Warming up the white heat of technology

Whatever happened to the UK ICT industry? It's been a good few decades since Harold Wilson wandered around proclaiming the UK would be at the forefront of the emerging IT sector. Since then his promised “white heat of technology” has cooled almost to freezing point. Even the UK government's IT national champion ICL fell to the Japanese in the 1990s. 

 

Those of us with long enough memories can recall some notable UK software success stories. Synon, Infobank, Systematica, LBMS, there have been B2B success stories. But where are they now? The harsh reality is that the enterprise software champions of today are American – and that one big German firm.

 

It's not for want of skills or talent. Look at most of the phenomenally successful IT firms in the US and you won't have to dig too far to find some UK top talent in the upper echelons. So why can't we keep them here? Why aren't those people creating their own UK versions of Oracle and Google and Microsoft?

 

One reason is lack of understanding among the venture community in the UK and Europe. One of the most enlightening, yet rather frightening evenings of my life was when an enterprise software firm decided – for reasons that remain a complete mystery to me to this day – that the best way to get me 'on side' was to let me sit in on a meeting with some investors – Essex wide-boys and girls to a man and woman! 

 

The software firm in question proceeded to pitch a line to these hapless souls in their red braces and pencil skirts that bore little or no resemblance to reality. And they soaked it up. They all whipped out their filofax (that dates it, doesn't it!) and scribbled frantically as this vendor tried to position itself in the market and the words swept high over their heads. 

 

One chap finally put his hand up and asked: “So is it like what Microsoft does?”. In fact it was almost completely unlike like what Microsoft does, but the vendor in question, presumably figuring that this was as good as it was going to get, just nodded. 

 

The point is, with lack of understanding of the market and the technology like that, where's the investment in technological innovation going to come from?  In Silicon Valley, start-ups wander off down Sand Hill Road in Menlo Park and – depending on the economy of course – come away with funding and backing dispensed by veterans of the ICT industry who can spot a likely winner when they see one. Over here, innovative start-ups struggle to get a meeting, never mind a cheque!

 

But innovation is all the rage these days. We've seen the dangers of being hooked on the financial services sector for growth so interest in how to stimulate research and development is on the rise. One answer of course lies in tax breaks, which is the message of Sir James Dyson's Ingenious Britain report. Another lies in greater government backing and investment for firms engaged in research and development.

 

Both approaches have their plus points, but also their downsides. Once you start dishing out tax credits to hi-tech firms as Dyson recommends then every business in every sector is going to want them and that's unlikely to win much favour in Number 11.  Meanwhile the new age of austerity that will be set in motion by whoever is inside Number 10 on May 7th makes backing 'risky' R&D investment exceedingly unlikely. Public spending on such ventures will be looking for swift and guaranteed ROI whereas a truly productive innovation culture is one that is based upon being encouraged to fail as well as to succeed. 

 

And yet...what is the alternative? When the Tories talked of putting large tranches of the NHS IT programme up into the Cloud via the likes of Google, all hell broke loose. Partly this was down to security concerns about Cloud Computing, but partly it was about the idea of a US software firm storing and managing hugely personal UK citizen data. But until the UK backs it own Googles, what else is to be done? 

 

I am encouraged that all parties are talking up innovation and focusing at least their pre-election attention on R&D, but I'm afraid I remain hugely pessimistic that anything much will change. Ironically we're this week commemorating the ten year anniversary of the dot com bust, the end of the last period of frenetic 'gold rush' innovation. The emergence of Cloud Computing and online marketplaces such as those run by Salesforce.com and Google as well as the new industry in mobile apps for the iPhone and other devices creates the opportunity for a new generation of innovation. Will the UK be left behind or can we at least warm up Wilson's white heat for another go?