Four-page special report on Ecommerce Scotland

New frontiers

Angus MacSween and the rapid advance of iomart

Blue sky thinking

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Business Insight

Wednesday December 4 2013

Wednesday December 4 2013 | the times

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Global IT ambition starts here

Reasons to bridge the great digital divide

In this issue of Business Insight we discover why global names in the IT sector have chosen to locate in Scotland. We also look at the Ecommerce Scotland programme, an initiative designed to help Scottish companies master the art of business online.

‘Cloud pioneer’ Angus MacSween relates how he has guided iomart to become Europe’s leading cloud hosting provider and Accenture’s Bill McDonald says that introducing digital technology is liberating rather than scary.

In The Times Forum, our experts discuss Open Standards and Open Source Software and consider how the digital technologies industries are faring as 2013 draws to a close — while Canadian software giant CGI explains why it selected Glasgow to create the UK’s only centre of excellence for Open Source Software.

Welcome

Inside ...Business ForumOur panel of experts considers the potential of Open Source Page 4

New frontiersA four-page special report on the ecommerce revolution in Scotland Page 5

Top-down approachAccenture’s Bil McDonald believes every company should be digital Page 9

Sky’s the limitWhy Scotland ticks the boxes for companies wanting to host in the cloud Page 11

Demand driven by a reputation for innovation

Polly Purvis, Executive Director of ScotlandIS, agrees this is an important time for the sector, and says an increas-ing presence of Scottish businesses in the international markets is a clear sign many in the industry are already grabbing those opportunities.

“While other sectors have strug-gled through the recession the digital technologies industry in Scotland has not only proved resilient, but has also continued to grow,” she says. “Demand has been driven by a recognition that investment in technology systems can not only increase sales but also cut costs, and even small businesses have been able to buy into web-based software systems to increase efficiency in areas such as accounting or marketing.

“Since 2009 we’ve seen year on year growth in excess of 10 per cent in Scot-land’s digital technologies industry, and our most recent annual survey of Scot-landIS members showed more than half of respondents are selling overseas and another 13 per cent actively looking to export. There is a clear mood and desire to increase exports, with markets includ-ing the US, Middle East and Australia particularly attractive.”

The digital technologies industry is a di-verse sector, that encompasses both small and large independent businesses along-side the global organisations, that are help-ing to drive the demand for skilled staff as they ramp up their presence throughout

the country. CGI, one of the world’s big-gest independent IT services firms, will be opening a centre of excellence in Glasgow early next year, and Capgemini, a global leader in consulting, technology and out-sourcing services, will be doing the same in the Highland capital, Inverness.

Meanwhile, Scotland’s Digital Health In-stitute has also been launched, a collabora-tive partnership between public and private organisations. Its aim is to bring together leading health and care operators with technology businesses to speed up research and development in order to produce new technologies that will not only increase the quality of people’s lives but also help Scotland become a significant exporter of world-leading products and services.

Smith added: “Scottish Enterprise is committed to helping businesses embrace the digital economy through the advice and support we provide to help compa-nies increase their investment in technol-ogy, through partnership working with

innovation centres such as the recently launched Digital Health Institute, via the Framework for Action developed with the Technology Advisory Group, and through our work with ScotlandIS in encouraging more companies to increase their use of ecommerce to improve exports.

D ynamic, innovative, and pioneering, Scotland’s digital technologies indus-try is flourishing, contributing an es-timated £4 billion in GVA to the Scot-tish economy, with export revenues

also on the up. Almost 80,000 people are working in this industry, according to ScotlandIS, the membership body for software, IT and creative technology busi-nesses, who also say the demand for digi-tal jobs is outstripping all other sectors.

It’s an encouraging story that is rooted in a synergy between business, the Scottish government, ScotlandIS and our universi-ties; partnerships that are underpinning an industry in the business of generating success. From health to banking, retail to gaming, digital technology is revolutionis-ing every aspect of our lives, and Scottish talent is at the heart of that sea change.

“Scotland has a vibrant technol-ogy sector where global companies are producing innovative, world-leading products,” said David Smith, director of technology, engineering and creative industries at Scottish Enterprise. “The increasing power of digital technologies and the convergence of more established technologies are transforming business models and we need to grasp the oppor-tunity to stay ahead of the competition.”

It will take more than pictures of cats to eliminate digital exclusion in de-prived communities. As more and more people, businesses and organi-sations go online it is all too easy to

focus on these pictures and to forget the plight of those who remain offline.

However, some households simply cannot afford to pay for the equipment and broadband connections needed to go online so the kids can do their home-work.

They cannot access the internet to find a bargain, plan a journey, or apply for a job, nor can they use social media

to maintain links with families, friends and other communities.‘Spreading the Benefits of Digital Participation’, the in-terim report of a major Royal Society of Edinburgh inquiry, is published today. It presents evidence we have gathered by talking with hundreds of individuals and organisations in Scotland.

Digital exclusion is closely linked to deprivation. Where there is deprivation — in employment and income, in educa-tion and health, in housing and geogra-phy — there is low broadband uptake and a lack of digital skills, further burdening the socially deprived.

Digital deprivation is more than just an obstacle to organising life and access-ing essential services. As Mr Frank La Rue, the UN Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, has put it, the internet brings opportunities for individuals to exercise “not only their right to freedom of opinion and expres-sion, but also a range of other human rights”.

It is not just individuals who miss out by being digital outsiders. Scotland has well over 100,000 small and micro busi-nesses; most of these are either not on-

Scotland’s vibrant technology sector is creating crucial partnerships that are allowing our digital industries to excel in the global marketplace, writes Ginny Clark

Scotland’s First Minister, Alex Salmond, in Inverness at the announcement of 500 jobs created by Capgemini, with its CEO Paul Soutter

Professor Michael Fourman FRSE FBCS

David Smith says while other sectors have struggled in recession, digital technologies have grown

COVER PICTURE: PETER DEVLIN

Business Insightthe times | Wednesday December 4 2013 3

“The newly formed Digital Scotland Business Excellence Partnership will pro-vide a framework to further develop our partnership activity. Through effective partnership working, we can focus our ef-forts on the areas of greatest opportunity in the digital economy that can have the most impact and drive forward performance.”

Capgemini, which has created up to 500 new jobs as part of the investment in Inverness that will position the city as one of the company’s centres of excellence for advanced IT, say Scotland’s atmosphere of collaboration and support has been key to its development in the Highlands.

“We have long found Scotland to be a dynamic and productive environment for business; in fact 2014 marks 20 years since Capgemini opened its first Scot-tish office,” says Christine McFadyen, Capgemini’s UK Delivery Director. “Since then our presence in the area has grown significantly, from a handful of colleagues in 1994 to now nearly 700 people in the Highlands, boosted by our recent creation of 500 skilled jobs.

“Such is our confidence in the region and its ability to compete in global mar-kets, we plan to create an extra 300 jobs

by 2015, making us the biggest private employer in the Highlands, something of which we are very proud. The decision to create a global centre of excellence in the Highlands and Islands is testament to the highly-skilled business services work-force we are already developing here. This new growth in high quality jobs will strengthen the opportunities for both our existing colleagues and the next genera-tion of jobseekers, a responsibility that we take very seriously.

“Over the past few months we have been recruiting people with suitable IT work experience and related under-graduate degrees to work at our Scottish base, as well as school-leavers interested in joining Capgemini’s new Highlands Apprenticeship Programme. We also de-veloped strong links with the University of the Highlands and Islands in Inverness and consistently attract exceptionally high quality candidates.

“We’ve been delighted to receive inval-uable support from the Scottish govern-ment, Highlands and Islands Enterprise and Scottish Development International for our work creating jobs and appren-ticeships in the region, which all work

hard to promote business in the area.”That reputation for a strong talent pool,

the links that have been forged with Scot-land’s universities, and the opportunities for skills development, were also signifi-cant for CGI, which will be hiring around 250 local professionals to staff their Open Digital Services Centre in Glasgow. The centre will develop software for com-mercial and public service clients across Europe, and CGI has made it clear one of the main reasons it had selected Glasgow as the location for its new centre was the availability of highly-skilled profession-als in the area.

