Paul Etherington, Head of mid-market, south at EY, explains how mid-market companies are leading the way in embracing new technology and how the Thames Valley is thriving at the forefront of innovation.
The Thames Valley is one of the fastest growing and economically important areas of the UK, with a burgeoning entrepreneurial mid-market community focused on driving productivity through technology. Earlier this year, the University of Reading opened the doors to its flagship Gateway building, the first part of the £35 million Thames Valley Science Park to open, which provides office and laboratory space for technology-led companies such as BioInteractions, Sage People and Clasado BioSciences. As a graduate of the University of Reading myself, it’s great to see this innovative partnership investing back into the local economy, and is the first of its kind in the region.
Reading and the Thames Valley have been earmarked as the UK’s Silicon Valley and is already home to large tech companies including Microsoft, Oracle, Cisco Systems, Huawei and Symantec. The region’s tech sector is also supported by strong universities in Reading and Oxford, as well as Henley Business School – making it the perfect place for businesses of all sizes to thrive and grow. Reading has also been identified as one of 30 key digital tech clusters in the UK, with business turnover of the digital sector in Reading climbing to £13.6bn in 2017 – up 70% in five years. Tech Nation’s 2018 report, sponsored by EY, found that Reading has one of the highest digital densities in the UK, at seven times the UK average, demonstrating that it is a great place for attracting high-tech startups who want to be at the cutting-edge of technology.
Against this background, the EY Growth Barometer findings reveal strong evidence that mid-market companies are leading the way in adopting new technology, by focusing on the opportunity that digitisation and artificial intelligence (AI) presents. The UK’s mid-market is fifth globally in the use of AI, above USA, Germany and Russia and was found to be an early adopter of AI with 8% of companies already deploying it – above the US (6%), Russia (5%) and Germany (5%). What’s more, a further 89% of company leaders plan to adopt AI within the next five years. This is an extraordinary turnaround on 2017, when almost two-thirds (64%) said they would never use cognitive technology.
Attitudes toward new technology have evolved rapidly over the past year and this is a strong reflection of the fact that we are now firmly in the midst of the fourth industrial revolution – described as a range of new technologies that are fusing the physical, digital and biological worlds, and impacting all disciplines, economies, and industries. Our research shows how intelligent automation and machine learning have moved center stage as vital enablers to ambitious mid-market growth. Almost 3 in 10 business leaders (29%) see technology as the best means to improve productivity.
This pace of technological change brings with it unparalleled opportunities for Thames Valley companies to disrupt themselves and enter new markets. The growth we’re seeing in both Reading and the Thames Valley reflects the strengths of the region in terms of its highly skilled workforce; the employer base ranging from world-leading corporates through to fast-growth entrepreneurs; and the region’s sectoral composition.
However, the region faces considerable threats to its future success and EY’s Thames Valley report says there are reasons for caution. Growth is slowing more generally across the UK – this, coupled with increasing competition, rising housing costs and transport infrastructure challenges, means the Thames Valley is facing considerable threats to its future success. The report calls out the need for an integrated and cohesive growth strategy if the region is to achieve its potential as the UK’s fastest growing economy.
To read the EY Growth Barometer report or to find out more on accelerating growth for your business, visit us at ey.com/growthbarometer. EY’s Thames Valley report analyses how the region can respond to some of the growth challenges ahead; read more at ey.com/uk/eythamesvalley.
Head of Mid-Market, South at EY