Scotland’s
Digital Economy Maturity Index
The Scottish Government’s vision
The Scottish Government has a vision for all businesses in Scotland to have
the
• Availability of digital infrastructure,
• Confidence, and
• Skills
required to embrace the internet and digital technologies.
Whether they are large or small, working in Agriculture or in the Business
activities sector, this will enable all businesses to make optimal use of digital
technologies as appropriate for their specific sector, size and geographical
location.
Using data from the Digital Economy Business Survey 2014 (DEBS), the
Scottish Government has developed a Digital Economy Maturity Index,
which allows for the segmentation of businesses in Scotland according to their
level of digitisation.
Background –
Business demographics and key findings from DEBS 2014
Business demographics – Sector and size
Distribution of businesses by sector
(%)
The largest sectors were
Distribution of businesses by size (%)
•
Most businesses are micro – with 1-9
employees.
•
Business Activities and
•
Wholesale/Retail
Large
1
Medium
2
Small
•
This means micro businesses make up
the majority of businesses in each
maturity segment.
Number of employees:
Micro (1-9)
Small (10-49)
Medium (50-249)
Large (250+)
15
Micro
82
0
50
100
Source: Digital Economy Business Survey 2014
Key findings – Internet take up
• 92% of businesses have broadband – 19% of which have
Next Generation Access**
* Includes mobile networks such as 3G and 4G and dial-up.
** Download speed that is greater than 24Mbit/s.
Key findings – Adoption and Benefits
Adoption
The most commonly adopted technologies were:
• Having a website (73%) and
• Using mobile internet and technologies (64%)
Benefits
Using different types of technologies bring a number of benefits to
businesses. The most commonly cited were:
• Generating exposure to the company;
• Allowing greater flexibility and remote working for staff; and
• Better targeted advertising.
Key findings – Reasons for not using digital
Among businesses that do not use various digital technologies, there
was
– a belief that the technology in question was of no relevance
to the business;
– a lack of understanding or knowledge of how to use
technology; and/or
– a lack of funds or lack of time.
Scotland’s Digital Economy
Maturity Index
Purpose
• To measure the level of digitisation of Scottish businesses and
segment the business population into levels of digital maturity.
• To establish the characteristics of businesses in each segment
and identify the opportunities to develop their use of digital
technologies based on their strengths and challenges.
• To measure progress of digitisation of Scotland’s businesses
over time.
Methodology
• Scotland’s Digital Economy Maturity Index (DEMI) has been
constructed using a range of indicators from the Digital Economy
Business Survey 2014* (DEBS).
• The index consists of four main strands, under which there are a
total of 12 indicators
• Each indicator has been given a score based on its relative
importance in terms of digital maturity.
• A maximum score of 100 can be achieved.
* Further details about the Digital Economy Business Survey 2014 can be found in the Annex.
Indicators
Digital
Economy
Maturity Index
Adoption
Usage
Benefits
Skills
Type of internet
conncetion
Type of technologies
used
Benefits experienced
from using digital
technologies
Digital technology
skills gaps
Overall importance of
digital technology to
current operations of
the business
Integration of
technology into
business
Proportion of sales
made over the
internet
Plans to develop
employees' digital
skills
Engagement with
public services
online
Internationalisation
Strategy for use of
digital in delivering
business
Digital technologies
supporting product
development
Indicator weightings
Benefits
Digital Maturity Index – Indicators, sub-indicators and scores
Score
Max
score
* NGA (<24 Mbit/s)
* Standard broadband
* Internet not broadband
* No internet connection
4
2
1
0
4
* Essential
* Very important
* Important
4
3
2
* Not important
0
Indicator
Sub-indicator
Adoption
Type of internet
connection
Overall importance
of digital
technology to
current operations
of business
4
Usage
* Website
* Social media
* Mobile internet and technologies
Technologies used
* Cloud computing
* Data analytics
* Management software
1
1
2
2
3
3
* Essential (9-10)
* Very important (7-8)
* Important (5-6)
* Use but not important (3-4)
* Use but not at all important (1-2)
5
4
3
2
1
30
* Obtain information
* Obtain printable forms
* Return filled in forms electronically
* Carry out transaction digitally
* eTendering
1
2
2
3
3
11
Integration of
technology into
business
Engagement with
public services
online
Strategy for use of * Yes
digital in delivering
* No
business
1
1
2
2
3
3
* Researching competitor products online
* Researching and gathering market data
online
* Collecting customer feedback via website
or social media
1
Using digital
technology to help
innovation
Proportion of sales
made over the
internet
* All - 100%
5
* 80-99%
* 60-79%
* 40-59%
* 20-39%
* <20%
* None
4
3
3
2
1
0
12
Internationalisation
* Use of digital technology has increased the
number of international markets exported to
* Website tailored to international markets
2
12
6
3
4
5
8
4
Skills
2
0
* Website
* Social media
Benefits experienced * Mobile internet and technologies
from using digital
* Cloud computing
technologies
* Data analytics
* Management software
2
Digital technology
skills gaps
* No skills gaps
* Some skills gaps
* Considerable skills gaps
* Not applicable
3
2
1
0
Doing anything to
develop employees'
digital skills
* Yes
* No, but planning to in future
* No, and not planning to in future
3
1
0
Total max
3
3
100
Maturity segments and scores
Segment
Digital Economy
Maturity Index Score
Disconnected Doubters
0-10
Basic Browsers
11-30
Tentative Techies
31-49
Enthusiastic Explorers
50-66
Digital Champions
67-80
Digital Pioneers
81-100
Digital Maturity of Scottish
Businesses – Results
Distribution of businesses by maturity segment
• The vast majority of Scotland’s businesses are classified as Basic Browsers
(38%) and Tentative Techies (30%).
