We and our colleagues from the Intellect-Nasscom Partnership Programme delegation returned to the UK last week hugely impressed with the health of the Indian emerging IT sector and excited about the partnering opportunities available. The week-long mission was kindly sponsored by the South East Media Network, UK Trade and Invest and the UK India Business Council and was the first initiative in a partnership programme which aims to increase trade between the UK and India.

The UK delegation of nine was lead by Tom Wills-Sandford of Intellect.  Other participants were Arjun Chatterji (Playmetv), Gina Fegan  (South East Media Network ), John Gavin (G4h), Keith Dewar (SBA ), Nigel Hartnell (FFastfill and also Chairman SEMN), Phil Rice (Erudine),  Richard Sykes, and Steve Roche (Xenzone).

The kind of partnership opportunities explored by the UK delegation included:   

• Outsourcing of software/web development and IT services   
• Business and knowledge and process outsourcing   
• Strategic consulting   
• Selling into the Indian market   
• Assistance with UK market entry (for example, sales/marketing execution and resourcing)

A significant degree of momentum was generated during the week with, for example, a number of follow-up meetings scheduled to take place in London in the coming weeks in order to continue the discussion started in India. Some members of the UK delegation even said they were planning or making significant changes to their business plans to maximise the opportunities they identified during the week. Additionally, the UK companies identified synergies and ways that they could partner and do business together.

One of the most striking things we found was an acceptance in India that the cost advantage, compared to the US and UK (its two biggest customers) will erode, as wage inflation in the local IT industry is running at about 15 per cent per annum. 

Many Indian IT leaders believe  they have already reached the position where their competitive advantage comes not just from lower costs, but from their huge and skilled workforce and the quality of the services that they deliver. 

We heard many times about the paramount importance of quality. Even with their large talent pool, wage inflation is high because there is still a shortage of skilled workers. This leads in turn to high staff turnover - the industry average is 19 per cent per annum for the IT sector and much higher for the IT-enabled services sector. This a major concern for the industry. We heard a lot about the measures individual companies were taking to reduce staff turnover, but the effectiveness of the measures appeared to be limited.

The mission team concluded that if you are in IT and you have not at least explored how India and its vast array of IT services (as well as its growing domestic market) can help you grow your business or reduce your costs or get access to scarce skills, you will be putting your organisation at a serious disadvantage.

A successful partnership will bring benefits to both sides - not least to UK small and medium-sized enterprises (SMEs). It is for this reason that Intellect expects to continue with this programme linking SMEs from both countries. We are planning a return visit with Indian IT companies visiting the UK for a week in late spring and expect to create a forum to exchange experiences and learnings. We also expect to return to India with other SMEs in 2009 and beyond.

By Tom Wills-Sandford (Intellect) and Steve Roche (Xenzone and Intellect member)

As MiFID - the EU's Markets in Financial Instruments Directive finally arrives, questions are still being asked about many firms' readiness for the new regulations. Whether steps taken by regulated firms have been sufficient, only time will tell. For the technology industry, however, there are two interesting issues to watch as we continue to see the implementation and enforcement of the new MiFID rules.

The first affects suppliers directly, and concerns outsourcing arrangements. The new rules place obligations on firms that directly affect their relationship with their outsourced service providers. The extent to which the Financial Services Authority (FSA) is able to regulate these relationships in the context of the new rules will be an important development. This is given further importance by the broad definition of outsourcing that is used by the FSA, which captures a lot of activity that may not be classed as outsourcing by the supplier or the regulated firm.

The second concerns regulated small and medium-sized enterprises (SMEs), who will have been faced with a number of obligations that may well have increased their costs significantly. Methods used by SMEs to comply with the new rules will have varied, and whether these will be sufficient for the FSA we will again have to wait and see. For the technology industry, the opportunity that MiFID was supposed to be now remains almost solely in this sector. Although the deadline has now come and gone, there may still be some distance to run in the MiFID story.

This week I've been looking into writing a report on how digital convergence has transformed the lives of everyone living in the UK. This got me thinking about role of new, convergent  technologies  in shaping the marketing industry, and in particular advertising.

Advertising, like any other communication method dependent on the media, has been subject to massive disruption by the arrival of digital convergence.

