,” she added. 

Commenting on the findings, Antony Walker, deputy CEO of technology trade body TechUK, said: “These stark findings highlight that to be a world-leading digital economy, we not only need a thriving tech industry, but also widespread adoption of digital technologies across all sectors.

“If we can increase adoption rates of the 45% of businesses that are at the start of their digital journey, we can drive their productivity and growth across the whole of the UK,” he said. 

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In practical terms this means the CBI and its members should be very much more active in lobbying for effective action to enable and encourage employers to invest in improving the skills of their existing workforce and ensuring that the new apprenticeship programmes are fit for purpose, unlike the current planning processes of BIS/OfQual/SFA.

They should also be active in supporting programmes to bring the UK's communications infrastructure into the 21st century - instead of protecting those who are seeking to ration demand in order to avoid having to write off obsolete technologies which cannot cope.
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