• Only 3% are classified as Digital Champions or Digital Pioneers.
• 92 is the highest score achieved by any business.
How the maturity segments differ - General characteristics
Characteristic
Disconnected Doubters
Digital Champions
Size
Small and micro businesses are
overrepresented in this segment.
Medium businesses are overrepresented in this
maturity segment.
Sector
Wholesale/retail, agriculture and
construction sectors are overrepresented in
this segment.
Transport/Communications, Manufacturing and
Other services are overrepresented in this
segment.
Age
Are often over ten years old (84%*)
Are often between 3-10 years old (48%)
Growth
expectations
Expect to stay about the same size in the
coming year (62%)
Expect to grow moderately (50%) or expect to
grow substantially (22%) in the next 12 months.
Turnover
Relative to other segments tend to have an
annual turnover of less than £100,000
(37%)
Tend to have an annual turnover of more than
£250,000 but below £1 million (31%)
Export
Tend not to export (5%)
Tend to be exporters (57%).
Adoption of digital
Tend to have adopted one technology –
either website or mobile technologies.
Tend to have adopted most of the six
technologies.
* All percentage
figures throughout
exclude don’t knows
Disconnected Doubters (13%)
Key characteristics
Sectors
Size
Small
(7%)
Medium
(1%)
Micro
(92%)
Wholesale/Retail
Agriculture
are overrepresented in this maturity segment compared
with their overall presence in the business population.
Disconnected Doubters tend to …
… have been established for over ten years (84%).
… expect to stay about the same size in the coming year (62%).
… have an annual turnover of less than £100,000 (37%).
… not export (5%).
Construction
Disconnected Doubters (13%)
Digital characteristics
Current
Future
• Likely not to have an internet connection
(34%).
• Are unlikely to consider getting an
internet connection.
• If using technologies at all, it tends to be
mobile technologies or have a website.
• Have no intentions of using digital
technologies in the future.
Attitudes
Do not see the need to go online or use digital technologies. Do not see how it
could benefit the business.
Disconnected Doubters (13%)
Barriers
No need and lack of a strong business case are the
biggest barriers to future digitisation of the business.
Opportunities
• Changing attitudes towards digital.
- Need to create a desire among Disconnected Doubters to
explore the use of digital technologies to become more efficient,
improve their competitiveness and grow.
- Need to promote the benefits of adopting internet.
Basic Browsers (38%)
Key characteristics
Size
Sector
Construction
Agriculture Health/Social work
Medium
(1%)
Small (15%)
Micro (84%)
are overrepresented in this maturity segment
compared with their overall presence in the business
population.
Basic Browsers tend to …
… have been established for over 10 years (70%).
… expect to remain about the same (51%) or expect to grow moderately
(35%) over the next 12 months.
… have an annual turnover of between £50,000 and £250,000 (46%).
... not export (7%).
Basic Browsers (38%)
Digital characteristics
Current
Future
•
Tend to have a standard broadband
connection.
•
Tend not to have any plans to develop
digital skills of staff.
•
Most have adopted 1 or 2 technologies – most
commonly a website or mobile technologies.
•
•
Some make use of public services online –
mainly to look for information.
However, a majority hope to develop
the use of their websites and social
media. Some wish to expand their use
of mobile technologies, cloud
computing and data analytics.
Attitudes
Tend not to consider technologies important to the running of the business. Do not
think that technologies are of any relevance to the business.
Basic Browsers (38%)
Barriers
Lack of funds and lack of skills pose the greatest
barriers to future digitisation of the business.
Opportunities
• Encourage take up of improved broadband connections and a wider
range of technologies.
• Learn from businesses in more digitally mature segments about how
effective use of digital technologies can benefit the business.
• Equip staff with the appropriate skills to further develop use of the
technologies in place.
