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					  South West Large Organisations ICT Research: Impact, Issues
                     and Intentions 2008
                             Final Report

                            Prepared for:

               South West Regional Development Agency




                            Prepared by:

                     Step Ahead Research Ltd
                              and
                      John Horne Associates

                             2nd Floor Suite
                          23 Southernhay East
                                 Exeter
                                EX1 1QL
                         Tel No. 01392 433288

                        790 Innovation Buildings
                           Kent Science Park
                              Sittingbourne
                             Kent ME9 8HL
                         Tel No. 01795 438827

                                Suite 209
                           Coppergate House
                             16 Brune Street
                              London E1 7NJ
                         Tel No. 0207 7953 8423

July 2008
                                                                                                    South West Large Organisations ICT Research 2008




CONTENTS
EXECUTIVE SUMMARY .................................................................................................................................................... V
1.       INTRODUCTION AND BACKGROUND .................................................................................................................... 1
     1.1     AIMS OF SOUTH WEST ICT LARGE ORGANISATIONS RESEARCH ....................................................................................... 1
     1.2     METHOD AND APPROACH......................................................................................................................................... 1
     1.3     THIS REPORT.......................................................................................................................................................... 4
2.       OVERVIEW OF ICT IN THE ORGANISATIONS ......................................................................................................... 6
     2.1      BACKGROUND ................................................................................................................................................... 6
        2.1.1    Policy context ........................................................................................................................................... 6
        2.1.2    Impact of ICT on organisations ................................................................................................................ 7
        2.1.3    Differences between ICT Exploitation by Large Organisations and SMEs ................................................ 7
     2.2 TYPOLOGIES .......................................................................................................................................................... 8
     2.3 CONCLUSIONS ...................................................................................................................................................... 12
3.       ICT ADOPTION – CURRENT AND FUTURE............................................................................................................ 14
     3.1 BACKGROUND ...................................................................................................................................................... 14
         3.1.1    Key Issues ............................................................................................................................................... 14
     3.2       KEY FINDINGS ................................................................................................................................................. 15
         3.2.1    Current technologies .............................................................................................................................. 15
         3.2.2    Future ICT plans ..................................................................................................................................... 16
         3.2.3    Less important technologies .................................................................................................................. 17
     3. 3      CONCLUSIONS ................................................................................................................................................. 18
4.       INTEGRATION OF ICT IN THE BUSINESS .............................................................................................................. 20
     4.1 BACKGROUND ...................................................................................................................................................... 20
        4.1.1   Key Issues ............................................................................................................................................... 20
        4.1.2   SME Business Processes supported by ICT ............................................................................................. 20
     4.2 KEY FINDINGS ...................................................................................................................................................... 21
        4.2.1   ICT in Main Business Processes .............................................................................................................. 21
        4.2.2   Integration of ICT ................................................................................................................................... 21
        4.2.3   Barriers to Integration ........................................................................................................................... 22
     4.3 CONCLUSIONS ...................................................................................................................................................... 22
5.       ICT STRATEGY....................................................................................................................................................... 24
     5.1 BACKGROUND ...................................................................................................................................................... 24
        5.1.1   Key Issues ............................................................................................................................................... 24
        5.1.2   SME adoption of ICT strategies .............................................................................................................. 24
     5.2 KEY FINDINGS ...................................................................................................................................................... 25
        5.2.1   ICT strategy ............................................................................................................................................ 25
        5.2.2   Drivers for adopting an ICT strategy ...................................................................................................... 25
        5.2.3   Senior Management Awareness of ICT .................................................................................................. 27
     5.3 CONCLUSIONS ...................................................................................................................................................... 28
6.       PRODUCTIVITY AND GROWTH ............................................................................................................................ 30
     6.1 BACKGROUND ...................................................................................................................................................... 30
        6.1.1   Key Issues ............................................................................................................................................... 30
        6.1.2   Adoption of ICTs by SMEs and reported profitability/ turnover ............................................................. 30
     6.2 KEY FINDINGS ...................................................................................................................................................... 30
        6.2.1   Productivity ............................................................................................................................................ 30
        6.2.2   Barriers to Fully Exploiting Potential Productivity Gains ........................................................................ 32
        6.2.3   Growth ................................................................................................................................................... 33


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                                                                                                  South West Large Organisations ICT Research 2008


        6.2.4 Barriers to Growth ................................................................................................................................. 34
     6.3 CONCLUSIONS ...................................................................................................................................................... 34
7.       INNOVATION AND COLLABORATION.................................................................................................................. 37
     7.1 BACKGROUND ...................................................................................................................................................... 37
        7.1.1   Key Issues ............................................................................................................................................... 37
        7.1.2   SME collaboration .................................................................................................................................. 37
     7.2 KEY FINDINGS ...................................................................................................................................................... 38
        7.2.1   Innovation and Collaboration ................................................................................................................ 38
        7.2.2   Barriers faced by Functional ICT users ................................................................................................... 39
        7.2.3   Public sector collaboration ..................................................................................................................... 39
     7.3 CONCLUSIONS ...................................................................................................................................................... 41
8.       SUPPLY CHAIN, LOCAL SUPPLIERS, OUTSOURCING ............................................................................................ 43
     8.1 BACKGROUND ...................................................................................................................................................... 43
        8.1.1   Key Issues ............................................................................................................................................... 43
     8.2 KEY FINDINGS ...................................................................................................................................................... 43
        8.2.1   Supply chain integration ........................................................................................................................ 43
        8.2.2   Barriers to supply chain systems ............................................................................................................ 44
        8.2.3   Local suppliers ........................................................................................................................................ 45
        8.2.4   Public versus private sector procurement .............................................................................................. 46
        8.2.5   Private sector outsourcing ..................................................................................................................... 47
        8.2.6   Public sector outsourcing ....................................................................................................................... 48
     8.3 CONCLUSIONS ...................................................................................................................................................... 49
9.       ICT AND THE ENVIRONMENT .............................................................................................................................. 52
     9.1 BACKGROUND ...................................................................................................................................................... 52
        9.1.1   Key Issues ............................................................................................................................................... 52
        9.1.2   SMEs and ICT impact on the environment ............................................................................................. 52
     9.2 KEY FINDINGS ...................................................................................................................................................... 52
        9.2.1   Environment policies/ strategies ............................................................................................................ 53
        9.2.2   Travel ..................................................................................................................................................... 53
        9.2.3   Energy .................................................................................................................................................... 54
        9.2.4   Paper Reduction ..................................................................................................................................... 54
        9.2.5   Office Space ........................................................................................................................................... 55
        9.2.6   Drivers .................................................................................................................................................... 55
        9.2.7   Barriers................................................................................................................................................... 55
     9.3 CONCLUSIONS ...................................................................................................................................................... 56
10.      FLEXIBLE WORKING ............................................................................................................................................. 58
     10.1     BACKGROUND ................................................................................................................................................. 58
        10.1.1       Key Issues .......................................................................................................................................... 58
        10.1.2       SMEs reported benefits of flexible working ....................................................................................... 58
     10.2     KEY FINDINGS.................................................................................................................................................. 58
        10.2.1       Attitudes to flexible working ............................................................................................................. 58
        10.2.2       Drivers / Benefits ............................................................................................................................... 59
        10.2.3       Provision of ICT flexible working for staff relating to disability, health, caring responsibilities or
        cultural background ............................................................................................................................................. 60
        Shift working ........................................................................................................................................................ 61
        10.2.4       Barriers / less successful aspects of flexible working ........................................................................ 61
     10.3     CONCLUSIONS ................................................................................................................................................. 62
11        SECURITY ISSUES ................................................................................................................................................. 64
     11.1     BACKGROUND ................................................................................................................................................. 64
        11.1.1       Key Issues .......................................................................................................................................... 64
        11.1.2       SMEs and security ............................................................................................................................. 64
     11.2     KEY FINDINGS.................................................................................................................................................. 65

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                                                                                                  South West Large Organisations ICT Research 2008


        11.2.1     Barriers .............................................................................................................................................. 65
        11.2.2     Issues attributable to flexible/ remote working ................................................................................ 65
        11.2.3     Lack of full trust in ICT ....................................................................................................................... 66
        11.2.4     Disaster Recovery Plans (DRPs) ......................................................................................................... 66
        11.2.5     Overcoming Security Breaches: Laptop Precautions, Devices and Policies ....................................... 67
     11.3     CONCLUSIONS ................................................................................................................................................. 68
12       INTERNAL BARRIERS ............................................................................................................................................ 70
     12.1     BACKGROUND ................................................................................................................................................. 70
        12.1.1       Key Issues .......................................................................................................................................... 70
        12.1.2       Barriers to ICT adoption among SMEs............................................................................................... 70
     12.2     KEY FINDINGS.................................................................................................................................................. 70
        12.2.1       Corporate culture .............................................................................................................................. 70
        12.2.2       Budget ............................................................................................................................................... 71
        12.2.3       Lack of understanding/ training ........................................................................................................ 71
        12.2.4       Specific public sector barriers ............................................................................................................ 72
        12.2.5        Skills levels ........................................................................................................................................ 72
        12.2.6       Location ............................................................................................................................................. 73
        12.2.7       Graduates and university links .......................................................................................................... 74
     12.3     CONCLUSIONS ................................................................................................................................................. 75
13.      CONCLUSIONS & RECOMMENDATIONS.............................................................................................................. 77
     13.1     OVERALL CONCLUSIONS .................................................................................................................................... 77
        13.1.1 Typologies.................................................................................................................................................. 78
        13.1.2 Integration................................................................................................................................................. 78
        13.1.3 Strategy ..................................................................................................................................................... 78
     13.2     SPECIFIC AREAS OF INTEREST .............................................................................................................................. 79
        13.2.1 ICT adoption and future plans .................................................................................................................. 79
        13.2.2 Productivity and growth ............................................................................................................................ 79
        13.2.3 Innovation and collaboration ................................................................................................................... 79
        13.2.4 Supply chain, local suppliers and outsourcing .......................................................................................... 80
        13.2.5 ICT and the environment .......................................................................................................................... 80
        13.2.6 Flexible working ........................................................................................................................................ 80
        13.2.7 Security issues........................................................................................................................................... 81
        13.2.8 Internal barriers......................................................................................................................................... 81
     13.3     IMPLICATIONS FOR BUSINESS SUPPORT ................................................................................................................. 82
BIBLIOGRAPHY .............................................................................................................................................................. 84
     APPENDIX I:            LIST OF STAKEHOLDERS CONSULTED ........................................................................................................... 88
     APPENDIX 2:           INTERVIEW TOPIC GUIDE ......................................................................................................................... 89




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                                                       South West Large Organisations ICT Research 2008




Executive Summary
While it is widely perceived that large public and private sector organisations have high levels of
information and communications technology (ICT) adoption and use, what this groundbreaking
research addresses is the extent to which these organisations fully exploit the opportunities
afforded by ICT. The issue for many senior managers lies in understanding what is available,
reviewing their existing business processes against these new opportunities and assessing the
strategic and business gains that full exploitation of the new technology could offer. As one Chief
Information Officer put it:

       ‘The rate of technological change has the potential to leave all of us standing.’

In February 2008 the South West Regional ICT Research Group comprising business advisers,
local authorities, private sector representatives and hosted by the South West Regional
Development Agency, commissioned this research to achieve an understanding of:

      The impact of different ICTs on business activity and productivity;
      The barriers large organisations face in optimising the use of different ICTs; and
      Current intentions in relation to ICT.

Detailed depth interviews with senior decision makers in public and private sector large
organisations across the region were conducted. Interviews were carried out with organisations
in each of the sub-regions across a spread of industry sectors and with organisations having
regional, national, international and global reach. Many of the largest organisations in the South
West participated in the study and as a result the findings offers a unique insight into senior
management strategic approaches to ICT issues and the impact of ICT on organisations’ activities
and delivery in the region, as well as their plans for the future.


Key messages
The key messages that emerged from the research were:

 Most large organisations in the South West exploit ICT to a degree for competitive advantage
  or improved service delivery. Many large organisations are working to align business processes
  and ICT in order to achieve efficiency or competitiveness gains. However, only a small group of
  organisations had a high level strategic approach to the role of ICTs in their business and were re-
  positioning their business activities around technological advances.

 Large organisations still have great potential to improve their exploitation of ICT. The potential
  gains in productivity, innovation, workforce flexibility and environmental benefits afforded by ICT
  are not yet being fully taken advantage of in the region. The large organisations reported various
  barriers to full exploitation of their ICT investments such as a lack of senior management
  understanding and financial support for ICT; failure to plan for training and not applying best-
  practice approaches when implementing ICT-enabled organisational change.




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                                                      South West Large Organisations ICT Research 2008




The research found strong examples of the significant role ICT can play in helping organisations
achieve productivity gains and drive innovation. However, differences in the extent of ICT
exploitation and the level and understanding of the role and impact of ICT among large
organisations became apparent during the research. Public and private sector organisations
range from having a functional understanding of ICT to a strongly strategic approach to ICT
exploitation.

      The Relationship between Strategic ICT Use and Productivity

Most large organisations reported that their ICT investment enables efficiency savings. Those
organisations which make links between business objectives and ICT strategy were found to have
a detailed understanding of how ICT has also enabled
them to achieve productivity gains and growth.             The reported business benefits of
Organisations with a more functional understanding of      integrated ICT systems included:
ICT reported their productivity gains in terms of
smaller-scale process efficiencies.                         Faster, more reliable
Those organisations using ICT applications to innovate           management information
or work collaboratively with external partners                   leading to competitiveness;
reported the benefits to be: improving communication            More efficient working –
with clients and suppliers; offering a better awareness          reducing duplication of effort,
of the business environment, identifying trends and              mistakes and confusion;
emergent technologies; enabling diversification into            Improved information for work
different markets; and offering access to a wider                scheduling and planning;
spread of skills and expertise. Functional ICT users            Limiting business risk and
tend not to work collaboratively on innovation.                  exposure to systems failure.

      Supply Chain and Local Suppliers

In terms of the impact on business productivity, the benefits associated with the use of ICT -
supported supply chain systems were increased efficiency and reliability of processes and
information. Local suppliers may miss out on orders if they are not ICT-enabled. There is broad
commitment among private sector organisations in the South West to operate ‘buy local’
policies.

Concluding comments

Strategic ICT exploitation by large organisations in the South West has enabled growth and
competitive advantage. For those with a more functional understanding of ICT the picture is one
of limited efficiency gains, missed competitive opportunities, and potential vulnerabilities to
market or social changes.

Board-level engagement with strategic ICT issues is needed in the South West. ICT-focussed
discussions among existing senior level networks in the region could encourage collaborative
working, initiate a review of the supplier network in the region and enable information sharing
on environmental and flexible working policies. The findings from this research can be used to
focus debate and direct actions among those engaged in the shaping of future policy and delivery
to support sustainable economic development in the South West.

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                                                          South West Large Organisations ICT Research 2008




1.       Introduction and Background

1.1      Aims of South West ICT Large Organisations Research

This study was commissioned in order to investigate issues affecting the exploitation of ICT
across larger firms and employers including public sector organisations in the South West.
The overall aim of the research is to support the South West Regional ICT Research Group
by providing an accurate and timely understanding of:

       The impact of different ICTs on business activity and productivity;
       The barriers large businesses face in optimising the use of different ICTs;
       Current business intentions in relation to ICT.

The data on which the research findings presented in this report are based was collected by
means of in depth qualitative interviews with senior management in 50 large organisations
in the South West. The findings have been contrasted with a range of contemporary articles
and publications on the subject and form a ‘sister study’ to the ICT Benchmarking Research
2008 – a quantitative survey of 3,205 South West SMEs which focused on ICT issues and
intentions relating to Small and Medium-Sized Enterprises (SMEs) 1.

The South West ICT Large Organisations Research had a range of specific areas of interest
which can be summarised under the following headings:

       Productivity and growth;
       Supply chain, including outsourcing, local suppliers, system use;
       Flexible working and broadening access;
       Environmental issues and procurement;
       Security;
       ICT plans including NGA Access 2, SaaS3, Version Deployment 4, etc, and;
       Skills.


1.2      Method and approach

The methodology used to conduct the ICT Large Organisations Research included five main
elements, which are outlined below:

1
  Step Ahead Research
2
 ‘NGNs essentially deliver convergence between the traditional world of public switched telephone networks,
and the new world of data networks’. www.ofcom.org.uk/consult/condocs/ngn/
3
  Software hosted online by suppliers.
4
  Updates to software or other applications. Example is MS Office 2007 which updates previous version MS
Office 2003. Issue of backwards compatibility when one organisation operates a more recent version.



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                                                        South West Large Organisations ICT Research 2008




              1. Review of current relevant research;
              2. Scoping exercise among key partners to ensure the research outputs
                  matched their delivery agendas;
              3. Range of organisations;
              4. Topic guide design; and
              5. Fieldwork.

Review of current relevant research
This review of current research looked at ICT adoption and exploitation among large
organisations at the national and international level. The scope of the review included
international sources, especially the US, where research has been conducted historically,
and the South East where most large UK businesses and organisations are located. The
review looked at the most recent findings from key business schools conducting research
programmes in area of ICT and business impact 5, and focussed on the key areas of interest
as detailed above. The process involved desk based research and web searches, reviewing
and collating information from the relevant literature and documentation. The review
focussed on recent material or publications from before that date that were considered
seminal to the field of study. The main findings from this review stage fed directly into
development of the topic guide and inform this report.

Scoping exercise
A central part of the preparatory work for the research was to establish with the South West
Regional ICT Research Group the most useful forms and type of information for meeting
their policy agendas. Short, exploratory telephone interviews were conducted with 9
stakeholders, a further two were consulted via email.6 The information gathered via the
interviews was collated and analysed for key themes and emerging important question
areas. A brief summary was created, the findings of which steered development of the topic
guide, ensuring the key issues and agendas of stakeholders were taken into account by the
research.

Range of organisations
The research focused on large organisations with over 200 employees based in the South
West.7 The sample was constructed to offer a spread of sectors and sub-regions and to
include a mix of local businesses and those with head offices located elsewhere nationally or
internationally.

The sample was also divided according to whether they were public or private sector
organisations. It was felt the range of ICT issues faced by public sector organisations was

5
  London Business School Digital Transformations Programme partners, further European and American
Business Schools.
6
  See Appendix 1 for list of participating stakeholders.
7
  The sample was extended to include organisations with over 200 employees rather than over 250 employees,
in order to provide fuller coverage across industry sectors in the region.



                                                                                                2
                                                          South West Large Organisations ICT Research 2008




likely to be more homogenous than those of the private sector, so a greater number of
private organisations were selected. The sample also included organisations operating as
trading entities within the public sector.

Topic guide design
The topic guide was structured according to the three research objectives:

            1. Impact;
            2. Issues; and
            3. Intentions.

The topic guide incorporated the detailed areas of interest set out in the Invitation to
Tender (listed in Section 1.1 above), and was designed to cover further areas of interest
emerging from stakeholder interviews and the results of the review stage.

The draft topic guide was piloted with a small sample of ‘friendly’ organisations and the
questions reviewed. Specific attention was given to flow and comprehensibility of the topic
guide as well as the manner in which respondents were engaged in the research.

Fieldwork
The fieldwork was conducted between February and May 2008. It was felt that all
organisations would benefit from an introductory contact from the RDA. The aim was for a
senior SWRDA representative to initiate contact with a senior management contact in the
organisations. The public sector organisations were contacted directly by the researchers.
This introductory contact was followed up by phone and email in order to secure agreement
and book interview time.

The interviews were conducted using a mixture of face-to-face and telephone interviews.
Part of the approach to securing engagement from respondents was to offer the choice of
interview methods in order to fit with their time pressures.

Sixty respondents from a range of senior management positions were interviewed.
Generally we spoke to a single respondent per organisation, however up to three
respondents per organisation took part. Of the 50 organisations which took part, 32 were
private businesses, the remainder were a mix of public sector organisations and
public/private hybrid organisations. Interviews were conducted with organisations in each
of the sub-regions, and across a spread of industry sectors. Businesses were selected from
the 8 RDA priority sectors 8 (with the exception of the Environmental Technologies sector
where no large organisations were identified) and other industry sectors such as Transport,
Retail, Professional Services and Mining. The organisations were regional, national,
international or global in reach.



8
  Advanced Engineering, Food and Drink, ICT, Leisure and Tourism, Marine, Bio-medical and Health, Creative
Industries and Environmental Technology. www.southwestrda.org.uk/sectors/index.shtm.




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                                                    South West Large Organisations ICT Research 2008




The public and public/private sector organisations interviewed represented the emergency
services, universities, a primary care trust, district, unitary and county councils and
providers of large-scale information services.

