UK firms could generate billions with procurement tech

20 November 2017

UK firms are falling behind their European competitors by failing to embrace tried-and-tested technologies such as cloud computing and online procurement, according to the CBI.

Carolyn Fairbairn, the Confederation of British Industry’s (CBI) director general, told businesses that they could add as much as £100bn gross value to the UK economy were they to invest in well-established systems and catch up with more advanced countries.

“Too many firms are missing out on what’s right under their noses,” she said.

“Failing to adopt the nuts-and-bolts technologies of today is leaving a yawning gap in productivity and pay between businesses.”

It its report, From Ostrich to Magpie, the CBI found that UK only had a small contingent of highly productive firms at the cutting edge of new technologies and using the best management techniques.

It said almost 70% of UK workers were employed by firms where productivity is below the median. By contrast, only 65% in France and 60% in Germany were employed in such firms.

Fairbairn said their research showed low-productivity firms were not using the same technology as the best firms.

“Proven technologies like cloud, mobile, e-purchasing and cyber security are all technologies that the best firms are already using and some of the tail of low productivity firms are not,” she said.

“The UK is a decade behind Denmark—the proportion of companies with e-purchasing, enterprise resource planning [systems] is below the level where Denmark was in 2009.”

In the report, the CBI said it wanted the government to ensure that proven technologies such as cloud computing, electronic purchasing and cyber security were accessible to more businesses. 

It also said it wanted to establish a list of five key steps that any firm could take to become more productive, including adopting cloud computing, using e-purchasing technology, working with customer relationship management systems, enhancing cyber security plans and improving management and innovation skills.

Fairbairn called on the government to fund extra research to find the best way to boost productivity and marketing to get it those firms that need it.

“At a time when the public purse is tight, encouraging new technology take-up is one of the most effective routes to raising productivity,” the report said. 

“The diffusion of technology and best practices has been a serial blind spot for the government in its attempts to solve the UK’s deep-seated productivity pains and while there is no shortage of business support programmes from the government, this new industrial strategy is the perfect opportunity to address this blind spot in public policy.”

Meanwhile, the Prime Minister’s office and the Department of Business Energy and Industrial Strategy announced that an extra £2.3bn of public money will be pumped into research and development (R&D) spending in 2021-22.

The government said it would also work with industry to increase private spending, which could see total R&D spending increase by as much as £80bn over the next 10 years.   

The new funding is linked to Britain’s Industrial Strategy—a push to create more skilled, high-paying jobs that was first announced by May after she took office last year to help fortify Britain’s services-reliant economy against Brexit-related shocks.

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