Digital transformation could grow the UK economy by over £413 billion by 2030

This year, the UK Government published its Digital Strategy 2022, with a mission to strengthen the country’s position as a “Global Science and Tech Superpower”, and to encourage investment and innovation so that the UK can continue to compete on a global stage.

At Amazon Web Services (AWS) we share this vision, and we commissioned independent consultancy Public First to undertake a new study to understand the role that cloud computing can play in unlocking the UK’s digital ambitions.

According to Public First’s report, digital technology could grow the economy by over £413 billion by 2030. That is the equivalent of around 19% of the entire UK economy – or bigger than the entire regional economy of the South East of England, and more than twice the annual output of the UK’s manufacturing sector (£183 billion).

The research also revealed that both citizens and businesses see digital technology as one of the biggest areas of growth for the country after health, with cloud computing playing an integral role in underpinning the technology stack that will enable the UK’s digital future.

Yet while the UK has the ambition to strengthen its position as a global science and tech superpower, the research shows many organisations are still not equipped with the right tools, skills, and digital infrastructure to take full advantage of the digital opportunity. As such, Public First’s report shows that the UK will need to focus on increasing digital adoption, strengthening digital skills, and continuing to invest in digital infrastructure to unlock its full digital potential.

The UK is already making progress when it comes to digital technology. According to the UK Digital Strategy, the country has more unicorns, and more start-up and scale-up investment, than France and Germany combined, and it is recognised as a world leader in emerging technologies like artificial intelligence (AI), advanced semiconductor design, and quantum computing. In recent years, the tech sector, has grown by around 7% a year – faster than the UK economy as a whole – and it is now estimated to support around three million jobs.

This progress is reflected in Public First’s report, which showed that over half of UK organisations (53%) agree that digital technology has become increasingly important over the last five years. This increases when talking to large companies with over 250 employees – of which 89% believe that technology is more important now than it was five years ago. However, Public First’s report showed there is still a long tail of UK businesses that are yet to capitalise on digital technologies.

Polling conducted by Public First found that:

• There remains significant potential to increase further the adoption rates of basic technologies. 42% of businesses don’t use digital tools to track orders or inventory, 31% don’t yet advertise online, and 38% are not using social media.
  
• Lack of awareness of the role that technology can play in advancing a business’ productivity was a key reason for low digital adoption. Over a third (40%) of the least digitally intensive businesses (businesses using a high level of digital technology, such as employees’ business internet use, number of ICT specialists, or online customer interactions) said that they did not know what difference greater use of digital technology would make to their operations.
  
• Almost half (48%) of business leaders had not heard of cloud computing or did not know what the term “cloud computing” meant. This was particularly true of small businesses, who were twice as likely to be unfamiliar with cloud technology compared to large enterprises (48% vs 24%).

With business costs rising, it is vital that financial support is complemented with the right guidance and advice. Growth hubs and peer networks, which provide concrete local touchpoints for businesses, should also continue to be a key component of Local Enterprise Partnerships (LEPs) as they undergo integration plans. One example of how AWS is trying to address this gap is through the AWS Digital Innovation Program for Small and Medium Businesses, which offers participating businesses access to on demand sessions where they can hear practical examples of how UK small and medium sized businesses are leveraging AWS to transform and differentiate their organisation, and discover opportunities to drive growth, reduce costs, and innovate for their customers.

UK Government estimates indicate that there were 31.5% more individuals working in the digital sector in 2020 compared with 2011. Turnover and employment growth in the digital sector is currently growing at more than double the rate of the economy as a whole, requiring a significant expansion of the UK’s current digital workforce.

With 80% of the 2030 workforce already in work today, reskilling the existing workforce is likely to be important for the UK to realise its digital ambitions. Increasing the availability of advanced digital skills in the UK will allow businesses to take greater advantage of digital technologies and the benefits of cloud computing. This can be achieved by boosting the number of specialists, as well as improving the digital skills of the average worker.

Public First polling showed:

• Digital skills were seen as important or essential by 82% of businesses, rising to 98% for digitally intensive businesses. In fact, digital skills are increasingly more desirable than other formal qualifications. 46% of businesses consider intermediate digital skills (such as creating a website) as important; but only 28% of businesses say the same for university degrees.
  
