BUSINESS AND TECHNOLOGY – THE FUTURE in association with
Northern Counties Club, Newcastle 25 November 2014
DEBATE
DEBATE
BUSINESS AND TECHNOLOGY – THE FUTURE
in association with
If SMEs are the engine room of the UK economy, then technology is increasingly the fuel that keeps their motors turning. But, despite the evermore innovative tools available to businesses, challenges remain and opportunities continue to be missed by the nation’s smaller firms. Here, in a debate hosted by Microsoft, North East influencers ask what is holding the region’s businesses back and how technology might propel them towards a more prosperous future. There was a time when the technology needed to tap into world markets was only for big firms with big budgets. Then came the web, the cloud and the rise of the free and suddenly businesses of all denominations could access as much software as they needed to accelerate their growth. Today, as mobile devices and connectivity progress at breakneck pace, technology continues to emerge as an increasingly potent force in driving business success. But growth barriers persist for SMEs, both in taking advantage of the tools available to them and in realising their full potential. Seeking solutions to these challenges, Microsoft – one of the most prominent technology partners of SMEs in the UK and elsewhere – hosted a debate in the North East of England.Delegates gathered at Newcastle’s Northern Counties Club, one of the world’s oldest private members clubs and a grand old venue for an afternoon of heated business debate.Representing Microsoft was Peter Ferry, who heads up the firm’s business partner channel in Scotland and the North East He was joined by influential leaders from the region’s private, public and education sectors, as well as representatives from successful
BUSINESS QUARTER
North East SMEs.Chairing the debate was Chairing the debate was Ammar Mirza CBE, a serial entrepreneur and chairman of Asian Business Connexions, a social enterprise that aims to connect, support and promote the Asian and wider business community. THE DEBATE Peter Ferry started the discussion by putting into context the importance of technology to the future prosperity of North East businesses and the wider UK economy. “I really see the potential of the growth of the UK economy to come from small to medium-sized businesses and technology is an important part of that. When I entered the IT industry, a lot of the sophisticated technology solutions were only available to the biggest companies with lots of skilled IT people available to them. “That has really changed in the last half decade and SMEs can now take advantage of some quite sophisticated technology to improve their working practices, find more customers, grow more quickly and compete on a national or international scale.” He cited remote working, accessing data via
02
TAKING PART Peter Ferry, strategic partnerships, Microsoft Ahmed Khan, owner, McDonalds Regional Franchise North East Dinah Jackson, strategic economic plan – policy and programme lead, North East LEP Steven Hall, area manager, Barclays Colin Turnbull, ICT manager, North East BIC Marie Wilson, deputy regional director, UK Trade and Investment Rob Hamilton, principal economic advisor, Newcastle City Council Natalie Sykes, regional director, Institute of Directors Joanna Berry, director of engagement, Newcastle University Business School Rob Kleiser, director of Lifestyle Academy, Newcastle College Bob Paton, managing director, Accenture (North East) Steven Forrest, CEO, Forfusion In the chair: Ammar Mirza CBE, chairman, Asian Business Connexions Taking notes: Andrew Mernin
devices on the go and using cloud technology to share business information as examples of simple measures many SMEs are yet to benefit from. “Where previously those sorts of things might have been the domain of much larger companies, smaller companies can take advantage of them,” he said. But in encouraging SMEs to adopt such technologies, Bob Paton said they had to be exposed to real world examples of their potential impact on their business. Joanna Berry suggested a lack of trust might also be holding SMEs back from bringing new technologies into their business. High profile examples of large organisations getting mass technology investment horribly wrong could have played their part in creating a cautious approach among business leaders, she said, adding: “They might be thinking ‘if big businesses spending gazillions of pounds can’t
For SMEs and big companies we really need to address the skills agenda if we are to get these ‘more and better jobs’ get it right, why am I even considering it?’” But positive changes are happening in the North East’s SME community, according to Rob Hamilton. “More of the innovation is happening now in small companies than bigger companies,” he said. “In the past it was just the big companies who were innovating.” And with younger generations growing up immersed in technology, the long term outlook for innovation in the region’s businesses is bright, said Marie Wilson. Especially, added Peter Ferry, since major technology businesses like Microsoft are playing their part in inspiring schoolchildren into IT careers. He also underlined the importance of ensuring that beyond the IT industry, young tech-savvy “digital natives” get access to the latest technology tools across all business sectors. He also warned that businesses today are being hamstrung by a lack of awareness about technology. “There is ignorance about what technology
can actually achieve and education is needed directly with those SMEs right now, before the next generation and our future leaders come through,” he said. Next, Dinah Jackson, who represents the North East Local Enterprise Partnership which aims for the North East economy to provide over one million jobs by 2024, explained perhaps the biggest barrier to growth of employers in the North East. “Whenever we’re talking to businesses, small, medium or large, skills comes up time and again,” she said. Bob Paton: “For SMEs and big companies we really need to address the skills agenda if we are to get these ‘more and better jobs’ [as referred to in the North East LEP’s strategic economic plan]. This is not solely an education problem; it’s about businesses working with education. Business has to engage with education; if we can do that we can sort the North East’s problems out.