Sarah McKinlay, Director of Recruit-ment at CGI, says the new jobs will in-clude roles from highly-skilled technical and managerial staff, to graduate and apprenticeship entry-level opportunities. “Providing employment opportunities for young people is one of the Scottish gov-ernment’s key objectives, and at CGI, we are keen to support them,” she said. “Our decision to base the CGI Open Digital Services Centre in Glasgow will enable us to benefit from the talent in Scotland.

“Scottish universities have a reputa-tion for providing first-class education to thousands of students while investing in world-leading research across a wide range of disciplines. Scotland’s world class education system and strong re-search base coupled with a proactive ap-proach towards collaboration, provide the optimum conditions for the development of new ideas and products.

“Scotland has 15 universities with 70,000 graduates annually, 15,000 of these are IT literate, and all four of Glasgow’s universities develop software graduates. As there are no tuition fees for residents in Scotland, more than 52 per cent of school leavers will go onto further edu-cation and many will choose to live and work in Scotland. This provides a signifi-cant talent pool of young people who may wish to work in the IT sector in Scotland.

“CGI is committed to investing in new and emerging talent and we provide a range of entry points into our UK business. In addition to graduate entry we also offer opportunities for Industrial Placements, Higher Apprenticeships and the CGI Sponsored Degree Programme for under-graduates and school or college leavers.”

To some degree, the industry is a vic-tim of its success, in that there is now an urgent need to increase the talent pool.

Purvis added: “We’re now working with the Scottish government to address the issue of skills shortage the sector cur-rently faces. While Scotland is recognised for quality and innovation in the digital technologies sector, it’s estimated there is a workforce shortfall of around 9000 people per annum, and the fast-changing recruitment needs of this industry pre-sent more opportunities in themselves.”

line or not yet making effective use of digital tools.

Government initiatives have been fo-cussed primarily on much-needed digital infrastructure. However, building net-works is just a first step to digital inclu-sion. Affordability, disability, and lack of motivation all obstruct digital participa-tion.

The second step in eliminating digital exclusion is to ensure that the internet is affordable and accessible for all. Housing associations can help by providing afford-able connections. Government should help by extending public access to public assets.

For example, if a child from a digitally deprived household could take a parent to use the school’s IT networks, after school, while she does her homework, then there

would be one less ‘disconnected’ family.The third step, digital inclusion — so-

cial inclusion in a digital society — is the hardest to achieve. A digital society depends on a multitude of social, eco-nomic, political and cultural interactions.

Government must ensure that every individual has the knowledge and skills it takes to participate in such interactions, and to navigate the internet confidently and safely. Digital inclusion requires this digital literacy.

A digital society brings new opportu-nities — but also new threats and risks. Government must ensure that everyone has the access, motivation and skills they need to participate in our digital society. It must also assume wider responsibilities to respect and protect our freedoms and privacy online.

We challenge the Scottish government to embrace these new responsibilities and ensure that everyone, everywhere in Scotland, can reap the benefits of digital inclusion.

We welcome suggestions and com-ments on our interim conclusions and recommendations, and on the wider re-sponsibilities of government to respect and protect the foundations of our digital society. These contributions will inform our final report, to be published in April 2014. All comments should be submitted by February 7 or earlier.For further details and to download the in-terim report visit www.digiscot.netProfessor Michael Fourman FRSE FBCS, is Chair of the Royal Society of Edinburgh inquiry ‘Spreading the Benefits of Digital Participation’.

Affordability, disability and lack of motivation all obstruct digital participation

Through effective partnership working we can focus our efforts on the areas of greatest opportunity

PETER JOLLY

www.brodies.com

@BrodiesLLP

Wednesday December 4 2013 | the times

Business Insight4

Business Forum

Recognition of Open Source software as a preferred option to de-liver fl exible solutions for sectors as varied as oil and gas, fi nancial services, energy and utilities and the public sector is on the rise; not least as a result of

the Scottish government’s commitment to use Open Source software. The private sector might have been leading the fi eld, but more and more public sector organisa-tions are now realising that the time is ripe to start getting things out into the open.

How are the digital technologies indus-tries faring as we head into 2014? What are the trends?Rab Campbell suggested that customers are moving away from the larger mono-lithic ITO (Information Technology Out-sourcing) model as they want to split up their provision and to either retain, or take back more, control. He sees Open Stand-ards as an important part of that trend.

“I don’t think the ITO model is neces-sarily wrong, but there’s a strong percep-tion that it hasn’t worked in Scotland and we need to fi nd new ways of achieving higher levels of business agility” he said.

Gill Grassie agreed. “There appears to be an incentive to move over to Open Source software and Open Standards be-cause there is a perception that the old system of proprietary software way of do-ing things tended to have lots of problems associated with it,” she said.

Ian Ritchie noted that the trend over the last 20 years or so is that organisa-tions don’t do a big monolithic system any more and products and technology tend to get split up and assigned, which makes it important that they can be plugged into other things. “That either means that you adopt a standard, like Mi-crosoft, or you go open source — and it’s much safer in terms of not being trapped in somebody else’s technology,” he said.

Sounding a more sceptical tone, Greg Soper, whose company focuses entirely on open solutions, noted that whenever he does procurement exercises, he still encounters the same old mindsets that go down the proprietary vendor routes, suggesting that there’s a huge education needed to convert some good thinking within local government about Open Source into the procurement channels.

What challenges is the industry facing at present?Angus McKechnie suggested that there have been a lot of changes in the way that public sector services are delivered

so Open Source has become more valu-able, but the goal of every commercial operator is to make technology more proprietary, even in an open environ-ment,” he said. “All the commercial op-erators are trying to lock things up into their proprietary solution and the Open Source market is trying to combat that. It’s a commercial battle.”

Campbell pointed out that the fact that the nature of Open Source is labour-related rather than license-related was signifi cant from a public sector perspective because it affords the opportunity to stimulate the economy and create high value jobs.

Soper agreed, noting that, for every £1 spent on proprietary software, 90p goes back to the country of origin in the form of licence fees, whereas, with Open Source, 90p or more of every £1 stays in the country of origin, creating high value jobs and increasing the skill base.

“Open Source is not just a development philosophy or a cost reduction strategy; it’s an economic strategy as well – a job creator,” he said.

Do Open Standards create more nimble organisations because they are free of cumbersome licensing agreements that cost time and money to administer?Grassie agreed that the use of Open Standards and Open Source software does create an environment where or-ganisations can be more nimble, but not because they are free of cumbersome li-censing arrangements.

“The reasons that Open Source makes companies more nimble is not necessar-ily because it gets rid of all the headaches of licensing – it doesn’t – but because it means that the software is inter-operable; organisations are not locked into any one vendor at the mercy of their price in-creases,” she said.

The key for Ritchie Sommerville is not the technology, but the culture in the or-ganisation. “Open Standards is a way of allowing us to examine and explore the plethora of business solutions we cur-rently have; we must then start to make those function in a more direct way so that the value is clear,” he said.

“That’s as much a cultural perspective as it is anything to do with the technol-ogy or the standards or the software or the licensing.”

McKechnie suggested that it is all about the agility of change.

“The world is an increasingly faster place; business gets quicker; we want more for less, right now,” he said.

“There’s a massive change programme going on and Open Standards plays into that because you can’t do all this at once; it’s like eating the proverbial elephant – you’ve got to do this bit and then this bit and then this bit – and if you don’t have Open Standards to glue all that together then you’re going to struggle.”

Are Open Standards underpinning a fundamental change in IT, away from big IT projects towards IT that is agile and responsive to user needs?