Tentative Techies (30%)
Key characteristics
Sector
Size
Micro (79%)
Small (18%)
Medium
(3%)
Large
(1%)
Manufacturing
Business Activities
Health/social work Other services
are overrepresented in this maturity segment
compared with their overall presence in the
business population.
Tentative Techies tend to …
… have been established for over 10 years (66%).
… expect to grow moderately (44%) or remain about the same (36%) over the
next 12 months.
… have an annual turnover of between £50,000 and £250,000 (43%).
… have started to export (23%).
Tentative Techies (30%)
Digital characteristics
Current
Future
•
Tend to have standard broadband
connections.
•
Consider digital technologies to be very
important to the future competitiveness of
their business.
•
Most have adopted 3 of the key digital
technologies.
•
Expect to start or increase the sales
made over the internet in the next 2-3
years.
•
Tend to use public services online to obtain
information and return filled in forms online.
•
Tend to make at least some sales online.
Attitudes
Consider technologies to be important to
the current running of the business.
However, they tend not to see the full
potential of how technologies can benefit
the business.
Tentative Techies (30%)
Barriers
Lack of time and lack of funds are the biggest
barriers to future use of digital technologies.
Opportunities
• Encourage a more structured approach to the use of digital by
promoting the adoption of a digital strategy.
• Promote the use of technologies as a means of increasing their
international presence.
Enthusiastic Explorers (15%)
Key characteristics
Size
Large
(2%)
Sector
Business Activities Transport/Communications
Medium
(4%)
Small (17%)
Micro (76%)
Enthusiastic Explorers have the greatest
representation of large businesses.
Other services
Manufacturing
are overrepresented in this maturity segment
compared with their overall presence in the business
population.
Enthusiastic Explorers tend to …
… have been established for over 10 years (58%)
… expect to grow moderately (47%), or remain about the same size (26%) over the next
12 months.
… have an annual turnover of between £100,000 and £500,000 (44%).
… be likely to export (42%).
Enthusiastic Explorers (15%)
Digital characteristics
Current
•
•
•
•
•
Tend to have adopted at least 4 of the key
digital technologies.
Likely to have a digital strategy.
Tend to be exploring new ways of
communicating with customers through a
range of social media channels.
Most have started using digital technologies to
aid product development.
Will use digital technologies to increase their
exports.
Future
• Consider digital technologies to be very
important or essential to the future
competitiveness of the business.
• Expect to start selling or significantly
increase the proportion of sales made
online.
• Hope to develop the use of their existing
technologies.
• Tend to have plans to develop the digital
skills of their staff.
Attitudes
Consider technologies to be very
important or essential to the running of
the business.
Enthusiastic Explorers (15%)
Barriers
Cost, lack of time and lack of skills are the biggest barriers to future
use of digital technologies.
Opportunities
•
Build on existing desire to digitise: Need to build on these businesses’
established desire to develop their use of digital technology. Further
promote the use of digital technologies to aid product development and to
increase their international presence.
•
There is still scope for further exploitation of digital technologies for
Enthusiastic Explorers to become more efficient, increase their turnover and
improve their competitiveness. Look towards the Digital Champions to learn
from them.
•
Promote the case for wider adoption of Next Generation Access,
presenting the opportunities that follow from having a fast and reliable
internet connection in place.
Digital Champions (3%)
Key characteristics
Sector
Size
Transport/Communications
Manufacturing
Micro (65%)
Other services
Small
(26%)
Medium
(7%)
Large (2%)
are overrepresented in this maturity segment compared
with their overall presence in the business population.
Digital Champions tend to …
… have been established for between 3-10 years (48%).
… expect to grow moderately (50%) or expect to grow substantially (22%) in the next
12 months.
… have an annual turnover of between £250,000 and £1 million (31%).
… be exporters (57%).
Digital Champions (3%)
Digital characteristics
Current
Future
•
Among the most likely to have adopted NGA
(29%).
•
Tend to have plans in place to
develop staff’s digital skills.
•
Tend to have a digital strategy.
•
•
Tend to use all digital technologies and use
them extensively.
Have a desire to develop the use of
the digital technologies already
adopted.
•
Most are using digital technologies to aid
product development and have also increased
the number of international markets they have
been able to export to.
•
Expect to start selling or
significantly increase the proportion
of sales made online in the next 2-3
years.
Attitudes
Digital technologies are essential to the
running of the business.
Digital Champions (3%)
How do Digital Champions differ from the rest?
Exploitation of digital technologies
• Digital Champions do not only make use of most of the key digital technologies,
but also make more extensive use of the technologies. For example, they tend
to:
• Allow customers to place orders and make payments over the internet via
their website;
• Communicate with customers and promote the business through a range of
social media channels;
• Use social media to help recruit;
• Use data analytics to provide better targeted marketing.