The study was designed to cover a spread of all sectors and to gain a view of the ICT climate
for large organisations in the South West. It was not designed to make comparisons
according to individual industry sectors.

Respondents were generally self-selecting after the initial approach to the organisation. The
majority of interviews were conducted with a single representative from the organisation,
however up to three people from some organisations were interviewed in order to gain
information across the range of topics of interest. The main job role clusters were:

       Managing Director / Regional or European Director;
       Director/ Head of IT, ICT, IS or Chief Information Officer / Finance Director;
       Head of Transformation or Business Analyst Managers; and
       Director of Operations or Deployment.


There were some unexpected respondents: in one large organisation with a proportionately
small office-based team, the Personnel manager was responsible for IT. Those at Director
level and above were generally board members. Some Directors or Heads of IT were on
Senior Management Teams, others reported to the Finance Director or IT Director.

Interviews lasted between 45 minutes and 3 hours with the majority lasting around 2 hours,
and covered a wide range of topics in depth. The interviews were transcribed and analysed
using a coding frame constructed from the original detailed areas of interest.

This research is qualitative and therefore was not designed to provide directly comparable
data to the ICT Benchmarking Research 2008.9 Instead the research explores the climate for
ICT among large organisations in the South West in terms of how well organisations feel
they embed ICT into strategic planning; senior management attitudes to ICT and the
organisational conditions that lead to successful adoption and roll out of ICT across the main
business processes.


1.3       This report

The researchers gained access to senior decision-makers in some of the largest
organisations in the South West and as a result this report offers a unique insight into senior
management strategic approaches to ICT issues and the impact of ICT on organisations’
activities and delivery, as well as their plans for the future.




9
    Step Ahead Research



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                                                  South West Large Organisations ICT Research 2008




This report presents the key findings of the Large Organisations ICT Research as well as
emerging trends by comparing the findings of the 2008 ICT Benchmarking Research 10 and
other relevant published information.

Chapter 2 explains the coverage of the research in terms of the range and type of
organisations and respondents and develops two typologies of ICT-exploitation. Chapter 3
investigates levels of ICT adoption and integration, while Chapter 4 examines the integration
of ICT in the business. Chapter 5 looks at ICT strategy. Chapter 6 explores the impact of ICTs
on productivity and growth; Chapter 7 reviews ICT-enabled innovation and collaboration.
Chapter 8 focuses on supply chain issues, followed by an examination of environmental
impacts in Chapter 9. Flexible working is looked at in Chapter 10. Security issues faced by
large organisations in optimising their adoption and exploitation of ICT are outlined in
Chapter 11. Chapter 12 examines internal barriers to ICT exploitation and makes an
assessment of current and future business intentions in relation to ICT. And finally Chapter
13 details the overarching key findings, and the conclusions and recommendations to be
taken forward.

A full bibliography for the articles referenced in the text can be found at the end of the
report.




10
     Step Ahead Research



                                                                                        5
                                                  South West Large Organisations ICT Research 2008




2.     Overview of ICT in the Organisations
2.1    Background
2.1.1 Policy context
In 2000, European Leaders committed the EU to becoming ‘the most dynamic and
competitive knowledge-based economy in the world capable of sustainable economic
growth with more and better jobs and greater social cohesion, and respect for t he
environment’. 11 A key area of policy was the ‘knowledge society’ – which would prioritise
research and development (R&D) and promote the use of ICTs to achieve sustained
economic growth.

The EU’s ICT strategy, i2010 was adopted in 2005. A mid-term review published April 2008
sets out key issues to address competitiveness and ICT take-up in Europe, paraphrased
below:
     to lead the transition to next-generation networks
     to create a Single Market for the digital economy
     to increase ICT research expenditure
     to evolve safeguards to match technology and market developments, without
       stifling the huge opportunities that online social and economic activity offers.

The key aims of UK government regarding ICT in the business sector are set out on the BERR
website. The ICT team is responsible for ‘promoting better regulation principles in pursuit of
proportionate market focused International and European regulatory environments for
electronic communications services and content sectors, ensuring that European industry
policy initiatives advance UK economic and commercial objectives.’ These principles are
underpinned by initiatives looking at ICT regulation, e-standards and global ICT
infrastructure.

Exploitation of ICT by public sector organisations in the UK was given a kick start by the e-
government initiative announced in 2002. The aims of the e-government agenda were to
exploit new technology in order to encourage partner working between public agencies,
improve services for the public, increase efficiency and deliver better engagement with the
public to help local government become more accessible and accountable. 12

The 2008-2011 SWRDA Corporate Plan sets out the key ICT issues for South West England.
The geography and lack of a strong transport infrastructure in the region limits access to
markets for South West businesses. Making better use of ICT is seen as a key way to enable
businesses in the South West to ‘engage with global markets for labour, finance, goods and
services, and ideas.’13 ICT is also seen as a key enabler of a ‘low-carbon regional economy,
where growth is driven by productivity gains and resource efficiency’. A priority is given to
improving broadband speeds in the region.

11
   Wim Kok
12
   TFL
13
   SWRDA (2008)



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                                                   South West Large Organisations ICT Research 2008




The key actions set out in the Corporate Plan to deliver these ICT policy aims are:

     • ‘Explore opportunities offered by “Next Generation Access” technologies
     • Investigate how all new planning approvals will make provision for future-proof, next-
        generation internet access technologies, including fibre-optic and wireless or satellite
        installations
     • Encourage private sector provision of commercial Internet access services to the hard
        to reach areas of the region
     • Commission research into take up and use of ICTs and their impact on the economy
        and in spatial planning
     • Promote ICTs that encourage green travel and flexible working.’14

2.1.2 Impact of ICT on organisations
The Leverhulme Digital Transformations Programme sets out the industry-level impact of
ICT: ‘ICT’s impacts on the structure and nature of industries are indelible: value chains are
being transformed; businesses that used to be integrated can now be unbundled with the
help of ICT; ICT-enabled cyber-mediaries, such as B2Bs, are driving new structures in
numerous value chains.’15 Rahul Basole states that at the level of individual organisations:
‘In today’s global and competitive environment, ICT can provide enterprises with the means
to streamline their organization, create new competitive advantage and potentially enter
new industries and markets.’ 16

As well as restructuring the way products are made and sold, and services delivered, ICT also
enables organisations to repurpose the way their workforces work collaboratively, take up
flexible working options and access information remotely. The issue for all organisations lies
in understanding what is available in terms of developments in ICT, reviewing their existing
business processes against these new opportunities and identifying the strategic gains that
adoption of the new technology could offer.

2.1.3 Differences between ICT Exploitation by Large Organisations and SMEs
In general current levels of ICT adoption in large organisations are higher than for SMEs.
Research done for DEFRA in 2005 found that ICT adoption increased with business size. ‘The
mean ICT adoption index for rural businesses rises from 4.4 (for sole traders) to 13.8 (for
250+ sites).’ For large urban businesses ICT adoption increases to a mean index of 15.5, the
highest score reported (maximum of 18). 17

Research by the Economist Intelligence Unit found that in Europe, ‘SMEs fare poorly
compared with large firms in access to capital, the fruits of research and development, high
quality networks and information technology systems, as well as management skills
training’.18


14
   SWRDA (2008)
15
   UCL
16
   Basole
17
   DEFRA
18
   The Economist Intelligence Unit (2006)



                                                                                         7
                                                    South West Large Organisations ICT Research 2008




The benchmarking research found 11% of SMEs in the South West are ‘strategic adopters’ –
who believe e-business is very important or essential.19 ‘Strategic adopters’ are significant
users of e-business techniques, including buying and selling online; use order-tracking and
CRM systems; almost all have a website and are broadband connected. A quarter of SMEs in
the region do not believe ICT is important to their business, do not use computers at all nor
plan to introduce ICT in their business in the future.

It was felt that there would be clearly observable differences between large organisations
and SMEs adoption and exploitation of technology. This Large Organisations ICT Research
was commissioned in order to address a lack of knowledge about the scale of these
differences, and the potential gulf that may exist between larger organisations and the
smaller ones in the South West in terms of their ICT exploitation. Key research questions
were constructed following initial discussions:

        Are large organisations in the South West universally good at exploiting ICT?
        Does the public sector lag behind the private sector with adoption of new
           technologies and the scale of implementation?
        Is it the case that larger private sector organisations can better afford to stay ahead
           in terms of investing and adopting new technologies?
        ...Or are they slower to change and adopt as their larger organisational structures
           may inhibit innovation?
This research addresses these questions, through a focus on the specific ICT areas of interest
set out in Section 1.1. Answers to these questions will enable the members of the South
West Regional ICT Research Group to gain an overview of the climate of ICT among large
organisations in the South West, as well as understand where best to target resources in
order to achieve the key aim of ‘productivity led growth’.


2.2        Typologies

As reported in the following chapters, most large organisations interviewed have an ICT
strategy, yet differences in the extent of ICT exploitation and the level of understanding of
the role and impact of ICT became apparent during the research.

To understand the interplay between ICT and successful delivery of strategic objectives, we
compared those public and private sector organisations interviewed according to:

        ICT strategy – whether aligned with business objectives, level of sophistication
        How ICT strategy is implemented – understanding of how to achieve business change
        Extent of ICT within the business and how fully systems are integrated


19
     Step Ahead Research



                                                                                          8
                                                          South West Large Organisations ICT Research 2008




      Sophistication of approaches to security issues and Disaster Recovery Planning
      Corporate culture – role of ICT specialists in advising Senior Management, Senior
        Management Team attitudes to ICT


From this analysis it emerged that public and private sector organisations range from having
a functional understanding of ICT to a strongly strategic approach to ICT exploitation. In
terms of our research questions in Section 2.1.2, not all large organisations we consulted are
universally good at exploiting ICT, and some public sector organisations are as good as
private businesses in adopting new technologies and the scale of implementation. The
evidence for this is presented against the key areas of interest in the rest of the report, and
the implications discussed.

Following on from the analysis two typologies were developed and are set out below.

The first is an example of a strategic transformation-led organisation. In the private sector
this is often as result of a merger or acquisition and the drive to maximise that investment
through standardising operations thereby achieving efficiency savings. For the public sector,
local government is also engaged in transformation programmes – the result of unitary
changes for councils, and the twin drivers of improved services and efficiency-savings.20 In
this first typology ICT is treated as a strategic function, linked to corporate objectives.




20
  For example: LIFT SW RIEP initiative (Regional Improvement and Efficiency Partnership) is improving
practice among Local Authorities in the South West. The scheme includes business process efficiencies through
use of technology.




                                                                                                   9
                                                 South West Large Organisations ICT Research 2008




                          Strategic Business Transformation

     Respondents had strategic responsibility for ICT. Job roles tend to be Business
     process or Transformation focussed. These respondents were responsible for
     transforming business processes, operating business improvement programmes
     aimed at achieving process and efficiency savings.

         ‘My role is to target the operating model and optimize business structures and
         processes.’

     Reporting structures mean they directly advise Senior Management, or are on the
     Senior Management Team. They see their role as to advise on the best ways to
     optimise business systems and channels of communication to the Board are in
     place. The ICT strategy is directly tied into corporate aims:

         ‘We operate business-led decision making. We put together strategy papers.
         Priority systems for the business are identified and the priority order for how
         they’ll be run is set out.’

     A strategy typically includes looking at:

     o   Efficiency
     o   Integrated information systems
     o   Providing better management information
     o   Future demand and growth


The second typology (below) shows an organisation where the opportunities afforded
through recent developments in ICT are not being exploited. The role of the ICT department
is seen as a support role, achieving functional efficiencies and cost-savings.




                                                                                      10
                                         South West Large Organisations ICT Research 2008




                           Functional ICT User

Responsibility for ICT tends to rest with a Head of IT. Their role often is one of
support, managing an IT support team and responsible for the day-to-day
maintenance of the IT infrastructure. Often they look to achieve cost-savings by
reducing down-time and systems outages. A ‘Functional ICT’ organisation tends
not to have an ICT strategy, or has one which focuses on infrastructure and
maintenance. They may be on the Senior Management Team, or report to
Finance Director but they lack influence and often have to deal with Senior
Management’s lack of understanding of ICT.

    ‘There’s a lack of understanding of IT in rest of business. Senior
    Management Team resist IT spend and don’t understand.’

The impact of a lack of strategic involvement in the rest of the business can be
negative:

    ‘The rest of organisation demand lots but they don’t budget. They don’t plan
    or incorporate spending on IT into projects. Finance have to sort out
    problems because IT was not consulted before projects began.’

    ‘IT is fragmented – sprung up in different parts of the business. I’m trying to
    coordinate IT better. We need to get the scale sorted out – using the best IT
    to support the business and achieve cost saving and efficiencies.’




                                                                              11
                                                   South West Large Organisations ICT Research 2008




The graph below shows an indicative distribution of organisations on a scale between
functional and strategic approaches. The distribution shows that the majority cluster in the
middle of the scale. Fewer functional ICT users cluster at the far left of the graph having the
least strategic take on ICT in their organisation. Similarly a small group of organisations had
a consistently high level strategic take on the role of ICTs in their business and were re-
purposing their businesses around technological advances. These strategic transformers are
found at the extreme right of the graph.

It is important to note that organisations tended to move along the scale depending on the
specific area of interest under discussion. For instance, one organisation with no ICT
strategy and very limited ICT integration nevertheless had identified business-critical
activities within a disaster recovery plan.

Figure 1       Typology distribution




2.3    Conclusions

As well as restructuring the way products are made and sold, and services delivered, ICT also
enables workforces to collaborate, adopt flexible working practices and work remotely.
General current levels of ICT adoption in large organisations are higher than for SMEs. The
benchmarking research found 11% of SMEs in the South West are ‘strategic adopters’ – who
believe e-business is very important or essential. A quarter of SMEs in the region do not
believe ICT is important to their business, do not use computers nor plan to introduce ICT in
their business in the future.

Differences in the extent of ICT exploitation and the level of understanding of the role and
impact of ICT among large organisations became apparent during the research. Public and
private sector organisations range from having a functional understanding of ICT to a
strongly strategic approach to ICT exploitation. Two typologies have been developed –
strategic transformers have a strongly strategic understanding of the role of ICT in achieving


                                                                                        12
                                                 South West Large Organisations ICT Research 2008




business objectives; functional ICT users tend to think of ICT in terms of simple process
efficiencies and cost-savings. The differences in ICT-related outcomes for each of these two
typologies are reported on against the key areas of interest in the rest of this report.

Implications
The productivity, innovation and workforce mobility opportunities afforded by ICT, reported
on at the start of the chapter, are not being fully taken advantage of by all large
organisations in the South West. Some public and private sector organisations are better
than others at exploiting gains from ICT. Consideration needs to be given to how these firms
might be engaged and supported to fully exploit ICT-enabled opportunities in order to
achieve the desired productivity led growth in the region.

The following chapter will look at the extent to which ICT underpins business processes in
large organisations in the South West.




                                                                                      13
                                                 South West Large Organisations ICT Research 2008




3.      ICT adoption – current and future

3.1     Background
3.1.1 Key Issues
Key trends in Information and Communication Technology are identified by the latest
review of the EU’s i2010 strategy. 21 These can be broadly summarised as changes in the way
information is created, stored and accessed:

Digitisation
The process by which previously separate media – eg: photos, music, documents such as
bank statements – become digital and able to be delivered via the global network. 22
‘IT has enabled the creation of a host of tools to create, manipulate, organize, transmit,
store and act on information in digital form in new ways and through new organizational
forms.’23

Digital convergence
‘Digital convergence brings together the separate worlds of audio, video, data and voice
communication services.’24 Examples of digital convergence are: Voice over Internet
Prototol (VOIP) which enables telephone services to be delivered via the internet; similarly,
radio and television stations are able to broadcast via the internet.

Connectivity
Digital convergence means the internet has become an essential tool for business and public
sector organisations. The key issues identified are set out below:

‘Broadband is becoming the standard mode of connectivity.’ 25 Key broadband issues are
increasing bandwidth requirements and ‘sluggish’ migration to high-speed broadband in
Europe. Ofcom's director of policy development, suggested Next Generation Access to
broadband (NGA) is ‘likely to be provided by a whole range of technologies and networks,
[including not only] Next Generation Networks (NGNs) and cable but also wireless and
satellite.’ 26

Wireless access is emerging in Europe as an alternative to the fixed-line internet
infrastructure, especially in rural areas. New handheld mobile devices using wireless
technologies, such as Blackberrys and Personal Digital Assistants (PDAs) will expand
broadband connectivity.


21
   EU Review (2008)
22
   EMC
23
   Atkinson
24
   EU paper (2006)
25
   EU Review (2008)
26
   Meyer



                                                                                      14
                                                       South West Large Organisations ICT Research 2008




Radio-frequency identification devices (RFID) are electronic tags which store data. They are
used to identify items, but unlike bar codes, do not need to be in close proximity to a
scanner.27 The EU mid-term review predicts that ‘RFID and sensor technologies embedded in
products will generate much more machine-to-machine communication and extend the
Internet to the “Internet of Things”.’
The 2008 ICT Benchmarking Research did not look at adoption of individual technologies so
direct comparison with SMEs in the region is not possible.28

3.2        Key Findings
3.2.1 Current technologies
Organisations were asked which new technologies have changed the way they work. The
technologies they mentioned are clustered into the following five main areas, which relate
back to the key technologies identified in the i2010 strategy:

           1. IP network – VOIP, centralised data storage, access gateway/portal technology
               enabling flexible/remote working, sending rich media over high speed internet;
           2. Wireless connectivity – blackberries and laptops (mentioned by many
               respondents), wireless services across sites, in hotels etc;
           3. Digitisation – digital content and products, digital dictation, Computer Aided
               Design (CAD and 3D CAD) is enabling move away from paper designs towards
               ‘virtual walkthroughs’;
           4. Web-based applications – online sales/bookings, blogging, intranets to enable
               information share;
           5. Bar-coding and RFID – used for real time stock control in warehouse, ticketing
               system.

Digitisation, increased connectivity and access to digital content are becoming increasingly
mainstream in the South West, and businesses and public sector organisations are
beginning to adapt ways of working to utilise them to achieve business objectives.

Strategic organisations we interviewed had embraced ICT and were aware of the pace of
change. As one Chief Information Officer put it:

           ‘The rate of technological change has the potential to leave all of us standing.’

Functional ICT users were able to point to key new technologies too. They were beginning to
move to wireless networked sites, applying technology to manage bandwidth requirements
and increasing use of web-based applications. The main difference between strategic and

27
     PC Magazine.
28
     Step Ahead Research.



                                                                                            15
                                                   South West Large Organisations ICT Research 2008




functional organisations’ adoption of new technology is one of scale – for functional ICT
users the extent of ICT innovation tends to be smaller and focuses on supporting existing
business processes. In comparison, strategic ICT organisations had re-engineered business
processes or organisational structures to deliver ICT-enabled productivity and achieve
growth.

3.2.2 Future ICT plans
Organisations were asked about their ICT plans for the future. Strategic transformers gave
detailed answers which referenced ongoing 3 or 5 year strategies and anticipated future
developments. Functional ICT users tended not to be able to reference detailed future ICT
plans.

A noticeable number of organisations were undergoing change management or business
transformation processes underpinned by ICT and this was reflected in the job titles of those
interviewed. They saw their role as one of understanding the business opportunities of key
ICT developments – transforming processes and procedures through ICT supported
initiatives. For some respondents their role does not involve running ICT projects or
delivering live services – instead they are responsible for ensuring ICT is aligned with
business strategy. (This issue will be discussed later in the report.) In line with the extent of
the ICT-enabled re-engineering of business processes found by this research, respondents
tended to talk about future ICT plans in terms of required outcomes more than specific
technologies.

Drivers of future investment
The drivers of future investment identified by the more strategic organisations were felt to
be increased expectations from business customers,
consumers and staff:                                         Some public sector organisations
                                                                had detailed plans including:
       ‘Demands will continue to grow for more
       information at the press of a button and wherever           PDAs enabling staff to
       it is required.’                                             interview the public and store
                                                                    signatures, show public-
Access wherever                                                     safety videos and complete
Public sector services were clear about the need to be              paperwork without returning
more joined up and seemed more innovative than the                  to the office
private sector in adopting new wireless technologies to            GPS-enabled police radios
underpin their work. This may be a reflection of the drive
                                                                   ERP systems to rationalise
to improve communications with the general public and               management        information
make services more accessible.
                                                                    across departments
                                                                   RFID used to manage library
Private sector businesses need to provide online services
                                                                    stock
to consumers and link into b2b virtual networks for
                                                                   SMS being used to book and
customers and suppliers. Key plans include:
                                                                    confirm home visits
      Wireless – Blackberrys and laptops, site specific
       wireless provision (hotels, transport hubs, worksites), remote working for emergency
       services staff and public sector officials



                                                                                        16
                                                 South West Large Organisations ICT Research 2008




       Web-based applications – online sales and improved access to information for
        consumers and business customers. Provision of access gateways for the total
        workforce.