Sommerville said there will always be large projects that need to be delivered, but the nature of how they are delivered changes. “There is a lot more agility emerging at the engagement layer, where the user touches the service: that will be the layer that will innovate fi rst and move to become more agile,” he said.

“Anyone with a ha’penny worth of pro-ject management nous will say if you try to move a number of major systems at the same time it’s going to be problematic, so it’s about understanding risk, which is not really to do with Open Standards, but how people approach innovation or change.”

What does the future hold?Soper suggested that there is a real strate-gic drive towards openness and suggested that, ultimately, education was a key to realising more agile methods of working.

Mackenzie concurred, observing a move towards a more transparent society with innovation through collaboration, within which important areas are the sup-port of skills enhancement and legality.

Picking up on this point, Grassie noted that data protection is a growth area for the legal sector but that the trend to-wards transparency and collaboration should lead to less disputes.

McKechnie suggested the disaggrega-tion of contracts can foster competitive tension between suppliers and lead to a more agile delivery, adding that data in-tegration and the advent of big data is starting to expose the value of data. We should be mindful of some of the other behaviours that this disaggregation can foster.

Campbell, agreed, emphasising the value of open data and noting a trend towards a citizen-centric front-end that supplemented legacy systems He sug-gested that opening up data would pro-vide suppliers with an opportunity to show customers what they could actually do for them, rather than just telling them what they would do.

Sommerville observed that the world had turned on its head over the last six years and suggested that there had been a shift in focus from systems to data. “It’s about the manipulation of data – we’ve moved from buying a box to buying in-sight,” he said.

Observing that one of the main chang-es over recent years has been the develop-ment of the app store, which he described as transformational, Ritchie emphasised that nobody knows everything, a point with which the panel concurred.

The Times Scotland Business Forum discussed Open Standards, Open Source Software and Open Data. Graham Lironi reports on the verdict

Around the tableThe Business Forum was chaired by Polly Purvis, Executive Director, ScotlandIS, who was joined by: n Angus McKechnie, Technology Practice Leader, CGI n Ian Ritchie CBE, Chairman, Iomart n Ritchie Sommerville, Planning, Strategy and Relationship Manager, ICT Solutions, The City of Edinburgh Council n Jackie Mackenzie, Head of Innovation Programmes Scotland, NESTA n Greg Soper , Managing Director, Salesagility (an open source consultancy focused on customer relationship management solutions) n Gill Grassie, Head of IP litigation, Brodies LLP n Rab Campbell, Public Sector Manager, CGI and Chairman of ScotlandIS

in Scotland, all of which drives a push to technologies that allow those changes to happen more quickly and easily.

“I see an acceleration of this change, pushing different technologies because, we have a real problem with money at the moment,” he said.

“The push is to get the cost down and to deliver business change, so we need to be more agile and cost effective in how we do it; which is where Open Standards and Open Source come into play.”

Jackie Mackenzie said that she works with many small developers who struggle to secure any projects from local authori-ties and to compete against bigger compa-nies. “Many of those smart, talented peo-ple working for start-ups and SMEs in the Open Data, Open Source basis are strug-gling to be taken credibly by public agen-cies,” she said. “That might well change through time, but it needs some local au-thorities and public agencies to take up the mantle and be the champion — and Edinburgh has started on that journey.”

Is there a change in attitude about how the technology is built and how Open Standards are applied and the use of Open Source?Ritchie noted that, in a competitive mar-ketplace, companies fi ght with whatever they’ve got.

“You pick the best technology for the purpose; increasingly that has been open,

Now’s time for an open mind

Open Source is not just a cost reduction strategy –it’s a job creator

(Left to right) Ian Ritchie CBE, Angus McKechnie, Gill Grassie, Rab Campbell, Ritchie Sommerville, Polly Purvis and Greg Soper

JEREMY SUTTON HIBBERT FOR THE TIMES

in association with

Business Insightthe times | Wednesday December 4 2013 5

Four page special report: The Ecommerce Scotland programme

ECOMMERCE, sell-ing goods and services over the internet, is important to Scotland for three key reasons: exports, geography, and the profi le of Scottish companies.

Recognising this, ScotlandIS, the trade

body for the digital technologies industry, is partnering with development agency Scottish Enterprise and Scotland’s Smart Exporter export development pro-gramme, to deliver Ecommerce Scotland, a series of events inspiring companies to start selling online or to do it better than they already are.

Ecommerce Scotland industry brief-ings and masterclasses involving experts and online companies are largely free to participants while the Ecommerce Scot-land Awards and Ecommerce Scotland Forum complete the picture.

This investment in time and money chimes well with Scotland’s export agen-da: companies offering goods and/or ser-vices online quickly generate orders from outside Scotland.

“We all want to see everyone getting involved in exporting as we get the econ-omy onto a more sustainable basis’,” says Polly Purvis, executive director of Scot-landIS. “Scotland is far from many main markets, but ecommerce is a great level-ler that helps to remove this barrier.”

Also, while Scotland’s stock of compa-nies is dominated by small and medium-sized enterprises (SMEs), ecommerce is open to everybody across the corporate scale.

“It fi ts well with tourism, food and drink SMEs, and the retail industry which is being transformed by the web. We want to make sure we are not behind the curve. There’s a whole generation coming through that are just so used to shopping online.”

While the United Kingdom has a strong reputation for ecommerce, much of the action is centred on London and southeast England where head-offi ces tend to be, particularly in retail and fash-ion.

“But Scotland is doing fi ne compared with locations such as north-east Eng-land,” Purvis says. “And that is despite connectivity challenges which have meant we have not been as quick to get companies using full ecommerce as we might otherwise have been. This is start-ing to resolve as next generation broad-band rolls out. Companies based up the glen or on an island will no longer face those challenges in taking their business-es online.”

For example, Highlands and Islands expects 80 per cent broadband coverage across the region by 2015. “It is only two years away but gives companies a good opportunity to start planning for ecom-merce,” says Purvis.

“Bear in mind too that you do not need to have tip-top, 24/7 web access for all aspects of ecommerce, and you can start building foundations now. But we must

all keep pressing for full broadband cov-erage as there are many places outside the Highlands and Islands that have con-nectivity issues too.”

The good news is that others have already been down the road and have insights to share. “We have plenty of case studies in Scotland of businesses that have used ecommerce to transform themselves from being small and local to become substantial and international. It is an accelerator of business,” Purvis says.

Apart from the positive aspects of ecommerce, it is also about mitigating the risk of losing market share because of not being on the web or not being up-to-date online, says Purvis.

“This is a fast-moving market place. Look at the fi gures on growth of ecom-merce over mobiles. The younger genera-tion is increasingly comfortable buying that way, and social media such as Face-book and Pinterest also play an expand-ing role.”

Many SMEs are doing many things well but in isolation do not necessarily know where to go to keep staff up to date when suppliers have moved on to their next project and cannot necessarily pro-vide extensive support anyhow.

“So one of things we’re trying to do is to

develop a self-help community of people who are practitioners and experts in ecom-merce,” explains Purvis. “The masterclasses, for example, are intended for people who are already trading online, but at different stages, and who want to become more so-phisticated at it and keep up to date.”

Industry experts feed into this emerg-ing community. “Some of the experts are quite specialised too, say in Google Ana-lytics or Search Engine Optimisation, and appreciate being able to keep abreast of what is going on in the broader ecom-merce world,” Purvis adds.

Polly Purvis tells Frank Simpson that ecommerce can transform small Scottish companies into global players

Three crucial reasons to promote ecommerce

We are trying to develop a self-help community of people who are practitioners and experts in ecommerce

Polly Purvis of ScotlandIS describes ecommerce as “an acclerator of business”

Career pathScotlandIS represents more than 260 digital technologies businesses, from innovative start-ups to global brands such as Microsoft and Oracle.

Executive director Polly Purvis has led the trade body since 2003 when she became executive director following a merger that included her then employer, the Scottish Software Federation which she had joined after a period in management consultancy with special-ist business growth consultants Matrix Management.

