Data Opportunity Action Plan October 2014

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1 October 2014 An Action Plan within the Framework for Action for the Technology and Engineering Sector in Scotland TECHNOLOGY ADVISORY GROUP

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3 INTRODUCTION The phenomenal growth in Data is a consequence of the digital age that we live in. Most activities leave a digital trace enabled by ubiquitous, low-cost computing and communications technology. This Action Plan sets out a path for Scotland to embrace the Data Opportunity and to marshal our considerable assets in industry, the public sector and our world class universities to ensure that the potential benefits that data can deliver are realised in Scotland. We will seek to deliver the economic, societal and scientific benefits of utilising data while recognising the need to address concerns around security and privacy. This Action Plan is driven by the Technology Advisory Group (TAG), which brings together key stakeholders with an interest in the delivery of this plan. It builds on strategic analysis undertaken by Scottish Enterprise which identified opportunities that mapped well to Scotland s company and economic strengths. This analysis identified that data was such an opportunity, with evidence of significant scope for growth and considerable global demand. This coincided with the view of TAG as they considered the potential contribution of the Technology and Engineering Sectors to the delivery of the Scottish Government s Economic Strategy. This Action Plan sits within the overarching Framework for Action for the Technology and Engineering Sector produced by TAG. It embodies the opportunity; the strategic objectives; priorities and economic development objectives that will be actioned and that will drive and complement the activities of the newlylaunched Innovation Centre, The Data Lab. The data opportunity is twofold: For our technology businesses it represents the opportunity to develop products and services that will enable the exploitation of data resources across a wide supply chain, ranging from Data Capture through Processing to Analytics and Visualisation. For businesses who apply this technology to their data assets, there is the potential to deliver the majority of the economic impact, primarily through gains in productivity and competitiveness. Such businesses are to be found within almost every sector of the economy. Work has been undertaken to validate the opportunity through: Looking at how the assets that existed might best be exploited Considering what actions would be needed across all stakeholders to maximise the potential of the opportunity Identifying and putting in place any missing assets which would be required to make this happen UK Economic Benefits Business Efficiency 17, ,471 Business Innovation 2,865 24,062 Business Creation 4,843 42,430 Total 25, ,964 CEBR

4 THE DATA OPPORTUNITY Big Data has become one of the most hyped areas of technology in recent times and it is easy to see why this has happened. The scale, impact and opportunity involved can appear extreme and can attract considerable attention. Several factors contribute to this: Scale: The amount of data involved can be enormous, but often it is the ability to effectively collate, access and analyse it that is the differentiator rather than its absolute size. Breadth of Application: The impact can be felt in almost every area of human activity. Impact: Much of the interest generated reflects both the positive and negative aspects and their impact on society. (E.G. access to health records to facilitate better care versus concerns for individual privacy is an example of the tension that this can create.) Non-Intuitive Insight: The ability to link many sources of data often creates an evidence base to support and facilitate actions that are being proposed, however the insight gained can sometimes be entirely unexpected and can prompt an entirely new or revolutionary change in response. Whilst data at scale is contributing to the opportunity and new tools and platforms are aiding the derivation of insights, there is one other emerging factor that is transformational and that is Openness. Many organisations, and in particular Governments, have committed to making as much of the data that they hold as open as they can (without compromising security or the privacy of the individual). This is not entirely driven by altruism. They recognise the potential to drive economic opportunity and growth through allowing access to this public asset and they envisage reaping the service delivery and productivity benefits which should follow. The Scottish Government has established its own Data Management Board (DMB) to provide strategic direction across all data activity to ensure that best use is being made of data; to support growth and improve public services whilst maintaining the trust of the public. The DMB has published its strategic vision and subsequent draft action plan 1 outlining the steps required to deliver this strategic vision for the Public Sector in Scotland. The UK Government recently announced 42m of funding to develop a Turing Institute to support the UK in establishing a leading position in Big Data. The role of Big Data in the wider context of Scottish academia is recognised and its extent mapped in a recent discussion paper by the Scottish Science Advisory Council 2. This highlights the extent and potential synergies of a broad base of academic activity and opportunity. The scale of the anticipated opportunity has resulted in many commentators making statements such as Data is the new Oil (Clive Humby 2006) or McKinsey Global Institute s major report in 2011 asserting that Big Data is the next frontier for innovation, competition and productivity. Despite the hype, companies are identifying compelling business cases and anticipated Return on Investment (ROI) which is persuading them that the data opportunity is indeed real. This is leading to substantial investment. Recent estimates of the scale of global opportunity includes International Data Corporation s Technology and Services market projection (Dec 2013) with an estimate of 27.1% Compound Annual Growth Rate (CAGR) through to 2017 (from $12.6B to $32.4B) on its way to being a $100B market by Strategic Action Plan For Effective and Responsible Collection, Management and Use of Data across Scottish Public Services, Scottish Govt. July Big Data and Data Science in Scotland, Scottish Science Advisory Council, March 2014

