Business Technology

Thursday 28 August 2014

Creating a connected country will accelerate recovery

We're not doing nearly enough to encourage Irish firms to go online, says UPC boss Magnus Ternsjö

Magnus Ternsjo

Published 22/06/2014 | 02:30

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We need to upgrade our broadband network
We need to upgrade our broadband network

THERE has in recent years been a complete transformation of Irish society into one of constant connectivity at home, at work and across every aspect of our lives. We have seen phenomenal developments in recent years and these are continuing at a rapid rate of change.

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Encouragingly, we're doing well in Ireland when it comes to the essentials of being connected – broadband. Some 30pc of our population now say they're signed up to broadband speeds of 30 Mbps or more. This is good compared to 10pc in 2012 and a current EU average of 18pc.

The second UPC report on Ireland's digital future, Accelerating Economic Recovery, is a measure and analysis of digital transformation in Ireland. It gives a picture of economic conversion and opportunity and also of the rapidly changing personal lifestyles driving digital adoption across our society – the widespread use of mobile Internet devices being one example.

While broadband connections are essential, simply being connected to the internet isn't enough. We all need to focus on the benefits that can be gained if we use the internet to create productivity and value for Ireland. These are the benefits of 'digitisation'.

The question we need to be delivering answers to is whether Ireland is adapting quickly enough to be a leader, not a follower or absorber of a gathering digital trend. Globally, that trend is playing a key role in driving the sale of goods and services. Digital is now an imperative business platform. It is also the basis for enhanced choice and flexibility for consumers.

'Digitisation' isn't another piece of technology jargon. For businesses, it should support increased revenues, lower costs and better access to consumers and customers. It can also change how businesses manage and organise their human resources with flexible working practices, which doesn't always need to be office based.

For people and consumers, increased digitisation should mean better delivery of education, technological literacy, enhanced employment prospects and greater access to public and commercial services. It also means more community engagement and improved wellbeing, including health-related information and services.

Ireland's current internet economy value of €8.4bn will be worth an estimated €21.1bn or 10pc of GDP by 2020. Online consumer spending will contribute close to €13bn of this 2020 figure.

Growth comes to every business and every economy one sale at a time, one job at a time. It is the accumulated impact of individual business and customer choices that paint the bigger picture. The good news is that Irish businesses are increasingly embracing digitisation and driving change, one decision at a time.

In our export-driven economy, over half of Irish businesses plan to sell to more customers outside of Ireland using the internet in the next two years. Encouragingly, CSO figures indicate that 24pc of Irish enterprises already use the internet for a proportion of their sales via e-commerce. The EU average is 17pc, so Ireland is doing comparatively well.

Irish businesses are also good at embracing social media. Nearly half of all Irish enterprises (employing 10 or more people) use some type of social media compared to an EU average of 30pc. All of these indicators reflect rapid change in Ireland.

However, currently 60pc of Irish online consumer spending goes abroad. We simply can't afford a situation where we only capture just 40pc of a €13bn opportunity in Irish consumer activity. That would be an almost €8bn lost online sales opportunity by 2020 if we do not become more competitive in this area.

These aren't just big numbers – it translates into jobs for individual people. For every 1pc increase in the value of e-commerce in Europe, there is an estimated 1pc increase in direct e-commerce employment. In Ireland 79,000 extra staff will be directly employed through the internet economy by the end of the decade where companies want people with analytics, programming, social media and digital marketing skills.

We need to encourage digital Irish businesses who can on one hand substitute the imported flow of online purchased goods; and on the other, offer significant online export potential in their own right.

Educating our young people with digital skills from an early age is also essential. And competitiveness is key, because many people feel they get better quality, choice and value from online retailers abroad.

Unfortunately, Ireland is not making adequate headway in bringing more Irish businesses online. Approximately 47,000 Irish businesses don't even have a website. You've got to ask yourself, in an age where everyone searches for everything online, if only to find a phone number or store location, why are these businesses invisible on the Internet?

Faced with ongoing rapid changes, we are all challenged to realise the potential of our current generation. A new generation is also emerging who have had the internet all of their lives. They're using it to shape a constantly connected world which is driving new market developments.

Interestingly, the importance of digital access and faster broadband speeds is underlined by the fact that Irish consumers would want €130 a month or up to €1,500 a year to replace the loss for them if their internet connection was to disappear tomorrow. That's a strong indication of the consumer surplus and value that people place on their internet service and the contribution it makes to their daily lives.

The Irish digital economy is growing. Digital technology is changing and evolving. The underlying momentum for digitisation is personal change matched by the adaptation of businesses and governments to engage across the internet and deliver better services online. Ireland is making strong progress but we need to accelerate that, and quickly.

Magnus Ternsjö is chief executive officer of UPC Ireland

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