Companies embracing and investing in digital transformation, including through inventory tracking, use of social media and online advertising could boost the UK economy by up to £413bn by 2030, according to new research.
The study, carried out by consultancy Public First on behalf of Amazon’s cloud platform AWS, explored the role cloud computing and digital transformation can play in helping deliver the Government’s Digital Strategy 2022, including ways to strengthen the country’s position as a “global science and tech superpower”.
Researchers came to the £413bn figure by adding up the gross value added to the economy by businesses not currently using digital technologies adopting them. Growing the economy by this amount would equate to the same as adding an entire additional region to the country. It is the same as the value generated by the South East of England, or about 19% of the entire UK economy.
The research polled 993 senior business leaders, as well as 400 business cloud users, and found that a large number of organisations were not equipped with the right tools, skills and infrastructure to take advantage of these benefits, recommending that the UK needs to focus on increasing digital adoption, strengthening digital skills and investing in infrastructure.
Some progress has been made according to Public First’s report. The UK has more unicorns, tech companies worth more than £1bn, as well as more start-up and scale-up investment than France and Germany combined, and is a leader in emerging technologies including AI, semiconductor design and quantum computing.
In arguing for the need for further digital push to grow the economy, the AWS-sponsored report cites the fact the tech sector has grown by around 7% a year – faster than the UK economy as a whole – and it is now estimated to support around three million jobs.
Public First found that half of UK organisations agree that digital technology has become increasingly important over the past five years and that number goes up when talking to companies with more than 250 employees. In those companies, 89% say tech is more important now than five years ago.
While some companies are heavily invested in digital, “there is a long tail of UK businesses that are yet to capitalise on digital technologies,” the report warns.
Staffing a major problem for UK digital transformation
In a survey conducted as part of the research, the team found that there was significant potential to improve adoption rates of even basic technologies, finding that 42% of businesses don’t use digital tools to track orders or inventory, 31% don’t yet advertise online, and 38% are not using social media to promote their products and services.
Almost half of business leaders had not heard of cloud computing or did not know what the term “cloud computing” meant, something particularly true of small businesses, who were twice as likely to be unfamiliar with cloud technology compared to large enterprises, the report revealed.
Digital skills are seen "as important or essential by 82% of businesses, rising to 98% for digitally intensive businesses,” the researchers explained.
“In fact, digital skills are increasingly more desirable than other formal qualifications. Forty-six per cent of businesses consider intermediate digital skills (such as creating a website) as important, but only 28% of businesses say the same for university degrees.”
Despite the benefits digital tools provide for organisations, digital transformation is not guaranteed, according to an AWS spokesperson, as achieving the ambitious goals requires the right investment.
“For the UK to benefit from increased growth and productivity, there should be a greater focus on growing awareness and support available to businesses to adopt digital tools; the creation of a more diverse talent pool to address the digital skills shortage; and continuing investment in the infrastructure that will underpin innovation and the next generation of digital technologies," they said.