5 Big Data Benefits Customer Intelligence Supply Chain Management Quality Management Risk Management Performance Management Fraud Detection Key Industry Beneficiaries Retail Retail Banking Telecommunications Manufacturing Retail Transport & Logistics Manufacturing Energy Utilities Telecoms Investment Banking Retail Banking Insurance Government Healthcare Government Retail Banking Insurance Wikibon 3 is seeing current market growth rates of over 50% and predicting revenue growth to $50.1B by 2017 (representing CAGR of 38% in the period ). Although there is constant reference to the potential of Big Data on the demand side, there is very little evidence illustrating or predicting impacts as more businesses begin to deploy solutions. A 2012 study by CEBR 4 made an estimate of this at a UK level and Optimat 5 have interpreted these figures to arrive at an indicative position for Scotland. UK UK Scotland CEBR 2012 Sector 2011 ( m) ( m) Relative Scale ( m) Manufacturing 5,965 45, % 3,341 Retail 3,406 23, % 2,479 Other Activities 3,446 27, % 2,225 Professional Services 3,039 27, % 2,045 Central Government 2,517 20, % 1,981 Healthcare 1,450 14, % 1,402 Telecoms 1,465 13, % 708 Transport & Logistics 1,360 12, % 929 Financial Services 1,779 16, % 1,204 Energy & Utilities 660 5, % 1,494 Total 25, ,962 17,808 Potential Sector Impact of Big Data for Scotland, Optimat, 2013 (original source CEBR 2012) 3 Big Data Vendor Revenue and Market Forecast , Wikibon 4 Centre for Economic & Business Research: Data Equity, Unlocking the Value of Big Data (2012) 5 Optimat: Big Data Opportunities Analysis (2012), commissioned by Scottish Enterprise 3

6 From those companies that have been deploying Big Data solutions, there is emerging learning that may influence those who have yet to make that step. Having examined 400 large companies, Bain & Co. 6 concluded that: those with the most advanced analytics capabilities are outperforming competitors by wide margins. The leaders are: Twice as likely to be in the top quartile of financial performance within their industries Five times as likely to make decisions much faster than market peers Three times as likely to execute decisions as intended Twice as likely to use data very frequently when making decisions However a Wikibon survey highlighted some of the potential pitfalls which may prevent delivery of anticipated ROI. Typically this identifies three common causes for failure to achieve maximum business value. These are: A lack of skilled Big Data practitioners Raw and relatively immature technology Lack of a compelling business case These findings emphasise that whilst the benefits are worth attaining, many critical success factors have to be in place to achieve this including having the right application, strategy, business model, skills and technology. 4 6 The Value of Big Data: How Analytics Differentiates Winners, 2012

7 KEY FACTS Scotland has approximately 10,000 High-Impact companies which are supported by our Enterprise Agencies. These include those companies important to the economy, growth companies, companies with growth potential and companies who are actively trading globally. Recent studies by CEBR 7 /Optimat 8 identified the potential to deliver 17bn of business benefits from these companies over a 5-year period. The Public Sector will have an important role in this; not only as a data owner but as a customer for platforms and solutions. In analysing the data landscape in Scotland, Optimat identified that we have: Over 100 companies who have a capability as part of the Big Data supply chain Of those, 59% are SMEs 80% are active in global markets and right across the range of Scotland s growth sectors Scotland has a highly relevant, globally significant research base in SICSA (Scottish Computing Science and Informatics Alliance) consisting of 14 institutions, including: 4 member institutions in the top 200 of the Academic Ranking of World Universities 20% of the top-rated research activity in the UK 790 academics and researchers and over 750 PhD students 13.8% of the UK s competitively awarded research funding allocated throughout the UK In addition to the strength of our academic and technology sectors, it is the presence of significant data owners and data users across the key sectors of Scotland s economy that presents the opportunity to derive real benefit from the data opportunity. This opportunity exists in nearly all sectors, but Scotland stands out for its strength of presence in particular areas where data has the opportunity to be transformational in the way that these sectors operate. Health and Care: In the area of health and care Scotland has a long established patient record database that is of the right scale to support meaningful analytics. Financial Services: We have strong banking, insurance and asset management companies within our financial services industry who are facing challenges such as regulatory compliance, fraud detection and the need to offer differentiated and personalised products to retain and attract customers. Energy: We have mature oil and gas fields in the North Sea from which masses of data has been gathered and continues to be so. The challenges revolve around maximising production efficiency and extraction rates from these mature fields and in decommissioning assets which have reached end-of-life. With a strong renewables sector and a diverse generating mix, grid management and optimisation will also present opportunities for data innovation. Not only does Scotland have the capacity to create data solutions but it has a ready base of customers who are in need of such solutions and who have the ability to take these into global markets. Our challenge is to engage with all elements of the supply chain in order to foster innovation and adoption. 7 Centre for Economic & Business Research: Data Equity, unlocking the value of big data (2012) 8 Optimat: Big Data Opportunities Analysis (2012), commissioned by Scottish Enterprise 5