Demand for more information
Plans ranged from:

       Creation of a new HR database for employees – ‘travel, recruitment, leave all done
        online’
       Implementing product life cycle management – ‘customer support, activity, can track
        modifications made’
       Embedding a information knowledge management strategy – ‘opens opportunities to
        be agile in commercial requirements’

Demand for capacity
A third driver was the increase in numbers of people using ICT and the quantities of data
being shifted around. Digitisation of documents, blueprints and consumer content is forcing
                                       organisations to review their network capacity.
                                       Several were installing new data centres and server
 One organisation plans to
                                       farms, increasing data capacity to enable them to act
 implement          manufacturing
                                       as data stores and securely store or archive digital
 software that collects data on
                                       content.
 processes.
                                       Key plans include:
‘The ideal is one global contract
                                            New data centres and server farms enabling
so processes can be monitored
worldwide. This offers better                organisations to act as data stores
connectivity globally, better data          Secure storage and archiving of digital content.
management...
                                     Support and overhaul infrastructure
..more    information,       more    The final driver of future plans was to ensure the
usable, now.’                        infrastructure is resilient.
                                     Key plans include:

                                      ICT spares and repairs, refreshing servers,
    systems upgrades etc
   Ensuring bandwidth capacity for predicted growth
   Improvements to Disaster Recovery Plans

3.2.3 Less important technologies
Organisations’ ICT plans concerning Software as a Service (Saas) and Version Deployment
were a specific area of interest (Section 1.1).

No organisations spontaneously mentioned Software as a Service as a key future
development trend. One organisation expressed the opinion that ‘ICT is too important to
the business to leave it in someone else’s hands’. This aligns with findings from the 2008




                                                                                      17
                                                    South West Large Organisations ICT Research 2008




Benchmarking Research 29 where just 12% of responding organisations expressed an interest
in SaaS and is supported by industry opinion:

           “…software functionality delivered over the wire as a service will find its way into
           most businesses over time, but SaaS is…simply another option for potentially meeting
           business requirements that is appropriate in some cases, but not in others.”30

Similarly Version Deployment was not a major area of interest or concern to those large
organisations we spoke to.


3. 3       Conclusions
Key trends in ICT include:
    digitisation of content – information in digital form
    digital convergence – such as Voice over Internet Protocol (VOIP) or internet
       television and radio stations
    increased connectivity – through increased access to broadband and wireless
       networks accessed through mobile devices

Digitisation of content, digital convergence, the demands for increased connectivity and
access to high-speed broadband are becoming increasingly mainstream in the South West
among organisations consulted. Organisations we spoke to in both the public and private
sectors are beginning to adapt their ways of working to utilise new ICTs to achieve business
objectives. Even organisations with a more functional approach to ICT are using new
technologies to help them to achieve process efficiencies. However functional ICT users
tended to use ICT to improve existing ways of working rather than spotting opportunities to
re-engineer business processes to achieve growth or competitive edge.

Respondents tended to talk about future ICT plans in terms of required outcomes more than
specific technologies. The drivers of future investment identified by the more strategic
organisations were felt to be increased expectations from business customers, consumers
and staff. Strategic organisations have ICT-supported plans which will enable them to
provide:
    access to information wherever a worker, customer or client happens to be;
    increased levels of information online
    increased capacity to meet the demand for more access to ICT and the amount of
        data being stored and moved
    a resilient and up-to-date ICT infrastructure

Functional ICT users tended not to be able to reference detailed future ICT plans. Without a
structured approach to future planning they are unable to predict and anticipate demands
on their ICT infrastructure or organisational information needs.

Implications

29
     Step Ahead Research.
30
     The Register



                                                                                         18
                                                 South West Large Organisations ICT Research 2008




There are emerging core basic requirements for doing e-business and operating public
services. Next Generation Access including wireless networks are vital to underpin the ICT
ambitions of large organisations in the South West. Functional ICT users are in danger of
being left behind the current pace of change in new technology and are vulnerable to
increased demands on their ICT infrastructure.


             Strategic usage                                 Functional usage

   Plan for the future                             Lack clear future plans
   Anticipate future developments                  Vulnerable to future developments
                                                     and changes in the market place




                                   Recommendations


     Monitor broadband access in the South West, and work with suppliers to
      improve high-speed access across the region at all times of day. Including
      identifying ‘holes’ in wireless network provision (see Chapter 11 for more
      details).

     Work with organisations in public and private sector which have a more
      functional approach to ICT to ensure they are aware of future ICT trends and can
      anticipate and match demand.




                                                                                      19
                                                   South West Large Organisations ICT Research 2008




4.      Integration of ICT in the Business
4.1     Background
4.1.1 Key Issues
This chapter looks at the issue of ICT integration in large organisations – how far these ICT
systems are integrated, and the impact of integration in transforming business processes.

An ERP (Enterprise Resource Planning) or MRP (Manufacturing Resource Planning) system is
an integrated ICT system that serves all departments within an organisation. ‘An ERP system
can include software for manufacturing, order entry, accounts receivable and payable,
general ledger, purchasing, warehousing, transportation and human resources. The major
ERP vendors are SAP, PeopleSoft, Oracle.’ 31

The benefits of integrated ICT systems at a technical level are that they avoid the
incompatibilities sometimes found between multiple systems, and enable organisations to
move away from legacy systems. Legacy systems often run on older software and a lack of
compatibility with newer systems can lead to business inefficiencies (manually re-entering
data) and inaccurate management information (human error during data-entry or
information not transferring accurately between systems). Further issues of using legacy
systems can be system failure, downtime and suppliers no longer supporting systems or
offering upgrades.

In terms of business benefits, integrated ICT systems offer faster access to accurate business
information, enabling better planning and improved productivity. Aral and Brynjolfsson
summarise research on information flow in large organisations:

        ‘Timely access to strategic information ... can highlight hidden opportunities, provide
        negotiating leverage (Burt 1992), promote innovation (Hargadon & Sutton 1997, Burt
        2004), and ultimately drive economic performance (Reagans and Zuckerman 2001,
        Hansen 2002).’ 32

4.1.2 SME Business Processes supported by ICT
The top business processes supported by ICT applications in SMEs in the South West were:
finance and accounts; customer relationships and processing orders. Joint product
development, a significant indicator for economic growth was reported as being important
by a third of SMEs. However it was one of the least likely processes to be supported by ICT
applications. The extent to which ICT systems were integrated was not asked by the 2008
ICT Benchmarking Research so direct comparison between SMEs and large organisations in
the region is not possible. 33




31
   PC Magazine
32
   Aral et al
33
   Step Ahead Research



                                                                                        20
                                                    South West Large Organisations ICT Research 2008




4.2      Key findings
4.2.1 ICT in Main Business Processes
ICT underpins all the main business processes of large public and private sector
organisations in the South West. Most commonly mentioned were:

       Finance (including purchasing, payments);
       Supply chain;
       Internal collaborative working; and
       Business planning.

Least frequently mentioned were Customer Relationship Management systems (CRM), New
Product Development (NPD) or Research and Development (R&D). (These are discussed in
later chapters.)

4.2.2 Integration of ICT
Some strategic businesses we spoke to operated MRP or ERP systems and had integrated all
major business processes. The outcomes set out by Aral and Brynjolfsson above for the
impact of improved business information flow were reflected by respondents who operated
integrated ICT.

         ‘The benefits of operating MRP? We get a complete picture of the business across the
         organisation, which means speedy decisions can be taken on ready data. Manual
         processing is no longer done, so there are efficiency savings.’

And improving the accuracy and flow of management
information:                                                One organisation plans to roll out an
                                                            MRP system to support their growth
         ‘Integration would help us ditch multiple links    into new markets:
         and slow running reports. We’d end up with
         one set of numbers for faster and more             ‘We’re operating in Asia more, so we
         accurate reporting – at the moment there are       need systems to provide information on
         people working on 2 different sets of the same     sales etc. At the moment we can’t find
         data.’                                             out how much is sold in Asia without
                                                            going through 3 systems and creating
Among the public sector organisations we spoke to,          an excel spreadsheet. The need for
one local authority reported considering a move to          faster, better informed decision-making
an ERP system. This would enable them to base               led to the decision to implement MRP.’
shared services around a common interface and
ensure access to information for all partners. They
are currently conducting a cost/benefit analysis. They feel the benefits would be: increased
productivity, standardisation of services and integration with CRM systems preventing
duplication or incorrect information being held on separate systems.



                                                                                         21
                                                  South West Large Organisations ICT Research 2008




4.2.3 Barriers to Integration
Most private sector organisations we interviewed operated a more piecemeal approach to
their ICT. Systems were not integrated; bespoke software, MS Office products and other
proprietary software were all being used.

       ‘Packages used are MS project management software, MS Office, 4C for sales and
       estimating. We have the odd bit of bespoke system to do parts of the work.’

Organisations interviewed also frequently mentioned legacy systems.

       ‘The customer orders into SAP – these are then manually transferred into our legacy
       systems – which we plan to integrate soon. Our financial system is also on a different
       legacy system.’

        ‘We had experienced existing problems – 18% growth has caused the system to
       “creak”. There were problems invoicing etc. Plus the system supplier wouldn’t provide
       support on it in the future.’

Similarly in the public sector most organisations do not currently operate single, integrated
ICT systems. As with the private sector organisations, the general picture is one of a mixture
of bespoke systems and ‘off the shelf’ software packages being used. The main barrier to
implementing integrated ICT systems is cost. One organisation is conducting work in-house
to create links between systems and integrate them better. This is considered to be cheaper
than replacing them with a fully integrated system.


4.3    Conclusions
Integrated ICT systems avoid the incompatibilities sometimes found between multiple ICT
systems, and enable organisations to move away from slow and unreliable legacy systems.
In terms of business benefits, integrated ICT systems offer faster access to accurate business
information, enabling better planning and improved productivity.

Some strategic businesses we spoke to operated MRP or ERP systems and had integrated all
major business processes. They reported business benefits including: fast access to
management information leading to improved decision-making; efficiency savings through
reducing manual processing of data; faster processing of data and more accurate reporting.

Among the public sector organisations interviewed, most do not currently operate single,
integrated ICT systems. As with the private sector organisations, the general picture is one
of a mixture of bespoke systems and ‘off the shelf’ software packages being used.
Organisations frequently mentioned using legacy systems and some were experiencing
problems with slow-running reports or unreliable systems. The main barrier to
implementing integrated ICT systems is cost.




                                                                                       22
                                                   South West Large Organisations ICT Research 2008




Implications
Integrated ICT systems enable organisations to deliver improved productivity and efficiency.
Organisations are also reporting extensive use of legacy systems which are vulnerable to
system failure, downtime and lack supplier upgrades and support. Productivity and
efficiency gains could be achieved in the region if organisations move away from legacy
systems towards either ‘off the shelf’ stand-alone software packages or fully integrated ICT
systems. The public sector is trailing the private sector in terms of adopting single integrated
ICT systems. Existing initiatives which adopt integrated systems should be publicised among
public sector organisations in the region.

               Strategic usage                                   Functional usage

     Integrated ICT                                    Multiple systems lack read-across
     Faster, more reliable management                  R&D not supported by ICT
      information                                       CRM systems not in place
     Business process efficiencies                     Operating legacy systems




                                      Recommendations


        Highlight the organisational efficiencies of greater ICT integration in order to
          optimise levels of integration of ICT systems to enable information flow among
          public and private sector organisations;
        Help organisations understand the role ICT could play in some under-supported
          areas such as R&D or CRM; and
        Encourage organisations to move away from legacy systems.




The following chapter will look at ICT strategy and how well organisations feel they integrate
ICT into business strategy and planning.




                                                                                        23
                                                    South West Large Organisations ICT Research 2008




5.        ICT Strategy

5.1       Background
5.1.1 Key Issues
This chapter looks at the role ICT strategy and senior management awareness of ICT plays in
enabling organisations to achieve their corporate objectives. Research links ICT strategy and
a supportive ICT organisational culture with productivity / efficiency and growth outcomes.
A ‘greater alignment between business and ICT domains leads to superior performance or
perceived business performance.’ 34

Cumps et al set out three typologies of ICT strategy:

Table 1           Description of ICT Strategy Typology

          ICT Strategies
          Conservative ICT is primarily regarded as a tool for reducing costs and
                         the organisation only relies on proven and mature
                         technologies.
          Essential      ICT is critical and essential to the business and the
                         organisation invests in leading technologies.
          Innovative     ICT is used as a competitive weapon and the organisation
                         uses it to compete at the cutting edge of innovation.

Quantitative analysis done by Cumps of survey data provided by organisations in seven
European countries shows that organisations with innovative ICT strategies can ‘potentially
build a sustainable competitive advantage from alignment [of business and ICT strategies]
than organisations with a conservative ICT strategy’. The extent of alignment of ICT and
organisational objectives can be linked to senior management understanding of the role of
ICT. Research conducted in 2004 found that a key barrier for organisations seeking to
maximise the benefits of their ICT investment is a ‘lack of ICT knowledge in senior
management and the *resulting+ failure of IT and business management to work together’. 35

5.1.2 SME adoption of ICT strategies
Very few SMEs interviewed for the 2008 ICT Benchmarking Research had a standalone ICT
strategy (2%), or an ICT strategy that formed part of an overall business strategy (9%).
Strategic adopters were more likely to have an ICT strategy.36




34
   Cumps et al.
35
   Economist Intelligence Unit (2004).
36
   Step Ahead Research.



                                                                                         24
                                                  South West Large Organisations ICT Research 2008




5.2    Key findings
5.2.1 ICT strategy
Most private sector organisations in the South West who took part in the research had
either national or regional ICT strategies which they were involved in agreeing and
implementing. Similarly most public sector organisations interviewed also had an ICT
strategy. A few private sector organisations were subject to global ICT strategies with
limited or no autonomy:

       ‘We used to have a European structure but now we operate a global infrastructure
       and ICT decision-making has moved to US.’

       ‘There’s no say in decisions made. Global people at [company] make the IT decisions.’

Most organisations interviewed who are characterised as strategic transformers in this
report operated ICT strategies that could be characterised as ‘Essential’ according to Cumps’
typologies. A few highly strategic organisations had ‘Innovative’ ICT strategies which linked
into corporate planning and business objectives. A highly business-objective focussed ICT
strategy was described by one organisation:

        ‘We have a strategy in place known as the Service Improvement Plan which
       underpins the 8 key priorities. All programmes have links to the Strategic theme.
       Resource Planning is the reality check. Implementation turns on the priorities and
       funding available. A bidding process from departments dictates which projects are
       supported. Departments bid in with mentoring from the ICT Department. All bids are
       assessed against cross cutting themes. ICT Steering Group then considers them. Main
       hook is the pay back and bottom line. The programme is then matched against
       resources.’ (public sector organisation)

The ICT strategies of a few organisations could be characterised as ‘Conservative’, focussing
simply on support services and infrastructure replacement:

       ‘Probably as simple as ensuring an efficient ICT set up for all business areas’. (public
       sector organisation)

These organisations, and those with no ICT strategy have been characterised in our
typologies as functional ICT users.

5.2.2 Drivers for adopting an ICT strategy
Key drivers which led the organisations we interviewed to adopt an ICT strategy can be
clustered into four areas. The table shows that strategic needs – market positioning and
corporate strategic planning – are as important a driver in developing an ICT strategy as
business efficiencies and infrastructure.




                                                                                       25
                                                      South West Large Organisations ICT Research 2008




Table 2            Drivers of developing an ICT strategy

    Market positioning                                     Business efficiencies

    Changing business focus, moving into               Cost efficiencies / savings through
          different markets                                   better planning
    Increased collaborative working with               Creating ICT ‘culture’ among staff /
          external partners                                   enabling dispersed workforce
    Increased e-purchasing/ e-bidding                  Assess          benefits   of   integrating
          needs ICT support                                   systems or standardising processes



    Corporate strategic planning                           Infrastructure

    ICT          supporting    corporate    plan       Resilience         and business continuity
          aspirations                                         planning
    Recognise           business’s    increased        Infrastructure support and capacity
          reliance on ICT                                     planning
    Global pressure for information –                  Future demands and growth eg:
          ‘need       faster     better-informed              multi-media use, environment
          decision-making’


Those few organisations without an ICT strategy were from both the private and public
sectors.


Table 3            Reasons for not having an ICT strategy

  Lack of time                                         Day to day fire-fighting

  ‘Mostly the team work on short lead-                 ‘There is so much development work to
  time projects. Therefore it is virtually             do to meet immediate requirements.’
  impossible to integrate the ICT activity
  into the Corporate Plans for the
  Company.’

  Strategy not considered important                    ICT issues are peripheral

  ‘The owners make the decisions based                 ‘IT supports core activities of the
  on need.’                                            organisation.’


                                                                                           26
                                                  South West Large Organisations ICT Research 2008




5.2.3 Senior Management Awareness of ICT
Organisations were asked whether they felt senior management kept up to date with
developments in ICT. Those few organisations whose responses were consistently at the
strategic end of our scale were most likely to say ‘not as much as they’d like’. This
dissatisfaction seems to stem from a combination of two factors: very high-level aspirations
– the more technologically aware a company is, the more likely they are to be aware of the
pace and extent of recent changes to ICT technology; and the fact that the function of
staying up to date is considered so important a specific department has been created in the
organisation:

        ‘IT Lead Team stays up to date. It raises points to the board – so we have channels of
       communication.’

Respondents with the strongest grasp of strategic ICT issues saw their job as advising Senior
Management:

       ‘There’s no pull from them for bleeding edge technology. I hold briefings at
       appropriate times in the “art of the possible”.’

Organisations with a more limited strategic understanding of ICT seemed more complacent
about whether they were staying up to date with developments in ICT. One Finance Director
stated:

        ‘Keep up to date? – we’re not at front edge but do ok.’

Techniques for keeping up to date with new developments included talking to suppliers
about demo kit and new technologies, attending conferences, reading journals, training
courses. One Managing Director mentioned the peer pressure effect of network groups:

       ‘Blackberry adoption – one person has it, everyone else wants it, same with wireless
       working on laptop.’

One organisation interviewed gave the example of recent ICT graduates mentoring more
senior staff in order to keep the business up to date with the rate of change. Respondents
felt there was a clear role for public agencies in enabling better access to information about
                                        ICT developments and initiating ICT discussions in
  One strategic transformer has existing network groups. There was a clear pull for
  set up a specific technology better information from organisations with a
  watch function enabling them functional approach to ICT:
  to scan emergent technologies
  and keep up with the pace of        ‘Helpful to know what the latest developments are.
  developments.                       Some local means of keeping up to date.’

The more strategic organisations had specific information needs and emphasised targeted
and relevant advice and support:



                                                                                       27
                                                    South West Large Organisations ICT Research 2008




                                                                    One council has set up a network
           ‘Could promote solutions that could have benefit         of EMC Documentum users. A
           elsewhere e.g. advanced tickets.’                        network of Local Authorities
                                                                    using this Enterprise Content
           ‘Solutions have to be appropriate that work for          Management (ECM system) share
           council. Would like to learn from other organisations    experiences      and      discuss
           – good and bad experiences, what failed and why.’        suppliers.

Respondents felt there was a clear role for public agencies in enabling better access to
information about emergent ICT technologies. To be most useful the information should be
targeted to their areas of interest.

5.3        Conclusions

Research links innovative ICT strategies and a business culture which is supportive of ICT
with productivity and growth outcomes. The extent of alignment of ICT and organisational
objectives can be linked to senior management understanding of the role of ICT. Research
conducted in 2004 found that a key barrier for organisations seeking to maximise the
benefits of their ICT investment is a ‘lack of ICT knowledge in senior management and the
*resulting+ failure of IT and business management to work together’. 37

Most private and public sector organisations in the South West who took part in the current
research had ICT strategies which they were involved in agreeing and implementing. The ICT
strategies of some organisations interviewed could be characterised as ‘conservative’,
focussing simply on support services and infrastructure replacement. A minority of
organisations had no ICT strategy. Organisations failed to develop ICT strategies due to a
lack of capacity – departments were instead ‘fire-fighting’ or working on short lead-time
projects.