Purvis’ career started in banking, working in the City of London with Royal Bank of Scotland Group. She returned to Scotland to join the Scottish Develop-ment Agency’s (now Scottish Enterprise) Small Business Division where she

initially arranged early stage venture capital funding. She then moved on to acting Director of Scottish Enterprise Edinburgh & Lothian’s Company Growth Division with special responsibility for the development of small business policy before moving to Matrix Management.

She represents ScotlandIS on the eskills UK Scotland board; the Aspekt board, the commercialisation arm of the Scottish Informatics and Comput-ing Science Alliance; the Scottish government’s Public Sector ICT Industry Board; the Industrial Advisory Board of the University of Dundee’s School of Computing; and is a director of dotScot Registry, the not-for-profit venture plan-ning to establish and operate a new .scot Top Level Domain.

Wednesday December 4 2013 | the times

Business Insight6

encourage SMEs to connect with this emerging growth story by developing ecommerce sales to the rest of the UK and internationally. Some 35-36 per cent of Scottish companies were already en-gaged in ecommerce related activity by 2012, according to a report last year for development agency Scottish Enterprise by Fife based consultants SQW, who fo-cused on firms selling goods and services business-to-business (B2B) or business-to-consumer (B2C).

Similarly, SQW estimated that to-tal direct employment associated with Scotland’s ecommerce sales in 2010 was around 196,000, of which 65,000 was at-tributable to ecommerce over websites, and the remaining 131,000 to other ICTs. Ecommerce was further calculated to support 146,000 jobs indirectly.

Ecommerce at its best is a well-honed strategy and careful implementation rather than a blunt instrument. For one thing, not all ecommerce markets are the same. Beyond the usual need-to-know data and trends concerning demograph-ics, economics and consumers, practical but critical issues such as payment be-haviour, courier infrastructure, and dis-posable income must be factored in, ac-cording to Forrester, the US-based global research and advisory firm.

Taking this into account, Forrester’s September 2013 Readiness Index of 55

global markets found the US most ready for ecommerce penetration, followed by China, Japan, South Korea, and the UK.

Forrester also noted that Central Eu-ropean countries are strong contenders for ecommerce expansion. Poland has 35 per cent online buyer penetration com-pared to just 14 per cent in Brazil and Polish consumers show growing appetite for online activity, with 31 per cent year-over-year growth in the number of Face-book users: 9 per cent of businesses have already taken their products online.

Among the big ecommerce players, the US topped the list for readiness with its retail market size, economic wealth, and an engaged online population. Japan was closest in readiness; it accounts for 7 per cent of global retail sales and has a tech-nophile population, high retail sales per head, and a love affair with credit and debit cards (around 6.2 cards per person compared with 6.0 in the US).

So what are Scottish SMEs new to ecommerce or wanting to get better at it to make of all of this?

“The UK is actually one of the most mature markets for the adoption of ecommerce, both from a supplier/retailer perspective and a buyer/consumer one too,” says Hayden Sutherland, director and lead consultant at Glasgow based Ideal Interface, Scotland’s only dedicated ecommerce consultancy. “Digital retail-

New agenda lets you take the business anywhere

From mighty Amazon to the best known pur-veyor of Scottish short-bread, ecommerce is tomorrow’s world today. The customers are cer-tainly out there. Internet use still keeps growing in the UK. Office for Na-tional Statistics (ONS)

data suggest that in the third quarter (Q3) of 2013, 43.8 million UK adults (86 per cent) had used the internet, a rise of 1 per cent on the same period of 2012. Only 7 million adults (14 per cent) had never used the internet, 616,000 fewer than in Q3 2012. Almost all (99 per cent) 16 to 24 year olds had used the net, and even a third (33 per cent) of adults aged over 75.

In 2011, 93 per cent of UK businesses had broadband internet and 81 per cent had a website; 5.8 per cent of businesses had broadband with a connection of 100 Mbps or more, with 34 per cent of the largest businesses, those with 1,000 or more employees, using this high speed broadband.

Ecommerce sales accounted for 19 per cent of UK companies’ total turnover in 2011, up from 18 per cent in 2010, accord-ing to the ONS’ ICT Activity of UK Busi-nesses survey published in December 2012. Average annual growth in ecom-merce sales was 13 per cent over 2008 to 2011, with total growth since 2008 of 44 per cent. In 2011, the estimated value of ecommerce sales was £483 billion, up £148 billion on 2008 when the UK slipped from boom towards bust.

Ecommerce as defined by the ONS also covers transactions between com-panies by means such as electronic data interchange. Sales through actual web-sites represented £127 billion (5 per cent) of companies’ total turnover in 2011, up from 4.6 per cent in 2010.

Figures for 2012 are due soon and are

expected to show continued growth in ecommerce in general, web sales, and the per centages of companies’ turnover ac-counted for by both .

Globally, the ecommerce prize is im-mense. International management con-sultants Boston Consulting Group (BCG) predicted last year that the internet econ-omy in its broadest sense will contribute US$ 4.2 trillion to the economies of the world’s richest 20 nations (G20) in 2016.

BCG estimated that the UK internet economy would enjoy annual growth of around 11 per cent per year over the peri-od 2012-2016 and remarked that such ac-tivity in the UK accounted for the highest per centage of national GDP among G20 nations in 2010.

In many countries, SMEs engaged actively with consumers on the internet enjoyed three-year sales growth rates up to 22 per cent higher than for companies with low or no internet presence, BCG found last year.

“Around the world, SMEs that embrace the internet are growing faster and add-ing more jobs than those that don’t. By encouraging businesses to turn to the internet, countries can improve their competitiveness and growth prospects,” Paul Zwillenberg, a BCG partner and co-author of the report said at the time.

The ecommerce Scotland programme run by ScotlandIS with Scottish En-terprise and Smart Exporter seeks to

The ecommerce prize for Scottish companies is immense. Rob Stokes examines the opportunities to be seized and the strategies for success

Tino Nombro of Ambergreen says that while customers remain the same, they increasingly want to research and buy products online

Dunfermline-based Canvas Holidays believes it is possible to operate in global markets even with a complex product

Ecommerce

Business Insightthe times | Wednesday December 4 2013 7

ing, technologies and communications are not going to go away. We need to em-brace this chance, utilise the online skills and experience we have, share best prac-tice, build up more talent and skills and then sell to the world.”

Beyond the vision thing lies the nitty gritty detail, such as how to get noticed as a needle in the global haystack of ecom-merce sites.

“Have you ever seen the film Field of Dreams with the tagline ‘build it and they will come’,” asks Tamlin Roberts, manag-ing director of Mercurytide, one of Ed-inburgh’s leading web development com-panies, whose clients include Walkers Shortbread, a venerable Scottish brand that has wholly embraced ecommerce with a stylish and user-friendly site.

“Well that is the biggest issue that most of these companies face. They can have great products and even have a great site, fantastic order supply, packaging and such like, but if no one knows about you then you are not going to get sales. Whether you are using Search Engine Optimisation, channel advertising, social media, email marketing or anything else, building relevant traffic is the area most of them need the most help with.”

Customers have not changed but their shopping habits have. “Most compa-nies are still dealing with the same type of customers as they were 10 years ago,

however many of those customers would rather engage, purchase, or research your product online,” says Tino Nombro, CEO of Edinburgh-based internet marketing company Ambergreen.

The good news is that “it is possible to operate in global markets even with a complex product,” says Margaret Rob-ertson, European marketing director for Dunfermline-based Canvas Holidays, an online seller of luxury camping holidays and campsites around Europe.

It is easy to get carried away with the bells and whistles that can be added to an ecommerce site, but never lose sight of business fundamentals and what the customer experiences, says Robertson.