8 PRIORITIES AND KEY STRATEGIC OBJECTIVES The priority for this Action Plan is to position businesses in Scotland to participate fully in the data revolution such that they are able to recognise, exploit and profit from the value in the data assets that they currently hold, can access or create in order to grow their businesses. For our technology companies we need to ensure that they are able to exploit the opportunity by understanding the needs of the demand side businesses and delivering the innovative products and services that will address not only those needs of our data-enabled businesses in Scotland but a global demand for such solutions. The data opportunity is still in its early stages. It is widely recognised as a foundation of the intelligent economy and is now moving rapidly from anticipation to adoption. The nature and scale of opportunity and the lack of availability of skilled practitioners will ensure that this transition will take some time to permeate all sectors and businesses which stand to benefit. In Scotland we will put in place the opportunities for companies to train their staff and to develop the skills that will enable their participation. Industry working hand-in-hand with our world class universities will ensure that we have the right materials and courses and the means of delivery, not only for training needs but to ensure that a pipeline of skilled people is created through a range of focused and relevant degree programmes. At a Scottish-level the anticipated impact of the data opportunity is huge and it spans every sector of the economy. The forecasts predict the impact on the basis that businesses embrace the tools, technologies and business models that facilitate their participation in and successful exploitation of the data revolution. Currently some businesses are beginning to do this, but it should not be taken for granted that all, if indeed the majority, are equipped to respond. There are real gaps in the knowledge, skills and capacity of businesses (of all sizes and in all sectors) which may prevent them from responding to this opportunity and competitive threat. In the context of a whole-scotland Action Plan for data, The Data Lab ( represents an essential piece of infrastructure to support industry as it seeks to embrace this challenge. It will provide a focus for industry s efforts to acquire the skills and knowledge to leverage this opportunity and create an environment in Scotland where participation by our largely SME company base is achievable. Supporting the successful operation of The Data Lab will be a factor in delivering the overall objectives of our action plan. 6

9 Over the next five years The Data Lab will undertake a range of activities with the objective of: 1. Creating a world-class environment where universities, technology companies and their customers can come together to address opportunities and challenges associated with exploiting data. The Data Lab will deliver industryled innovation, community building and skills through exploitation of the capability of Scotland s world class academic community in Informatics and Computing Science. The purpose being to help develop a thriving community of supply and demand side companies, successfully exploiting data to fuel their productivity and competitiveness and deliver growth. 2. Supporting Collaborative Research & Development (R&D) in Scotland, particularly in connecting our technology companies to data-driven local markets. The Data Lab will be demand led, however, it anticipates that the majority of opportunities and hence the focus will be in Energy, Financial Services, the Digital Industries and the Public Sector (including Health). Supporting R&D will serve the dual purpose of assisting businesses to access the capability to exploit data and also to position our technology companies to be able to address global markets with the solutions that they develop and perfect for sizeable local markets. The Data Lab will provide a focus for much of our activity. It delivers the visibility and tangible entity that will drive the engagement and participation that is deemed as an essential catalyst by TAG. The Data Lab will attract 25m in investment from industry and the public sector in its first 5 year approval period. Whilst the fast moving nature of this space makes it impossible to predict what the landscape will look like that far out, it is essential that we have delivered some key objectives for the Scottish economy by then. This will be indicated by: a. Widespread understanding of the role of data in a competitive global economy b. Significant levels of evaluation of the data opportunity/threat by business c. Significant numbers of businesses having adapted their business models, products and services in response to the data opportunity/threat 3. Ensuring that Scotland s companies and academics develop relationships with leading practice across the world. Through The Data Lab and a focus on targeted inward investment we will develop collaborative relationships between our company and academic capability. We will attract companies to engage with The Data Lab through hosting international conferences and events (based on the attractiveness of our own cluster of excellence) and we will support them to engage internationally by promoting Scottish excellence using events, missions and learning journeys that create such opportunities. 7