At one time the advertising model was relatively straightforward: find a big audience and speak to them, insistently and disruptively if need be, but ensure that your message is put across. However, new technologies have facilitated the fragmentation of mass audiences to such a degree that advertisers - mega-media events such as X-factor or the FA Cup final apart - can no longer identify a mass audience, grazing like a herd of buffalo on the plain. The audience are hiding now, elusive and difficult to reach, on the internet watching Youtube, fast forwarding through adverts on their digital video recorders, listening to their iPod’s and oblivious to billboards. How will businesses and advertisers respond to this huge shift in audience behaviour? Could technology, the initial cause of the disruption, also provide the solution?      

What about the opportunity that audience migration to a variety of digital technology offers to advertisers? For some, the compression of time between the delivery of the message and the potential fulfilment of purchase that digital convergence affords, either on the internet or on mobile phones, is more than capable of compensating for the loss of mass demographics. For instance, big spikes in music downloads were being seen on mobile phones after targeted delivery of adverts to small groups. 

Others see opportunities in a blurring of the distinction between content and advertising - already seen in advertorials and product placements - as being the surest and most effective method of reaching and influencing consumers. Yet others still see location coming back into play, as a key method of reaching the audience: micro-sites, and sponsorships of specific places, times and days would provide the targeted experience that was the most successful method of selling. And there is the argument that the mass-media model still eventually works.

The data that would truly transform the market, and show the where the greatest opportunities really are, by revealing audience behaviour is already out there stored on Sky boxes, mobile phones, Oyster cards and loyalty cards, ready and waiting to be interrogated. So what are advertisers waiting for?

While convergence has opened up many new opportunities for the advertising industry, it has also created new threats. Brands can be broken by one misjudged or overtly intrusive campaign. What would consumer reaction be to the exploitation of personal data by a large retailer? Or to stealth advertising on social networking sites that sent targeted ads after monitoring user content? While the prospect of losing influence and trust remains, aggressive use of this data is unlikely.   

By Sam Ingleby, programme manager at Intellect

Despite software and IT services being one of the most important sectors of the UK economy - both in terms of direct contribution to GDP and employment - the industry is currently poorly served by data.

The Office of National Statistics (ONS) measures the IT sector as a whole. Its latest figures suggest that the IT sector contributes £66.4bn to the UK economy . That means that that IT contributes 6.4 per cent to the UK economy. Similarly the ONS says that the IT sector employs around one million people. However it does not measure software and services, which we believe account for a large proportion of these figures.

Accurate industry data enables companies to better plan for the future and take advantage of new opportunities. On a macro level, statistical measures inform policy are therefore are the foundations of government’s decision-making process. It is therefore vital to have up-to-date, pertinent data on key sectors within the technology industry.

Intellect is conducting a survey to create an annual snapshot and benchmark of software and IT services companies in the UK. We are asking software and IT services companies for help in providing an accurate picture of the industry by completing this survey. If you work for a software or services company, just click on this link to access the survey:

http://www.surveymonkey.com/s.aspx?sm=P4SPOOP9ynQ5UaT7pgCSIg_3d_3d 

and please do forward it on friends who also work in this sector. 

The survey covers all aspects of software development and sales within the software and IT services community, from staff turnover and profitability to sales and outsourcing of development. The results will be published with an accompanying report towards the end of this year. The report will be sent to government, policy makers, think-tanks, NGOs, trade bodies, and the media.

Thanks for your help with this. Hopefully we will be able to gather a comprehensive and true picture of the sector that will benefit us all.

Intel has become the latest in a line of companies concerned about the impact of email on business productivity. An email-free day has been trialled by a number of companies, to improve communications internally and externally, with some success. But these attempts to deal with email highlight a broader problem facing almost every organisation.

Email has proliferated massively over the last decade. A reliance on email is now commonplace, with some workers found to be checking inboxes 30 to 40 times per hour. Email management has become an increasingly difficult, but vital, skill, as information within emails becomes more business critical and has legal standing.

Information within organisations has also increased, as much as sixfold every year, according to IDC. How companies manage this information, whether it is email, electronic documents, paper files, and so on, is becoming an ever more important part of business strategy. Effective information management is increasingly being seen as a differentiator, adding value that can provide a competitive edge.