“All companies regardless of size have to prioritise and assess what improve-ments will deliver most business benefit. Changes are iterative and you need to review constantly as technology changes, for example the growth and importance of mobile and tablets (tablet computers). But remember to see it from the consum-er’s perspective.”

Sage insights from these and other companies are the most valuable ele-ments of the Ecommerce Scotland pro-gramme which launched recently and is running a series of Masterclasses, Indus-try Briefings as well as the Ecommerce Scotland Awards and Ecommerce Scot-land Forum over the next few months.

Around the world, SMEs that embrace the internet are growing faster than those that don’t

Languages are a key to online marketing

Creating website content that customers want to read and share, or can use, is a key to ecommerce sites appearing high up the rankings when

people use search engines such as Google to find goods and services.

Few Anglophone SMEs translate sites into languages other than English, allow-ing polyglot competitors to climb the rankings by marketing to the world in its own tongues. Which is where Lingo24, one of the fastest growing translation companies, comes in. Founded in Aberdeen in 2001, it has continental hubs in Edinburgh, London, Manchester, Romania, Panama, the Philippines and New Zealand.

Lingo24 helps clients in some 50 countries to make money from multilin-gual material through foreign language internet marketing, website and product localisation, and revolutionary transla-tion software. It offers a range of transla-tion tools for companies with budgets ranging from little to large.

To supplement its professional transla-tion services, Lingo24 has developed a new range of translation engines (software). “They are like Google Trans-late, but good,” says founder and CEO Christian Arno. “They allow people to translate vast reams of content, particu-larly online retailers, to a lower standard than a professional translator but at good enough standard to generate sales.”

He adds: “We’re very keen to support online retailers who want access to that

engine. The question is: does the transla-tion achieve the business goal? If it is in a customer help area of the website, does it provide the information people need to fix a problem? If it is for marketing material, do they buy?”

As the price point per word is signifi-cantly lower than using a professional translator, it is easier for companies to generate a good return on investment, Arno says.

So Lingo24’s new software is about achieving different quality levels of translation for different purposes and at different price points to support a broader range of ecommerce approaches.

Tea seller brews up an ecommerce tonic

Eteaket Tea, the Edinburgh leaf tea experts, has just rejigged its shop window — online. It redesigned retail packaging for its leaf teas to put into gift pack-

ages selling online for Christmas.With 13 employees and turnover

around £500,000, it overcomes its size by emphasising ecommerce in a growth strategy to raise sales to £1 million within three years.

Eteaket selects teas worldwide, selling them in its Edinburgh tearoom, to trade customers in the UK and, increasingly, overseas, and to international consumers online. Launched in 2008 and re-designed in 2012, the eteaket.co.uk ecom-merce site drives around 8 per cent of turnover. “Ecommerce sales have risen 83 percent on last year,” says Erica Moore, who co-founded eteaket five years ago.

A wholesale channel on the site generates “a couple of enquiries daily, converting into quite a few new custom-ers monthly”, Moore adds. The company even exports tea to Japan.

“We want to double ecommerce sales within the next year,” Moore says. “It is achievable: little things can make a tremendous difference.” This includes updating the site regularly and showing new products. Christmas 2012, for example, saw eteaket launch a ‘Tea Club’ sending out regular samples to annual subscribers and offering 20 per cent discounts on internet orders.

“Social media are also becoming more important to us — Facebook, Twitter, Pinterest and blogs.”

The hard part was pinning down consistent advice. “But courses that Busi-ness Gateway ran gave me the overview I needed to work with web designers and developers. So we can control our own website, put up our own products and do some search engine optimisation as well social media.”

eteaket presented at the first Ecom-merce Scotland masterclass. “It was incredibly helpful. Scotland really needs something like this to push people a bit more,” Moore says.

Wednesday December 4 2013 | the times

Business Insight8

Everyone enjoys a bar-gain. When it could transform business prospects it becomes a no-brainer. Free masterclasses and in-dustry briefi ngs are at the heart of the Ecom-merce Scotland pro-gramme to galvanise

online selling in and from Scotland.It is offered by digital industries trade

body ScotlandIS, alongside develop-ment agency Scottish Enterprise and the Smart Exporter export development pro-gramme funded and delivered by Scot-tish Development International (SDI) in partnership with Highlands and Islands Enterprise (HIE) with funding from the European Social Fund (ESF).

Masterclasses are pitched at ecom-merce and IT managers and technicians and at ecommerce supply chain business-es. Masterclasses are: intermediate level for people with basic technical knowl-edge of ecommerce who want to develop a more sophisticated approach; and ad-vanced level for sophisticated practition-ers who wish to add more complexity.

The next masterclass, today in Perth, focuses on driving traffi c to a website. Speakers will include experts from Ed-inburgh-based Ambergreen, an internet marketing company whose client portfo-lio includes Hotel Chocolat, Mind Candy, PricewaterhouseCoopers, Titan Travel, and Saga Holidays.

Visibility of websites, mobile sites, or mobile/tablet applications is crucial in generating online sales, given the vast choice and intensely competitive nature of online trading, says Tino Nombro, Ambergreen CEO.

“Online visibility has been diffi cult for businesses because of the fast moving pace of online technology and constant change in consumer behaviour online,” he explains. “What worked a year ago or six months ago is not likely to work any-more and many business from start-up to multinational fi nd that hard to keep up-to-date. Many paid media channels for visibility are so sophisticated in target-ing that there are now large demands on companies to be highly profi cient in data collection and analysis as part of their visibility strategy.”

On January 22, 2014 a masterclass in Edinburgh on optimising user experience to improve conversion rate — making the site so good to look at and use that a great-er proportion of visitors will buy some-thing — will reveal insights from four companies: Edinburgh’s User Vision and Lynchpin Analytics, Livingston’s Schuh, and A Hume Country Clothing, Kelso.

A Hume Country Clothing has been running a conversion rate optimisation

programme for its website for 18 months. “It has shown good success and has seen us implement several changes to develop and enhance our desktop and mobile sites,” says James Abbott, digital market-ing and development manager.

“There is a strong correlation between usability and higher conversion rates,” says Chris Rourke, managing director of User Vision, experts in website user ex-perience and usability whose clients have included, among others, Emirates Airline, Visit Scotland, IKEA, Scottish Enterprise, and Mackays stores. “We have plenty of practical examples to show how to design the user journey on an ecommerce site to be better and more cost effective.”

Footwear retailer Schuh, one the largest Scotland-based multi-channel

retailers, has a long pedigree in trading through shops and websites in tandem.

“We have addressed various scaling problems (to do with increasing web traffi c and complexity) over the years and have lots of data from which to make decisions,” says Stuart McMil-lan, deputy head of ecommerce for the company. “I plan to share some great tips that will allow attendees to go back to their offi ces and look at some simple changes they can make to improve their business metrics. We don’t typically outsource much work, which gives us much greater insight into every area of e-business.”

On Ecommerce Scotland, he says: “These sorts of events are fantastic breeding grounds for innovation; it is of-ten hard to get a wide-angle view of the industry and identify where you could improve. Most ecommerce events hap-

pen in London. It is great that something is happening in Scotland. You may hear about developments happening in com-panies hundreds of times bigger than your own, but that is not to say that there are not lessons to be learned.”

Other masterclass themes lined up in 2014 include international aspects of ecommerce (February 26, Glasgow) and managing payment and fraud (March 26, Aberdeen).

Companies presenting at previous masterclasses — on growing and scaling ecommerce businesses and planning and choosing the right ecommerce platform — are enthusiastic about the Ecommerce Scotland programme.

“In my view it is all about awareness,” says Tamlin Roberts, managing director of Mercurytide, one of Edinburgh’s lead-ing web development companies, whose clients include Walkers Shortbread.

“By understanding all of the different components from search engine optimi-sation and analytics to distribution and logistics, the more these companies know about each of the various disciplines the more they will make better decisions and the faster and more robustly they will grow.

“They do not need to know how to do everything but they do need to know what to ask for and what effect it has.”

