UK Business Digital Index by Lloyds Bank: there are still around 1.2 million SMEs in UK that lack basic digital skills

• The 2015 Lloyds Bank UK Business Digital Index tracks digital adoption among small to medium sized businesses (SMEs) and charities.

• Latest report shows overall improvement for SMEs but over a million (23%) still lack basic digital skills. This is even more significant in the charity sector where 58% lack basic digital skills.

• Challenges remain around the perceived benefits of being digital, with one-quarter of all organisations believing digital is irrelevant’ to them.

• SMEs with a high level of digital skills are more than a third more likely to report an increase in turnover in the past two years compared with those firms that are the least digitally able. For charities it is double.

• Significant rise in digital maturity for organisations in the North West and North East following proactive regional programmes to boost digital skills, by organisations such as charity Go ON UK.

LONDON, 27-3-2015 — /EuropaWire/ — More small to medium-sized UK businesses (SMEs) are seeing the benefits of being digitally enabled but there are still around 1.2 million that lack basic digital skills, missing out on potential revenue and customer interaction, according to the second annual UK Business Digital Index by Lloyds Bank.

The Index, in association with Accenture and digital skills charity Go ON UK, is the only report of its kind in the UK and tracks the level of digital adoption of SMEs and charities, for example running a website, using e-commerce, maintaining a social media presence or using online banking tools.

In the first year of comparison the Index shows that there has been slow but positive progress in digital adoption among all organisations in the past year with an overall rise in the UK Index score by two points to 102.

However, the report also highlights that some SMEs and charities still do not understand the benefits of digital technology and that a ‘digital blind-spot’ remains, potentially jeopardising their success. One-quarter (25%) of all organisations surveyed believe digital is ‘irrelevant’ to them.

Charities struggle to keep up as SMEs show some momentum

The number of charities with basic digital skills* has dropped from 45 to 42 per cent from a year ago – a decrease of around 6,000 charities, showing a continued lack of digital adoption.

In contrast, the number of SMEs with basic digital skills has improved since 2014, increasing from 75 per cent to 77 per cent – an increase of over 100,000 in a UK population of 5.2m SMEs**.

The overall limited progress in developing digital skills, reflects the fact that there is no increase in the amount of investment organisations are making to develop these skills, with three quarters (75 per cent) investing no money at all.

Those charities at the lowest end of the digital skills spectrum also reported an increase in doubts as to how websites (78 per cent) or social media (83 per cent) could help increase their funding.

Miguel-Ángel Rodríguez-Sola, Group Director for Digital, at Lloyds Banking Group said: “The UK Business Digital Index provides a crucial measure of how UK small businesses and charities are adopting digital technology and we are extremely proud to be able to offer this insight and establish a strong link between digital skills and organisational success. In just one year it is pleasing to see that over 100,000 more small businesses in the UK now have basic digital skills.

“But what is also clear is that real challenges remain – over a million small businesses and charities still lack basic digital skills and the perceived benefits of being digital remain. For example 25 per cent of all organisations surveyed believe digital is ‘irrelevant’ to them. We cannot emphasis enough the benefits that digital adoption can offer – such as saving time, increasing revenue or funding or reaching wider audiences. Digital is the key to unlock these benefits.

“Even if an organisation does not believe they need to be online, many of their customers already are. There needs to be further awareness to give charities and businesses the confidence to do more online.”

Significant link between organisational success and digital maturity

A new indicator for 2015 is the correlation between digital maturity and organisational success. The 2015 Index shows that the most digitally mature SMEs are more than a third more likely to report an increase in turnover in the past two years compared with those businesses that are the least digitally mature.

This is even more dramatic when looking solely at charities, where the most digitally mature charities are twice as likely to see an increase in funding, compared with those at the lower end of the maturity scale. Such measurement clearly demonstrates the monetary value for organisations to become more digitally advanced.

Regional Success

A positive finding is the significant increase in both the North East and North West’s digital maturity which increased by eight and nine points to 104 and 100 respectively. This suggests that where there has been concentrated activity to boost local digital capabilities, such as that undertaken by digital skills charity Go ON UK, there appears to have been a real impact at a local level.

The North East is now showing an above average digital maturity for the UK, a real improvement from last year’s position in the bottom half of the table. Progress in the North West has been equally impressive with a nine point increase; the highest of any region.

Overall, London remains the most digitally mature region with an index score of 110 but the 2015 Index shows that the regional divide has reduced.