Intellect recognises how important information is and how damaging poor management of it can be to business. We are working with our members to ensure that there is greater clarity around the information overload debate and to provide businesses with a path to effectively manage customer and internal information, without resorting to banning emails.

The Markets in Financial Instruments Directive (MiFID) is an EU initiative designed to create a harmonised regulatory regime for a range of financial services. It will come into force on 1 November, introducing new obligations on regulated financial services firms that will impact heavily on technology. IT departments in financial services organisations and IT companies providing business-critical outsourced services to the sector will be affected by the new regulation.

Notably, the broad definition of outsourcing used by the Financial Services Authority (FSA) is likely to capture a far greater range of services than are usually classified as outsourcing.  Those affected must make their contracts MiFID compliant. The exact requirements can be found in the FSA handbook, section SYSC 8.1.

There are now only four months left for financial services companies and their regulators to prepare for MiFID implementation. These companies, and for the most part regulators, are at varying stages of readiness - from a little behind schedule to totally unprepared. In particular, many small financial services firms have not yet fully assessed how MiFID will impact them, much less how they will ensure they are compliant.

MiFID could represent a strong opportunity for the IT industry, as the regulation will affect a number of systems and processes. There are a number of IT products and services that firms might require in order to become compliant. As such, suppliers would be advised to be ready to respond to demands from financial services companies that will emerge over the next four months.  They need to ensure they are equipped for what to expect and are able to respond quickly.

Some areas of the regulation, relevant to technology suppliers, do need clarification from the FSA. They need to be addressed soon, leaving enough time to implement the changes required, before 1 November. We will continue to discuss with the FSA those concerns and queries that our members have regarding the new obligations for firms. For those wanting a little more information, Intellect has produced a guide to assist suppliers with identifying possible opportunities - see www.intellectuk.org/mifid.

Since Intellect is a member of the Information Age Partnership, an industry-government discussion forum established by the DTI, it was very pleasing to see the IAP's i2010 Working Group's paper Delivering i2010: Ensuring the Right Conditions for an Innovative, Inclusive and Competitive UK Knowledge Economy,  published last week.

The report, which was the result of several months of work, calls on government, industry and academia to improve how they work together to ensure a strong UK knowledge economy. It makes several radical proposals, some of which build on work that organisations like Intellect are already pursuing.  For example it calls for the extension of R&D tax credits to include items such as capital expenditure and it stresses the importance of making computing courses more attractive as part of an overall campaign to address the technology industry's skills shortage.

The most interesting recommendation is to do with venture capital funding for startups. As noted previously in this blog, the UK is great for innovation, but not great for turning this innovation into concrete businesses. Many UK innovations are going abroad and much of the venture capital funding for technology startups that stay in the UK is still coming from the US. The report suggests reducing bureaucracy so that local funding is easier for small companies to secure.

This sounds like an interesting idea and a seminar is planned for June to discuss all the proposals contained in the report. However, the IAP is sponsored by the DTI - a department that several political commentators are saying could be dissolved and its constituent parts folded into other government departments in the next few months. If this is the case, let's hope that the IAP finds a good home and that these proposals are not forgotten. Intellect, for one, will be pushing for them to be acted upon.

Last week saw the creation of a new professional body - the Institute of Knowledge Transfer. The Institute is for individuals who help to turn world-class research in science, the arts and social sciences into products and processes that could enhance the competitiveness of the UK and Ireland.

Anyone whose work involves generating knowledge, transferring knowledge or applying knowledge in the development of products and services is encouraged to become involved whether they work in the public, private of intermediary sectors, these include academics, venture capitalists, patent and intellectual property specialists and R&D procurement specialists.

Its aim is to promote the interests of the profession and the practice of 'knowledge transfer'. To do this it plans to develop a national portal to promote the these interests and best practice in the area. It will also offer members services like continuing professional development and technology brokering.

At first glance it might seem that there are already a lot of professional associations in existence that represent the people who are being termed knowledge transfer professionals and promote their interests, however, this association should be a welcome addition for a range of reasons.

