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Sector trends

Life after coronavirus: the technology sector

Neil Bellamy, head of technology, media, telecoms and services at NatWest, expands on the significance for his sector of a major new research project by the bank’s group principal economist, Stephen Blackman.

Is this a distraction from the task of helping us meet the challenge of the pandemic? Quite the opposite. It’s an indicator of the changes that both citizens and businesses will see, and feeds into the technology and data trends that we have captured in our research at the bank.

The government’s strategy identifies “five concrete and significant opportunities for data to positively transform the UK”: driving better public services; supporting new businesses and jobs; boosting productivity and trade; creating better scientific research; and making a fairer society for all. In his new report, ‘Time, trauma and transformation: how COVID-19 is reshaping the world’, Stephen Blackman, the bank’s principal economist, shows this policy is an essential aspect of – and potentially a catalyst for – the technology changes we will see post-coronavirus.

Nation & Society

The idea of a National Data Strategy is increasingly important at a government level, as we face a period in which big government collaborates with organisations and technology companies with the capacity to collect, analyse and store data. We are all aware right now that the first role of government is to protect its citizens, and we are becoming accustomed to ever more detailed analysis of the progress of the disease, of local economies, of our patterns of travel and consumption, being used as a basis for policy.

With the EU’s General Data Protection Regulation (GDPR) – and its equivalent in the UK, the Data Protection Act 2018 – in place, governments have created a more mature framework for tech companies. If we can trust the use of data, we may volunteer more of it: in healthcare, for example.

One unfortunate consequence of this, especially if we have passed peak globalisation, is a potential long-term tech talent shortage in the UK, as our education system struggles to create the employees who will deliver that secure, effective data infrastructure.

Work & Play

The National Data Strategy aims to support new businesses, but the tech talent shortage will also be felt by businesses forced to accelerate their digitisation strategies. We have already been talking to businesses that have had to go through five years of technology innovation in six months.

What does this mean? Most importantly, a much higher emphasis on cyber security when your employees are working from home and using cloud-based technology. The chief information security officer (CISO) has become, in a matter of months, one of the pivotal roles for businesses who want to make automation, remote working and digital-first propositions effective.

There may, however, be positive effects from technology on our balance of life and work. Many of us have been living our working lives with too little sleep, and one of the unexpected benefits of our new remote work patterns is that many of us are not perpetually tired when we are working. Another potential bonus is the wider access to talent that remote working can offer businesses, as geography will no longer be regarded as the barrier it once was.

Place & Community

We’re also going to have to relearn what it is to be collaborative, and that might mean re-imagining the future of the office. For a long time, we have been discussing the function of our big city offices, re-imagining them as places where we come to discuss work and meet customers, rather than actually do the work. That has been accelerated for us, and for many businesses.

For everyone, learning to be “digital first” in our day-to-day lives will be a challenge. On the one hand, many of us will have had the experience of teaching relatives how to make video calls, or use internet banking, which can be intimidating for some of them. But the potential is that we can automate many day-to-day tasks and free up our time for something we would prefer to do. Most of our customers tell us they are likely to settle on a hybrid approach to working at home and the office.

Economy & Finance

This raises the important question: how will we finance investment in this? From speaking to our customers in the technology sector, we have identified two trends.

Rather than commit to multimillion-pound investment projects with far-off rollouts, the urgency of change has shifted innovation to smaller, iterative, project-led improvements. This delivers upgrades to the business while retaining agility

The first is to think small. Rather than commit to multimillion-pound investment projects with far-off rollouts, the urgency of change has shifted innovation to smaller, iterative, project-led improvements. This delivers upgrades to the business while retaining agility.

An example: a large national coffee shop chain I have been working with has embarked on a project to digitise all of its manual processes. There are many of them, and they are all monitored using paper forms on clipboards. These are the sorts of processes that are easy to digitise (when was this cleaned? Who has checked the toilets?) but there was never an incentive to do it. Now a series of small, quick, necessary innovations can create a long-term opportunity for profitable innovation.

Second, we have seen a massive shift to the use of cloud services, which means employing opex [operational expenditure] business models. This means that even if there is no additional capital to commit, a project is not delayed. We don’t know what the future will be like, and opex models can flex up and down. They can also be deployed today, improved tomorrow and transformed next year.

As more businesses become accustomed to these models, there’s clearly more scope for innovation. I can foresee that technology providers may soon be delivering, for example, flavours of HaaS – homeworking as a service – to employees, with bundles of applications, security and connectivity.

Health & Meaning

Health tech was one of the most important uses of data pre-pandemic, and the National Data Strategy makes no secret of the fact this will continue. Those of us who have had a GP appointment by video call will have seen that necessity has broken taboos about how healthcare can, and cannot, be delivered.

We may be encouraged to think about our well-being more holistically, too. For example, health advice – or education – that is delivered how we want, when we want it. The experience of people struggling to use the NHS at a distance, and of schoolchildren and students (and their parents), show how difficult this is to do, and that the main problems are often not technology-based. But here’s why having a National Data Strategy is important: if we measure the impact of policies, we can do more of what works, and less of what doesn’t work – creating, in the words of the UK National Data Strategy, a fairer society for all.

Megatrends: five essentials for the tech sector
  • Create a recruitment strategy to manage the talent shortage. With increased demand for high-skill jobs and reduced immigration, this could get worse, so challenge your bias towards geography to broaden your search.

  • Remote working is an opportunity for hackers to compromise your systems, so invest in cyber security and training.

  • Think creatively about how you collaborate – video calls cannot replicate the experience of working in a group.

  • Ask if you can you deliver smaller, iterative technology projects for your clients and shift from a capex to an opex business model.

  • Look at growth opportunities from M&A, while also building the same capabilities inside your business – prices for quality firms has been rising.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the NatWest Group Economics Department, as of this date and are subject to change without notice.

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