Organisations whose responses were consistently at the strategic end of our scale were
actually most likely to say senior management does not stay up to date with ICT
developments. This dissatisfaction seems to stem from a combination of two factors: very
high-level aspirations; and the fact that staying up to date is considered so important a
specific department has been delegated responsibility to maintain awareness of technology
trends. There was a clear pull for more information about opportunities afforded by ICT
from organisations interviewed.

Implications
Research shows that organisations should develop innovative ICT strategies that align with
corporate objectives. This alignment is a key factor in enabling organisations to maximise
productivity and efficiency benefits from ICT investment. There are clear opportunities for
public agencies to work with organisations to improve knowledge and information about ICT
among senior management and encourage organisations in the South West to develop
organisational cultures which support ICT.


37
     Economist Intelligence Unit (2004)



                                                                                         28
                                                   South West Large Organisations ICT Research 2008




             Strategic usage                                   Functional usage

    ICT strategy integrated into                   No ICT strategy or ICT strategy focuses
     corporate planning                              on infrastructure and support desk
    Responsibility exists within the                functions
     organisation for staying up to date            No clear responsibility for staying up to
     with ICT                                        date with ICT
    Open channels of communication                 Complacency about ICT awareness
     between ICT experts and Board                  Would welcome general advice and
    Pull for specific information and               support on new ICT developments
     targeted support.




                                     Recommendations


      Begin discussion among senior management in the region of the benefits of
         creating innovative ICT strategies aligned with corporate objectives;
      Share best practice approaches to staying up to date with ICT developments;
      Embed ICT discussions into existing private business networks and public sector
         senior management forums to encourage organisations to learn from each
         other;
      Programme of ICT skills fairs to demonstrate the latest technology;
      Virtual user-networks could be established rather than calling for face to face
         meetings.




The following chapter will explore the link between strategic adoption of ICT and
productivity and growth.




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                                                        South West Large Organisations ICT Research 2008




 6.        Productivity and Growth

6.1        Background
6.1.1 Key Issues
The links between ICT investment and productivity and growth are pointed to by the 2008
mid-term review of i2010: ‘In the longer term, it is increased use of ICTs, accompanied by
the reorganisation of business processes, which contributes to efficiency gains (‘multifactor
productivity growth’) in the entire economy.’ 38

The previous chapter reported recent research which shows a link between a strategic
understanding of ICT and increased productivity and growth. According to a study by the UK
Office of National Statistics, there is a direct link between levels of ICT investment and
improved productivity among British businesses: ‘Manufacturing companies gain an extra
2.2% in productivity for every 10% of their employees who use computers—and nearly 3%
more if they use the Internet.’ 39

This chapter will compare the reported productivity and growth outcomes linked to ICT
achieved by the strategic organisations we spoke to against those organisations interviewed
which operated a more functional approach to ICT. The chapter focuses on productivity and
growth among private sector organisations only. Issues relating to improving efficiency
among public sector organisations are dealt with elsewhere in the report (especially Chapter
4 ICT Integration and Chapter 7 Innovation and Collaboration).

6.1.2 Adoption of ICTs by SMEs and reported profitability/ turnover
For both turnover and profitability the most significant factor in SMEs reporting increases
was adopter profile. Strategic adopters were more likely to have increased profitability in
the last 12 months and less likely to have decreased profitability. This correlation does not
necessarily demonstrate a causal link between ICT adoption and profitability however.


6.2        Key findings
6.2.1 Productivity
Most businesses we interviewed report ICT investment enables efficiency savings. The key
differences between strategic organisations and more functional ICT users were in the level
of increased productivity achieved and how strategic organisations are able to lever
business advantage from the improved management information that underpins their
productivity gains.

Strategic transformers most often mentioned the benefits of integrated ICT systems when
improving productivity. For them the benefits were:


38
      EU review (2008)
39
     Quoted in The Economist Intelligence Unit (2006)



                                                                                             30
                                                 South West Large Organisations ICT Research 2008




Efficiency savings:

       ‘Systems now work around SAP for maximum efficiency and common data sets.’

Swift integration of merged or acquired companies:

   ‘Realised systems should work *on+ common data sets. That way another organisation
   with SAP can link in without major disruption.’

In comparison, strategic transformers were able to draw links between ICT exploitation and:

Improved production/design processes:

       ‘In the design office we’ve saved time by not using paper drawings.’

       ‘Higher quality? Not of components necessarily – but we can more accurately
       measure things due to ICT, so it’s more likely to be right first time.’

       ‘Our systems are fully integrated so an improvement to part of the system affects the
       overall quality.’

       ‘We’ve now got better information about production which means we can target
       areas which lose productivity and lost products etc.’

Project management:

       ‘Business and IT project management is assigned. We plan, then estimate the time it
       will take to build new approach. The live product is heavily tested with a regression
       plan – CMMI insists every single project has a regression plan – so we can pull a
       project if it doesn’t work.’

Strategic transformers drew links between ICT-enabled solutions and increased
                                         competitiveness:
 One organisation plans to move towards
 a fully integrated ICT system:          ‘Analysis of sales data drives NPD, particularly
                                         which products to refresh because they’re not
                                         selling so well.’
 ‘Systems integrated? Not fully, but the
 plan is to do so. The benefits would be ‘MIS reporting is possible – it shows effective
 moving away from the current situation sales and distribution data. This gives us an
 of standalone applications. We want to edge over our competitors.’
 integrate with manufacturing system,
 that way we’d immediately get full
                                         When asked about the impact of improved
 information about planning and
                                         management          information,      strategic
 production capacity, delivery and transformers stated:
 automatic stock management.’


                                                                                      31
                                                  South West Large Organisations ICT Research 2008




       ‘We gain a complete picture of the business across the organisation, which means
       speedy decisions can be taken on ready data.’


6.2.2 Barriers to Fully Exploiting Potential Productivity Gains
Functional ICT users operate a more piecemeal approach to their ICT, with legacy systems,
bespoke software and MS Office products all being used. Their productivity gains were
reported as being smaller-scale process efficiencies:

        ‘Manual processing is no longer done.’

       ‘The accounting process now takes days not weeks.’

Strategic transformers were much better than functional ICT users at detailing the impact
ICT has on their business. Typical comments from a functional ICT user include:

       ‘Any impact is improved efficiency – ICT is only a business enabler.’

       ‘ICT is a service function, it doesn’t create growth. SAP stands for “system
       applications and product”, it’s not actually the business itself.’

Functional ICT users were also more likely to say that key driver of business is not supported
by ICT:
        ‘The speed we’re able to fix [vehicle] is the driver of our business.’

One functional ICT user is the only UK based company to be offering a new product which
‘makes *customer vehicles+ faster’ and reduces fuel bills. Growth comes from delivering new
and improved services, and speed of service delivery:

       ‘Growth is attracting people because we offer a better, faster service, not having fast
       IT system. We’re more interested in production processes than IT.’

Functional ICT users tended to mention process inefficiencies which prevent productivity
gains:

       ‘Management of email accounts was brought back in house because it was taking 3
       days to get a new email account not 3 minutes’.

       ‘A proposal for video conferencing was dropped because of cost.’

       ‘We don’t have ICT-supported capacity planning or project management software.’

Functional ICT users tended to lack shared business information:

        ‘There’s no read across.’




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                                                    South West Large Organisations ICT Research 2008




           ‘There is currently no way of tracking IP agreements. Global management is difficult
           so a database is being built.’

In comparison with strategic organisations analysis of sales and stock data to achieve
competitive advantage, one functional ICT user simply offered:

           ‘There’s some integration between EPOS and Stock control only.’

Broadband
Problems caused by slow broadband connections were identified in the ICT Benchmarking
Research 2008. 40 This was borne out by respondents taking part in the large organisations
research. Many organisations require massive bandwidth and predict that ‘bandwidth
requirements will ever increase’. Many organisations reported varying speeds across
locations. Generally organisations tackle this by purchasing leased lines. However, low
broadband speeds cause particular problems for those organisations with high levels of
remote or home-based working and can affect the productivity of a distributed workforce.

          ‘Broadband is “good enough” which goes down to “barely good enough” at times. All
          our different offices are networked so the issue is for home workers, especially those
          living in rural areas.’



6.2.3 Growth
ICT-supported growth was achieved by offering improved information around for instance,
work scheduling and planning, or allowing fast integration of newly merged companies.
Metrical information on processes can be used at an operational level to improve efficiency.
However, if the business is sufficiently strategic in its approaches to business planning,
information about spare capacity could be utilised in a move into a new business area.

Strategic transformer:

           ‘We use IFS when developing projects. This has work definition capacity and we use a
           scheduling tool... We did workflow planning and identified peaks and troughs from
           [main client] commissioned work – so diversified into *premium consumer product+.’

Strategic transformers mentioned ICT-driven business planning limiting business risk or
exposure:                                            One organisation is using ICT to move
                                                     into a new market:
       ‘We went through a process of rationalising
       suppliers as part of our business process     ‘We’re moving away from traditional
       mapping. This identified vulnerabilities to 1 engineering into IKM [information and
       or 2 suppliers.’                              knowledge management] – hosting
                                                           information for clients        especially
                                                           configuration management and general
                                                           engineering information. [Company] is
40                                                         factoring in large amounts of latent
     Step Ahead Research
                                                           capacity. The new data rooms need
                                                           specifying for commercial potential.’
                                                                                         33
                                                     South West Large Organisations ICT Research 2008




           ‘ICT is focussed around ERP, which is currently being rolled out across both
           companies and ensures full functionality *across the sites+.’

Strategic transformers were also able to point to the way ICT has enabled them to monitor
changes in the market place:

           ‘A shift eastwards has been noticeable, perhaps to the USSR. Knowledge
           management systems are vital to help understand the changes.’

           ‘Growth comes from looking for new income streams [from customer base],
           advanced ticketing systems, buying on line and via mobiles.’

Or smooth transition following merger or acquisition:

Strategic transformer

           ‘Systems should work around SAP for maximum efficiency and common data sets.
           That way another organisation with SAP can link in without major disruption.’

6.2.4 Barriers to Growth
Functional ICT users do not demonstrate clear awareness of trends in their industry sector
and tend to react to marketing and growth opportunities rather than create them:

           ‘I don’t feel [the sector] has decided where it is going further downstream. Customer
           base is generally the same but we would like to get into new markets and work with
           younger organisations.’

           ‘Accessing new markets? It tends to be reactive. We collect email addresses from
           ticket systems. These are used for marketing and we also send out monthly
           information.’

A lack of ICT integration across existing sites holds one functional ICT user back following a
recent acquisition:

           ‘Plans are for networking the sites, installing further servers and rolling out
           applications across the 3 sites.’


6.3        Conclusions

The links between ICT investment and productivity and growth are pointed to by the 2008
mid-term review of the European Union’s ICT strategy – i2010. According to a study by the
UK Office of National Statistics, there is a direct link between levels of ICT investment and
improved productivity among British businesses. This association was also found by the
2008 ICT Benchmarking Research although no causal link can be proved. 41

41
     Step Ahead Research



                                                                                          34
                                                  South West Large Organisations ICT Research 2008




Most private sector organisations interviewed report ICT investment enables them to
achieve efficiency savings. Organisations with a business culture which encourages links
between business objectives and ICT strategy tend to have a more detailed understanding
of how ICTs enabled their business to achieve productivity gains and growth. Functional ICT
users mention process inefficiencies which prevent productivity gains, lack access to reliable
and up-to-date business information and react to opportunities for growth in new markets,
rather than proactively spotting them.

Implications
Previous chapters have set out the inter-dependencies between an organisational culture
that is aware of developments in ICT, is supportive of ICT investment and which integrates
ICT strategy with corporate objectives. Some organisations interviewed in the South West
lack these elements and as a result are not able to point to how ICT investment has enabled
productivity gains and growth. Without a strategic take on ICT some organisations achieve
only limited efficiency gains, miss competitive opportunities, and are potentially vulnerable
to changes in the marketplace. There are opportunities for the region to improve overall
productivity by working with these organisations to implement ICT-led business
transformation.


               Strategic usage                                 Functional usage

    ICT supports design and production             Piecemeal ICT systems prevent
     processes                                       business process efficiencies
    Integrated ICT is identified as driver         Lack of read-across is barrier to reliable
     of better business information                  information from across the business
     leading to competitiveness                     Less aware of changes in the
    Aware of ICT-enabled opportunities              marketplace and opportunities for
     to move into new markets                        growth
    Can smoothly integrate acquired                Period of ICT consolidation is needed
     firms                                           following expansion through merger or
                                                     acquisition



                                      Recommendations

      Improve business understanding of the links between strategic ICT exploitation
         and productivity and growth;
      Enable organisations to become more productive by matching ICT solutions to
         business objectives; and
      Encourage organisations to engage more in business networks and horizon-
         scanning to understand changes in the marketplace and opportunities for growth.




                                                                                       35
                                                  South West Large Organisations ICT Research 2008




The following chapter will explore role of ICTs in innovation and collaborative working.




                                                                                       36
                                                         South West Large Organisations ICT Research 2008




7.      Innovation and collaboration
7.1     Background
7.1.1 Key Issues
Collaborative working involves partnership working with people inside an organisation or
with external partners. Innovation and collaborative working are closely linked. A literature
review of collaborative working undertaken by a European Commission-funded organisation
found the benefits to be: achieving best practice by focusing on core business strengths;
reducing lead times and increase market responsiveness; increasing innovation capacity and
capability; access to specialist resources and exploitation of economies of scale. They quote
a survey of 300 business leaders conducted by Deloitte Consulting who found that ‘75% of
those surveyed consider collaboration a top priority, and those who've linked partners and
suppliers to their internal business processes report 70% greater profitability than
companies that haven't integrated with partners yet’. 42

The importance of ICT in collaborative working is supported by research. 43 At its simplest,
ICT-enabled collaborative working includes standalone email systems, audio and video
conferencing. Further technologies include hosted virtual offices 44, collaborative
whiteboards 45 and virtual presentation systems.

Evidence of the benefits to business of using ICT-enabled collaborative working tools is
extensive. Benefits reported by the MOD of operating a collaborative working environment
include ‘reduced IT infrastructure costs; lower travel costs from fewer meetings; faster,
more visible communication; file-sharing allowing more coherence in remote teamwork’.46
A survey conducted by CIO magazine concluded that the majority of respondents confirm
that on-demand collaborative tools can accelerate business processes and help knowledge
workers work better, faster and cheaper. 47

7.1.2 SME collaboration
The ICT Benchmarking Research shows that those SMEs who collaborated with other
businesses on new product development (NPD) and tendering were more likely to report an
increase in profitability. It also showed there was no difference in terms of increased
turnover between collaborating organisations and those who do not engage in collaborative
working. This must be down to SMEs collaborating on areas such as NPD which is directly
related to profitability. 48




42
   SMEcollaborate.com
43
   Tung quoted in Bajwa.
44
   ‘A secure area in which a user community (such as a project team) can share information; it can contain
documents of interest to members, bulletin board, etc.’ www.Cornwell.co.uk
45
   ‘Software that enables freehand drawing and writing on handheld computers or other mobile devices with
the ability to display the images produced on remote workstations in real time.’ www.Cornwell.co.uk
46
   Microsoft
47
   www.cio.co.uk
48
   Step Ahead Research



                                                                                                 37
                                                     South West Large Organisations ICT Research 2008




  7.2    Key findings
  7.2.1 Innovation and Collaboration
  Organisations were asked about the impact of ICT applications on their ability to innovate. A
  particular area of interest was how ICT enabled higher levels of collaboration – both
  internally and with external partners – when developing new products and services.

  Again there were differences in the extent of ICT-enabled innovation and collaboration
  among the organisations interviewed according to their strategic understanding of the
  possibilities afforded by ICT. Several large private sector organisations we spoke to work
  with internal and external design partners via a shared network or online ‘collaborative
  working environment’. These networks host designs in progress using 3d CAD (Computer
  Aided Design):

         ‘Designs are held centrally on a database so there are no clashes with multiple
         designers working on different bits. Suppliers have direct access into the digital
         product – they can access product specs and design work. They log into a controlled
         network.’

  In comparison, functional ICT users had a less sophisticated approach to working
  collaboratively:

         ‘We have a database of customers which is part of a 4C package – it’s just a
         database.’

  For some strategic organisations we interviewed, development work is underpinned by ICT
  applications using virtual manufacturing approaches. New products can be designed and
  modelled in the virtual world – saving huge amounts of money. This technology is also used
  to improve communications with clients and agree schedules of work:

                                                ‘We can show clients the specifications, what
One organisation worked       with smaller      evidence there is of the need to repair and get
companies, gaining access     to emerging       their approval to proceed. The client can
technologies and in return   offering them      therefore be consulted with, fully informed and
advanced Research &           Development       approve any extra work.’
capacity:
                                                Businesses engaged in collaborative working at
‘Technology brokering’ is a way to describe     a global level emphasised the benefits of a
it – the group becomes aware of emergent        dispersed workforce in terms of skills and
technology and works in partnership with
                                                expertise:
the SME. Strict Intellectual Property
agreements and commercial conditions are
in place.’                                       ‘Skills areas in certain sites and countries can be
                                                 utilised. Rather than having a centre of
         excellence which is isolated. It helps diversify the client base too.’



                                                                                          38
                                                 South West Large Organisations ICT Research 2008




       ‘We capture international talent and are able to respond fast’.

   Organisations interviewed reported the following benefits of collaboration:

        improving communication with clients and suppliers;
        enabling more efficient working - reducing duplication of effort,
           mistakes and confusion;
        offering a better awareness of business environment, identifying trends
           and emergent technologies;
        enabling diversification into different markets; and
        offering access to a wider spread of skills and expertise.




7.2.2 Barriers faced by Functional ICT users
Research and Development (R&D) and New Product Development (NPD) tended to be
treated as a standalone function by organisations we interviewed and not linked into other
ICT systems. Functional ICT users tend not to innovate or work collaboratively with external
partners. Those with a marginally more strategic approach to ICT are developing products
and services but tend to lack collaborative approaches, or dedicated ICT support:

        ‘NPD is not really ICT-driven. The R&D departments work locally in a standalone way,
       there’s little or no collaboration with outside organisations.’

       ‘ICT is not involved in NPD. R&D is currently a manual process. Developing ICT
       solutions to R&D issues is “on the list of things to do”.’

In some cases organisations were innovating and developing new services, but don’t see it
as related to ICT:

       ‘I’m more interested in production processes – engineering technology – than IT.
       We’re the only (company) offering this new service to customers.’

Where organisations did use ICT-enabled approaches to develop new products and services
the benefits were clear.

7.2.3 Public sector collaboration
There is evidence of increased collaborative working among the public sector organisations
we interviewed. Several organisations are setting up online collaborative working
environments with external partners. For the public sector the drivers are increased




                                                                                      39
                                                           South West Large Organisations ICT Research 2008




efficiency through shared services; improved knowledge transfer and access to pooled
information.

Several public sector organisations are developing shared services with other agencies. For
instance, the South West One initiative sets out to create cost savings through shared
services.49 As well as sharing core costs, one council is intending to measure productivity
gains achieved through standardisation of processes and services and integration of data
across multiple systems.

        ‘Basing shared services around an ERP 50 system offers the benefits of productivity,
        standardisation of services, integration with CRM 51 systems etc.’

A further benefit is seen to be improved inter-agency information sharing:

        ‘Previously we didn’t know we had a noise abatement issue because the police dealt
        with the majority of calls outside office hours.’

Improved knowledge transfer was seen as imperative in improving operational efficiencies
and strategic working. A university emphasised the importance of global collaboration in
order to remain at the cutting edge of academic study:

        ‘Now need to have world-wide contacts and collaboration. Typically we operate an
        information exchange hub with interactive white boards and cameras. These
        approaches demand more creativity.’

As well as efficiency savings, the move to pooling information also offers direct benefits to
the public – the stated ambition of one council was to achieve a ‘tell us once’ standard
whereby members of the public need notify them only once of a change of address or other
personal information, rather than notifying multiple
departments or agencies as can currently be the
case. Similarly health-care organisations are working    One emergency service organisation
on a national initiative to create an online,            has several university partners who
centralised data warehouse of patient care records.      are    studying    social   marketing
This data-sharing exercise includes major hospitals      techniques with the aim of changing
and GPs surgeries. The benefit to patients is clear:
                                                         behaviour among the general public.
        ‘If you get ill in Scotland you don’t have to get
        a courier to take your medical records up the                ‘They develop best practice case
        motorway.’                                                   studies which we can then use.’




49
   ‘A joint venture between Somerset County Council, Taunton Deane Borough Council, Avon and Somerset
Constabulary and IBM’. www.southwestone.org.uk.
50
   Enterprise Resource Planning (ERP) is an integrated ICT system which handles the manufacturing, logistics,
distribution, inventory, shipping, and invoicing in larger organisations.
51
   Customer Relationship Management (CRM) is the storage and maintenance of customer information.