03
“As an example, the University of Sunderland came to us and said ‘tell us what you want us to teach. What you want us to teach our young people?’ And I think that’s the openness and level of engagement that we need.” Dinah Jackson suggested that the LEPbacked North East Growth Hub – a new digital conduit for business support and funding providers could also help address the region’s skills shortages. She said: “The North East Growth Hub could have a key role to play in terms of gathering intelligence from SMEs on what their skills needs are now and what they are likely to be in the next five years and playing this in to the skills agenda. There is also the opportunity for the North East LEP’s Apprenticeship Growth Partnership to drive the skills agenda in the North East. A lot of businesses find that quite difficult to articulate.” From a further education perspective, Rob
BUSINESS QUARTER
DEBATE
DEBATE
BUSINESS AND TECHNOLOGY – THE FUTURE
in association with
If SMEs are the engine room of the UK economy, then technology is increasingly the fuel that keeps their motors turning. But, despite the evermore innovative tools available to businesses, challenges remain and opportunities continue to be missed by the nation’s smaller firms. Here, in a debate hosted by Microsoft, North East influencers ask what is holding the region’s businesses back and how technology might propel them towards a more prosperous future. There was a time when the technology needed to tap into world markets was only for big firms with big budgets. Then came the web, the cloud and the rise of the free and suddenly businesses of all denominations could access as much software as they needed to accelerate their growth. Today, as mobile devices and connectivity progress at breakneck pace, technology continues to emerge as an increasingly potent force in driving business success. But growth barriers persist for SMEs, both in taking advantage of the tools available to them and in realising their full potential. Seeking solutions to these challenges, Microsoft – one of the most prominent technology partners of SMEs in the UK and elsewhere – hosted a debate in the North East of England.Delegates gathered at Newcastle’s Northern Counties Club, one of the world’s oldest private members clubs and a grand old venue for an afternoon of heated business debate.Representing Microsoft was Peter Ferry, who heads up the firm’s business partner channel in Scotland and the North East He was joined by influential leaders from the region’s private, public and education sectors, as well as representatives from successful
BUSINESS QUARTER
North East SMEs.Chairing the debate was Chairing the debate was Ammar Mirza CBE, a serial entrepreneur and chairman of Asian Business Connexions, a social enterprise that aims to connect, support and promote the Asian and wider business community. THE DEBATE Peter Ferry started the discussion by putting into context the importance of technology to the future prosperity of North East businesses and the wider UK economy. “I really see the potential of the growth of the UK economy to come from small to medium-sized businesses and technology is an important part of that. When I entered the IT industry, a lot of the sophisticated technology solutions were only available to the biggest companies with lots of skilled IT people available to them. “That has really changed in the last half decade and SMEs can now take advantage of some quite sophisticated technology to improve their working practices, find more customers, grow more quickly and compete on a national or international scale.” He cited remote working, accessing data via
02
TAKING PART Peter Ferry, strategic partnerships, Microsoft Ahmed Khan, owner, McDonalds Regional Franchise North East Dinah Jackson, strategic economic plan – policy and programme lead, North East LEP Steven Hall, area manager, Barclays Colin Turnbull, ICT manager, North East BIC Marie Wilson, deputy regional director, UK Trade and Investment Rob Hamilton, principal economic advisor, Newcastle City Council Natalie Sykes, regional director, Institute of Directors Joanna Berry, director of engagement, Newcastle University Business School Rob Kleiser, director of Lifestyle Academy, Newcastle College Bob Paton, managing director, Accenture (North East) Steven Forrest, CEO, Forfusion In the chair: Ammar Mirza CBE, chairman, Asian Business Connexions Taking notes: Andrew Mernin
devices on the go and using cloud technology to share business information as examples of simple measures many SMEs are yet to benefit from. “Where previously those sorts of things might have been the domain of much larger companies, smaller companies can take advantage of them,” he said. But in encouraging SMEs to adopt such technologies, Bob Paton said they had to be exposed to real world examples of their potential impact on their business. Joanna Berry suggested a lack of trust might also be holding SMEs back from bringing new technologies into their business. High profile examples of large organisations getting mass technology investment horribly wrong could have played their part in creating a cautious approach among business leaders, she said, adding: “They might be thinking ‘if big businesses spending gazillions of pounds can’t
For SMEs and big companies we really need to address the skills agenda if we are to get these ‘more and better jobs’ get it right, why am I even considering it?’” But positive changes are happening in the North East’s SME community, according to Rob Hamilton. “More of the innovation is happening now in small companies than bigger companies,” he said. “In the past it was just the big companies who were innovating.” And with younger generations growing up immersed in technology, the long term outlook for innovation in the region’s businesses is bright, said Marie Wilson. Especially, added Peter Ferry, since major technology businesses like Microsoft are playing their part in inspiring schoolchildren into IT careers. He also underlined the importance of ensuring that beyond the IT industry, young tech-savvy “digital natives” get access to the latest technology tools across all business sectors. He also warned that businesses today are being hamstrung by a lack of awareness about technology. “There is ignorance about what technology
can actually achieve and education is needed directly with those SMEs right now, before the next generation and our future leaders come through,” he said. Next, Dinah Jackson, who represents the North East Local Enterprise Partnership which aims for the North East economy to provide over one million jobs by 2024, explained perhaps the biggest barrier to growth of employers in the North East. “Whenever we’re talking to businesses, small, medium or large, skills comes up time and again,” she said. Bob Paton: “For SMEs and big companies we really need to address the skills agenda if we are to get these ‘more and better jobs’ [as referred to in the North East LEP’s strategic economic plan]. This is not solely an education problem; it’s about businesses working with education. Business has to engage with education; if we can do that we can sort the North East’s problems out.