Free ecommerce industry briefi ngs based around less technical case studies

for the tourism and food and drink indus-tries have already taken place. Another food and drink briefi ng is scheduled for January 14 in Aberdeen when speakers will include Hayden Sutherland, direc-tor and lead consultant at Glasgow-based Ideal Interface, which is wholly dedicated to ecommerce and online marketing con-sultancy.

“We can learn from fantastic success stories that are out there already, build or evolve current off-line processes, prod-ucts and services to suit a growing online population and contribute to growth of the Scottish economy,” says Sutherland.

Other companies and organisations that have presented or are lined up to do so are: INDEZ, Glasgow; eteaket, Edin-burgh; Glasgow City Marketing Bureau; Rabbie’s Trail Burners, Edinburgh; Tu-ring Festival, Edinburgh; Scottish Foods Overseas; and C2Software, Dundee.

Whatever your level of knowledge or expertise, the experts can point to a better and more cost-effective ecommerce site

Master the art of ecommerceEcommerce

Still time for the big eventThe Ecommerce Scotland Awards, organised as part of the Ecommerce Scotland programme as the first ecommerce awards in Scotland. Bookings are open now for the February 13 evening that will show-case world-leading ecommerce expertise and experience. Awards will be made for the best use of ecommerce in the UK market, in international markets, and there will be recognition for the ecommerce innovation of the year, newcomer of the year, digital agency of the

year, and specialist supplier of the year. The deadline for entries for the awards is December 12 and criteria are posted on the scotlandis.com website. “This is about celebrating the best in ecommerce practice and showing companies that are not involved in ecommerce that others just like them have done it success-fully,” says Polly Purvis, executive director of organisers ScotlandIS.

The awards coincide with the first ever Ecommerce Scotland Forum, in Glasgow, which is lining up a cast

list of inspirational, world-renowned speakers, case studies and ‘how to’ sessions to share knowledge and experience, address issues, and generate ideas. A trade fair, technical demonstrations, ecommerce clinics and an investment and support area completes the package. “We hope and expect that this will become an annual event in the Scottish business calendar,” says Purvis. “Reinforcing the sense of an ecommerce com-munity in Scotland makes a huge amount of sense to us.”

Tamlin Roberts emphasises awareness of components ranging from analytics to distribution

Chris Rourke points to a correlation between usability and higher conversion rates

Business Insightthe times | Wednesday December 4 2013 9

Profi le

So what is a digital busi-ness? Accenture Scotland would argue, quite sim-ply, every business should be a digital business. The phrase is sometimes used as an umbrella term for the IT, software and crea-tive industries, but in a fast-changing business

environment, any organisation that rein-vents their approach through digital tech-nologies will have the framework not just for survival, but for success.

Accenture is a worldwide company at the forefront of digital transformation, with a client list that includes BMW, Unilever, and Warner Bros. In Scotland, where its client base is rooted in fi nancial services and energy, many businesses are at the eye of a consumer storm. Digital technologies can not only help navigate that storm, but also help organisations realise their potential and exploit an in-creasing range of opportunities.

Bill McDonald, managing director of

Accenture Scotland, stresses this is not just about front end, with many busi-nesses choosing to focus on transaction volume at the expense of marketing strategies. McDonald insists it’s vital that businesses move beyond transactions to interactions, to create large-scale digital relationships with their customers.

“Businesses need to regain control,” he said. “They can either be consumer-led, driven by the rapid way customers access services, or they can take control and fundamentally change their products or services. They have to ask: ‘Are we engag-ing with customers in the right way?’ One major difference is the pace and momen-tum, of digital change: it is happening in real time. Businesses need to understand that more, and it will become an integral part of what makes them competitive.”

This need for change doesn’t just apply to consumer businesses, as digital tech-nologies offer the tools to reinvent core processes for all kinds of set-ups, such as supply chain, logistics and distribution. Digital technology allows information and experience to be shared in real time on one platform, making all the available information compatible.

Earlier this year, the newly-unifi ed Police Scotland awarded Accenture a 10-year contract that involves creating their new Operational Policing System, i6. This will replace more than 120 IT and paper-based systems and bring key oper-

ational policing functions together under one crime-fi ghting system, standardising processes and freeing up police time.

Time, of course, is a driving factor for any digital business. The pace of change can be so rapid, with 12 weeks as opposed to 12 months now the period that can im-pact on a company.

Organisations such as telecoms, banks and utilities, have to cope with this chal-lenge on a daily basis, with customers able to change bank account or energy sup-plier while sitting at home. So becoming a digital business is not just about handing out iPads and employing analytics, social, mobile or cloud technology. An effi cient digital business will use all of these to dig-itise their operation or process, a synchro-nised approach that can take the data it provides to a new level.

Tim Cody, Accenture’s managing di-rector for the UK & Ireland Financial Services Management Consulting prac-tice, says the dialogue now is about the three ways businesses are digitising.

“The fi rst dimension is about putting new digital products or digital services into the marketplace to create value,” he says. “The second dimension is about marketing and how you digitise that, in-cluding social media campaigns. The fi -nal element is the digital processes that operate the business and enable the peo-ple, and partners, who run the business to collaborate in a totally new way. These

digital processes allow them to be more agile, more effi cient and to innovate more quickly. It’s a powerful way of enabling an organisation.

“A survey of our clients has shown that the organisations most successful at em-bracing and exploiting digital have the sponsorship of the chief executive, where he or she has a heavy involvement in em-bracing digital change from the top down. It’s not a scary process, it’s liberating. Where an organisation has made up their mind to take forward a digital programme it presents a genuine opportunity. One of the things we fi nd exciting when we work with companies is most of their employ-ees are already technology savvy, where in previous cycles of change, the employ-ees were last to know — now they’re the fi rst and are often the innovators.”

Accenture say it’s all about delivering innovative digital solutions to help busi-nesses create value, and also perform at the highest level. By having the ability to share information and experience in real time, and to bring that data together on one platform, clients have an opportunity to reimagine how their whole organisa-tion works.

“At Accenture we’ve been engaged in this process of digital transformation with businesses since around 2009, when we were having conversations about digitis-ing products or building a mobile applica-tion, but we’ve now progressed to much deeper conversations,” says McDonald.

At one end, he says, there are clients that are consumer led such as banks, while at the other end we have clients such as oil exploration companies.

“Yet we are working in both these areas, on systems and processes where the dig-itisation of data on production and supply can increase productivity. Real-time data sharing can have so many uses. In the oil and gas industry, where safety data can be instantly shared across a number of platforms, it represents a huge step for-ward in the industry.”

However, McDonald argues thatorganisations that are slow to react to this evolving business environment are gambling with their survival. They must act now to become digital businesses, he says. “It needs to be embraced — a digital system is a fundamental part of a busi-ness strategy these days.”

The pace of change also means the conventional model of growth, to be followed by a later period of consolida-tion can no longer be viable. Equally, the traditional prudent approach of spread-ing investments across the organisation, supporting growth in one area while per-haps cutting another, is becoming equally redundant as it can pull an organisation apart at a time when it needs to be more unifi ed than ever.

The same goes for substituting one form of technology hardware for anoth-er — becoming a digital business is not about an organisational face-lift, it de-mands a fundamental change to operat-ing and cost structure. Accenture offers a powerful example, after working with one company on the digitising of a utility bill, the information and functionality of a phone app led to customers who were surveyed showing a 50 per cent reduction in their inclination to ring the company, which would in turn lead to a 30 per cent drop in workload.

“Digital business allows a company to move at pace, with an ability to remain agile, and that can determine how suc-cessful they are,” said Cody. The result, adds McDonald, means organisations “can achieve growth while also reducing costs”.