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                                                 South West Large Organisations ICT Research 2008




7.3    Conclusions
Innovation and collaborative working are closely linked. The benefits of collaborative
working on areas such as NPD and R&D for organisations include: achieving best practice by
focusing on core business strengths; improving market responsiveness; increasing
innovation capacity and capability; accessing specialist resources and exploiting of
economies of scale. Both in the general literature, and from the ICT Benchmarking Research,
businesses engaged in collaborative working report greater profitability than those who do
not collaborate with external partners.

Some strategic organisations interviewed operate ICT-enabled collaborative working
environments which enable close working with clients and external partners. Generally
organisations interviewed reported the benefits of collaborative working to be improving
communication with clients and suppliers; increased efficiency; better awareness of the
business environment; diversification into different markets; and offering access to a wider
spread of skills and expertise. Some public sector organisations are increasingly seeing the
benefits of working collaboratively.

Functional ICT users tended not to work collaboratively, they operate standalone R&D
functions and do not take advantage of ICT-enabled collaborative working tools.

Implications
Businesses who are not working collaboratively are missing out the benefits reported by
those organisations who do work with external partners. There is a clear link between
collaborative working and profitability, and therefore opportunities for the region to
improve economic outcomes by engaging more in collaborative working and innovation.




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                                                 South West Large Organisations ICT Research 2008




            Strategic usage                                  Functional usage

   Operate collaborative working                 R&D is a standalone function
    environments, minimising design               Do not collaborate with external
    clashes and enable version control             partners
   Collaborate with external partners            Lack awareness of ICT-enabled
   Clear vision of benefits of                    collaboration opportunities and
    collaborative working                          benefits




                                  Recommendations


    The organisations could be supported through the following actions:

     Active promotion of the SW1 initiative among public sector organisations in the
       South West;
     Work with large organisations to develop a platform to encourage
       collaborative networks across the region by sector or issue basis;
     Provide information on ICT opportunities which support collaborative working
       and innovation to functional ICT users who are less aware of the potential
       impact of ICT in these areas.




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                                                  South West Large Organisations ICT Research 2008




8.      Supply chain, local suppliers, outsourcing

8.1     Background
8.1.1 Key Issues
One area of interest is the promotion and development of regional and local supply
chains.52 Supply chains involve networks of retailers, distributors and suppliers working to
make, deliver and sell a product. According to the European e-Business survey undertaken
in 2006, a more challenging economic climate encourages companies to ‘enhance their
competitiveness by joining efforts with other companies within the sector.’ 53

The BIT survey of large organisations in the US in 2006 found that ‘partner relationshi p
functions are becoming more automated as supported by the strong increase in the
adoption of e-payments and e-procurement.’ 54 ICT-enabled supply chain networks work to
increase profitability by improving the flow of information and goods. Two issues of ICT-
enabled supply chains are the need for all agents to work to common standards, and the
relatively weak position SMEs occupy in supply chain networks.

The 2008 ICT Benchmarking Research did not ask questions about SME involvement in ICT-
enabled supply chain systems. 55


8.2     Key findings

All organisations were asked about the extent and impact of ICT systems on their supply
chain. The two key technological issues with supply chain systems used by large
organisations in the South West are:

           the extent of automation and integration; and
           the nature of the relationship with suppliers.

This chapter also looks at the impact of supply chain ICTs on local suppliers and the extent of
‘buy local’ policies in operation among large organisations in the South West.

8.2.1 Supply chain integration
Supply chain issues are highly specific to individual organisations – dependent on industry
sector and their relative influence within the marketplace. Some organisations are working
to high levels of automation of supply chain processes (strategic transformers in the
typologies). Several organisations send automatic Purchase Orders via ‘e-business’ to
suppliers who are logged onto the network.

52
   SWRDA (2006)
53
   www.ebusiness-watch.org
54
   Karmarkar et al
55
   Step Ahead Research



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                                                  South West Large Organisations ICT Research 2008




       ‘Some suppliers are linked in. We use ‘repetitive supply scheduling’ where suppliers
       are linked in to the forecast for the next 12 months. They deliver the next 4 weeks of
       the forecast.’

Just In Time ordering processes are used by some organisations. This depends on
information about stock levels to be quickly communicated to suppliers who then supply the
goods as needed.

       ‘The local suppliers run our consignment stock – they hold it, manage stocks for us.’

The benefits of Just In Time technology according to those using it are ‘avoiding costly
warehousing’, meeting deadlines and managing stock.

For some large private sector organisations we spoke to the driver is their relationship with
customers, often the supermarkets:

       ‘Evolution has mainly been as a result of the customers demanding real time stock
       control.’

       ‘Our stock records are web enabled – the customer requires access to stock levels
       every day for the last 10 years.’

In terms of the impact on business productivity, the benefits associated with use of ICT-
enabled supply chain systems were seen as increased efficiency and reliability of processes
and information:

       ‘Stock optimisation removes overheads and multiple handoffs between departments
       and people are rationalised.’


8.2.2 Barriers to supply chain systems
A lack of internal integration was a barrier for some organisations. One large private sector
organisation interviewed stated:

       ‘We use a base system which interfaces with the distributor. This knows about stocks,
       levels of material and finished goods. It doesn’t control the whole process though,
       such as raising works orders, not up to date bill situation either. Mapping work has
       been done recently identifying where information is held and where it’s needed.
       There are lots of bespoke systems everywhere.’

A lack of standardisation across networks of supply chain systems was mentioned as a key
barrier.

       ‘Bar-coding is very much to the fore but the systems are non-standard, making
       recognition tricky. There is to be a new sensitive distribution and warehouse
       management system.’



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                                                        South West Large Organisations ICT Research 2008




         ‘Supermarkets occasionally send an email outlining what you have got to do to be
        their supplier. But you have to be one step ahead – ... you need to keep to the
        universal standards if plant *operations+ are dependant.’

One respondent made the point that the ability to require suppliers to fit to your supply
chain systems is dependent on your relative size and influence in the marketplace:

         ‘We use a paper-based system with suppliers. They are generally huge businesses –
        so we can’t impose our supply chain systems on them.’

Some organisations have not grasped ICT technology for supply chain management or
procurement. Several organisations we spoke to had no automated processes, use paper-
based Purchase Order forms, and order using email, phone or fax.

8.2.3 Local suppliers
More than one respondent mentioned conducting recent reviews of supply chain processes
and suppliers. Following a review one organisation identified that they are vulnerable to one
or two suppliers for key parts, a vulnerability which they are now addressing. Another has
completed an end to end chain review which has reduced their supplier list.

        ‘We went through a process of rationalising suppliers as part of business process
        mapping.’

The benefits of these reviews for large organisations are increased efficiency of business
processes and minimising risk of being exposed to only one supplier for a key component.
However, the impact on local suppliers may be less positive. In the light of these reviews of
suppliers, the need for smaller local suppliers to adopt ICT systems to ensure they remain on
supplier lists is critical.

The research looked at organisations’ experiences of working with local suppliers. One
business described the issues they’ve come across during their work on their downstream
supply chain:

        ‘Local suppliers possibly do miss out because they’re not IT enabled. Some low tech
        companies don’t get integrated. It’s unlikely they have ERP for instance, and this has
        impact on whether we can work with them. Need to convert information into
        spreadsheets for them, in order for them to work with us.’

Research shows that ‘new firms tend to be the most innovative in their markets and often
prod incumbents towards more innovative behaviour as well’.56 Major organisations in the
South West have set up an initiative entitled 21st Century Supply Chains (SC21) which deals
with accreditation and ‘upskilling’ of local SME suppliers.57 As well as raising skills levels and


56
 ‘Economist Intelligence Unit (2004)
57
 SC21 aims to accelerate the competitiveness of the aerospace and defence industry,
www.sbac.co.uk/pages/80338686.asp



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                                                   South West Large Organisations ICT Research 2008




quality assurance within the supply chain, the organisations also recognise the benefits of
working with smaller businesses:

       ‘We recognise the agility and innovation that is within the supply chain, within SMEs
       – they can be more fleet of foot’.

8.2.4 Public versus private sector procurement
Organisations were asked whether they operated ‘buy local’ policies; here differences
between public and private sector became apparent. Only one public organisation stated
they were able to buy locally – the remainder are subject to major or national framework
agreements and operate collaborative procurement.

       ‘Buying local is not allowed despite a statutory responsibility to improve local
       facilities and services.’

       ‘Mostly the procurement is part of a national framework. There’s little opportunity to
       purchase locally.’

Public sector procurement policies, and the drive towards collaborative procurement as a
way of harnessing the massive purchasing power of local government therefore often
precludes smaller local suppliers from being able to supply public sector organisations
locally. There was some recognition that this is not an ideal situation:

       ‘Value for money makes a local purchase policy difficult. Mostly we’re part of major
       UK contracts. This is a main area where the new South West One organisation will be
       looking closely.’

In contrast, over half of private organisations said they either informally purchased locally or
had ‘buy local’ policies. One organisation felt buying local was an important part of their
corporate social responsibility:

       ‘The policy is to buy local if you can. There are important loyalty relationships with
       the local community for supply of goods and services and labour which are highly
       prioritised across the group.’

Only one private organisation specifically expressed a negative opinion about buying local,
saying ‘it’s too difficult’. However despite the strong commitment among businesses to
buying local where possible, the value of purchases made locally may not be high. Examples
of goods purchased from local suppliers included catering products, raw materials and
uniforms.

       ‘We do work with local suppliers for the day to day consumables, the domestic stuff.’

In contrast, one firm acknowledges their best supplier with an award announced at an
industry event. There is broad commitment among private sector organisations in the South



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                                                  South West Large Organisations ICT Research 2008




West to operate ‘buy local’ policies which could be encouraged. An example of an existing
model of sub-regional development was mentioned by a manufacturing based organisation:

       ‘Cornwall Pure Business. Helps companies relocate – they’re drawing the right people
       and resources into the county. They bring in companies that can work as suppliers for
       us. Strong in bringing in small companies but with networks of sub-contracting or
       freelancing staff – so more skills available when necessary.’

8.2.5 Private sector outsourcing
Many businesses in the South West we spoke to said they had outsourced some elements of
their business. ICT has enabled outsourcing of what would previously have been seen as
core parts of the business, and ICT itself has also been outsourced in many cases. However,
there is a picture emerging of businesses starting to review their outsourcing policies and
assess whether the cost-savings offered by outsourcing are being achieved at the expense of
service quality, over-complexity of delivery and loss of control over crucial business areas.

The extent of outsourcing ranged from full contracts and service level agreements to ‘as and
when’ agreements with specialist firms. Non-ICT contracts which had been outsourced
ranged from (in frequency order): specialist engineering/fitting out; cleaning contracts;
marketing/printing; distribution; call centre, telephony, catering, security and business
facility management. In some cases the outsourcing had clearly been enabled by new
developments in ICT – one organisation mentioned digital dictation now being outsourced;
in others such as catering or cleaning the ICT connection was less obvious.

A small number of businesses have outsourced all ICT. Typically these contracts are
extensive, and subject to fixed delivery standards:

       ‘ICT is delivered via BT where SLAs *Service Level Agreements+ exist on
       maintenance/installation.’

A more common picture was for organisations to have outsourced some parts of the ICT
function. These included web site hosting, repair or build of PCs and Wide Area Networks. In
a few private organisations IT subcontractors were based onsite:

       ‘We have 30 subcontractors on site in IT, bits of software, telephone exchange etc
       outsourced. The core ICT structure is maintained in house.’

Reasons given for outsourcing ICT included reducing fixed costs, increasing efficiency or (for
national or global firms) harnessing combined purchasing power. In some cases ICT was
considered to be non-core to the business and outsourcing offered streamlining of the
business around core processes. A public agency interviewed predicted a future of
outsourcing of ICT services and systems hosted in large centralised data centres. A benefit



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                                                   South West Large Organisations ICT Research 2008




of this centralisation they felt would be improved disaster recovery measures among
businesses.

Application build and development work were being contracted overseas by two
organisations:

       ‘Some development work has been off-shored – contracted out to two Indian
       providers. We’re openly looking at future outsourcing more development work
       overseas. Most IT needs doing locally but application development can be done
       overseas.’

Benefits of sending development work offshore were seen as:

       ‘Flexibility in the workforce gives us a competitive edge and better risk profile.
       Graduates from India can give a greater attention to detail for the operational setup.’

A significant number of businesses have tried outsourcing either parts or their entire ICT
system and are now reviewing that decision. Reasons for not continuing to outsource ICT
services included:

Over-complex structures leading to increased costs:

       ‘Until 4 years ago ICT was outsourced but the costs and complexity of the operation
       prompted the work to be brought back in house. There are no plans to entertain this
       again.’

Concerns about standards of service and ability to ‘stay live’:

       ‘The business relies on ICT very heavily. We don’t put ICT support out of house as we
       don’t want it in someone else’s hands.’

Lack of efficiency:

       ‘Management of email accounts was brought back in house. It was taking 3 days to
       get a new email account not 3 minutes.’

One organisation is considering bringing work which had been contracted overseas back to
the UK because of concerns about quality of customer service:

       ‘Much will come back in the drive to improve customer service. Call centres abroad
       are typical services to be home based in future.’

8.2.6 Public sector outsourcing
Half the public sector organisations interviewed were planning to outsource some or all of
their ICT function. As discussed in Chapter 7 this can be the result of collaborative
partnerships such as South West One, or a national initiative such as the NHS Patient



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                                                  South West Large Organisations ICT Research 2008




records contract. Financial systems, including payroll and transactional processes tended to
be outsourced.


   Benefits of outsourcing according to those public sector organisations interviewed
   included:

        harnessing collaborative purchasing power;
        increased efficiency - centralising data demands standard processes and
           reduces duplication of information and effort;
       accessing technical expertise and strategic guidance on ICTs; and
       customer service benefits.


Among private sector organisations, the research shows some outsourcing is being brought
back in-house. In the public sector there is a clear trend towards ‘collaborative outsourcing’
and outsourcing ICT.

In terms of future development, we asked if organisations were likely to do more
outsourcing and generally the answer was ‘yes’. There are potential gains for the region if
outsourced activity is brought back in-house within the South West, or is placed with
providers based in the South West.

8.3    Conclusions
Supply chains in the US and Europe are becoming increasingly IT enabled, using ICT in all
areas to support e-business and supply chain management. ICT-enabled supply chain
networks work to increase profitability by improving the flow of information and goods.

Some organisations interviewed are working to high levels of automation of supply chain
processes, for instance, sending automatic Purchase Orders via ‘e-business’ to suppliers
who log onto shared networks. In terms of the impact on business productivity, the benefits
associated with use of ICT-enabled supply chain systems were seen as increased efficiency
and reliability of processes and information.

Barriers to adopting supply chain networks included a lack of internal integration; lack of
standardisation. Smaller local suppliers may be excluded from supply chains due to their
lack of ICT. One industry sector in the South West recognise the benefits of working with
smaller businesses and have set up an initiative called ‘SC21’ which deals with accreditation
and ‘upskilling’ of local SME suppliers.

‘Buy local’ policies were widely supported by large private sector organisations interviewed.
Procurement policies generally prevent public sector organisations from purchasing from
local suppliers.




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                                                  South West Large Organisations ICT Research 2008




Both public and private sector organisations interviewed feel that generally they are likely to
outsource more in the future. Areas currently outsourced include specialist
engineering/fitting out; cleaning contracts; marketing/printing; distribution; call centre,
telephony, catering, security and business facility management.

Implications
There are opportunities to harness the goodwill of big business in the region in terms of
embedding and encouraging more extensive and higher value ‘buy local’ policies. The South
West One initiative is reviewing the existing problems with local procurement in the public
sector and progress in this may unlock potential for the public sector to procure goods and
services more extensively in the region.

ICT-enabled supply chains deliver increased efficiency and improved flow of goods and
information. There are potential efficiency gains for the region if businesses continue to
move to ICT-based supply chain systems. However, increasing levels of ICT use mean that
smaller local suppliers are in danger of being excluded from supply chain networks. SMEs
may need to be supported to adopt ICT to enable them to continue fulfilling contracts.




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                                                  South West Large Organisations ICT Research 2008




           Strategic usage                                   Functional usage

Supply Chain                                  Supply chain

   Integrated ICT networks                       ICT not integrated within business
   Automated ordering, scheduling                Ordering processes not automated
    and stock-control processes                   Lack of standardisation in supply chain
                                                   networks


                                  Recommendations

Supply Chain

     Broker business advice for functional ICT users to move towards digitising their
        order processes;
     Lead the debate about industry standards; and
     Help individual large priority organisations integrate into supply chain networks.

Local Suppliers

     Work with industry partners to review the supplier network in the South West
     Work with smaller suppliers to ensure they are able to get onto supplier lists
     Target opportunities for local suppliers providing higher value goods and
       services
     Existing goodwill could be harnessed and celebrated with a ‘best regional
       supplier’ award for SMEs or a ‘best buy-local policy’ award for large
       organisations
     Develop the SC21 model in other industry sectors

Outsourcing

     Share information about ICT outsourcing – the risks and gains – and best
       practice
     Ensure future outsourcing plans are matched with providers within the region
     Scope the need to develop the profile of providers in the South West




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                                                 South West Large Organisations ICT Research 2008




9.     ICT and the Environment

9.1    Background
9.1.1 Key Issues
Information and Communications Technology has a role to play in enabling organisations to
monitor and reduce resource use. A paper published in 2007 gives examples including ‘the
dematerialisation of transport, such as the switch from air travel to videoconferencing, and
the digitalisation of information represented by the switch from catalogues to websites.’58

According to Business Link, saving energy is the easiest way for businesses to reduce carbon
emissions by investing in energy saving products and technologies and could cut energy
costs by 20%. Business Link suggests a workplace travel plan 59 can be used as a strategy to
manage the travel generated by businesses, and in doing so reducing its environmental
impact.

However investment in ICT hardware can have a negative impact on the environment.
Increased demand for ICT hardware drives consumption of energy and resources and ICT
manufacture requires certain toxic substances. One way of reducing the negative impact of
ICT equipment is purchasing ICT equipment which runs efficiently – minimising energy use
and limiting the amount of hazardous chemicals used in manufacture. A second method is
virtualisation of servers – ‘a method of running multiple independent virtual operating
systems on a single physical computer. This slashes the majority of hardware acquisition and
maintenance costs.’ 60

9.1.2 SMEs and ICT impact on the environment
SMEs were asked whether ICT had an impact on the environment. Strategic adopters or
those who consider e-business to be essential or very important were most likely to report a
positive or very positive impact on the environment. Micro-businesses (0-4 employees),
who make up the largest proportion of the South West economy were less likely to report
ICT had a positive or very positive impact on the environment.


9.2    Key findings

Large South West organisations were asked about ICT applications and their potential
impact on the environment. Organisations were also asked whether they have
environmental strategy in place for transporting and recycling.




58
   www.euractiv.com
59
   Business Link
60
   Ou



                                                                                      52
                                                  South West Large Organisations ICT Research 2008




9.2.1 Environment policies/ strategies
Most organisations consulted had an environmental policy/strategy in place whilst others,
although at present didn’t have a ‘green plan’, were still active in implementing
environmentally friendly activities and were in the processes of developing environmental
policies. These organisations were largely aware of the potential implications of the use of
ICT in their organisation and its impact upon the environment, and were already or in the
processes of undertaking actions to reduce such impacts. However, no consistent theme
emerged regarding organisational sector or public/private organisations although as would
be expected, organisations that had environmental policies in place were strategic
transformers. Typical views included:

       “Its early days. We’re beginning to recognise that what we do has an impact on the
       environment”’.

       “All activities have an environmental consideration”.

       “This is a priority issue...with many environmental plans in place”.

9.2.2 Travel
Travel plans were one environmental activity targeted in terms of reducing the
environmental impacts as a result of ICT. ‘Green travel plans’, are linked in with flexible
working, that enables employees to work from home will in effect reduce carbon emissions,
thus having a beneficial impact upon the environment (flexible working is discussed further
in the following chapter). Furthermore, in terms of reducing business travel, video or virtual
conferencing and instant messaging was noted amongst some organisations as a way in
bringing people together but not impacting upon the environment in terms of travel. Also,
the use of video/virtual conferencing is increasingly being used as cost-effective way to
achieve collaborative working within large organisations. The following statements
summarise the opinions expressed:

       “Instant messaging means less face-to-face contact, thus connectivity has reduced
       travel”.