03
“As an example, the University of Sunderland came to us and said ‘tell us what you want us to teach. What you want us to teach our young people?’ And I think that’s the openness and level of engagement that we need.” Dinah Jackson suggested that the LEPbacked North East Growth Hub – a new digital conduit for business support and funding providers could also help address the region’s skills shortages. She said: “The North East Growth Hub could have a key role to play in terms of gathering intelligence from SMEs on what their skills needs are now and what they are likely to be in the next five years and playing this in to the skills agenda. There is also the opportunity for the North East LEP’s Apprenticeship Growth Partnership to drive the skills agenda in the North East. A lot of businesses find that quite difficult to articulate.” From a further education perspective, Rob
BUSINESS QUARTER
DEBATE Kleiser called for clearer information from the private sector about the specific skills needs SMEs are facing. “If someone was able to articulate the key things that SMEs need to grow and throw that back at colleges and the universities, every undergraduate programme could be delivered with those elements in and you would start to see an impact. “We need to be more responsive to industry to be able to say every graduate leaving us needs to have an awareness of X, Y and Z. If you want us to help SME growth, that type of information is absolutely critical.” Marie Willson suggested that an awareness of international business opportunities should also be incorporated into further and higher education courses to help foster the growing enterprises of the future. Embedding leadership skills at a young age is also vitally important, Natalie Sykes said. “Two years ago the Institute of Directors launched student memberships and, more recently, we have made membership available to apprentices in Yorkshire in a pilot scheme which we plan to roll out into the North East. We are saying to apprentices, their parents and to the education establishment that apprenticeships can be a direct route to the boardroom or just to becoming a leader within a particular aspect of their career. They can also come to the IoD’s guru panel for advice on any issue they might have. So we are really starting to engage future leaders.” Rob Hamilton: “We’ve identified that there’ve been skills shortages forever, but we are entering a period - looking ahead to public sector cuts and cuts in education – in which skills is an area that is going to see big, big reduction in funding. “The ability of people to go back and relearn GCSEs or A-Levels will be greatly reduced. It’s important to make sure that young people in particular are aware of what they need to do and the opportunities that they might have in the future. Because some of those second chances will not necessarily exist, at least in the public sector. So actually businesses could be the ones in the future that are driving the skills agenda.” Bob Paton: “But we have to make it easier for SMEs to take on apprentices because
BUSINESS QUARTER
DEBATE
Skills are incredibly important for the tech industry and technology is an area which all businesses can benefit from it’s pretty difficult at the moment. It took us eight months to set up our apprenticeship scheme, and we’re a big corporate with a big management team to implement it.” There is, however, a new North East IT apprentice hub in the pipeline backed by the regional IT industry body Dynamo, working with e-Skills and the National Apprentice Service. This, explained Bob, will have around 20 apprenticeship places each in Newcastle and Sunderland and addresses a major gap in the region’s training sector. But those drawing up its syllabus will be hoping to avoid Steven Forrest’s experiences of apprenticeships. He said: “As a professional
04
services organisation, one of the biggest challenges we face when we look at apprenticeship schemes, for example, is the actual relevance of their content. So we have had to develop our own in-house training scheme where we helped individuals develop skills that would allow them to move into senior roles fairly quickly. I think that’s a huge failure of apprenticeship schemes at the moment.” Natalie Sykes drew attention to soon-to-beimplemented government reforms that will enable SMEs to access training courses set up by larger companies under the ‘Trailblazer’ scheme. “The government is saying is that if large organisations can create the academies and the framework, then there’s no reason why SMEs cannot link into those. So they are actually giving businesses what they need, as opposed to the colleges who historically have catered for trendy classes, like sports for the boys or perhaps beauty for girls. It’s a change that has to happen to make [training] relevant for business and it will be remarkable when the change does happen.” Of course, there are sector skills councils to help academia contribute to plugging skills gaps. Rob Kleiser warned: “There is some anxiety from an academic point of
view about the engagement of sector skills councils with SMEs. Inconsistency occurs across different sectors in terms of how much they engage with industry and respond to their needs effectively. There are certain sector skills councils who are strong, but some are too distant from industry and so some layers still need to be broken down in order to get appropriate direction.”Rob Hamilton highlighted the power of industry representative organisations, such as the North East IT group Dynamo, in generating positive changes to aid small business success. However, he added: “We don’t have that type of leadership across the board in all sectors.” Bob Paton: “We have to make sure that changes because every piece of research tells us industry will only be successful if it groups together as a network and collaborates for the common good. We are the only industrialised region which can reach out to every company large or small, public or private, and every school, college, university, MP and support organisation. We need to grab hold of this opportunity and keep on preaching the same message about collaboration and skills.” Rob Hamilton: “In political circles when they talk about Sheffield, Manchester, Leeds and Liverpool inter-connectivity [between cities] is perceived as very important because of the agglomeration of activity. But the North East is very different. We are quite a small region but actually we can be genuinely very well-connected because there’s not [as much movement of people] in or out of the region. So that means organisations should be extremely incentivised to invest in success here and in the skills base of the workforce. But they need to recognise that they have to work in partnership with others.” Strengthening the region’s pull factor as a place to forge a career is also important, said Steven Forrest: “What we’re seeing as a business compared to a few years ago is that we’re managing to encourage bright minds that work in and around London to come back to Newcastle. It would appear that the future bright minds of the North East now want to stay the North East, whereas 10 or 15 years ago that wasn’t the case.”Peter Ferry: “When I left university you went to work in London because that’s where you got the experience
