Digital divide is holding back UK economy: CBI

A digital divide is opening up between the 55 per cent of businesses who have adopted digital technologies and processes, and the 45 per cent who are falling behind.

This warning comes on the back of new research from the CBI and IBM, in a report called Embracing Digital in Every Sector. They say that businesses from retail to manufacturing must understand what digital can do for them in order to prosper.

Despite the UK taking top place globally for e-commerce and fifth place for the availability of technology, it ranks only fourteenth in the world for company-level adoption of digital technology, with many companies struggling to digitise their businesses at the rate of peers in other countries. The study suggests that 42 per cent of businesses lack appropriate skills, while 33 per cent are unclear on the return of investment.

The problem is not lack of conviction about the potential impact. Nearly all firms believe that digital technology has the ability to revolutionise the business landscape, driving productivity (94 per cent), growth and job creation, and almost three quarters (73 per cent) see improved customer satisfaction and experience as its biggest benefit. To take advantage of digital technology across the economy, the CBI, the UK’s largest business group recommends that firms should appoint a chief digital or technology officer, while also increasing the age and skills diversity of boards and advisers, including members of the ‘digital native’ generation.

“Businesses globally are in the throes of an extraordinary digital revolution that is transforming productivity and creating a new generation of winning companies,” said Carolyn Fairbairn, director-general of the CBI. “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.

“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.

“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.”

David Stokes, chief executive of IBM UK and Ireland 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.

Other findings from the CBI/IBM research include:

More than a quarter of pioneer firms (28 per cent) have already invested in advanced artificial intelligence and cognitive technologies over the past year. ‘Pioneer’ firms tend to have a long term approach and vision to digital strategy

Only 9 per cent of businesses on the other side of the digital divide have done so, but 16 per cent plan to do so in the next year.

The CBI also wants to see 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.

Read Embracing Digital in Every Sector (pdf)