Commenting on the report, Baroness Lane-Fox, Chair of Go ON UK said:“What is hugely encouraging from this report is that we have seen a significant impact in the regions that Go ON UK has been running digital skills programmes. But, whilst we should be encouraged by these successes, we need to be mindful of the challenges ahead.

“Perceptions and motivations remain key issues, with a quarter of organisations still believing that doing more online isn’t relevant to their business. And in an increasingly globalised marketplace, still only 13 per cent of organisations are using their website for e-commerce. This is an ever increasing concern that needs our imminent attention.

“Another large issue uncovered by this year’s report is the intelligence that charities are being left behind in this shift, and we must do more to ensure that this doesn’t continue. The UK has a proud tradition of giving and charitable work, and surely supporting charitable organisations to achieve their digital potential must be part of this.”

Business Minister Matthew Hancock said: “Digital skills and online promotion are an essential part of starting and growing a modern business. This report shows that although there has been some improvement in small firms embracing the internet, more organisations should be taking advantage of all the benefits of being online.

“We want to make life as easy as possible for Britain’s small firms and I encourage all entrepreneurs to get behind the Government’s Do More Online drive.”

Gareth Wilson, a managing director in Accenture’s Financial Services operating group, United Kingdom and Ireland, said: “It’s encouraging to see a positive trend in the adoption of technology compared to 2014. At the same time, those small businesses and charities that are still not benefiting from the more sophisticated digital technologies, such as internet banking, online recruitment or advanced digital security, are losing out on the potential positive benefits they offer.

“This is a major concern. The evidence shows there is a clear correlation between the digital maturity of an organisation and its success, and, by making digital a part of the fabric of their operating DNA, these organisations could stretch their boundaries in startling new ways.”

ENDS

* Basic Digital Skills are the skills needed to enjoy a wide range of online benefits. Through working with leading experts, Go ON UK has defined these skills, and examples of the activities that they enable. These include the ability to complete tasks such as communicating, finding the right information, or carrying out a transaction safely online.

**UK SME population of 5.2m and UK charity population of 200,000 according to the Department for Business, Innovation and Skills, Charities Commission, Scottish Charity Regulator.

Notes to Editors
1. For more information please go to www.lloydsbank.com/businessdigitalindex or contact Ed Smith at the Lloyds Banking Group press office on 0207 661 4936 or ed.smith1@lloydsbanking.com More case studies are also available.
2. The Business Digital Index measures the use of, and attitudes towards, digital technology among businesses and charities across different sizes, sectors and regions. The report is based on 2,000 in-depth questionnaire-led surveys.
3. The index gives a ‘benchmark’ score where 100 is the average. Anything above 100 means that the organisation is more digitally able – in other words they engage in more digital activities. A score below 100 means that the organisation is less developed in their digital capability.

4. About Lloyds Banking Group
Lloyds Banking Group is a proud founder partner of Go ON UK and our association has directly led to the creation of this index which allows us to measure the level of digital maturity of organisations in the UK to demonstrate progress and areas for improvement.
We are building our business and our strategy with digital firmly at the centre. We have committed to invest £1 billion in our digital capability over the next three years which is focused on delivering customer focused propositions, enhancing digital capabilities and delivery, and transforming our customer experience, whether they are a retail, business or insurance customer. Being able to bank digitally is of ever increasing importance to our customers

• Lloyds Banking Group have over 10 million active internet users
• 5 million actively use mobile, making us the ‘biggest mobile bank’ in the UK.
• Our customers logged on to our secure banking site 1 billion times in the last 12 months

Business can increase turnover, charities can increase funding and organisations can become more efficient by embracing digital skills. Our guides at https://resources.lloydsbank.com/business-guides/digital-know-how/ are designed to highlight the benefits of online skills, digital platforms and marketing and communication channels, and how to apply them to your organisation

5. About GO ON UK
Go ON UK is an agile cross-sector digital skills charity established by Baroness Lane-Fox in 2012. Go ON UK is a partnership organisation and has the chief executives of nine major organisations around its boardroom table – Age UK, Argos, BBC, Big Lottery Fund, E.ON, EE, Lloyds Banking Group, Post Office and TalkTalk. Working with its partners, Go ON UK’s vision is to empower everyone in the UK to reach their digital potential. For more information please visit http://www.go-on.co.uk/

6. About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with approximately 319,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.