I’ve wasted a lot of money [on technology] because things are changing at such a fast pace and exposure to the major companies. But apprenticeships in the tech industry are now being seen as a great way of getting the right kind of experience and I think anything that can be done on a regional level to layer the experience onto the value of apprenticeship programmes is a tremendous thing.” Joanna Berry and Dinah Jackson both reminded delegates of the power of placement schemes within education. Dinah said: “Even before young people reach that decision between work, college or university, there is maybe more work we can do with SMEs and larger organisations around work placements.” Ahmed Khan suggested that “exciting youngsters” about industry was also important. “If we take the hotel sector, for example, most 15-year-olds have never been in a hotel, so why would they think about working in a hotel? So it’s up to the hotels to give young people exposure to them and show they are a great place to work. So what does industry have to do to excite people into industry?” Bob Paton: “I think it’s really hard for young people today. When I was young you could see where industries were. You could see coal, you could see the steel industry and the shipbuilding but I think it’s very difficult for young people to see where the jobs are now. We’ve got to get into schools very early on and tell them about various jobs and excite them because we will only get people who want to pick IT at secondary school if they’re excited about it at primary school.” Peter Ferry: “Skills are incredibly important for the tech industry and technology is an area which all businesses can benefit from.” Peter then asked delegates how the region’s
05
BUSINESS QUARTER
DEBATE Kleiser called for clearer information from the private sector about the specific skills needs SMEs are facing. “If someone was able to articulate the key things that SMEs need to grow and throw that back at colleges and the universities, every undergraduate programme could be delivered with those elements in and you would start to see an impact. “We need to be more responsive to industry to be able to say every graduate leaving us needs to have an awareness of X, Y and Z. If you want us to help SME growth, that type of information is absolutely critical.” Marie Willson suggested that an awareness of international business opportunities should also be incorporated into further and higher education courses to help foster the growing enterprises of the future. Embedding leadership skills at a young age is also vitally important, Natalie Sykes said. “Two years ago the Institute of Directors launched student memberships and, more recently, we have made membership available to apprentices in Yorkshire in a pilot scheme which we plan to roll out into the North East. We are saying to apprentices, their parents and to the education establishment that apprenticeships can be a direct route to the boardroom or just to becoming a leader within a particular aspect of their career. They can also come to the IoD’s guru panel for advice on any issue they might have. So we are really starting to engage future leaders.” Rob Hamilton: “We’ve identified that there’ve been skills shortages forever, but we are entering a period - looking ahead to public sector cuts and cuts in education – in which skills is an area that is going to see big, big reduction in funding. “The ability of people to go back and relearn GCSEs or A-Levels will be greatly reduced. It’s important to make sure that young people in particular are aware of what they need to do and the opportunities that they might have in the future. Because some of those second chances will not necessarily exist, at least in the public sector. So actually businesses could be the ones in the future that are driving the skills agenda.” Bob Paton: “But we have to make it easier for SMEs to take on apprentices because
BUSINESS QUARTER
DEBATE
Skills are incredibly important for the tech industry and technology is an area which all businesses can benefit from it’s pretty difficult at the moment. It took us eight months to set up our apprenticeship scheme, and we’re a big corporate with a big management team to implement it.” There is, however, a new North East IT apprentice hub in the pipeline backed by the regional IT industry body Dynamo, working with e-Skills and the National Apprentice Service. This, explained Bob, will have around 20 apprenticeship places each in Newcastle and Sunderland and addresses a major gap in the region’s training sector. But those drawing up its syllabus will be hoping to avoid Steven Forrest’s experiences of apprenticeships. He said: “As a professional
04
services organisation, one of the biggest challenges we face when we look at apprenticeship schemes, for example, is the actual relevance of their content. So we have had to develop our own in-house training scheme where we helped individuals develop skills that would allow them to move into senior roles fairly quickly. I think that’s a huge failure of apprenticeship schemes at the moment.” Natalie Sykes drew attention to soon-to-beimplemented government reforms that will enable SMEs to access training courses set up by larger companies under the ‘Trailblazer’ scheme. “The government is saying is that if large organisations can create the academies and the framework, then there’s no reason why SMEs cannot link into those. So they are actually giving businesses what they need, as opposed to the colleges who historically have catered for trendy classes, like sports for the boys or perhaps beauty for girls. It’s a change that has to happen to make [training] relevant for business and it will be remarkable when the change does happen.” Of course, there are sector skills councils to help academia contribute to plugging skills gaps. Rob Kleiser warned: “There is some anxiety from an academic point of
view about the engagement of sector skills councils with SMEs. Inconsistency occurs across different sectors in terms of how much they engage with industry and respond to their needs effectively. There are certain sector skills councils who are strong, but some are too distant from industry and so some layers still need to be broken down in order to get appropriate direction.”Rob Hamilton highlighted the power of industry representative organisations, such as the North East IT group Dynamo, in generating positive changes to aid small business success. However, he added: “We don’t have that type of leadership across the board in all sectors.” Bob Paton: “We have to make sure that changes because every piece of research tells us industry will only be successful if it groups together as a network and collaborates for the common good. We are the only industrialised region which can reach out to every company large or small, public or private, and every school, college, university, MP and support organisation. We need to grab hold of this opportunity and keep on preaching the same message about collaboration and skills.” Rob Hamilton: “In political circles when they talk about Sheffield, Manchester, Leeds and Liverpool inter-connectivity [between cities] is perceived as very important because of the agglomeration of activity. But the North East is very different. We are quite a small region but actually we can be genuinely very well-connected because there’s not [as much movement of people] in or out of the region. So that means organisations should be extremely incentivised to invest in success here and in the skills base of the workforce. But they need to recognise that they have to work in partnership with others.” Strengthening the region’s pull factor as a place to forge a career is also important, said Steven Forrest: “What we’re seeing as a business compared to a few years ago is that we’re managing to encourage bright minds that work in and around London to come back to Newcastle. It would appear that the future bright minds of the North East now want to stay the North East, whereas 10 or 15 years ago that wasn’t the case.”Peter Ferry: “When I left university you went to work in London because that’s where you got the experience
