SBA

IT’s The Future

So, welcome, Dear Reader, to my one-hundredth and final fortnightly IT Matters article. If you’ve read any of my previous mutterings - thank you for being there for me. If you’ve read lots of my IT Matters articles then I thank you most profusely, but you probably need counselling and should seek professional help. 

If you do seek help you won’t be alone. Tech and the digital world is enough to drive anyone nuts; ever-changing; as soon as you feel that you’re standing on solid ground some geek will jerk the rug from under your feet and flip you up into the clouds again with a new advance which renders yesterday’s assumptions and your associated strategy obsolete.

The Dept. for Enterprise is seeking help from its new Digital Isle of Man Executive Agency, a new public sector team directed by a largely private sector board. The agency’s purpose is “to develop and implement a strategy which will support sustainable economic growth and establish the Isle of Man as a centre of international excellence for the digital economy.”. I’ve been working in the development of tech-related strategy for a long, long time, and in the words of Ringo Starr, “It don’t come easy”. There will be mis-steps, failed initiatives, wasted money, curveballs, dropped catches - and we must accept them, they are part and parcel of operating in a highly dynamic and unpredictable sector. The new Agency should not be afraid of accepting risk and we should not automatically condemn it for its inevitable failures, it just needs to ensure that the island backs more winners than losers.

Ten years ago Treasury did not report the economic contribution of the ICT sector separately from the e-Gaming sector - it called them both ICT and in the national income accounts for 2008-9 the combined contribution was ten percent of our economy. The first separate reporting of ICT and e-Gaming was in the 2009-10 accounts, by which time ICT was estimated to be 3.8% of GDP, while e-Gaming contributed 9.1%. The last published accounts, for 2015-16, show that e-Gaming has nearly doubled in contribution over the past six years to 17.2% of GDP, and ICT has grown faster, increasing by c. 250% to 9.4% of GDP. Whatever we call it - ICT, Tech, Digital - it is the fastest growing substantive component of our economy and I hope that the next national income report, for 2016-17, will show that it has broken the 10% threshold. We have transformed from a position where our economic development policy did not really acknowledge tech value creation except as a support for e-gaming, to the place we are now where “Digital” - encompassing all economic contribution delivered to the world using digital channels - is recognised alongside our Finance, Visitor Economy and “tangible” Business sectors as one of the big hitters.

This makes sense to me - we can export digital value to the whole world instantly with little overhead, whereas shipping goods or people to or from the island is slow and expensive, and any services to do with finance or tax are now so heavily regulated and scrutinised by envious larger jurisdictions that the cost of sustaining existing offerings is unacceptably high. The Isle of Man will be doing well if it can maintain current levels of economic contribution from the Finance, Visitor and “tangibles” Business sectors - imagining that there will be any significant growth in our national income created by these is a naive fantasy, whereas Digital has demonstrated the ability to grow fast and serve global consumers. 

Some Digital offerings are controversial and under threat - on the island our success in online betting is vulnerable to external pressures, in other jurisdictions the delivery of digital pornography is similarly subject to a degree of global opprobrium, but the huge majority of online services are non-controversial and offer the island the opportunity to diversify and substantially grow our economy unfettered by significant regulatory or physical barriers. As a nation it is crucial that we empower ourselves to flourish in the global digital economy by diversifying our offerings and developing more of the talent and skills that have brought us recent success. I’m not offering anything new here - merely reiterating that which has been said before. 

We need more and better ICT education and skills development on the island. The original International Centre for Technology proposal would have seen The Nunnery become a leading-edge innovation in tech education - small but highly advanced; unfortunately the vision was not materialised despite the best efforts and intentions of the folk who sought to deliver it. Instead we are stuck with tertiary IT education from a University partner which is strong across many subjects in the arts and social sciences but sadly languishes in the bottom quartile of UK offerings for computing education. 

We need to eat our own dogfood more. We cannot expect to grow diverse and innovative digital offerings on the island if we are not prepared to help them along by buying from them when we have a choice. The recent example of the Bus-Man app, developed on island as the product of a competition organised by the Manx ICT Association and Gov’t, is a case in point. The competition stimulated the development of an advanced prototype public transport information service which could have been supported and developed into a strong and exportable product, but the ultimate customer, the Department of Infrastructure, ran off to the UK and partnered with a competitor instead. Similarly, on a larger scale, Isle of Man software developer PDMS which supplies a range of IT products to many UK public sector organisations, developed its “Employed” human resource management software which drives Employed.im and has been adopted by many similar sites in the UK, but instead of working with this local development to meet its needs the IoM Gov’t Office of Human Resources contracted with a UK supplier, Jobtrain, for the web system used to advertise and process applications for Gov’t jobs. 

This is not to say that Gov’t does not buy local digital services and products, of course it does, but it could buy more locally and in doing so would help more local digital companies to create more robust, diverse and exportable digital products. The same goes for the private sector, we have many companies on island who reach out to large off-island suppliers for some of their tech needs which could be fulfilled by local providers who employ on-island workers and have on-island product support. If as government and company bosses and senior managers today we hope that there will be jobs for our children on the island tomorrow then we need to direct more of our tech spending to smaller local providers - because they will probably be the employers of our children.

Much of that preference to spend off-island is simply about risk - the lower risk of buying from a big UK vendor instead of a smaller and more vulnerable local supplier. As I said earlier in this article, we must not be afraid of accepting risk. The digital sector is the fastest moving, fastest growing, legitimate business sector worldwide, it is a world of quick wins and fast failures but the scale of the wins clearly dwarfs the failures, seven of the top ten most valuable companies in the world are wholly or largely digital enterprises. Each risk is a small element of a much bigger ecosystem and without accepting risk and failure we cannot flourish. 

Risk is part and parcel of success. The Enterprise Development Scheme was a great idea, but its operating parameters have made it too risk-averse and demanded excessive due-diligence of investment candidates so that in the first two years only one sixth of the planned investment funding has been paid out. The Deputy CEO of the Dept. for Enterprise said recently “it was important the investment managers from SPARK ‘do their job and only support investments they think will be successful’”. I think we’d all like to be able to say that of our investments, everyone wants to back winners, but in seeking to be sure that we’re betting on the right horses we seem to have been too fussy, with the result that we have largely failed to place our bets. No bet equals no chance.

We must also collaborate more for our common good, Team Isle of Man, Isle of Man plc, however we wish to view it. As businesses we do not exist in isolation, we are each part of value chains which start with the original innovator who conceives a value-creating product or service and stretches through partner manufacturers, suppliers, intermediaries, promoters and reseller to the end consumer. In order to strengthen our digital sector we must collaborate more with on-island partners - the value of the whole being more than the sum of the individual parts. Similarly Gov’t as the largest supplier, consumer, and regulator on the island must think and behave in a more joined-up fashion. Having one department promoting the development of value-creating commerce on the island whilst another fails to provide the intellectual capital needed to support that commerce and other departments seemingly rush to buy products and services from foreign competitors is, bluntly, embarrassingly and unforgivably stupid and short-sighted. 

We have done OK, but we have room for improvement, our future prosperity depends on being better at digital and we have some great digital entrepreneurs and businesses on the island. They have delivered for us, providing high-value jobs which have absorbed the employment contractions in other sectors, and we as a nation must deliver for them. We, collectively, must supply the trained workforce, underwrite and accept the risk, buy the product - otherwise some other more far-sighted jurisdiction will offer them a better deal. 

Going forward there will be other folk writing about digital and tech in the Isle of Man Examiner Business News and I’m looking forward to seeing what they have to say.