Few would deny that the prosperity of our economy is driven in part by work coming out of our outstanding universities, such as Oxford or LSE. But imagine if it was revealed that they were delivering less than two thirds of their potential for economic innovation and productivity. It would be a national scandal for sure.
And yet, we face just such a shortfall in the value we get out of the data in our UK economy. At Digital Realty, we recently released the Data Economy report, suggesting that British business is extracting just 58 per cent of the potential value of the data it holds. If we exploited our data – often described as the “new oil of the economy” – to its fullest then we would add another £52 billion to UK GDP, which is about the same size as the total GDP of a country such as Sri Lanka. A prize worth fighting for.
So why are we not making the most of our data? It may be, in part, because people don’t really know where the value in data lies. In the wake of the misuse of Facebook data by Cambridge Analytica, people think of data in terms their personal information being sold for profit. But that is a very, very small part of the Data Economy.
Entire industries, industries the UK excels in, have been born from new and better ways to use data – computer game development, one of the UK’s fastest growing sectors has boomed by turning data into ever more interactive and immersive experiences. The sector’s latest ‘unicorn’, Improbable, builds on cloud computing technologies to process data en masse and turn it into large scale simulation and virtual worlds. Deepmind, meanwhile, leads a fleet of British Artificial Intelligence (AI) companies using data to transform everything from medical diagnosis to handling every day office administration.
Financial services businesses in the UK lead in their ability to turn data into value – data is worth £11 billion to them each year, and it shows in the rise of Britain’s FinTech industry. Banks like Starling are using live data to help users better manage their finances; DueDil has transformed due diligence around the world through data access and more new, innovative businesses appear every week that use data to transform finance, to the benefit of the people and the economy.
Much more important, however, is how data improves business intelligence and decision-making: how supermarkets know exactly what they are running short of, what is popular in one store but may not be needed in another one a few miles away – all this data improves the efficiency of the supply chain and logistics.
In Ansbach, Germany, Adidas has opened its ‘Speedfactory’, a factory that is populated with highly automated machines, creates trainers from digital plans and runs a ‘digital twin’ to simulate production and predict any issues in the manufacturing process. The entire Speedfactory runs on data which significantly shortens the time to market for trainers. This new lease of innovation for Adidas also enables them to offer designs that were previously impossible.
Or think of the agricultural sector – which the Data Economy Report shows has grown the value of its data more than any other sector over the past four years. Here data is enabling driverless tractors to plough fields or apply fertiliser more accurately than if they’d been driven by a human. Costs are cut, waste reduced and efficiency improved.
And, indeed, data will be vital in ensuring the safe use of driverless cars. Other developments in AI, which open up huge opportunities for the British economy, will be underpinned by vast amounts of data being processed.
There are other issues that are holding us back. Businesses – in particular small and medium sized businesses – are not investing at a sufficient rate in systems that will allow them to make the most of the invaluable data they have. Those that have managed to do so operate at a significant competitive advantage.
There is also a greater need to invest in the infrastructure that allows for the most efficient distribution of data. As we well know, superfast broadband and 4G are not universally available. The advent of 5G may change this over time but requires investment. This is also about how best to store your data. For bigger companies, making sure your data is being stored in the same centre as your main customers can give you vital improvements in speed, reliability and connectivity. By providing this ability plus rapid connectivity and processing, security and overall cost savings each new data centre adds £436 million per year to the UK economy.
But perhaps the biggest issue to be addressed is the skills gap. Most businesses have real problems recruiting staff who have the ability to develop and maintain data analytical systems. It was recently estimated that by 2020 the UK would be short of 150,000 skilled digital workers – and that was before the effects of Brexit were factored in. It is expected that the decision to leave the EU will seriously affect our ability to attract talent in the form of the mathematicians, statisticians and computer scientists who can build and develop the Data Economy.
Nowhere is this more important than in the City of London. According to the report, the financial services sector generates just over 15 per cent of the UK’s digital value – second only to the ICT sector itself. That value has grown by 22 per cent in the last four years; but the report suggests that it could grow at a rate of 55 per cent by 2025 if we can remove constraints on growth. That is a huge opportunity, particularly in a post-Brexit world.
The UK is leading the way in the FinTech revolution, established financial services, AI, and even aerospace. It would be a depressingly wasted opportunity if that competitive advantage was lost by not understanding the value of data, and by failing to exploit 100 per cent of its enormous and edge-giving value.
Rob Coupland, EMEA Managing Director at Digital Realty
Image Credit: Janneke Staaks / Flickr