I’ve wasted a lot of money [on technology] because things are changing at such a fast pace and exposure to the major companies. But apprenticeships in the tech industry are now being seen as a great way of getting the right kind of experience and I think anything that can be done on a regional level to layer the experience onto the value of apprenticeship programmes is a tremendous thing.” Joanna Berry and Dinah Jackson both reminded delegates of the power of placement schemes within education. Dinah said: “Even before young people reach that decision between work, college or university, there is maybe more work we can do with SMEs and larger organisations around work placements.” Ahmed Khan suggested that “exciting youngsters” about industry was also important. “If we take the hotel sector, for example, most 15-year-olds have never been in a hotel, so why would they think about working in a hotel? So it’s up to the hotels to give young people exposure to them and show they are a great place to work. So what does industry have to do to excite people into industry?” Bob Paton: “I think it’s really hard for young people today. When I was young you could see where industries were. You could see coal, you could see the steel industry and the shipbuilding but I think it’s very difficult for young people to see where the jobs are now. We’ve got to get into schools very early on and tell them about various jobs and excite them because we will only get people who want to pick IT at secondary school if they’re excited about it at primary school.” Peter Ferry: “Skills are incredibly important for the tech industry and technology is an area which all businesses can benefit from.” Peter then asked delegates how the region’s
05
BUSINESS QUARTER
DEBATE SMEs might better take advantage of technology-driven opportunities – and how that can be linked to getting young people enthused about technology to help plug skills gaps. Dinah Jackson explained how the North East LEP’s work with businesses to help drive demand for business support is part of the solution. “We are encouraging businesses who might not even know that they want to grow yet, to actually think about growth aspirations. It might not even be large-scale, but if a company with 15 staff takes on two more and you multiply that out by the number of businesses, that’s a lot of jobs.” Next, Bob Paton reminded those around the table that, despite looming concerns about current and future skills gaps, there are plenty of positive things happening in the region to help drive change. He mentioned Gateshead College’s work on Nissan’s Wearside patch and South Tyneside’s replica ship’s bridge – which enables trainees to simulate navigating any harbour in the world – as reasons to be optimistic about the North East skills base. Returning to the key theme of technology, Colin Turnbull, of the North East BIC – which is home to businesses of a wide range of sector and size – said: “People come to us with ideas for businesses which they then grow to a certain point. But then they often lack the expertise technology-wise to take them any further. If the managing director is 30 or under it’s not usually a problem. They embrace the technology and move on. But those above that age can struggle, so it then comes down to the trust. Who do they trust? Which partners do they use to try to advance their business? So the stumbling block on many occasions is the technology.” Positively, however, he has worked with plenty of businesses that have been transformed by embracing new technologies. In one example, he said, a team of electricians had grown their business by 20% through gadgetry like vehicle tracking and better use of mobile devices. Joanna Berry: “We need more of these stories out there. When you see someone else doing something and hear such stories it brings things to life.” Dinah Jackson: “It’s about putting case studies and stories of what worked and what
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We need talk ourselves up more [as a region] because we don’t do enough of that. For the size of our population we do achieve a considerable amount of business growth and diversity
06
didn’t work within people’s grasp, and the LEP is helping to facilitate that.” It was also suggested by Peter Ferry that North East SMEs could benefit from seeing more examples of global best practice in how technology has been used to fuel growth. Meanwhile, providing a small business perspective at the debate was Ahmed Khan, who shared the challenges he has faced in taking full advantage of technology. “Technology is vital to our business but I struggled when I first took on my franchise and had to set the business up and structure it. From an IT point of view, McDonald’s doesn’t provide any of that - that’s entirely up to the franchisee. I stumbled around to find my own way into securing help from an IT company to have a cloud-based system. I was quite technology savvy but it was tough trying to find the right outsourced facilities that I needed. That’s where a lot of businesses struggle. They don’t know what’s out there and how to get hold of it. It’s difficult for small businesses to actually find that cutting-edge technology which potentially isn’t going to cost them a great deal of money but could save them great deal of time. “So I think that’s where we are potentially falling down. We need to make things more accessible and market what’s available so that it’s easier for people to find what they need.” Joanna Berry: “But as an SME you also have to be future proofed in terms of technology, otherwise it gets expensive.”
Ahmed Khan: “I’ve wasted a lot of money [on technology] because things are changing at such a fast pace.” Bob Paton: “And you only get one chance to make a decision [on investing in technology].” Ahmed Khan: “You want to spend your pound wisely and to get return on that pound.” Peter Ferry: “What I’m hearing today is that there is an issue around the awareness of technology and what it can achieve, and also about trust. I think if we can use stories and similar examples of what other businesses have achieved and reach out through the networks that exist through banks and LEPs, that will help. At Microsoft we do build business case studies but maybe this isn’t working as well as it should from what I have heard.” Bob Paton: “I think there is just so much information out there that it’s hard to find the right thing.” Peter Ferry: “So maybe it’s not about creating more information it’s about being
more targeted.” Bob Hamilton: “For me that’s something that technology should be able to solve. How do you create and aggregate that information in a geographic area to make it easier for people to do things. Also, we talk a lot about needing more initiatives, but I think perhaps were not very good at working with the existing framework we have and supporting existing initiatives. One thing I hear a lot from businesses, is that there are too many things out there. Everyone has their own branded initiative. Maybe technology has a role in making it easier for businesses.” Marie Willson suggested that UKTI might be able to help businesses better access new technologies by making IT advice more prominent in the remit of its trade advisors. Dinah Jackson underlined the importance of “knowledge exchange sessions” facilitated by the North East LEP, which bring trade bodies, government departments and business advisers together in one room.“They are important mechanisms for helping
So I think that’s where we are potentially falling down. We need to make things more accessible and market what’s available so that it’s easier for people to find what they need
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BUSINESS QUARTER
