The Archives of IT counts amongst its objectives to raise public awareness of the “extraordinary success story of the UK IT and Telecommunications industry.” One industry observer recently challenged me, “Is it really is such a success story?”
How do you measure success? Innovation? Contribution to the economy? Improving quality of life? International league tables?
We have recently published a new collection of our material about “Entrepreneurs and Enterprise”, here. Together with our timeline and the review of social benefits, here, perhaps these help us see whether the UK is a success or not.
Clearly the UK was a leader in technical innovation after WW2 and indeed in the application of IT to commerce, with the Lyons Electronic Office. Quite soon it was outgunned by the industrial scale of the USA, giving them a leading position in the hardware market but the UK, remained a force in the application of technology to business, defence and medicine. See eg Prof Denis Noble’s story of using one of the early British Ferranti machines to explain the human heartbeat and Sir Michael Brady’s achievements, applying AI to diagnostic imaging. World leading ideas in future personal medicine are still being developed now at NIBEC in Belfast.
The discipline of Systems Integration gave rise to a new generation of companies, The Computing Services Industry, including companies like Hoskyns, Scicon and Logica, which broke new ground but fell one by one into the hands of overseas owners, whether because of their outstanding success or lumpy performance. Look at “Entrepreneurs and Enterprise” and there perhaps begins the story of unhappy tension between shareholder objectives and the workings of the Tech industry.
A key criticism of the UK industry is that it has not produced a blockbuster company like Google, Microsoft or Apple (although, to be fair, one great British success story, ARM, might be argued to have greater market reach, being responsible for the design of the chips that power mobile phones, of which three were sold for every person in the world last year.) One of the reasons cited for the UK’s failure to play in the super-league, cited by our interviewees, is the impatience of UK shareholders to realise a capital return. See for example the views of Martin Read on Logica, but also the reference to the relative market capitalisations of growth companies in Germany, France and the UK.
The FT of 6 March, Lex In Depth, covered the issues in some detail, quoting “Technology groups dominate global growth as businesses compete to be the next Google, Apple or Alibaba. The UK is barely in that race. The technology sector accounts for less than 5 per cent of the UK’s total market capitalisation. In Germany, it is 11 per cent. In the US, it is almost a third
The UK stock market does not seem to value growth prospects. It is a fair point that Tech accounts for 5% of Market Cap when it provides around 7% of GDP and is growing. However, that is not the whole story. Other statistics quoted there suggest that despite the market attitudes, the UK is the most attractive target ion Europe for inward investment and the most successful in recent years at creating high value start-ups (Unicorns). Is this a proxy measure of our success at innovation?
Does it matter that we have not built a Google? Maybe we have a different model and ranking No 3 in the world for Tech start ups does count as a success. Could we be do better? Let’s hope so, because this is the UK’s best bet for future prosperity and the competition is not far behind.