Adopting "nuts and bolts" technology could add £100bn to UK economy
CBI: Cloud, cybersecurity and better management will unlock productivity
Businesses could improve their productivity by adopting "nuts and bolts" technologies and better management practices, according to the Confederation of British Industry's (CBI's) latest report.
Using cloud, mobile tech, e-purchasing services and cyber security could add 100 billion to the UK economy, and cut income inequality by 5%, the business lobby group said.
CBI director-general Carolyn Fairbairn said: "While the eyes of the business world can often be on 'the next big thing' in cutting-edge technology, too many firms are missing out on what's right under their nose. Failing to adopt the nuts and bolts technologies of today is leaving a yawning gap in productivity and pay between businesses."
UK performance on taking up digital technology lags behind European leaders, the report - titled From Ostrich to Magpie - pointed out. In 2015 the number of UK firms adopting cloud computing was 30% below Europe's best performers, it said.
It also identified deep-seated, low productivity as the achilles heel of the UK economy, holding back prosperity. Lower productivity firms account for 69% of the UK's workforce, compared to 60% and 65% in Germany and France respectively.
While UK businesses lead counterparts in other G7 countries in integrating with global chains of commerce, collaborating with external partners and in having a mobile labour market, their exposure to strong competition, lack of staff training and development, and low budget for adopting new tech weaken their prospects, the report found.
The report claimed the UK's best performing businesses are highly innovative and are the first to adopt cutting-edge technology. Furthermore, firms that do not invest in readily available technology now are less likely to invest in cutting edge technology, such as blockchain and artificial intelligence, in the future.
Better management is also key to unlocking productivity, the CBI said. Its report stated: "UK businesses underperform on the adoption of effective management and leadership styles relative to top performing countries. This is crucial to productivity."
In order for this change to happen, the CBI has recommended five points the government should follow. Firstly, increasing the adoption of tested technologies should be a central theme of the Industrial Strategy.
Secondly, over the next 12 months the Department for Business, Energy and Industrial Strategy (BEIS) and the Treasury should run a competition to deliver a pilot scheme providing support for firms that want to adopt such technologies.
Thirdly, the future funding of Local Enterprise Partnerships should be linked to driving the adoption of new technology and best management practices.
Fourthly, the BEIS should partner with the 'Be the Business' movement and the CBI to run a campaign titled "five technologies that all companies could adopt".
Lastly, Innovate UK, the government's quango tasked with driving innovation, should launch a competition to create a TripAdvisor style e-platform where firms can assess technologies and technology providers.
Additionally, closing the productivity gap could also reduce the difference between the highest and lowest earners in the UK. The CBI highlighted analysis by the OECD which showed that where firms are more unequal in terms of productivity, people are more unequal in terms of pay.
Juergen Maier, CEO of Siemens UK, said: "There is an emerging consensus amongst businesses, policy makers and academics that a key focus of UK's industrial strategy needs to be on the digital technologies that will power the economy over the next decade. This report correctly points out that by prioritising tech diffusion we can boost productivity and support better wage growth."
The CBI wants the government to create an AI commission in 2018 to examine the effect of artificial intelligence on the workforce. It hopes the commission would be able to set out an action plan to outline how to raise productivity, spread prosperity and open up new paths to economic growth.
Image source: Bigstock
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