The UK and Ireland both have deservedly strong reputations for innovation.  Yet the number of patents we register does not reflect this.  Our innovators are not always able to or often do not succeed in taking their ideas to market - sometimes because the ideas are not commercially viable and sometimes because the creators don't really know how to successfully get them market-ready. 

However, there is a body of evidence to show that increasing the skills and the number of knowledge transfer experts within universities has driven up the number of spin off companies.  This is definitely a positive trend that we should encourage as it will not only benefit academia and small inventors, but will also have a positive knock-on effect on the economy in general in terms of job creation, competitiveness and productivity. 

The Institute of Knowledge Transfer can increase this trend because it recognises the skills needed to share knowledge on turning research into concrete business ideas and models and aims to work to enhance and promote these skills. Importantly it also plans to share best practice and work  to encourage others to become knowledge transfer professionals.

This is all noteworthy because it will help UK and Irish innovators get more ideas to market and make the most of the truly precious limited research and development budgets the have. Consequently it should help generate more wealth for the UK and for Ireland, with all its resultant benefits.

The new Institute should be welcomed and supported for the contribution it can make to the success of the UK technology industry and our economy in general.

As anyone who reads the newspapers is aware, the NHS is the subject of heated debate on a near-daily basis.

Yesterday, for example, the BMA called for a "more explicit means of rationing care." In response, the health minister, the Conservative health spokesperson and others made their views heard.

Regularly, the debate is about or touches on the subject of NHS IT. However, a quick search of Financial Times articles and even those from Computing, show that the issue of joined up health and social care has largely been overlooked in this debate, yet it is one of the most significant issues in improving whole care processes in England.

An integrated service across health and social care and their incorporation across a wider range of services including housing and education services could provide a much more inclusive and holistic service to our population.

A substantial amount of good work has been done in England by industry and Connecting for Health towards achieving integration between Health and Social Services. Many projects have been completed successfully, but many more are in danger of being overlooked. This is partly due to lack of a co-coordinated vision, which meant a lack of shared standards and shared vision. 

Throughout local government and the NHS, there is an awareness of the need to modernise. However, the biggest problem we currently face is achieving integration of service access, especially across health and social care. For example, currently in mental health there is virtually no access to information across client systems and the same data is often entered into two different systems.

Not only does the systematic sharing of information remove overlaps and save time, it also leads to faster and more effective intervention and improved outcomes. There is much energy, both in the services and in the ICT industry, that could be unleashed and focused on the issue of joined up health and social care, than is presently being sought by the public sector.

A move from fewer prescribed national/regional systems toward rigorous standards and a freer market that can be more locally driven would be a major step forward. Fortunately, we have recently seen a shift in this direction with the announcement of the Supplier Catalogue and we hope that the government and industry can build on this to ultimately achieve our goal of the integration of services across social and healthcare.

Broadband has been the key enabling infrastructure of the global knowledge economy in the 21st century, and is now an integral and everyday part of many people’s lives in the UK. Some 50 per cent of UK households have a broadband connection and the UK is in the top 10 OECD countries for broadband adoption.  Rapid take-up of broadband services, a fiercely competitive market place and the arrival of new bandwidth-intensive products and services, has led to a huge growth in internet traffic, which shows little sign of slowing down. So far so good, but what are the prospects for next-generation broadband deployment in the UK?

This is the subject of a report published by the Broadband Stakeholder Group earlier this week. Although several countries around the world are now starting to deploy new super-fast broadband services capable of delivering much higher upstream and downstream peak-rate access speeds, the report suggests that services such as fibre to the home may remain a pipe dream for all but the very few in the UK. However, the report finds that, for a range of reasons,  there is little prospect for the widespread deployment of next-generation broadband access networks in the UK and this could have serious implications for the wider UK economy. It recommends looking at a new approach to broadband regulation and policy making to achieve the right balance of investment incentives and competition.

The report's call for action has received widespread approval from government, Ofcom, industry and key media commentators. It is not yet clear exactly what the right regulatory and policy framework for encouraging market-led, next-generation broadband deployment might be, but you can be sure there will be lots of views on this. However complex the report was to put together, the difficult part lies ahead and it is critical that we get it right.