10 ECONOMIC DEVELOPMENT ACTIONS Data specific opportunities for future economic development activity and actions are summarised below Company Growth No. Action Description Objective Deliverables 1.1 Enterprise Agencies (EA) develop an approach for Company Growth including engagement of account managers and identification of companies who may offer the best immediate prospects for exploitation of the data opportunity. 1.2 Identification and segmentation of companies into those who might be targeted to engage with the Data opportunity (perhaps through The Data Lab) or who will be part of a wider programme of support and awareness 1.3 Direct dialogue with account managed companies to understand the specific nature of how they are impacted by data and to determine appropriate engagement. 1.4 Identify and create opportunities for companies to collaborate with research base and other companies in order to create new products and services. 1.5 Provide Thought Leadership through a range of channels to the wider company base. 2 Enterprise Agency Company Growth engaged in supporting Data Action Plan. Understanding within Company Growth of the actions needed to identify and support companies through provision of collateral, training or expert support. 1,2 List of companies who will be invited to participate in targeted activities. 1,2 Influence on company strategy. Delivery of interventions. Tailored support. Signposting. 1,2,3 Regular calls for R&D projects. Community building events. Creation of demonstrators. Knowledge dissemination events. 1 Bulletins, newsletters, case studies, signposting, market testing. Internationalisation and Inward Investment 2.2 Explore, understand and develop market and sector specific opportunities that are targeted at specific regions around the world. 2.3 Establish relationships with other key global centres of data expertise. 2.4 Establish Relationship with Connected Digital Economy Catapult (CDEC) and other UK Data activity. 1,3 Analysis, Missions, Trade Shows and Regional Events (3 targeted visits over first 18 months) 3 1 or 2 collaborations per year 1,3 Memorandum of Understanding in place with CDEC. Participation in collaborative projects. 2.5 Attract international events to Scotland. 1,3 Major international conference being targeted for 2015 with initial discussions having already taken place. Other events to follow. 8

11 No. Action Description Objective Deliverables Commercialisation 3.1 Ensure that EA commercialisation activity is well connected to The Data Lab and that there is a high level of awareness within The Data Lab of the products and support services that are available to commercialise opportunities arising from The Data Lab activity. 1 Two Data commercialisation opportunities identified each year. Investment 4.1 Create opportunities to attract investors for early stage companies (extension of Scottish Informatics & Computing Science Alliance Engage Invest Exploit activity) 4.2 Understand the investment requirements of growth companies in Data space. 1,2 Events bringing investors to Scotland or taking companies to engage with investors outwith Scotland. 2 Annual report Innovation 5.1 Fund collaborative R&D projects. 1,2 Support The Data Lab to deliver 100 projects over the next 5 years from private and public investment in new technology and product development. Deliver 100 new products/services. 5.2 Create a programme of innovation support activity targeting companies at various stages on the journey towards exploiting data and who are not yet ready for, or whose needs are not covered by The Data Lab. 1,2 Explore opportunities for specific targeted action to deliver in areas such as: Development of case studies to facilitate engagement. Business model innovation support. Specialist Data advisors. Support to manufacturing through SMAS. Infrastructure 6.1 Provide support for those partner organisations tasked with the provision of facilities and equipment and work with companies to understand any gaps in provision where EA intervention may be appropriate. 6.2 Monitor the availability of supporting infrastructure for the transport, storage and exchange of Data and anticipate future needs that may need intervention to maintain Scotland s competitive position. 1 Exploratory meetings with SFC and other Innovation Centres around data safe havens and other potential shared resources with other Innovation Centres. 1 Ongoing dialogue with stakeholders. Input into Scotland s Digital Strategy. Skills 7.1 Deliver the ICT and Digital Skills Investment Plan in response to industry need and support companies in addressing the demand for Data related skills. 7.2 The Data Lab will provide specific course material and learning opportunities to support company training needs, CPD, postgraduate and undergraduate education. 7.3 Support The Data Lab skills and training plan by aligning the actions of the ICT and Digital Technologies Skills Investment Plan 1 Long term pipeline of skilled people entering into relevant ICT careers. 1,2 >1000 people participating in training & skills courses 25 Funded Eng. programmes and 150 PhDs undertaken 1 Cohesive action on the spectrum of data skills requirements. 9

12 This document was prepared by Scottish Enterprise in October 2014 on behalf of the Technology Advisory Group. Scottish Enterprise Atrium Court 50 Waterloo Street Glasgow G2 6HQ T: E: SE/4116/Oct14