The Case for Digitisation: SMEs to Play a Big Part

Small Business News – 4th December 2012

This Is for Everyone - The Case for DigitisationA report commissioned by charity Go ON UK has discovered that the UK is missing out on huge opportunities to capitalise on the Internet due to a lack of basic online skills and that Small and Medium-sized Enterprises (SMEs) have a big role to play in the digitisation of the economy.

The report, This Is for Everyone: The Case for Digitisation , found that 10.8 million people in the UK do not use the Internet and that there is the potential for the Internet to generate an additional £63 billion if it were further tapped in to.

Businesswoman Martha Lane Fox, who famously co-founded, wrote in her foreword for the report that there is clearly room for digital growth, particularly in the small and medium-sized business sector.

Martha Lane Fox also sees the potential for the digital economy to provide far-reaching benefits beyond the business case including advances in education, and connecting the elderly and the isolated.

The knock-on effects, according to Lane Fox include helping people back into work and making our health and social services better.

The report, conducted by Booz & Company, looked into the boast at the 2012 Olympics that the UK is a leading digital nation, technologically advanced and a leader in the field.

Whilst broadly true, the United Kingdom ranked 12th out of 150 nations in the Booz & Company Digitisation Index. Norway ranked first in the world, followed by Hong & South Korea, with the USA in 4th place in the world. Switzerland, Iceland and Denmark, as near neighbours, came in the 5th, 6th and 7th spots with Israel, Canada, Japan and Luxembourg ahead of the UK.

With a population of near 80 million, the UK was held back by 16 million people lacking basic online skills. These included using a search engine, sending & receiving email and basic skills such as completing online forms and generally accessing information online.

Proposing a strategy for the future of the nation, the report went on to detail its three-pronged approach:

  1. Investing more in the digital infrastructure, developing services and boosting "human capital".
  2. Promoting Internet usage to be more inclusive of the individuals and organisations not already online
  3. Encouraging online entrepreneurship in all areas, including both the private sector and the non-profit entities.

Looking back at the electrification of the country in the late 19th and early 20th century, the report believes that a new revolution in digital technology could inspire the same impact, touching the lives of every Brit, even the most vulnerable.

Come in, UK SMEs

The UK’s small and medium-sized businesses generate 48.8% of the country’s private sector turnover and provide employment for 59% of the nation’s private sector workforce. In 2012 SMEs grew at 3% whilst the rest of the economy stagnated.

With this in mind a mere third of the country’s SMEs have a digital presence and that small and medium-sized businesses are seen as key to driving economic growth: Small businesses could unlock as much as £18.8 billion themselves and their use of digital could help their growth strategies. Furthermore, customer satisfaction and retention could al be bolstered by further use of the Internet.

The high demand for online retail in the UK is seen as one area where SMEs can be encouraged to venture more with the UK lagging behind the world-leader Norway – 14% of UK SMEs sell online. Across the North Sea that figure more than doubles to 30%.

A third of the UK’s SMEs communicated with customers online and 23% of SMEs stated they require further training and support to develop their online skills.

The business benefits of digitisation are clear in the report – increasing growth, reducing costs and improving customer services are vital to the health of our small businesses and to the wider economy as a whole with far-reaching benefits to all if the UK can push the digital agenda

As stated in the report, Sir Tim Berners-Lee, once said:

“The Web as I envisage it, we have not seen it yet.
The future is still so much bigger than the past.”

And as he put it at the Olympics:

“This is for everyone.”

Read the full findings in the PDF report This Is for Everyone: The Case for Digitisation.

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You might also find the following small business advice articles helpful: The SME/Small Business Guide to Cloud Computing and Your Website Strategy.

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