       ‘The culture of the company is to use video or audio conferencing wherever possible
       to avoid travelling. Monthly web casts are also in place.’

       “Video conferencing is used extensively and costings are maintained which show the
       savings in travel costs of £30k. £17.5k has been spent of a system which produces
       high quality definition and reliability. It is used in conjunction with design tools and
       display material”.

However, some organisations have moved away from video conferencing. Video
conferencing needs to fit in with the business culture, and for some organisations it was
seen as an ineffective way of working:

       “No one likes it, takes big room, lots of different time zones in global company.
       Telephone conferencing is much easier”.



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                                                   South West Large Organisations ICT Research 2008




       *Have video conferencing facilities that they don’t use+ – “people just prefer face to
       face”.

A further theme to emerge regarding reducing commuting / business travel was internal
training provision:

       “E-learning applications are now used extensively throughout the company but this
       technology is not used widely elsewhere in other organisations. We now have H&S
       and other material broadcast on line together with exams, certification and inclusion
       on HR records”.

       “We are using virtual conferencing for training. You log into the network – there can
       be 60-70 people online, for training and presentations. They talk on the phone and
       see what’s on the screen of their PC. It reduces the logistics of flying people round the
       world. We will do this more as it worked well”.

The outcomes of implementing a travel plan included reducing travel, reducing costs and
creating better networks among staff.



9.2.3 Energy
Reducing energy consumption was a key theme to emerge, such as using ICT to measure
energy consumption, using cost-effective resources, switch off monitor policies, low energy
use hardware and low power servers, using flat screens to save energy plus other energy
saving schemes.

A further issue of interest regarding reducing energy consumption was server virtualisation.
Several companies are subscribing to server virtualisation thereby reducing energy demands
of organisations’ data centres. Organisations that had implemented this scheme gave an
overall positive response.

       “Virtualisation involves buying one server and making it look like 1-5 servers... with
       no performance loss but save power and space”.

       “Virtualisation of servers brings down power and cooling costs”.

       “We had 130 server boxes which we have now been able to reduce”.



9.2.4 Paper Reduction
Organisations were also generally aware about paper
consumption and were active in trying to reduce this         One private sector business has a
but only a small proportion of organisations had been        ‘Green Team’ which is tasked
                                                             with reviewing environmental /
                                                             waste issues and implementing
                                                             ideas and solutions across all of
                                                                                     54
                                                             the company’s departments.
                                                   South West Large Organisations ICT Research 2008




able to change to a ‘paperless office’. In terms of purchasing ‘green PCs’, only one company
said they adopted green PCs and also had a robust sustainable operations group policy. In
terms of recycling PCs, a moderate proportion of organisations were active in recycling their
PCs in accordance with WEEE guidelines.

Some organisations had well developed environmental policies in place and considered the
                                     impact of their organisation on the environment to
  A public sector organisation be an issue of importance and thus, endorsed green
  consulted tackles green issues via activities and generally had a positive response by
  their own environmental steering implementing ‘green initiatives’. These organisations
  group and champions.
                                     were considered to be strategic transformers but no
consistent theme emerged regarding sector or public/private organisations.

Whilst a small number of public sector organisations felt that environmental issues was not
an overt concern for their organisation or felt that the issues were not related to their
organisation, most did have an environmental policy in place.



9.2.5 Office Space
Reducing office space needs was not felt to be significant amongst organisations, with only
one organisation stating that they have possibly been able to reduce the amount of office
space required.



9.2.6 Drivers
The main drivers appeared to be reducing costs and efficiency of organisational processes.

       “Major savings have been achieved”.

       “*Digital mail] supports an efficient workflow”

       “The driver is efficiency and the environment is sat in the corner wearing a very small
       hat”.

9.2.7 Barriers
‘Lack of resources’ was felt to be a key issue for some organisations:

       “Implementing environmental ambitions requires investment and resources. There’s
       no money here to replace the 30 year old heating system... it’s a lot of effort to
       challenge heating bills, the solution is generally a new building or revamping old
       ones. There’s no money to do this and it’s very politically sensitive to be seen
       spending money on council buildings”.




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                                                  South West Large Organisations ICT Research 2008




Another organisation reported a similar barrier in terms of the physical infrastructure of
buildings, utilising a building to its full potential rather than developing new buildings in
different areas.

       “Since a certain location has an installed base, we can’t quite relocate in the blink of
       an eye. The set of barriers is about where the company physically happens to be at
       the moment. It is easier to build on that than to start from scratch. Although we’ve
       already got people there; there’s a lot of underutilised office space to bring up to
       capacity. We need to migrate people and resources towards it... Minimising
       expenditure in this way (maximising use of facilities currently owned) allows
       fulfilment of environmental responsibility.”

A further barrier to emerge was not having a policy in place to implement green initiatives.
Although in the minority but of contrasting interest, one organisation reported that due to
environmental concerns their expenditure has dramatically increased in order to comply
with environmental regulations due to the nature of their business.


9.3    Conclusions

ICT has a role to play in enabling organisations to monitor and reduce resource use.
Examples include reducing travel and transport costs by switching to videoconferencing and
reducing resource use by placing information online rather than distributing paper versions
of documents. However investment in ICT hardware can have a negative impact on the
environment. Increased demand for ICT hardware drives consumption of energy and
resources and ICT equipment itself contains toxic substances. Two ways to limit these
negative impacts are to purchase ‘green’ ICT equipment which benefit from improved
manufacturing techniques and reduce energy requirements; and virtualisation of servers to
maximise their output.

The main activities organisations were partaking in or had polices /schemes for, were travel
plans; adopting server virtualisation; and polices for reducing energy consumption. Many of
the organisations were actively trying to reduce the amount of paper used. Few
organisations considered energy use or environmentally-friendly manufacturing processes
when purchasing ICT equipment. The main drivers appeared to be efficiency and cost
reduction. Key barriers mentioned were a lack of resources and having no policy in place to
implement ‘green initiatives’.

Implications
Improving information about ways to limit the impact on the environment of increased
investment in ICT hardware would contribute to a low carbon regional economy. Some
organisations we interviewed had environmental policies and plans, or ISO14001 and other
accreditation. However there is the opportunity to bring other large organisations in the
region on board.




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                                           South West Large Organisations ICT Research 2008




             Strategic usage                             Functional usage

   Environmental policies in place            Lack of awareness around benefits of
   Minimise unnecessary travel via             green policies and practices
    practices such as video conferencing       Perceive cost of implementing green
   Server virtualisation to reduce             practices to be a barrier to adoption
    energy consumption and costs               No environmental policies in place
   Clear vision of benefits of adopting
    green initiatives




                                  Recommendations

     Improve awareness of the benefits of implementing environmental ICT policies
       by communicating the positive business impacts (i.e. minimising unnecessary
       travel, savings in costs and energy consumption); and
     There is a need to demonstrate and promote ‘best practice’ environmental
       strategies and practices to current non-adopters.




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                                                   South West Large Organisations ICT Research 2008




10.      Flexible working

10.1 Background
10.1.1 Key Issues
This chapter looks at the impact of ICT on flexible working practices within large South West
organisations. In June 2007 the Equal Opportunities Commission called for changes to the
law to allow more flexible working, after finding that only 48% of UK companies offered
flexi-time, compared to 90% in Europe.61

It is increasingly clear that the use of ICT is creating different working patterns and working
environments and that this is helping to widen the availability of different working options.
In turn this is expanding opportunities for people who might not otherwise have been able
to continue working or to re-enter the work force. 62 Across the UK, three quarters of those
making a request to flexi-work are women 63. In the past women have often had to leave the
workforce because they could not combine their job with caring responsibilities. 95% of UK
businesses report the positive impact on employee work/life balance as a result of flexible
working.64 A report issued by EMDA found improved staff morale was the second greatest
benefit of remote working behind flexible working patterns/times. 65 An EU report in 2002
links ICT-based working and the development of a ‘knowledge economy’. The report
associates increased ICT-based work with ‘higher rates of job creation, increased
participation by women, and the improved quality and higher skills requirements of many
jobs.’66

10.1.2 SMEs reported benefits of flexible working
The main positive impacts reported by the majority of SMEs in the 2008 ICT Benchmarking
Research were improved productivity; competitiveness; responsiveness; staff morale and
quality of life issues.67 This finding is supported at a national level; four out of five workers
believe flexible working would improve quality time with children, their productivity and
loyalty to their company.68


10.2 Key findings
10.2.1 Attitudes to flexible working
Organisations consulted who stated they had a formal flexible working policy in place were
largely from the public sector. Although several private sector organisations did advocate

61
   BBC 14 June 2007
62
   Rolfe
63
   DTI
64
   BERR (2007)
65
   EMDA
66
   Quoted by Flexibility Ltd.
67
   Step Ahead Research
68
  Eclipse



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flexible working practices, it was not consistently felt to be a relevant issue to private sector
organisations interviewed.

Those strategic transformers from within the public sector organisations we interviewed
generally had a positive attitude to flexible working. Functional ICT users within the private
sector offered little or no flexible working options.

Most public organisations advocated good flexible working practices;

       ‘The senior management have a positive attitude to flexibility where the job allows it.
       There have been no downsides.’

        ‘We offer a wide range of flexible staffing, nothing is excluded.’

Functional ICT users were particularly likely to perceive that flexible working was impractical
in terms of the job role.

       ‘We’re pretty much a traditional engineering company... not a lot of home working.’

       ‘Not much in the way of flexibility in view of the nature of the work.’

Of the organisations that advocated flexible working practices, nearly all mentioned that it
has changed their organisations business model and working culture.

       ‘Flexibility has become the key to the change in business culture... new business has
       evolved and elsewhere inward investment from business moving into the area has
       improved prosperity.’

       ‘Flexible working policy is well advanced with 80 out of 160 having home working
       capability and 90% have an ability to work anywhere.’



10.2.2 Drivers / Benefits
Having the technology available was the overriding driver to organisations that have or plan
to implement flexible working patterns to its staff.

       ‘The technology is there to work remotely.’

Other drivers or benefits that were also consistently seen to be of importance were a
reduction in commuting / business travel and productivity.

       ‘Our general thrust is to reduce desk numbers by 20%, reduce travel and provide
       more scope outside of the office.’

       ‘Increasing productivity is the driver to our key flexible working programme.’




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Staff retention had also been noticed by employers offering flexible working:

       ‘Flexible shifts help keep the people we need.’

       ‘We lost 2 employees before implementing policy because we weren’t offering
       flexible working. One lived in Plymouth and found the travelling difficult for a fixed
       8am start.’

Other benefits that were highlighted included, staff morale, ‘get more out of people’,
reducing costs (in particular, ‘reducing real estate costs’), loyalty amongst staff, broader
recruitment geography and the attraction of new employees.


10.2.3 Provision of ICT flexible working for staff relating to disability, health, caring
responsibilities or cultural background
Offering flexible working is associated with widening access to work for people traditionally
excluded from the workforce. Some large organisations in the South West who offered
flexible working had noticed a change in their workforce. This was largely connected to
overcoming the barriers of childcare issues and shift working. In some cases flexible
working, particularly working from home, had been enabled through ICT investments, in
many cases the link between ICT and flexible working was not made explicit by respondents.

The role of women as primary child-care providers was implicit in one explanation of the
driver of offering increased flexible working:

       ‘The profession has become female orientated hence the need to adopt much more
       flexible approach to allow staff to work from home, remotely or other. The ratio of
       70/30 male to female is now reversed.’

One employer felt that few women in their workforce meant there was no requirement to
provide flexible working or child-care support:

       ‘Only one in 20 employees is female, so you’re not going to get crèche facilities etc.’

In practice organisations offering flexible working saw benefits to the workforce beyond
women with child-care roles. The benefits of flexible working were apparent for parents of
older children. One public sector organisation reported: ‘we’re trialling flexible working
around school holidays at the moment.’ One (male) managing director told us:

       ‘For example, I can leave early to go to parent’s evening, go and then do an extra
       hour’s work from home in the evening. I feel more motivated as a result.’

Several organisations had noticed a direct benefit of offering flexible working for mothers,
fathers and grandparents who are fitting their jobs around childcare. One public sector
organisation reported:




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       ‘In practice flexible working helps us to recruit from under-represented sections of the
       population. It lowers barriers to working for us.’

Private sector organisations generally tended to offer more impromptu flexible working: ‘for
majority of people working from home is possible, if their partner is sick etc’.

Shift working
Organisations with shift working were divided as to whether flexible working is appropriate
to their working patterns. One emergency service provider reported:

       ‘A lot of staff are [emergency service crews] doing shift work, even for them there is
       some flexible working available’.

Two private sector organisations with shift working have seen benefits in widening the
workforce to include older people, especially those combining work with caring for
grandchildren:

       ‘We introduced “mid shifts” on the shop floor – part time hours in the afternoon or
       evening. This has attracted the 50+ bracket who want just a few hours work.’

       ‘People with other commitments, or who live a distance from work, have kids,
       charitable interests, TA, grandkids, can fit it in with their work now.’

More common though was the view that shift work prevented offering flexible working
options:

       ‘Shift culture results in the general absence of flexible working policies... We have a
       rigid shift routine’.

Only one organisation specifically mentioned support for disabled workers; no specific
references were made to flexible working leading to a more culturally diverse workforce.

10.2.4 Barriers / less successful aspects of flexible working
The overriding reason that flexible working patterns had not been introduced (largely from
the private sector) was that flexible working was ‘not seen as a priority’ due to the ‘nature
of the job’, specifically in terms of ‘shift staffing’ and not being possible to undertake the
work required away from the current location.

       ‘It’s impractical to work elsewhere.’

       ‘It’s all very well having working from home if you’re an office-based company, but
       you can’t make things from home.’

Other barriers that came to light or the less successful aspects of flexible working for those
organisations that had adopted flexible working patterns was that potentially, ‘big
development costs’ would be involved and therefore doubts surrounding its ‘value for




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money’. A further consistent theme that could prove to be a barrier was issues concerning
connectivity, unable to get access to wireless and living in rural areas.

       ‘There’s only a fixed line connection needed at the moment so can’t work truly
       “flexibly”.’

       ‘You can't get wireless connection outside the city centres.’

       ‘Broadband is “good enough”... goes down to “barely good enough” at times.’

Other organisations felt the absence of social contact may be an issue and for a small
number of organisations security was also a concern (see Chapter 11).

A further concern was a lack of fairness in the way flexible working policies operate. A
specific example given was flexible working around maternity leave. One organisation
reported experiencing positive outcomes of offering flexible maternity leave:

       ‘Flexible working has even allowed certain staff to continue to work even on
       maternity leave’.

However, it was felt to be less successful if some people are treated too flexibly with
maternity leave, one respondent commented: ‘it can leave a bad taste in the mouth if one
individual is favoured over others.’



10.3 Conclusions

There have historically been lower levels of flexible working in the UK than in Europe. In
2007 only 48% of UK companies offered flexi-time, compared to 90% in Europe. Increased
use of ICT is creating different working patterns and working environments and that this is
helping to widen the availability of different working options. Research shows the benefits
of increased flexible working to be a positive impact on employee work/life balance leading
to improved morale among the workforce. ICT-

Organisations consulted who stated they had a formal flexible working policy in place were
largely from the public sector. Although several private sector organisations did advocate
flexible working practices, it was not consistently supported by private sector organisations
interviewed. Benefits reported by organisations supporting flexible working included
improved productivity, staff retention and staff morale, and reducing commuting and
business travel.

One reported barrier to offering flexible working was the ‘nature of the job’ (specifically the
need to staff shifts, and the lack of flexibility around production schedules). A concern was
that big development costs would be involved in enabling remote and flexible working
patterns. Connectivity proved a further barrier to remote working – especially concerns




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around inability to connect onto wireless networks or high speed broadband connections,
particularly in rural areas.

Implications
There was a general lack of understanding among organisations interviewed about the
organisational benefits of offering flexible or remote working policies. Improving
information on the benefits should encourage organisations in the region adopt flexible or
remote working policies. The public sector is leading the way in terms of offering flexible
working policies, however it will be important to communicate bottom-line benefits to
private sector organisations who believe the ‘nature of the job’ prevents them from offering
flexible working. Given the connection between flexible working and improved productivity,
staff morale and retention, increasing the numbers of large organisations offering flexible
working in the region should have a positive impact on regional productivity.




                Strategic usage                                Functional usage

     Flexible working policies in place             Little or no flexible working options
     Integrated within working culture and          Connectivity is sometimes an issue
      fully exploited by staff                       Perceived as irrelevant & impractical
     Technology in place to accommodate             Development costs are a barrier
      remote working                                 Lack of social contact is a barrier
     Benefits include reduced commuting,
      staff retention, increased productivity




                                      Recommendations

       Support functional users to develop the technologies necessary for
        implementing flexible working practices; and
       There is a need to improve awareness and promote ‘best practice’ to current
        non-adopters of flexible working.




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11              Security Issues

11.1 Background
11.1.1 Key Issues
ICT security is a major policy strand of the i2010 strategy. The focus is on privacy and
security for individual internet users amid concerns about the high levels of ICT-enabled
identity theft; the abuse of information from Radio Frequency Identification tags (RFID), and
security of online transactions – particularly across country borders.

At an organisational level, disasters such as virus attacks and blackouts through to terrorist
attacks can result in large monetary losses, legal ramifications, loss of customer confidence
and, in extreme cases, the company’s existence. Organisations need to have plans to
recover their assets so they’ll be able to return to normal operations as soon as possible.
This requires continuity planning. 69

Disaster recovery planning (DRP) involves organisations putting in place contingency plans
to deal with unexpected outages. Organisations are increasingly realising the importance of
ICT to their work. ICT related DRPs identify critical IT functions; how long an organisation
can function without these critical IT functions; how much data they would lose; and the
maximum tolerable outage. 70 Without a DRP and a robust data backup and storage policy
organisations are vulnerable to complete collapse following an outage.

A current issue in the UK is losses of public data, recent high profile security breaches
include the loss of 25 million child benefit records in 2007; and a report for BERR in early
2008 concluded that ‘many companies are not doing enough to protect themselves and
their customers' information.’ 71

Elements of ICT security include:
    encryption software;
    limiting access to networked information via Intranets or Virtual Private Networks
      (VPNs); and
    technology such as SMART cards or biometric devices which require fingerprints or
      iris scans to enable user access.

11.1.2 SMEs and security
 A lack of e-security is currently the primary concern about ICT among SMEs in the South
West, particularly the smaller SMEs.72 This is believed to be linked to lower levels of ICT
adoption and understanding among smaller businesses and can be seen as a reflection of
growing online crime reported the media.

69
   Mangal
70
   Bradbury
71
  BERR (2008)
72
   Step Ahead Research



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11.2 Key findings
There are two key issues to be addressed in the discussion of security issues for large
organisations using ICT consulted in the South West region:

          ICT-related barriers to security; and
          Solutions employed.

11.2.1 Barriers
In general, all firms consulted understood the value of ICT in taking effective precautionary
measures against breaches in security. Whilst no truly significant patterns emerged in terms
of barriers linked to the negative impacts of ICT usage on security, the issues attributable to
flexible working was found to be a recurring theme.

11.2.2 Issues attributable to flexible/ remote working
                                                                   After a security scare, one
Some strategic transformers were acutely aware of the              company took precautionary
heightened potential for sensitive information entering            measures for flexible/ remote
the public domain as a result of flexible working. This            working:
unease is evident in the reactive measures taken to
increase security by some organisations consulted, to               “...after the infamous lost laptop
protect sensitive information and documents.                       incident everything is encrypted,
                                                                   laptops need to be locked to
When discussing the potential for flexible working to              desks, and we are applying MoD
render an organisation vulnerable to viruses, one Head of          standards – everything is wiped
IT commented:                                                      75 times not just once, etc, etc.”

           “We have concerns – lots of transient people are employed by the company –
           contractors could come in with a laptop with a virus. We have a good firewall but it’s
           the people on the inside I’m more worried about as we don’t have encryption
           software at the moment...”

In terms of the practical issues associated with working flexibly, a couple of individuals had
encountered problems linked to logging on and retrieving data from secure sites when
accessing files remotely. One public sector respondent provided the example that some of
their organisation’s security features (such as their SMART secure access cards) were not
compatible with remote access methods such as PDAs or laptops as they require a separate
card reader in order to work.

These security issues around flexible working would appear to suggest that there are still
some negative perceptions associated with its introduction and integration into working
culture (predominantly within private sector businesses). Whilst its benefits (improved
productivity, competitiveness, responsiveness, staff morale, quality of life issues 73 and
facilitating work for those finding difficulties in accessing ‘traditional’ labour markets) are


73
     Eclipse



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evident from the 2008 South West Benchmarking Study 74, it is clear that until the above
negative issues are addressed, adoption of flexible working will be inhibited.