DEBATE SMEs might better take advantage of technology-driven opportunities – and how that can be linked to getting young people enthused about technology to help plug skills gaps. Dinah Jackson explained how the North East LEP’s work with businesses to help drive demand for business support is part of the solution. “We are encouraging businesses who might not even know that they want to grow yet, to actually think about growth aspirations. It might not even be large-scale, but if a company with 15 staff takes on two more and you multiply that out by the number of businesses, that’s a lot of jobs.” Next, Bob Paton reminded those around the table that, despite looming concerns about current and future skills gaps, there are plenty of positive things happening in the region to help drive change. He mentioned Gateshead College’s work on Nissan’s Wearside patch and South Tyneside’s replica ship’s bridge – which enables trainees to simulate navigating any harbour in the world – as reasons to be optimistic about the North East skills base. Returning to the key theme of technology, Colin Turnbull, of the North East BIC – which is home to businesses of a wide range of sector and size – said: “People come to us with ideas for businesses which they then grow to a certain point. But then they often lack the expertise technology-wise to take them any further. If the managing director is 30 or under it’s not usually a problem. They embrace the technology and move on. But those above that age can struggle, so it then comes down to the trust. Who do they trust? Which partners do they use to try to advance their business? So the stumbling block on many occasions is the technology.” Positively, however, he has worked with plenty of businesses that have been transformed by embracing new technologies. In one example, he said, a team of electricians had grown their business by 20% through gadgetry like vehicle tracking and better use of mobile devices. Joanna Berry: “We need more of these stories out there. When you see someone else doing something and hear such stories it brings things to life.” Dinah Jackson: “It’s about putting case studies and stories of what worked and what
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We need talk ourselves up more [as a region] because we don’t do enough of that. For the size of our population we do achieve a considerable amount of business growth and diversity
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didn’t work within people’s grasp, and the LEP is helping to facilitate that.” It was also suggested by Peter Ferry that North East SMEs could benefit from seeing more examples of global best practice in how technology has been used to fuel growth. Meanwhile, providing a small business perspective at the debate was Ahmed Khan, who shared the challenges he has faced in taking full advantage of technology. “Technology is vital to our business but I struggled when I first took on my franchise and had to set the business up and structure it. From an IT point of view, McDonald’s doesn’t provide any of that - that’s entirely up to the franchisee. I stumbled around to find my own way into securing help from an IT company to have a cloud-based system. I was quite technology savvy but it was tough trying to find the right outsourced facilities that I needed. That’s where a lot of businesses struggle. They don’t know what’s out there and how to get hold of it. It’s difficult for small businesses to actually find that cutting-edge technology which potentially isn’t going to cost them a great deal of money but could save them great deal of time. “So I think that’s where we are potentially falling down. We need to make things more accessible and market what’s available so that it’s easier for people to find what they need.” Joanna Berry: “But as an SME you also have to be future proofed in terms of technology, otherwise it gets expensive.”
Ahmed Khan: “I’ve wasted a lot of money [on technology] because things are changing at such a fast pace.” Bob Paton: “And you only get one chance to make a decision [on investing in technology].” Ahmed Khan: “You want to spend your pound wisely and to get return on that pound.” Peter Ferry: “What I’m hearing today is that there is an issue around the awareness of technology and what it can achieve, and also about trust. I think if we can use stories and similar examples of what other businesses have achieved and reach out through the networks that exist through banks and LEPs, that will help. At Microsoft we do build business case studies but maybe this isn’t working as well as it should from what I have heard.” Bob Paton: “I think there is just so much information out there that it’s hard to find the right thing.” Peter Ferry: “So maybe it’s not about creating more information it’s about being
more targeted.” Bob Hamilton: “For me that’s something that technology should be able to solve. How do you create and aggregate that information in a geographic area to make it easier for people to do things. Also, we talk a lot about needing more initiatives, but I think perhaps were not very good at working with the existing framework we have and supporting existing initiatives. One thing I hear a lot from businesses, is that there are too many things out there. Everyone has their own branded initiative. Maybe technology has a role in making it easier for businesses.” Marie Willson suggested that UKTI might be able to help businesses better access new technologies by making IT advice more prominent in the remit of its trade advisors. Dinah Jackson underlined the importance of “knowledge exchange sessions” facilitated by the North East LEP, which bring trade bodies, government departments and business advisers together in one room.“They are important mechanisms for helping
So I think that’s where we are potentially falling down. We need to make things more accessible and market what’s available so that it’s easier for people to find what they need
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organisations understand each other,” she said. “It’s about sharing intelligence and information on what works and what doesn’t work.” Natalie Sykes highlighted the power of similar schemes she has witnessed elsewhere in the UK. She added that SMEs shouldn’t be underestimated in terms of their ability to help shape frameworks that encourage business growth. She said: “There are incredible young, creative companies that can really change the whole framework into what’s needed, but it’s a leap of faith for the SME to think, if they are going to change for the better, it’s not going to cost them an absolute fortune to do so. But that all fits into the idea of knowledge exchange.” Dinah Jackson: “I also think we need talk ourselves up more [as a region] because we don’t do enough of that. For the size of our population we do achieve a considerable amount of business growth and diversity.” Rob Hamilton: “Getting those positive stories out does feel incredibly important. At the moment the North East is growing faster than many parts of the country and Newcastle is one of the fastest growing cities in terms of employment in the UK. But we don’t tend to shout about some of those positive messages. We could do much more to give the positive
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rather than negative side of things.” Bob Paton: “We just need to constantly keep on reaching out and introducing ourselves to new people and talking together. I would also be interested to see which sectors aren’t covered by networks because then I think we could encourage a few people to get them set up. The way Dynamo [the North East IT body] was created was by going out and looking at what other people were doing. We also have some powerful networks in the region for sectors like subsea and energy. Each industry needs to work collectively together. At this point Peter Ferry suggested some
08
