Opinion

Public sector digital infrastructure can stimulate and support SME growth

7 min read

24 February 2017

When it comes to SME growth, public sector digital infrastructure can be a great way to stimulate and support the process.

Currently, digital infrastructure and networks are key for SME growth, as the clear majority of leaders rely on access to them for business.

Whether a company needs constant connectivity or just touches on networks for some functions, access must be easy, robust and cost effective for businesses to compete and grow in the market place.

Infrastructure is the starting point of all digital networks. SME growth is not possible without reliable and functioning infrastructure in place delivering the connected services that businesses need to operate.

We’ve seen major investment in next generation fixed and wireless broadband services by the telecoms industry as well as the public sector over the last few years.

But there are still gaps in coverage. Businesses remain faced with constraints on availability, speed and choice. And there are still holes in the coverage, even in the largest cities in the UK.

For a large business, this presents less of a problem, as the current leased line market is aimed directly at them, offering dedicated bandwidths, service level agreements and high levels of uptime.

If digital infrastructure does not exist, suppliers will extend their network and charge the business excess construction costs. These services come at high ongoing costs (and potentially high connection cost if additional infrastructure build is required) that are prohibitive for most SMEs.

2016 ONS figures show that small businesses account for over 99 per cent of all private sector companies.

SMEs had a combined annual turnover of £1.8tn to the start of 2016; this is 47 per cent of all private sector turnover in the UK. In short SMEs are a huge and vital part of the UK economy.

100 per cent coverage is what all local authorities are aiming to achieve, but in an era of financial constraints this is going to be very difficult.

Digital infrastructure is a key driver of economic growth as well as an essential requirement to enable the delivery of the smart city of the future where services are delivered in an innovative and cost effective manner.

In our work with local authorities we emphasise that there are many different areas local authorities can focus on to support and stimulate SME growth.

Developing and extending their own digital infrastructure and making it available to the market is one option for local authorities to enhance offerings to SMEs, but this is not always available or affordable.

Engaging with suppliers about current digital infrastructure and service availability is vital and should be the first step.

Over the last few years, the suppliers’ marketplace has evolved with credible new players offering services based on different business models who may respond differently to new opportunities.

The telecommunications industry may not be aware of local issues and development plans. Effectively councils need to market their regions to the sector and make the case for inward investment.

Do suppliers have digital infrastructure to support business growth in key target locations? Is there spare capacity to support the local authorities’ growth areas?

Is there capacity and space for SME requirements? Are suppliers willing to extend commercially to fill the gaps?

Alongside fixed lines, wireless services are also essential to growing businesses. Authorities need to know where these are available, and more critically what are the areas that should be being served now and in the future.

Authorities are best placed to understand the future needs of an area. They know which neighbourhoods are growing and developing, where the planning applications are and where businesses, large and small, are looking to settle or build.

All councils want to attract businesses and need to know where there is the space and resources to allow them to be successful and to scale. These are the areas that will need connectivity and where partnerships should be prioritised to deliver good value for money and an efficient service.

Local authorities also need clarity around exactly what digital infrastructure they currently have in place and if it is right for their needs. Can it be leveraged to support the current market and future growth?

Councils are uniquely placed to be able to bring key stakeholders to the table, housing associations, SMEs and community groups for example. Through ongoing communication, they can find out exactly what these groups need, search out partnerships, negotiate wayleaves and so on.

In this way, the costs and benefits can be shared and any obstacles to growth can be highlighted and overcome.

Existing digital infrastructure owned by the local authority needs to be reviewed in detail alongside any plans for future development.

Assets such as telecommunications ducts, lamp posts, buildings and masts can all be used to support the availability of broadband, mobile and WiFi services.

Being smart about building projects and roadworks can save money and build in future-proofed contingencies at an affordable cost for both the local authority and suppliers, laying ducts and/or dark fibre networks alongside other services when the trenches are open, for example.

There are a lot of moving parts that need to come together before a local authority has an all-encompassing digital connectivity strategy in place.

But once it is there the benefits are legion. Stimulating and supporting SME growth is just one of the outcomes of a joined-up strategy. Digital inclusion, individual opportunities, private sector investment and encouraging economic growth in general are some of the other possible benefits.

Jean-Donan Olliero is principal consultant at Farrpoint and Robin Bosworth is director at Cube Ultra

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