• Almost two thirds (57%) of the most digitally intensive businesses have found it difficult to find staff with good digital skills. At the same time, those businesses said that a shortage of digital skills had slowed growth (62%) and increased costs (63%).
  
• However, most individuals have not received formal digital training and are instead self-taught. 52% of respondents had developed their skills through trial and error, closely followed by 44% who have learnt through their own research. A third of working respondents (32%) told us that they spend over 15 minutes a day trying to understand how to do something on their computer.

Digital and cloud skills will be key to ensuring the UK can continue to compete on a global stage. This is why AWS has committed to investing hundreds of millions of pounds to provide free cloud computing skills training for 29 million people by 2025 – reaching people from all walks of life and all levels of technical knowledge, in more than 200 countries including the UK. We have launched a number of learning and skills programmes in UK including AWS GetIT, AWS Educate, AWS Academy, and AWS re/Start.

We first piloted AWS re/Start in the UK in 2017 as a way of building an inclusive, diverse global pipeline of new cloud talent, and engaging individuals who otherwise might not have had access to this career path. AWS re/Start prepares learners from unemployed and underemployed populations who have little technology experience, for careers in the cloud – at no cost to the learner. AWS re/Start is now available in a number of cities across the UK including Belfast, Birmingham, Blackpool, Bristol, Cardiff, Dundee, Edinburgh, Leeds, London, Manchester, and Newcastle. The programme also connects learners with potential employers, and AWS re/Start graduates have secured jobs at organisations such as Cancer Research UK, BT Group, Matillion, Beauty Bay, and the Financial Times.

AWS also offers programmes to inspire the next generation of tech talent, and build a skills pipeline that supports longer term growth. One such initiative is AWS GetIT, an education programme and competition designed to inspire 12-14 year old students, especially girls, to consider a future career in STEM (Science, Technology, Engineering and Mathematics). The programme helps schools and educators bring tech role models to their classrooms and gives them access to a curriculum designed to help students build foundational skills, learn about cloud tech, and design app ideas to solve problems in their communities. Since launching in the UK in 2018, the programme has expanded internationally to countries including Australia, Germany, Israel, Mexico, and the United States.

Digital infrastructure, such as high-speed connectivity and cloud computing, continue to be fundamental to supporting wider digital transformation in the UK. Over the next decade, low latency and edge technologies will become increasingly important to enabling new workflows for advanced manufacturing, smart networks or autonomous transport. The cloud sits within the underlying technological stack for most of the leading digital opportunities of the next decade, enabling new technologies such as ML and helping companies to become more agile.

A report by 451 Research, part of S&P Global Market Intelligence, found that migrating compute workloads from on-premises to AWS can also help businesses to decrease greenhouse gas emissions. The report found AWS infrastructure to be five times more energy efficient than the average European enterprise data centre, and that businesses in Europe can reduce energy use by nearly 80% when they run their applications on the AWS Cloud instead of operating their own data centres.

Public First polling revealed:

• 80% of businesses using cloud agreed that cloud computing has made it easier for their business to compete with bigger enterprises, and 67% agreed that the costs of starting a business had reduced substantially because of cloud computing.
  
• Cloud computing also offers secure and reliable digital infrastructure. 92% of cloud users feel confident that their data is secure in the cloud. A further 45% of respondents said they would find it difficult to store data securely without cloud services.
  
• UK businesses and consumers prioritise faster or more reliable internet over building new roads and adding extra bus and rail routes.
  

AWS is committed to investing in the UK to create the conditions for organisations in all industries to become global leaders in their use of technology. Earlier this year, AWS announced that it expects to spend more than £1.8 billion in the next two years building and operating data centres in the UK in order to meet the growing needs of its customers and help to strengthen the UK’s digital infrastructure.

Despite the benefits digital tools provide for organisations, digital transformation is not guaranteed. Achieving these digital ambitions requires investment in the right areas. For the UK to benefit from increased growth and productivity, there should be a greater focus on growing awareness and support available to businesses to adopt digital tools; the creation of a more diverse talent pool to address the digital skills shortage; and continuing investment in the infrastructure that will underpin innovation and the next generation of digital technologies. Collectively, this will unlock the many opportunities afforded by this digital decade.

Read the full report and learn more about how cloud computing can support the UK’s digital ambitions.