measures that Microsoft could implement to help support technology-driven business growth in the North East. “We can help businesses hear some of success stories and become aware of what technology has to offer. We specifically need to address that trust issue by getting people to understand how other businesses have overcome the same challenges they have faced [and] what technology has been able to achieve. It’s not so much about Microsoft but our network of IT partners who deliver our technology. They are based locally in the North East and are supported by Microsoft.” Rob Hamilton suggested a positive step every delegate could take would be to each commit to supporting an initiative outside of those backed by their own organisations. He added: “There is also the challenge of how we as businesses and the public sector interact with younger people and provide opportunities for them. It could be through work experience, information and advice or in accepting some students for a period of time into our organisations.” Dinah Jackson called on business leaders in the region to back the work of the North East LEP’s business support board and its aforementioned online-based growth hub. “Part of what we want to do through the business support board is to raise profiles and promote the passion we’ve got in the North East and there is an opportunity to work on specific areas of that. But the growth hub is also going to be an absolutely pivotal force in the next few months. It’s about providing access to the right information at the right time for the right business purpose.” With delegates considering other ways of promoting business growth in the region, Marie Willson suggested collaborating with other organisations to promote more North East success stories. Natalie Sykes reiterated the importance of apprenticeships in driving business growth. “The apprenticeship pathway is paramount but it’s about having the right apprentices, the parents to support apprentices and actually say ‘this is the right pathway and could be a route to a degree without having to pay for it’. Attrition is also an issue. I’ve spoken to a few firms that might take on 10 apprenticeships but a year later
only have five left. So it’s about the resource that’s put into that framework to ensure those employees will stay with businesses for the longevity.” Colin Turnbull underlined the pressing need for more relevant IT skills to be embedded into apprenticeships and other training routes. “There are a lot of IT graduates that have taken the typical A-level and university route that are still not employer-ready. So the apprenticeship route could be ideal for the SME market. “The other issue in terms of technology is having the tools ready for the market so that the SMEs know what they’re buying into. If they make an initial mistake it’s really going to affect their business and could have a disastrous effect in the longer term. They don’t necessarily have the skill set themselves to make that decision, therefore they need a trusted partner. That is crucial.” Rob Kleiser argued that in the future the IT needs of SMEs should run throughout academic courses aimed young people: “IT cuts across everything in every sector,” he said. “Every single individual leaving at 18 or 21-years-old should know about what is required for an SME. But we need to know as educationalists what are the things that individuals should be leaving with. Also there is the role of colleges as a catalyst for business growth. Businesses understand their needs and they need to lead on this rather than the education providers. We often lead and set the standards, so I think it’s about supporting businesses to actually become more independent.” Ahmed Khan: “As a small business it’s about being aware of what’s out there to tap into to help my business progress, whether that’s taking on staff who are IT savvy and utilising them, or making sure existing staff have the right training so they can help expand the business.” Steven Forrest: “We also need to have the confidence to better promote the North East and make sure there is a consistent message. I also think it’s important to get the message outside of the North East about what we are doing here.” He added that social media could be a powerful tool in achieving this. Natalie Sykes agreed, urging delegates to form an online group to continue their sharing
High growth opportunities await While our debate in Newcastle highlighted some of the barriers between SMEs and growth opportunities, it also underlined the potent forces of technology, innovation and talent in terms of driving business success. High growth small businesses play a vital role in maintaining healthy economies, creating jobs and bringing investment into the UK.The North East, however, appears to lag behind other regions when it comes to nurturing these fast growing small firms. Despite being home to a thriving community of entrepreneurs, the region has the fewest fast growing small companies in England and Wales. According to a report commissioned by Octopus Investments and produced by the Centre for Economics and Business Research, the North East has 723 high growth small businesses. Nationally, this is higher only than Northern Ireland and compares to 2,147 in Yorkshire & The Humber, 2,294 in the West Midlands and 5,553 in London. The same report shows that, in 2013, high growth small businesses accounted for 36.2% of growth of UK GVA, despite making up only 3.4% of GVA. Clearly, then, this type of business is intrinsically linked to the success of regional economies. So how do we get more of them in the North East? Firstly, by encouraging small firms which are perhaps not yet in high growth mode to realise their full potential. And at Microsoft we believe they can do this by switching onto the amazing possibilities that arise when technology is fully exploited. Even the smallest of businesses now have access to extremely powerful tools which enable growth, ease access into new markets, tackle day-to-day problems and outstrip competition. Technology also has a role to play in overcoming industry-wide challenges to business success, such as skills shortages, as highlighted in our debate. It is also a catalyst for innovation and can help new ideas become profitable, growing businesses. We hope the actions set out in our debate, and Microsoft’s continued work in the North East, will help more high growth small firms come to the fore in the region in the coming months. Peter Ferry, strategic partnerships, Microsoft
of ideas beyond the debate. Her suggestion has since been actioned and plans are now taking shape for new collaborations in the future between the various organisations represented around the table. Delegates have launched an online group called Accelerate North East as a platform
09
for further discussion and, crucially, for the coordination of initiatives in the coming months. Peter Ferry ended the debate by promising to “bring everyone back together at some point in the future to review how we’ve been able to help move this agenda forward in the North East”. n
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DEBATE
organisations understand each other,” she said. “It’s about sharing intelligence and information on what works and what doesn’t work.” Natalie Sykes highlighted the power of similar schemes she has witnessed elsewhere in the UK. She added that SMEs shouldn’t be underestimated in terms of their ability to help shape frameworks that encourage business growth. She said: “There are incredible young, creative companies that can really change the whole framework into what’s needed, but it’s a leap of faith for the SME to think, if they are going to change for the better, it’s not going to cost them an absolute fortune to do so. But that all fits into the idea of knowledge exchange.” Dinah Jackson: “I also think we need talk ourselves up more [as a region] because we don’t do enough of that. For the size of our population we do achieve a considerable amount of business growth and diversity.” Rob Hamilton: “Getting those positive stories out does feel incredibly important. At the moment the North East is growing faster than many parts of the country and Newcastle is one of the fastest growing cities in terms of employment in the UK. But we don’t tend to shout about some of those positive messages. We could do much more to give the positive
BUSINESS QUARTER | SUMMER 14
DEBATE