Introducing digital technology from the top down in your company is not a scary process but a liberating one, Bill McDonald tells Ginny Clark

Fail to embrace evolving technology at your peril

The fi rst dimension is about putting new digital services in the marketplace to create value

Bill McDonald of Accenture believes that business needs to regain control and asks if it is engaging with customers in the right way

RICHARD SCOTT/MAVERICK

Wednesday December 4 2013 | the times

Business Insight10

Profile

Technology entrepre-neur Angus Mac-Sween was among the first to spot the potential of cloud computing, even be-fore it had a name. As CEO and co-founder of Glasgow head-quartered iomart

Group, he is driving relentless growth at a company recognised this year as Europe’s leading cloud hosting provider.

Iomart serves several hundred thou-sand customers daily through group companies Easyspace, iomart Hosting, iomartcloud, RapidSwitch, Backup Tech-nology, Melbourne Server Hosting, and Redstation.

It variously offers high quality web host-ing and domain name services to individ-uals, small and medium sized enterprises (SMEs) and larger corporates, delivering computing power ranging from basic to complex, mission-critical processes.

After 15 years at the helm of iomart, 13 of them listed on the Alternative Invest-ment Market, MacSween can say: “It’s been a long journey but we are getting where I wanted to be.”

Annual figures for the year to March 31 capped three years of strong growth with 2012-13 sales up 29 per cent at £43.1 million, pre-tax profit 56 per cent higher at £10.7 million, and EBITDA increasing 48 per cent to £16.5 million. Earnings per share were 21 per cent higher at 8.46p. Analysts are tipping strong growth in the current and succeeding financial years.

Although having sold £10 million worth of his own shares earlier in the year to rebalance his portfolio and lock in tax relief, MacSween retains 16 per cent of the company. “iomart’s prospects still drive me on,” he says.

What will the £263 million market cap company look like in 2018? “We are at the mercy of the market but have got the business model right and will absolutely be more valuable then,” says MacSween. “I think we will have at least doubled both revenue and profitability. Will the journey be a straight one? I don’t know. The real world’s not like that.”

There speaks the voice of experience. In the early noughties, MacSween had a ‘Eureka’ moment on how to deliver a product for filtering content on the World Wide Web.

“I saw the way to do this was remotely using the internet network, and invented one of the first product sets for the cloud,” he recalls. “We delivered it in 2004. It worked perfectly but we were too far ahead: people didn’t get it.”

They get it now. “One reason is that if they lose their mobile phone and get a new one, their music is still there,” Mac-Sween laughs.

As more businesses try the cloud,

Entrepreneur Angus MacSween describes iomart’s groundbreaking past and future strategy in the cloud to Rob Stokes

iomart aims to sell more virtual comput-ing, network capacity and data storage in a resilient, scalable and flexible way.

“No one else does that particularly well yet,” MacSween reckons. “iomart has demonstrated that we are well positioned to do that.”

Critically, owning its own infrastruc-ture gives it control over the services and quality that it can offer. This includes data centres in Glasgow, London, Maiden-head, Manchester, the English Midlands, Hampshire and North Wales. These con-tain some 20,000 physical servers.

iomart owns and manages 1,860 kilo-metre of fibre optics superhighway link-ing its UK data centres, one of the fast-est and most resilient fibre networks of any UK cloud computing company, and dedicated exclusively to its customers. It means fast connections for moving chunky data and improves security be-cause the network can be taken right up to a customer’s front door. The company’s points of presence (POPs) in Dubai, Sin-gapore and the US speed internet con-

nectivity to the Middle East, Southeast Asia and America.

Owning infrastructure is relatively un-common among cloud service providers, who typically lease. “We are now being copied, which is the best endorsement,” MacSween says. “It is the only way to of-fer a service level agreement that is wa-tertight, makes business sense, and can be measured and negotiated commercially.”

iomart offers 100 per cent service level agreements. “It’s about eliminating single points of failure. Building two or more of everything (e.g. a hard disk in a server) into the system makes it very resilient,” MacSween says. “100 per cent uptime is in this company’s DNA. If we do not deliver, we pay whatever penalties have been negotiated.”

Two customers illustrate how complex demands can be.

Edinburgh-based Skyscanner provides instant online price comparisons for mil-lions of flights internationally, as well as car hire and hotels. Its website, in 30 dif-ferent languages, receives more than 60 million visitors monthly.

Faced with huge and growing demand on its physical IT infrastructure, Skys-canner contracted iomart to provide a fully virtualised private cloud for high performance and high availability so cus-tomers can access the website from any-where anytime.

“It allowed us to scale up as fast as possible while still serving millions of customers in a professional, responsive and personal manner,” says Phil Dalbeck, infrastructure architect at Skyscanner. “The business can now expect to see ad-ditional server resources deployed within minutes rather than weeks.”

Dalbeck adds: “iomart’s data centre team has a no-nonsense, can-do attitude to support which takes away the pain of day-to-day hardware maintenance, al-lowing us to focus on the bigger picture”.

Scottish Borders firm Blackcircles.com has revolutionised tyre buying in the UK and has 5 per cent market share of the £1.2 billion market.

Founder and CEO Michael Welch says: “Our website is our shop front. It is imperative that technical support is first-rate and that’s where iomart comes in.”

He explains: “We previously relied on dedicated servers, controlled by our web developer and shared between a number of websites. We needed to move to an en-vironment which would be 100 per cent under our control and iomart’s costs, size and features fitted very well with our re-quirements. Support from iomart during and after the migration was always on hand. The freedom we have with these new servers allows us to implement many innovative changes to improve our site’s performance.”

Infrastructure ownership drives inno-vation in iomart’s R&D team, with a fo-cus on efficient control software, the key to service levels. Automation of control including related business processes such as billing is vital to avoid human error.

“I sometimes say we are becoming a control panel company,” says MacSween. “We would claim to have a lead on many competitors: we started writing software for this 10 years ago.”

Still, there is room for all in the cloud, MacSween reckons. “It is still in its infan-cy. There is a long way to go technically in delivery of services over the web. Peo-ple are still spending billions on equip-ment to stick under their desks and in computer rooms.”

First off the starting blocks

Iomart’s data centre team is described as having a ‘no-nonsense, can-do attitude’

Owning infrastructure is the only way to offer a service agreement that’s watertight, makes business sense and can be negotiated commercially

Fast forwardIomart’s growth story impresses many analysts who follow it. On November 22, the mean recommendation on iomart shares from analysts tracked by Thomson Reuters was 1.2 on a scale where 1.0 is a ‘strong buy’ recommendation and 5.0 a ‘strong sell’.

Among analysts who have updated forecasts to account for recent acquisitions, the average estimate of sales growth for the year to March 31, 2014, is 28% followed by 19% for 2014-15.

Organic growth is strong while sales and profits have ben-efitted from acquisitions which in 2012-2013 included Melbourne Server Hosting (bought for £6.7 million); Skymarket (for up to £1.4 million); and Internet Engi-neering (for up to £1.4 million).

Iomart’s acquisitiveness has continued in 2013-14: £23 million for Leeds based Backup Technology, iomart’s largest acquisition; and £6.6 million initially for Gosport, Hampshire based Redstation.

Angus MacSween says that iomart’s product was so advanced in 2004 that ‘people didn’t get it’

SNS GROUP/RON CASEY

Business Insightthe times | Wednesday December 4 2013 11

Digital industries

TRYING TO define ‘the cloud’, a much bandied buzzword in information technology, is akin to trying to grasp a bar of soap in a hot shower.

At its simplest it is about people access-ing computing power, software to do stuff, and files over the World Wide Web and/or private networks and data centres rather than using a personal or business computer to run programs and archive material.

Analysts agree there are limits to what businesses can or should do in the cloud. Some limits are to do with security, copy-right, data protection, cost management and reliability issues.

However, data storage in the cloud is gaining in popularity for uses such as

backup and disaster recovery. The cloud is also becoming more sophisticated as many leading providers focus on offer-ing value-added specialist services rather than commodity priced storage.