Many public sector organisations around the South West appear to be leading the way on
flexible working policies and are also well-practised in implementing precautionary
measures to prevent security breaches. These findings suggest the potential for introducing
a combined flexible working and security training programme targeted at the private sector
and modelled on the practices utilised by the public sector. Nonetheless, it is important that
a subtle approach is utilised in order to achieve private sector buy-in as they don’t
necessarily see their objectives as being the same as those of public sector organisations.

11.2.3 Lack of full trust in ICT
Trust also appeared to be a barrier for some organisations. Several more average or
functional users of ICT, who were in public-facing organisations, showed a reluctance to
place full trust in ICT systems in terms of disaster recovery, including the use of paper-based
back-ups as part of their DRPs:

           “A recent power surge lost four days records and but for the paper back-up, they
           would have been in real trouble.”

           “The issue would be no paper based back-ups [when we switch to a full ICT
           approach+... patients may need access to records urgently.”

It must be noted, however, that this was only representative of the minority of large
organisations consulted and as expected, these individuals did not display strategic
transformer characteristics.

11.2.4 Disaster Recovery Plans (DRPs)
Almost all organisations consulted had some form of Disaster Recovery Plan in place
although these varied in detail (only four organisations did not but were planning to have
one in the future). The majority of plans involved the
use of mirrored systems and most commonly off-site
                                                            One company included the
back-ups in the form of tapes, cds, paper, etc as well as
                                                            identification of key ‘business
despatch of mobile suites to provide emergency ICT
                                                            hypercritical’ activities into their
solutions. Several also test their back-up and recovery
                                                            DRP. They then set up specific
systems daily to avoid potential problems.
                                                            business continuity plans for
                                                            each of their most business-
                                         In addition to
   The DRP of one organisation                              critical services.
                                         these features,
   included looking at how long
                                         a number of
   they can afford key applications
                                         organisations (most of which were strategic
   to be down for and what they
                                         transformers) had rapid recovery plans in place so
   can afford to lose. This involved
                                         that if a problem occurs it is quick to get the system
   prioritising and setting minimum
                                         up and running, often within hours of loss of power
   targets for disaster recovery.
                                         or data.

74
     Step Ahead Research



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The most sophisticated of these actually recognised the need to prioritise critical activities
to ensure that the most valuable information is saved or critical activities up and running
again first in order to limit damage to productivity.

Both of these individuals have been at the forefront of the change management process for
their respective organisations and these companies can be identified as strategic
transformers who have been shown to be good at exploiting ICT across a range of business
practices. These two examples illustrate best practice in terms of good business planning
through highly strategic thinking.

Interestingly, whilst not displaying strategic thinking in many other aspects of their business,
one retail business placed a great deal of interest on prioritising their point of sale activities:

       “Risk analysis has been done and mission critical activities identified. The need to
       continue point of sale activity is a priority.”

Whilst this organisation demonstrates good practice, this would appear to be functional
usage of ICT as opposed to strategic thinking in line with the majority of organisations as the
emphasis is highly focused on one output (in this case, continuing point of sale activity)
rather than improving the overall efficiency and productivity of their business through ICT
processes.

11.2.5 Overcoming Security Breaches: Laptop Precautions, Devices and Policies
Many large organisations consulted recognised the importance of implementing
precautionary measures for laptops in a similar manner to security used on all other
machines for protecting access to sensitive information. Most commonly, encryption
software was utilised to ensure that in the event of lost laptops “...they could not be used by
outsiders”. Further to this, several more strategic organisations had fixed line, Virtual
Private Networks (VPNs) to ensure that only authorised personnel can access secure
organisational information:

       “Our laptops have high security. It takes about 20 minutes to get onto the system in
       the morning because of the high security. We log in through VPNs and the software is
       updated constantly... Our laptops are permanently backed up to the local server and
       regional ones. If we happened to lose a laptop, we would have a new machine by the
       next day with all the previous day’s data to midnight on it.”

In addition to some form of laptop security measures, strategic users of ICT were also likely
to utilise secure devices in order to overcome potential security issues. Several discussed
the use of SMART cards, and user-recognition data sticks and disks with authorised
passwords to enable only selected employees to access certain documents and information.
One strategic public sector organisation explained their use of ICT in overcoming security
breaches:

       “Everyone has a profile description geared to their role with an appropriate level of
       access to secure information... [You need an] active card and you key a sequence of



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           numbers in. It’s a SMART card that needs to be plugged into a card reader... We also
           have biometric (fingerprint driven) memory sticks.”

Nearly all organisations implementing these types of security precautions were public sector
organisations such as hospitals, councils and emergency services in positions of trust and
therefore potentially most susceptible to (and concerned about) attempted security
breaches. It would suggest that whilst some of these organisations are indeed strategic ICT
users across the board in terms of their processes, this sector has had to adopt a strategic
approach to security issues as a reactive measure to the environment within which they
operate. Whilst rollout of these precautionary measures could be useful for organisations in
a similar position, the issue is was seemingly not as prevalent for most others.

To further limit the potential implications of security breaches, several organisations
highlight a strategic trend in moving towards thin client operation whereby sensitive client
or customer data is stored at a centralised location offsite and is therefore inaccessible on a
local machine in the case of intervention. Moreover, some organisations sought to
implement authorised access systems, limit alternative computer software packages, spam
and virus filters or disciplinary measures for inappropriate web use to prevent the possibility
of deliberate system interventions.


11.3 Conclusions
At a European policy level ICT security concerns focus on the privacy and security of
individual internet users. Organisations are increasingly realising the importance of ICT to
their work. ICT related Disaster Recovery Plans identify how long an organisation can
function without critical IT functions; how much data would be lost; and the maximum
tolerable outage. 75 Without a DRP and a robust data backup and storage policy
organisations are vulnerable to complete collapse following an outage.

SMEs interviewed in the 2008 ICT Benchmarking Research were very concerned about IT
security threats from external agents. 76 In comparison, large organisations we interviewed
were concerned about security issues connected with staff engaged in remote and flexible
working. Almost all organisations consulted had some form of Disaster Recovery Plan in
place although these varied in detail. The majority of plans involved the use of mirrored
systems and off-site back-ups as well as despatch of mobile suites to provide emergency ICT
solutions. The most sophisticated of these recognised the need to prioritise critical activities
to ensure that the most valuable information is saved or critical activities up and running
again first in order to limit damage to productivity.

Implications
Organisations which lack a disaster recovery plan are extremely vulnerable to outages. One
organisation we spoke to realised the importance of disaster recovery planning during the
course of the interview. The establishment and promotion of best practice planning may



75
     Bradbury
76
     Step Ahead Research



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                                                    South West Large Organisations ICT Research 2008




    prove to be a useful component in terms of encouraging overall strategic development
    amongst large organisations in the South West.




             Strategic usage                                 Functional usage

    Secure devices to protect sensitive          Unease surrounding introduction of
     data / accommodate flexible working           flexible working practices
    Prioritisation of key activities &           Reluctance to rely solely on ICT
     continuity plans for each within DRP          systems in terms of disaster recovery
    Thin client operation and authorised         Basic DRPs based on data back-ups
     access systems to boost security




                                   Recommendations

The key points for overcoming the barriers associated with ICT in terms of security
were:

      The need to emphasise and evidence the value of adopting a flexible working
       policy and associated security precautions via a combined training programme
       targeted predominantly at the private sector;
      The need to provide specific best practice training and promotion of the benefits
       of strategic disaster and continuity planning, targeted at the ‘functional’ basic
       ICT users lacking a sophisticated security plan; and
      The potential for roll-out of sophisticated precautionary measures for public
       sector organisations holding highly sensitive data and most at risk of security
       breaches.




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12       Internal barriers
12.1 Background
12.1.1 Key Issues
As previously discussed in Chapter 5, a key barrier for organisations seeking to maximise the
benefits of their ICT investment is a ‘lack of ICT knowledge in senior management and the
*resulting+ failure of IT and business management to work together’. 77 Often the main
barrier to working closer together is organisational, caused by ‘difficulties in breaking down
barriers between functions and departments’.78

Characteristics of successful implementation of ICT-led change include: 79

Organisational culture supports ICT
    Strong communication between the organisation and IT – a ‘shared language’;
    Project team leaders have mix of ICT and business/organisational expertise;
    Organisational culture supports innovative thinking, widespread adoption of new
       technologies and organisational change;
    Impact on existing ICT architecture is considered.

Investment and commitment in place
    Budgeting for projects is set against financial benefits of delivering strategic
       objectives;
    Costings and planning for training for all affected staff include time away from ‘day
       jobs’.

12.1.2 Barriers to ICT adoption among SMEs
E-security was the biggest concern among SMEs in 2008 according the 2008 ICT
Benchmarking Research. 80 Cost and uncertainty about the benefits of ICT are factors which
are consistently mentioned over the years. While staff skills were thought to meet current
needs there was concern over their ability to develop ICT in the future. Failure to provide
training and support to address the lack of staff skills could be contributory factors to the
barriers of cost (or perceived cost) and uncertainty about the benefits of ICT.

12.2 Key findings
12.2.1 Corporate culture
Moving organisations from a functional to a strategic understanding of ICT-enabled business
solutions often involves tackling internal culture barriers. Key internal barriers identified by
respondents included resistance to change among staff – largely due to fears about loss of
control over data or loss of influence:

77
   Economist Intelligence Unit, (2004)
78
   Economist Intelligence Unit, (2007)
79
   See Amoroso, Cumps, Finnegan.
80
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       ‘The scale of the exercise requires influence and         A public sector organisation
       authority and people to give up ownership to allow        solved a training problem by
       changes to occur. The largest practical barrier is the    offering ‘Byte Size’ training which
       mental one.’                                              took a morning. The content in
                                                                 part was based on help desk
This could be exacerbated by the structure of the business       queries.
itself:

       ‘A silo mentality operates here. There’s no integration and no interface activity.’

One organisation found that where IT departments pushed projects through without wider
business buy-in they generally failed. Other barriers mentioned by respondents included a
lack of understanding and trust in the systems:

       ‘Figures are used to drive the business but people prefer their own figures kept
       separately. This is because originally the system was seen as a financial system.
       “Perception and ownership” is therefore biggest barrier to exploitation – not the
       capability of the system or staff.’

Lack of an ICT ‘culture’:

       ‘People say “I don’t need a computer to do my job... Can’t find parts I need... Didn’t
       realise the computer system could tell me where those parts are.” We’re currently
       using only about 50% of the capability of the system.’

Examples of good practice when implementing ICT-led change included ensuring business
buy-in and senior management involvement and putting in place cross-functional teams:

       ‘The project will have a non-IT sponsor from the business. There is a small team of 6
       with business analysis and project management skills, not directly reporting to IT but
       within *Chief Information Officer’s+ department. They act as bridge between IT and
       users.’

12.2.2 Budget
Budget was an issue for both private sector and public organisations. Functional ICT users
were more likely to believe: ‘ICT does not give a high return on investment.’ The perception
of ICT as an overhead is likely to be linked to a lack of understanding of the productivity
benefits offered by ICT exploitation (discussed in Chapter 5).

12.2.3 Lack of understanding/ training
A lack of understanding of ICT and suppliers not clearly spelling out the benefits of their
systems can prevent organisation from investing in new systems or applications. One
functional ICT user stated:

       ‘Someone phoned up with a managers’ software package. It was difficult to see how
       it worked and how it would improve our lives.’



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A key barrier (and one that contributes to the barriers above) was lack of resourcing for
training:

       ‘We have skill in IT and have the ‘want’ but need the resources to train and own the
       new application. This affects delivery of IT projects and decisions about whether to do
       something. An example is CRM stage 1 implementation – we lack implementation
       skills in house plus there’s no time to implement and test systems. There’s also a lack
       of operational training among sales staff.’

Lack of resourcing for training was mentioned widely by respondents apart from the few
organisations with a consistently strategic understanding of ICT. They are more likely to
schedule training as part of their detailed implementation plans.

Improving levels of training for all staff affected by ICT change would help organisations fully
exploit investments in ICT and improve productivity. Senior and middle management would
benefit from training on ‘the art of the possible’ and the strategic implementation of ICT-led
transformation projects.

12.2.4 Specific public sector barriers
Investment
Improvements in local government ICT provision had a ‘kick-start’ with the e-government
requirement. Several respondents reported that the funding is no longer there, and ICT
budgets are being cut, so it is possible that the pace of improvement in ICT exploitation by
the public sector in recent years may slow as they fail to keep up with necessary upgrades or
replacing ICT equipment.

DPA misunderstandings
Limitations caused by a lack of understanding of the Data Protection Act were mentioned as
a barrier to exchange of information within the public sector. One respondent made that
point that ‘If all “cells” – education, social services, health, police – tie into each other [with
shared services and common CRM systems] – the potential is of savings for everyone’. Often
this information-sharing is not possible, even within a single Local Authority, because of
concerns about allowing others access to data on the public.

Lack of alignment
Councils are faced with issue of neighbouring local authorities operating different, non-
compatible ICT systems.

12.2.5        Skills levels
Generally those organisations we interviewed reported that entry level ICT skills were up to
a good standard. In-house training also emerged as a consistent theme:

       ‘Skills at entry level have not been a problem... inundated with applications for jobs’.

       ‘Skills not an issue, entry level skills are good and there is in-house training to
       maximise performance’.



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       ‘ICT skills are not a problem as in-house arrangements and induction lifts the
       performance’.

In terms of recruitment, several raised a concern regarding a current lack of graduates
wanting to enter into ICT.

       “IT has a shortage of graduates at the moment...”

       “Graduates don’t tend to stay”.

       “We would like to recruit talent from local community but I’m not sure it’s there”.

A common point was made that organisations are increasingly looking for a mix of ICT and
business skills. One organisation had interviewed over 20 people for a role which required
strong technical skills coupled with people and leadership skills and experience of business
change.

Regarding employee turnover, most organisations reported a low turnover of ‘IT people’:

       “We have a low turnover within the ICT workforce”.

       “Assistant managers have a high turnover but elsewhere there are few losses”.

12.2.6 Location
Several organisations felt that they needed to look to wider regional areas as some felt
there was a lack of talent locally. This depended on the location of the responding
organisation. Those based in larger cities such as Bristol and Bath stated that there were no
problems in recruiting. In contrast, organisations that were located in Cornwall and Swindon
reported a greater issue in recruiting regarding ICT skilled staff:
       ‘Skills are not a problem in the Bristol area... there are enough similar types of
       business within the area.’

       ‘With many people in Swindon, we either employ then or we’ve seen them... Swindon
       lacks critical mass, the best go to London or Reading.’.

       ‘There is] not critical mass of companies or workers in ICT in Cornwall... attracting
       people to the area is difficult because there is
       only one employer.’
                                                           One emergency services public
To combat problems with recruiting several measures
                                                           sector organisation targeted
were discussed. Targeted marketing, using ‘quality of
                                                           members of staff working in ICT
life’ appeal to attract high skilled workers to come
                                                           companies in bigger cities to
and enjoy the ‘beauty of the location’ was favoured
                                                           come and work in a rural
by one organisation. A further ‘draw’ in recruiting
                                                           location, to utilise their ICT skills
mentioned is to promote ‘vocational appeal’ and
                                                           for ‘systems that save lives’.
working for a ‘worthwhile organisation’, to imply that
this would provide an overall sense of well being and


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                                                        South West Large Organisations ICT Research 2008




fulfilment.

An additional problem in recruiting relates to skills specific job roles. For example systems
engineering, ASIC design, web designer and professional ICT practitioners were mentioned.
Furthermore, skills shortages amongst managerial/senior level positions and professional
ICT practitioners were also an issue for a large proportion of organisations.

           “We’ve got a CRM position which is proving difficult to fill... help desk positions
           adverts were swamped”.

           “Recruitment of technical staff is not easy”.

12.2.7 Graduates and university links
                                              Graduate recruitment was an issue raised for most
     One private sector company
     operates a graduate trainee              organisations relating to skills. In contrast to the
     scheme. To boost recruitment of          situation in the US where links between universities
                                              and businesses are well-established, such links in
     skilled graduates, high calibre
     trainees are sponsored to                Europe remain weak 81.
     complete university.                Two themes emerged from the discussions with large
                                         South West organisations. The first theme centred
upon recruiting from the university’s graduate pool. Several private organisations, who
exhibited strategic transformer characteristics, worked collaboratively with universities or
had future plans in terms of ‘pulling graduates out’.

Depending upon the type of business, recruitment problems were not encountered even for
skills specific roles if the organisation was a well-established organisation that offered good
job prospects.

           ‘Skills are not a problem at any level from basic entry to degree level. ICT skills are
           extensive now amongst all recruits... we are considered a good employer and few
           leave the organisation. Opportunities exist to advance across departments rather
           than looking for career moves elsewhere’.




81
     The Economist Intelligence Unit (2004)



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                                                    South West Large Organisations ICT Research 2008




12.3 Conclusions

Internal barriers for organisations seeking to maximise the benefits of their ICT investment
include attitudinal barriers, lack of an ICT culture and failure to adopt best practice in ICT-led
change projects. Characteristics of successful implementation of ICT-led change include: a
shared language between the organisation and IT; an organisational culture that supports
change; budgeting includes time and resources needed to implement a full training
programme for staff.

Key internal barriers identified by respondents included resistance to change among staff –
largely due to fears about loss of control over data or where IT departments pushed projects
through without wider business buy-in; and a lack of understanding and trust in the
systems.

Lack of resourcing for training was mentioned widely by respondents apart from the few
organisations with a consistently strategic understanding of ICT. They are more likely to
schedule training as part of their detailed implementation plans.

Several organisations felt that they needed to recruit from wider regional areas as some felt
there was a lack of talent locally. This largely depended on the location of the responding
organisation. Those based in larger cities such as Bristol and Bath stated that there were no
problems in recruiting. In contrast, organisations that were located in Swindon (affected by
the pull of the ‘Thames Valley Corridor’) or those in more remote rural areas, reported a
greater issue in recruiting ICT skilled staff.

Implications
A lack of resources for ICT training (for staff working in non-ICT roles) was commonly
mentioned as a barrier to fully exploiting ICT investment. Improving levels of training for all
staff affected by ICT change would help organisations fully exploit investments in ICT and
improve productivity. Organisations would benefit from including training in ICT project
budgets, and planning for the time implications of ICT training for affected staff. Senior and
middle management would benefit from sharing information via existing business networks
on ‘the art of the possible’.




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                                                 South West Large Organisations ICT Research 2008




            Strategic usage                                    Functional usage

Internal barriers                                 Internal barriers

   Clear about ROI of ICT investment                 ICT seen as a cost, lack awareness of
   Aware of best practice when                        strategic and productivity benefits
    implementing ICT-led change                       Lack of ICT culture prevents full
   Plan training when rolling out new                 reliance on systems
    ICT systems                                       Training not embedded into business
                                                       planning




                                    Recommendations

Internal barriers

     Identify organisations implementing ICT-led change and work with them to identify
       barriers and risks;
     Raise importance of planning for training – both training costs and cost of taking
       staff away from their roles for training; and
     Share best-practice in training and business change projects through existing
       business networks.

Skills and recruitment

     Support recruitment campaigns for specific sub-regions with targeted marketing
       and PR emphasising quality of life;
     Support links between universities and local organisations in order to address
       specific skills gaps and begin to embed business skills and experience into ICT
       technical training.




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                                                 South West Large Organisations ICT Research 2008




13.    Conclusions & Recommendations

13.1 Overall conclusions

This chapter draws together the key issues and themes that have emerged from the large
organisations ICT research. The chapter:

      Reviews the impact of ICT on large organisations in the region; and
      Assesses the implications.

 Are large organisations in the South West universally good at exploiting ICT?

   Some large organisations we spoke to in the region are ahead of the field when
   exploiting ICT and aligning business processes in order to achieve maximum productivity
   and competiveness gains. Other organisations are experiencing barriers to full
   exploitation of their ICT investments such as lack of senior management understanding
   and support for ICT; failing to plan for training and not implementing best-practice
   approaches when implementing ICT-enabled organisational change.

 Does the public sector lag behind the private sector with adoption of new technologies
  and the scale of implementation?

   The public sector is leading the way with adoption of ICT-enabled flexible working
   policies. Some public sector organisations we spoke to are looking to what have
   traditionally been private sector applications such as Enterprise Resource Planning
   systems to enable them to deliver ICT-enabled efficiency gains. Public sector
   organisations are also investing in wireless network devices in order to support delivery
   of their plans for community working.