rather than negative side of things.” Bob Paton: “We just need to constantly keep on reaching out and introducing ourselves to new people and talking together. I would also be interested to see which sectors aren’t covered by networks because then I think we could encourage a few people to get them set up. The way Dynamo [the North East IT body] was created was by going out and looking at what other people were doing. We also have some powerful networks in the region for sectors like subsea and energy. Each industry needs to work collectively together. At this point Peter Ferry suggested some
08
measures that Microsoft could implement to help support technology-driven business growth in the North East. “We can help businesses hear some of success stories and become aware of what technology has to offer. We specifically need to address that trust issue by getting people to understand how other businesses have overcome the same challenges they have faced [and] what technology has been able to achieve. It’s not so much about Microsoft but our network of IT partners who deliver our technology. They are based locally in the North East and are supported by Microsoft.” Rob Hamilton suggested a positive step every delegate could take would be to each commit to supporting an initiative outside of those backed by their own organisations. He added: “There is also the challenge of how we as businesses and the public sector interact with younger people and provide opportunities for them. It could be through work experience, information and advice or in accepting some students for a period of time into our organisations.” Dinah Jackson called on business leaders in the region to back the work of the North East LEP’s business support board and its aforementioned online-based growth hub. “Part of what we want to do through the business support board is to raise profiles and promote the passion we’ve got in the North East and there is an opportunity to work on specific areas of that. But the growth hub is also going to be an absolutely pivotal force in the next few months. It’s about providing access to the right information at the right time for the right business purpose.” With delegates considering other ways of promoting business growth in the region, Marie Willson suggested collaborating with other organisations to promote more North East success stories. Natalie Sykes reiterated the importance of apprenticeships in driving business growth. “The apprenticeship pathway is paramount but it’s about having the right apprentices, the parents to support apprentices and actually say ‘this is the right pathway and could be a route to a degree without having to pay for it’. Attrition is also an issue. I’ve spoken to a few firms that might take on 10 apprenticeships but a year later
only have five left. So it’s about the resource that’s put into that framework to ensure those employees will stay with businesses for the longevity.” Colin Turnbull underlined the pressing need for more relevant IT skills to be embedded into apprenticeships and other training routes. “There are a lot of IT graduates that have taken the typical A-level and university route that are still not employer-ready. So the apprenticeship route could be ideal for the SME market. “The other issue in terms of technology is having the tools ready for the market so that the SMEs know what they’re buying into. If they make an initial mistake it’s really going to affect their business and could have a disastrous effect in the longer term. They don’t necessarily have the skill set themselves to make that decision, therefore they need a trusted partner. That is crucial.” Rob Kleiser argued that in the future the IT needs of SMEs should run throughout academic courses aimed young people: “IT cuts across everything in every sector,” he said. “Every single individual leaving at 18 or 21-years-old should know about what is required for an SME. But we need to know as educationalists what are the things that individuals should be leaving with. Also there is the role of colleges as a catalyst for business growth. Businesses understand their needs and they need to lead on this rather than the education providers. We often lead and set the standards, so I think it’s about supporting businesses to actually become more independent.” Ahmed Khan: “As a small business it’s about being aware of what’s out there to tap into to help my business progress, whether that’s taking on staff who are IT savvy and utilising them, or making sure existing staff have the right training so they can help expand the business.” Steven Forrest: “We also need to have the confidence to better promote the North East and make sure there is a consistent message. I also think it’s important to get the message outside of the North East about what we are doing here.” He added that social media could be a powerful tool in achieving this. Natalie Sykes agreed, urging delegates to form an online group to continue their sharing
High growth opportunities await While our debate in Newcastle highlighted some of the barriers between SMEs and growth opportunities, it also underlined the potent forces of technology, innovation and talent in terms of driving business success. High growth small businesses play a vital role in maintaining healthy economies, creating jobs and bringing investment into the UK.The North East, however, appears to lag behind other regions when it comes to nurturing these fast growing small firms. Despite being home to a thriving community of entrepreneurs, the region has the fewest fast growing small companies in England and Wales. According to a report commissioned by Octopus Investments and produced by the Centre for Economics and Business Research, the North East has 723 high growth small businesses. Nationally, this is higher only than Northern Ireland and compares to 2,147 in Yorkshire & The Humber, 2,294 in the West Midlands and 5,553 in London. The same report shows that, in 2013, high growth small businesses accounted for 36.2% of growth of UK GVA, despite making up only 3.4% of GVA. Clearly, then, this type of business is intrinsically linked to the success of regional economies. So how do we get more of them in the North East? Firstly, by encouraging small firms which are perhaps not yet in high growth mode to realise their full potential. And at Microsoft we believe they can do this by switching onto the amazing possibilities that arise when technology is fully exploited. Even the smallest of businesses now have access to extremely powerful tools which enable growth, ease access into new markets, tackle day-to-day problems and outstrip competition. Technology also has a role to play in overcoming industry-wide challenges to business success, such as skills shortages, as highlighted in our debate. It is also a catalyst for innovation and can help new ideas become profitable, growing businesses. We hope the actions set out in our debate, and Microsoft’s continued work in the North East, will help more high growth small firms come to the fore in the region in the coming months. Peter Ferry, strategic partnerships, Microsoft
of ideas beyond the debate. Her suggestion has since been actioned and plans are now taking shape for new collaborations in the future between the various organisations represented around the table. Delegates have launched an online group called Accelerate North East as a platform
09
for further discussion and, crucially, for the coordination of initiatives in the coming months. Peter Ferry ended the debate by promising to “bring everyone back together at some point in the future to review how we’ve been able to help move this agenda forward in the North East”. n
BUSINESS QUARTER | SUMMER 14
Every single individual leaving education at 18 or 21 should know what is required for an SME. But we need to know as educationalists what are the things that individuals should be leaving with ROB KLEISER, DIRECTOR OF LIFESTYLE ACADEMY, NEWCASTLE COLLEGE