Benefits
• Digital Champions are more likely to experience benefits from digital
technologies in terms of:
• Improved sales, turnover and/or profits
• Increased responsiveness to customers
• Increase efficiency.
Digital Champions (3%)
Barriers
Cost and lack of time pose the biggest barriers for these businesses to further
develop their use of digital in the next 12 months.
Opportunities
•
Build on existing desire to digitise: Need to build on the established
desire to develop their use of digital technology to maintain their
competitiveness in the increasingly digitised world.
•
Promote the case for wider adoption of Next Generation Access,
presenting the opportunities that follow from having a fast and reliable
internet connection in place.
•
Lessons to learn: Embrace the lessons available to learn from these
companies to encourage greater and more efficient use of digital among
businesses in the other maturity segments.
Digital Pioneers (0.2%)
• Businesses with a Digital Economy Maturity Index score of
between 81-100 are classified as Digital Pioneers.
• 0.2 per cent of businesses receive a DEMI score of between
81-100 at the moment.
• This suggests significant untapped potential in many Scottish
businesses to further develop their use of digital technologies to
fully reap the benefits that the digital age has to offer.
• The following pages provide a description of what Digital Pioneers
might look like.
Digital Pioneers – digital characteristics
Adoption and Usage
• Digital Pioneers have adopted Next Generation Access and are
making extensive use of a range of key digital technologies.
• They communicate with their customers and other businesses using
a number of digital channels, and they are likely to offer customers
the choice to order products and make payments online.
Strategy
• They have a strategy for digital, with a clear idea of their current
level of digitisation and how to improve in this area.
Digital Pioneers – digital characteristics
Benefits
• Digital Pioneers successfully exploit digital technologies and reap
benefits from this in terms of improving their competitiveness,
increasing their efficiency and increased growth of their business.
• They are improving working conditions for their staff through offering
flexible working using mobile technologies and cloud computing. They
also use technologies to increase their responsiveness to customers.
• They are also using digital technologies to innovate and develop new
products and services and effectively use technology to reach out to
international markets.
Skills
• Digital Pioneers recognise the need to continuously develop the
digital skills of their staff and have plans in place to do so.
Digital Economy Maturity
Index - Summary
Summary
• The vast majority of Scottish businesses are to be found in the
second lowest or middle maturity segments.
• Only around 3% of businesses are classified as Digital Champions or
Digital Pioneers.
• There is further potential for businesses to increase their digitisation to:
- Improve their competitiveness
- Increase innovation
- Improve efficiency
- Grow.
Summary of characteristics of the maturity segments*
Enthusiastic
Digital Champions Explorers
Tentative Techies
Basic Browsers
Disconnected
Doubters
Size
Large
Medium
Small
Micro
Size
Size
Size
Size
Size
Sector
Agriculture
Manufacturing
Construction
Wholesale/Retail
Hotels/Restaurants
Transport/Communications
Business Activities
Health/Social Work
Other services
Sector
Sector
Sector
Sector
Sector
Age
Between 3-5
Between 5-10 years
Older than 10 years
Age
Age
Age
Age
Age
Growth
expectations
Growth
expectations
Growth
expectations
Growth
expectations
Growth
expectations
Characteristic
Growth expectations
Grow substantially
Grow moderately
Stay about the same
Contract moderately
Contract significantly or close down
* Digital Pioneers have been excluded as the sample size is too small to draw any conclusions with regards to
their characteristics.
Summary
How the maturity segments differ
Businesses in the different maturity segments differ in terms of :
•
Take up of internet and the type of connection.
•
Number of digital technologies adopted.
•
Extent of the exploitation of the technologies used.
•
Attitudes to digital.
•
Extent of benefits experienced from using digital technologies.
•
Extent to which digital is used to aid product development and expand
international presence.
•
Plans to develop use of digital in the future.
Disclaimer
The results presented here are broad conclusions and
generalisations made based on the results from the Digital
Economy Maturity Index and the wider Digital Economy
Business Survey.
The results may not describe every business in the
respective maturity segments and should be seen as
indicative only.
Annex
Digital Economy Business Survey 2014
•
The Scottish Government, in partnership with Scottish Enterprise, Highlands
and Islands Enterprise and Skills Development Scotland, commissioned IFF
Research to carry out a Digital Economy Business Survey in the summer of
2014.
•
The aim of the survey was to establish a baseline on the current level of
digitisation by Scottish businesses and to allow digital progress to be measured
and tracked over time.
•
In total, 4,002 businesses (excluding sole traders) in Scotland took part in the
research via a telephone survey. 1,809 of these interviews were carried out with
businesses in the Scottish Enterprise (SE) area, while 2,193 interviews were
undertaken with businesses in the Highlands and Islands Enterprise (HIE) area.
•
A report on the High Level Results from the survey can be found here:
http://www.gov.scot/Topics/Economy/digital