   There is an issue with standstill or decreasing budgets for ICT in last few years among
   public sector respondents. Some respondents feared that the public sector, especially
   local government, will stagnate again.

 Is it the case that larger private sector organisations can better afford to stay ahead in
  terms of investing and adopting new technologies?
 ...Or are they slower to change and adopt as their larger organisational structures may
  inhibit innovation?

   ICT underpins all the major business processes of those large organisations we spoke to,
   however the study discovered that perceptions of the cost of ICT, and the resulting
   willingness to budget for major ICT projects, depended to a great extent on senior
   management understanding of the role ICT can make in contributing to strategic
   organisational objectives. A lack of understanding of ICT leads to management treating
   ICT as ‘cost-centre’ and opting for small scale ICT investment.



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                                                  South West Large Organisations ICT Research 2008




   The study found that organisational culture is the biggest barrier to large organisations
   fully exploiting gains from ICT investment. Silo working and a lack of corporate flexibility
   were felt to prevent ICT investment being fully exploited.

13.1.1 Typologies
A key finding is that some public and private sector organisations are leading the way in
exploiting ICT-led investment, while other organisations lag behind. In order to further
analyse the differences between these organisations and the implications for productivity
and growth at an organisational level, the research identified two typologies. The first is a
strategic transformation-led organisation. In this typology ICT is treated as a strategic
function, linked to corporate objectives. The second typology is an organisation where the
opportunities afforded through recent developments in ICT are not being exploited. The role
of the ICT department is seen as a support role, achieving functional efficiencies and cost-
savings.

It is important to note that organisations tended to move along the scale between
functional and strategic depending on the topic discussed. For instance, one organisation
with no ICT strategy and very limited ICT integration nevertheless had identified business-
critical activities within a disaster recovery plan. The conclusions are grouped according to
the typologies developed.

13.1.2 Integration
Some strategic businesses we spoke to operated MRP or ERP systems and had integrated all
major business processes. They reported business benefits including: fast access to
management information leading to improved decision-making; efficiency savings through
reducing manual processing of data; faster processing of data and more accurate reporting.

Among the public sector organisations interviewed, most do not currently operate single,
integrated ICT systems. As with the private sector organisations, the general picture is one
of a mixture of bespoke systems and ‘off the shelf’ software packages being used.
Organisations frequently mentioned using legacy systems and some were experiencing
problems with slow-running reports or unreliable systems. The main barrier to
implementing integrated ICT systems is cost, or perceived cost.

13.1.3 Strategy
Most private and public sector organisations in the South West who took part in the
research had ICT strategies which they were involved in agreeing and implementing. The ICT
strategies of some organisations interviewed could be characterised as ‘conservative’,
focussing simply on support services and infrastructure replacement. A minority of
organisations had no ICT strategy. Organisations failed to develop ICT strategies due to a
lack of capacity – departments were instead ‘fire-fighting’ or working on short lead-time
projects.

Organisations whose responses were consistently at the strategic end of our scale were
most likely to say senior management does not stay up to date with ICT developments. This
dissatisfaction seems to stem from a combination of two factors: very high-level aspirations;



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                                                  South West Large Organisations ICT Research 2008




and the fact that staying up to date is considered so important a specific department has
been created. There was a clear pull for more information about opportunities afforded by
ICT from organisations interviewed.

13.2 Specific areas of interest

The following sections set out the conclusions and implications for each specific area of
interest of the South West Regional ICT Research Group.

13.2.1 ICT adoption and future plans
Digitisation of content, digital convergence, the demands for increased connectivity and
access to high-speed broadband are becoming increasingly mainstream in the South West
among organisations consulted. Organisations we spoke to in both the public and private
sectors are beginning to adapt their ways of working to utilise new ICTs to achieve business
objectives. Even organisations with a more functional approach to ICT are using new
technologies to help them to achieve process efficiencies. However functional ICT users
tended to use ICT to improve existing ways of working rather than spotting opportunities to
re-engineer business processes to achieve growth or competitive edge.

Respondents tended to talk about future ICT plans in terms of required outcomes more than
specific technologies. The drivers of future investment identified by the more strategic
organisations were felt to be increased expectations from business customers, consumers
and staff. Strategic organisations have ICT-supported plans which will enable them to
provide:
    access to information wherever a worker, customer or client happens to be;
    increased levels of information online
    increased capacity to meet the demand for more access to ICT and the amount of
        data being stored and moved
    a resilient and up-to-date ICT infrastructure

Functional ICT users tended not to be able to reference detailed future ICT plans. Without a
structured approach to future planning they are unable to predict and anticipate demands
on their ICT infrastructure or organisational information needs.

13.2.2 Productivity and growth
Most private sector organisations interviewed report ICT investment enables them to
achieve efficiency savings. Organisations with a business culture which encourages links
between business objectives and ICT strategy tend to have a more detailed understanding
of how ICTs enabled their business to achieve productivity gains and growth. Functional ICT
users mention process inefficiencies which prevent productivity gains, lack access to reliable
and up-to-date business information and react to opportunities for growth in new markets,
rather than proactively spotting them.

13.2.3 Innovation and collaboration
Some strategic organisations interviewed operate ICT-enabled collaborative working
environments which enable close working with clients and external partners. Generally
organisations interviewed reported the benefits of collaborative working to be improving


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                                                  South West Large Organisations ICT Research 2008




communication with clients and suppliers; increased efficiency; better awareness of the
business environment; diversification into different markets; and offering access to a wider
spread of skills and expertise. Some public sector organisations are increasingly seeing the
benefits of working collaboratively.

Functional ICT users tended not to work collaboratively, they operate standalone R&D
functions and do not take advantage of ICT-enabled collaborative working tools.

13.2.4 Supply chain, local suppliers and outsourcing
Some organisations interviewed are working to high levels of automation of supply chain
processes, for instance, sending automatic Purchase Orders via ‘e-business’ to suppliers
who log onto shared networks. In terms of the impact on business productivity, the benefits
associated with use of ICT-enabled supply chain systems were seen as increased efficiency
and reliability of processes and information.

Barriers to adopting supply chain networks included a lack of internal integration; lack of
standardisation. Smaller local suppliers may be excluded from supply chains due to their
lack of ICT. One industry sector in the South West recognise the benefits of working with
smaller businesses and have set up an initiative called ‘SC21’ which deals with accreditation
and ‘upskilling’ of local SME suppliers.

‘Buy local’ policies were widely supported by large private sector organisations interviewed.
Procurement policies generally prevent public sector organisations from purchasing from
local suppliers.

Both public and private sector organisations interviewed feel that generally they are likely to
outsource more in the future. Areas currently outsourced include specialist
engineering/fitting out; cleaning contracts; marketing/printing; distribution; call centre,
telephony, catering, security and business facility management.

13.2.5 ICT and the environment
The main activities organisations were partaking in or had polices /schemes for, were travel
plans; adopting server virtualisation; and polices for reducing energy consumption. Many of
the organisations were actively trying to reduce the amount of paper used. Few
organisations considered energy use or environmentally-friendly manufacturing processes
when purchasing ICT equipment. The main drivers appeared to be efficiency and cost
reduction. Key barriers mentioned were a lack of resources and having no policy in place to
implement ‘green initiatives’.

13.2.6 Flexible working
Organisations consulted who stated they had a formal flexible working policy in place were
largely from the public sector. Although several private sector organisations did advocate
flexible working practices, it was not consistently supported by private sector organisations
interviewed. Benefits reported by organisations supporting flexible working included
improved productivity, staff retention and staff morale, and reducing commuting and
business travel.




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                                                   South West Large Organisations ICT Research 2008




One reported barrier to offering flexible working was the ‘nature of the job’ (specifically the
need to staff shifts, and the lack of flexibility around production schedules). A concern was
that big development costs would be involved in enabling remote and flexible working
patterns. Connectivity proved a further barrier to remote working – especially concerns
around inability to connect onto wireless networks or high speed broadband connections,
particularly in rural areas.

13.2.7 Security issues
SMEs interviewed in the 2008 ICT Benchmarking Research were very concerned about IT
security threats from external agents. 82 In comparison, large organisations we interviewed
were concerned about security issues connected with remote and flexible working. Almost
all organisations consulted had some form of Disaster Recovery Plan in place although these
varied in detail. The majority of plans involved the use of mirrored systems and off-site
back-ups as well as despatch of mobile suites to provide emergency ICT solutions. The most
sophisticated of these recognised the need to prioritise critical activities to ensure that the
most valuable information is saved or critical activities up and running again first in order to
limit damage to productivity.

13.2.8 Internal barriers
Key internal barriers identified by respondents included resistance to change among staff –
largely due to fears about loss of control over data or where IT departments pushed projects
through without wider business buy-in; and a lack of understanding and trust in the
systems.

Lack of resourcing for training was mentioned widely by respondents apart from the few
organisations with a consistently strategic understanding of ICT. These organisations are
more likely to schedule training as part of their detailed implementation plans.

Several organisations felt that they needed to recruit from wider regional areas as some felt
there was a lack of skills locally. This largely depended on the location of the responding
organisation. Those based in larger cities such as Bristol and Bath stated that there were no
problems in recruiting. In contrast, organisations that were located in Swindon (affected by
the pull of the Thames Valley Corridor) or those in more remote rural areas reported a
greater issue in recruiting ICT skilled staff.




82
     Step Ahead Research



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                                                  South West Large Organisations ICT Research 2008




13.3 Implications for business support

The productivity, innovation and workforce mobility opportunities afforded by ICT, reported
on throughout this report, are not being fully taken advantage of by all large organisations
in the South West. Some public and private sector organisations are better than others at
exploiting gains from ICT. There is a case for intervention to enable large public and private
sector organisations to fully exploit ICT-enabled opportunities in order to achieve the
desired productivity led growth in the region. Key recommendations are as follows:

Adoption

    Monitor broadband access in the South West, and work with suppliers to improve
     high-speed access across the region at all times of day. Including addressing ‘holes’
     in wireless network provision

Integration

     Highlighting the organisational efficiencies of greater ICT integration in order to
      optimise levels of integration of ICT systems to enable information flow

Strategy

    Embed ICT discussions into existing private business networks and public sector
     senior management forums to encourage organisations to learn from each other

Productivity & growth

    Improve business understanding of the links between ICT exploitation and
     productivity and growth

Innovation and collaboration

    Demonstrate the benefits of collaborative working for public sector identification of
     best practice and private sector growth and productivity

Supply Chain

     Broker business advice for functional ICT users to move towards digitising their order
      processes

Local Suppliers

    Work with industry partners to review the supplier network in the South West

Outsourcing



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                                                 South West Large Organisations ICT Research 2008




    Share information about ICT outsourcing – the risks and gains – and best practice

Environment

     Communicate ‘best practice’ environmental strategies

Flexible working

     Improving understanding of the benefits of flexible working and ICT-enabled
       solutions

Security

    Providing specific best practice training and promotion of the benefits of strategic
     disaster and continuity planning

Internal barriers

     Identify organisations implementing ICT-led change and work with them to tackle
      barriers and risk

Skills and recruitment

    Support recruitment campaigns for specific sub-regions with targeted marketing and
     PR emphasising quality of life

This report contains strong examples of the significant role ICT can play in achieving
productivity gains and driving innovation; and shows the value to the public sector of ICT in
helping to enable greater efficiency and improved service delivery. Included are specific
examples of best-practice actions which could be taken up by large organisations within the
region. It is hoped that the report will provide useful guidance to large organisations,
business support providers, ICT providers and all those concerned with delivering economic
prosperity and public sector services for the South West.




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                                                  South West Large Organisations ICT Research 2008




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                                          South West Large Organisations ICT Research 2008




Appendix I:        List of stakeholders consulted

Nigel Ashcroft                 ActNow
Julian Cowans                  ActNow
Mike Robertson                 Business Link
Vince McConville               Business Link
Stephen Hilton                 Connecting Bristol
Laurence Ramsey                EEDA
Dave Cornish                   Somerset County Council
Fabian King                    SWRDA
Andrew Gunn                    SWRDA
Lynda Scorer                   SWRDA (consulted via email)
Lynne Del Greco                SWRDA (consulted via email)




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                                                   South West Large Organisations ICT Research 2008




Appendix 2:            Interview Topic Guide
Topic Guide
Introduction
This interview forms part of a consultation exercise by the RDA on ICT issues for large
organisations in the South West. The results of the consultation will help inform future
actions and policy by the RDA.

The interview today will look at:
 background questions about you and your organisation
   impact and role of ICT on your business model
   your future ICT plans, and
   issues you wish to feed back to the RDA


What you say will not be directly attributed to you or the organisation you represent within
our report, unless you explicitly request otherwise.

It may be that there are questions in the interview where you feel someone else in your
organisation can better answer – just let me know as we get to them.



1.0 Background and Context

1.1 Respondent
     Job Title
       What are your responsibilities within the organisation?
       How role links with other roles in the organisation
       Participation in ICT decision-making / policy development
       [Age of respondent – interviewer judgement]
       Age of organisation
       Length of time in the organisation
1.2 Organisation
     Nature of the business
       Core activities/business model




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2.0 Technology status

By ICT we mean: IT hardware and software and services, and telecommunications
equipment and services.

2.1 Strategy

Does your organisation have an ICT strategy?
If yes, what does this include – Issues, intentions and objectives/aims for the business?

Who is involved in agreeing the ICT strategy?
        local, national head office, international head office?
          who within that office?


How long has your organisation had an ICT strategy for?
What led your organisation to adopt an ICT strategy?
           competitiveness, efficiency savings, customer/supplier demand?


Who is involved in implementing the ICT strategy?

How does the implementation process work?

>Ask if the organisation does NOT have an ICT strategy:

       2.2 No ICT strategy

When your organisation is making the decision to adopt new ICT technologies or practices...
  Who makes the decision to adopt new ICT technologies or practices?
              local, national head office, international head office?
                  Who within that office?
   What led your organisation/business to adopt these practices/technologies?
              competitiveness, efficiency savings, customer/supplier demand?


   When your organisation is considering changes to ICT in the organisation...
   Who is involved?
   How does the implementation process work?




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>Ask everybody:

2.3 ICT in organisation

Is there a budget for ICT?

Is there an ICT department in your organisation?

How well do you feel the organisation integrates ICT into business strategy and planning/ or
your Corporate Plan?


2.4 Business processes

Could you give me an overview of where ICTs are involved in the business model you’ve
outlined, and the extent to which the systems are integrated?

In terms of business processes:
     accounting, taking/making orders/ payments online
      supply chain management – what systems used and how fully integrated, links to
       other suppliers, logistics, procurement, production,
      New Product Development (NPD), online collaboration/document sharing online
      video conferencing/virtual project offices,
      Customer Relationship Management/marketing and customer service,
      destination management systems (tourism & leisure)



2.5 Tech follow-up

Are there any key new technologies you’ve recently started using that have changed the
way you work? (probe, if not much detail given at 2.4)




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              


3.0 Impact

3.1 Business processes

How would you describe the impact of ICT and ICT applications on the business activities
and processes of your organisation? In terms of:
Productivity:
       Reduced operating costs/increased turnover/profitability
       Improved internal admin and management systems,
       Effective information analysis improving business planning and management –
       managing capacity etc
       Improved use of data – GIS/geo-spatial mapping etc
       Lower cost/higher quality production of goods and services
       Extensive/flexible reach with customers/clients for supply or marketing
       Improved business competitiveness, or improved efficiency (for public sector)

Growth:
      Accessing new markets, Global market share, widened customer base, increased
      sales

Innovation:
       creating new products and services, Research &Development (R&D), collaboration –
       internal and external (where are partners based – reg/nat/global ?)

3.2 Supply chain

What has the impact of supply chain management software been on your business?
       Technological changes - Just In Time (JIT), Radio Frequency Identification (RFID)
          Changing way you work with suppliers, greater collaboration?
          Changing which suppliers you work with – fewer, more, only those e-enabled?


       Probe: Sourcing local suppliers – issues/barriers –
               they don’t process orders online,
                  lack of e-standards prevent them linking into supply chain software
                  anything else?



3.3 Outsourcing

Has ICT technology enabled you to outsource any areas of the business?
            Accounts, office services/facilities, HR, IT etc



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       >If no: Can you see a point in the future where the ICT support function is
       outsourced?
              What about for other areas of the business?

Outsourced activities located within the region – now or in future?


Has ICT enabled working across different sites (are there any specific local issues to each
site?)


3.4 Security

Security – concerns, issues.
        Network security – throughout the supply chain, remote working policy?
          Web security – who has access/controls content?
          Loss of equipment – encrypted laptops/data etc
          Do you have a disaster recovery plan? How fast could you get your business up
           and running again? Are backups tested regularly, are they held off-site?



3.5 Environment

How would you describe the difference ICT and ICT applications have made to your
organisation in terms of impact on the environment?
    Less transportation – materials and staff
      Reducing paper used
      Reducing amount of materials/energy used in production
      Reducing office space required
      Cost benefits – eg: use less energy, minimise higher energy prices


Has your business model/the way you work changed as a result of environmental issues?
    Minimise consumption by leasing not buying supplies
      Optimising consumption, not maximising consumption by customers


Does your organisation use ICTs to reduce impact on environment?
    Monitor/manage energy use, automatic switch off etc etc
Do you buy ‘green PCs’ and other ICT equipment?
Do you have an environmental strategy for transporting or recycling ICT equipment?



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Have you found that the actions you’ve taken have reduced costs?


3.6 Human resources

Has the use of ICT had an impact on working practices in your organisation?
Flexible working?
     job share,
      flexitime,
      compressed hours,
      work flexibly (home or at other organisation),
      mobile working (enabling working while off-site),
      leasing managed workspace – now or in future?
      hotdesking
      reduced commuting or business travel?


Has your business model/the way you work changed as a result of remote or flexible
working?

How would you describe senior management attitudes to flexible working in the
organisation?

Is there someone within the organisation to push the new ‘working culture agenda’?

Has there been any staff feedback on flexible working issues?

What have the benefits been for the organisation?
   employee retention, improved staff loyalty, broader recruitment geography,
       attracting new employees?
      Improved productivity, competitiveness, responsiveness
      Reduced costs, travel time


Anything you feel has been less successful?
        Reduced productivity,
          staff morale,
          management issues,
          set up costs,
          Insurance/H&S issues



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Have there been any changes to recruitment patterns as a result of increased flexible
working?
       For instance, increased recruitment from groups such as disabled people, older
      people or people from ethnic minorities?

Has your organisation found there is an issue with a lack of ICT skilled staff?
       If yes, what has this prevented you from doing?

What skills are needed?




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4.0 Future and barriers

I’d now like to ask you about your plans for the future and issues that may prevent your
organisation fully exploiting ICT technology.


4.1 Future plans

Do you feel senior management stays up to date with developments in ICT?
        Aware of new developments, (for example?)
             Deciding to adopt new technology (for example?)


Moving forward with ICT –
   Plans to upgrade, adopt new technologies, integrate systems, improve security,
          remote access to networks?
         Plans for website development – repurpose for handheld devices (enable sales to
          them) etc
         Plans to move to using Software as a Service, online support, help with version
          deployment, etc
         Next Generation Access – Virtual Private Networks (VPN) plans and potential
          benefits for both customers and suppliers?
         ‘digital generation’ – any issues? Better integration of technical knowledge and
          business awareness in the future?, social networking concepts like ‘facebooking’
          internal/external business directories?


4.2 Barriers

Do you feel your organisation is currently getting the most out of available information and
communications technology?
 internal barriers
          o   organisational culture, lack of management knowledge, skills, lack of investment
              in training on new technologies
          o Costs of ICT, expensive to replace systems/equipment every few years
   external barriers – skills gap, access speeds and infrastructure limitations, regulation etc
    etc




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5.0 RDA awareness/issues

       5.1 Specific issues for RDA

The RDA has an interest in ICT development in the region which ranges from the promotion
of ICT as a driver of productivity to ensuring that the infrastructure is not a barrier to
growth.
Are there any areas you’d like to see the RDA focus on with regards to ICT development in
the region?
Prompt:
    - Better use of data sets they hold, particularly GIS data – transport flow, location of
       services and facilities etc
   -   Skills, knowledge base, spin-out companies, knowledge transfer
   -   Smart working (flexible, mobile, remote)
   -   Broadband access, Next Generation Access
   -   E-regulation


Are there any other topics important to ICT development in your organisation that haven’t
come up so far?

>Close out any issues that come up earlier in the interview:

You mentioned the issue of ..... earlier. Can I just check, what are your intentions for
resolving this?

Is there anything you’d like to add?

Many thanks for your help today. We will send the draft results of the consultation to all the
organisations that have participated, offering an opportunity to comment before the
findings are finalised.




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