Quite apart from companies using the cloud, it is of importance to Scotland in a number of ways. As we report on the facing page, Glasgow-based cloud computing company iomart is a leading European provider of services.

Scotland ticks a number of boxes for cloud hosting and data storage companies pondering where to site data centres. Its ambient temperatures keep down cooling bills and it also benefits from resilient internet connectivity and reliable power supplies which are increasingly sourced from renewables.

Scotland’s internet connectivity has been boosted by the launch of IXScot-land, the new Internet Exchange (IXP) for Scotland that has been operational since October. Based at Pulsant’s data centre in Edinburgh, it means internet service providers (ISPs) and content providers with customers in Scotland no longer need to ‘trombone’ traffic down to London and back to Scotland.

This IXP provided by The London

Internet Exchange (LINX), the UK’s largest membership association for ISPs and other major network operators thus speeds up connectivity for Scottish net-works and internet users.

Companies that applied early on to connect through it include: brightsolid, Dundee; Fluency Communications, Edinburgh; M247, Manchester; Onyx Group, Stockton-on-Tees and Edinburgh; and Xtraordinary Networks, London and Edinburgh. Apart from these and Iomart and Pulsant, some other companies headquartered or operating in Scotland and whose services and products are

intimately bound up with the develop-ment of the cloud and associated infra-structure include: Cloudsoft Corporation, Edinburgh; Internet for Business (IFB), Aberdeen; RMD Power & Cooling, Alloa; and MevGen, Glasgow.

Aside from its infrastructure needs, the cloud is driving innovation such as start-up Cloudsoft’s multi-cloud applica-tion management platform (AMP). More simply, this is software being developed to allow a company to run and manage third-party applications (software that does stuff) across IT infrastructure pro-vided by more than one cloud service provider around the globe.

This would be a plus for international companies and spreads even further the risk that business critical processes, tools or data storage will be disrupted. This risk was underlined in September when Nirvanix, a leading US provider of cloud storage, gave customers including Fortune 500 companies two weeks’ notice that it was shutting down and that they should retrieve their data. For obvious reasons, Cloudsoft’s AMP approach also promises to create more competition to provide cloud services.

In a research note in November, US based analysts The 451 Group commented: “Market infrastructure providers such as exchanges and clearing houses may want to take note here. As they increase their revenue by selling datacentre space that is colocated within their marketplaces rather than from trading itself, the kind of high-value business services enabled by Cloudsoft could be useful additions to these developing portfolios.”

New frontier is no pie in the sky

The cloud is becoming more sophisticated as providers focus on offering value added services

Scotland manages to tick several boxes for cloud hosting companies looking to site data centres

KNOWLEDGE FOR GROWTH

Are you ready to take your business to the next level?

From opening up markets and investing in talent,

to streamlining operations and developing new products,

choose the information you need to shape your plans.

Find out more at scottish-enterprise.com/knowledge

Expand your knowledge

to accelerate growth

Wednesday December 4 2013 | the times

Business Insight12

COMMERCIAL REPORT: CGI

As the progress of digital development marches on, Glasgow is to find itself at the forefront of software development following the announcement last

month that IT giants CGI are to base their new Centre of Excellence in the city. The new base, the company’s third in Scotland after Edinburgh and Aberdeen, will be the UK’s only centre of excellence for Open Source Software (OSS) development. This new facility will deliver OSS services to CGI’s clients across the European public and commercial sectors.

CGI expects to recruit around 250 professionals within two to three years to support the projected business that will be delivered from the centre. The roles will range from highly-skilled technical and managerial staff, to graduate and appren-ticeship entry level opportunities.

As well as writing computer code developing client solutions they will become highly conversant with the global availability of OSS and be working col-laboratively with other individuals and organisations globally who subscribe to the OSS model. What’s more, they will be identifying customer requirements, identifying what OSS is the closest fit, modifying and integrating this code to fit the particular customer requirement, and then submitting this new code back into the OSS global ‘bucket’ for use by others. It’s a very sustainable model and will equip the staff to be full and active participants in the digital technology industry in the 21st century.

Chris George, CGI’s Vice President, Digital Government & Scotland, said: “The new Glasgow office is fundamental to our business growth plans in Scotland as well as the rest of the UK. We’re really excited about the potential of our new centre as it will play into Scotland’s digi-tal strategy and will support our overall digital strategy in the UK. It will become a centre of excellence not only for Scot-land but for the whole of the UK.

“Glasgow was one of a number of plac-es we looked at across the UK. We ended up going to Glasgow mainly because of the wealth of technological capability it provides compared to other locations.”

The recognition of Open Source Soft-ware as a preferred option to deliver fast and flexible solutions for CGI’s clients is increasing, not least due to both the Scot-tish and UK governments’ commitment to Open Standards Principles. The new Open Digital Services Centre will allow CGI to further consolidate its world-class capabil-ity and provide clients with the best mix of solutions for their evolving digital needs.

Open Source is computer software where the underlying source code is made available under a licence. This allows individuals and organisations who use the software to modify it, either to improve the software or adapt it to better meet their needs. This is in contrast to propri-etary software where the source code is

not made available and is strictly subject to their intellectual property rights.

Chris George added: “One of the key benefits of Open Source Software is that it can provide a lower total cost of ownership, encourage innovation and less lock-in to commercial software provid-ers. For Scotland this is going to generate up to 250 high quality professional jobs. That’s extremely important, particularly when you add the element that these jobs won’t just be servicing the Scottish public sector but will be part of a “centre of excellence” for the rest of the UK. We’ll be exporting skills from Scotland.”

Open source software can offer CGI’s clients with benefits including reduced dependence on specific software vendors, lower total cost of ownership and easier customisation through the wider use of open standards.

CGI has clients in Scotland from sectors as varied as oil and gas, financial services, energy and utilities and the pub-lic sector. At present CGI has around 250 members in Scotland based in offices in Aberdeen and Edinburgh, at client sites and working from home.

Scottish Development International has provided CGI with assistance, includ-ing a grant to support the development of the new centre and recruitment into these new roles. Anne MacColl, Chief Executive, Scottish Development Inter-

Glasgow’s key role in a new digital strategy

Canadian-based software giant CGI is basing its new centre of excellence in Glasgow with the creation of 250 jobs and a raft of global opportunities, finds Barry McDonald

national, said, “Together with colleagues across Scottish Enterprise, we’ve been working closely with CGI over the past year to understand their business and identify where Scotland can add most value to their global operations. That

CGI has chosen Scotland as the loca-tion for its new Centre of Excellence against global competition is testament to Scotland’s growing reputation as a world leader in software development and in delivering major international projects.”

First Minister Alex Salmond said of the new Glasgow base: “The move by CGI to create 250 skilled jobs is very positive and is yet another welcome boost for Scottish employment, reinforcing our position of out-performing the UK for securing inward investment. This is testament to both the skill of the Scottish workforce and the confidence interna-tional companies have in Scotland as a country to invest in.”

Tim Gregory, President of CGI UK with the First Minister and Lena Wilson, Chief Executive of Scottish Enterprise, announcing plans to recruit 250 staff at its Centre of Excellence

Local accountability, global deliveryWith 68,000 professionals operating in 400 offices in 40 countries, Canadian headquartered CGI fosters local accountability for client success while bringing global delivery capabilities to clients’ front doors. Founded in 1976, CGI applies a disciplined delivery approach that has achieved an industry-leading track record of on-time, on-budget projects. Its high-quality business consulting, systems integration and outsourcing services help clients leverage current investments while adopting new

technology and business strategies that achieve top and bottom line results.

Across the UK CGI has around 6,000 members who bring specific industry knowledge with a broad range of client experience in order to be a true local partner. CGI undertakes a wide range of activities for its clients focussed on information and business process services. It offers the financial strength and business rigour to support some of the UK’s biggest and best brands across the commercial and public sectors.

The move by CGI to create 250 skilled jobs is very positive and is testament to the skill of the workforce and the confidence of international companies