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Digital Solutions to the Productivity Puzzle

The first Chief Digital Officer for Scotland should be appointed with responsibility to offer high-profile, expert leadership and challenge across the Scottish Government and the public and private sectors on how digital transformation can meet Scotland’s key economic challenge of increasing productivity, according to a new report.

SCDI (Scottish Council for Development & Industry), Scotland IS , The Royal Society of Edinburgh and BT Scotland have joined forces to produce Digital Solutions to the Productivity Puzzle’. With input from a cross-section of industry leaders, it says that the Scottish Government and all sectors need to focus on utilising the new, world-class digital infrastructure in Scotland for higher economic growth and public service improvements over the next 5 years.

It calls for similar senior appointments across the public and private sectors to provide stronger leadership on digitalisation and action to recruit, train and continually develop more specialist Computer Science teachers. The report also makes recommendations on business transformation, data, skills and infrastructure and joint work to drive up digital adoption, usage, benefits and skills across the Scottish business base.

Availability of Next Generation Broadband in Scotland has increased significantly since 2011, from 41% of premises to 85% in 2015. Further investment has been announced in digital infrastructure in the draft Scottish Budget 2016-17. Around 95% of premises across Scotland will be able to access fibre broadband by the end of March 2018.

The recommendations were developed following research commissioned from the economist John McLaren and discussions by senior representatives of the industry and the public and private sectors in Scotland at a Digital & Productivity Forum. The research identified that developments in Information and Communications Technology have been, and are likely to continue to be, a key driver of productivity, but that the impact in the UK has fallen behind the US and other European countries [1]. It also found that while there is a crucial role to be played by invention and innovation as sources of productivity growth, there is an even greater role played by assimilation and ‘catching up’ by companies who are not at the forefront of technological progress.

It has been estimated that if Scotland became a digital world leader GDP would increase £13bn by 2030, compared to £4bn with only incremental improvements [2]. However, at the recent National Economic Forum, Deputy First Minister John Swinney MSP commented on the slow speed of digitalisation in Scotland’s public sector, while a survey of Scottish businesses has found that over two-thirds are currently classed as basic browsers or tentative techies for digital adoption, usage, benefits and skills [3]. 

The report highlights evidence that countries in which digital is contributing most to productivity growth, such as the US, combine ICT investment with new management structures and high skill levels, and that organisational redesigns will be required for Scotland to catch-up with them and realise the full potential from digital investments .

PwC reported last month that more of the world’s leading companies are appointing dedicated digital leaders with responsibility to transform them into a fully digital enterprise, but most are not embracing the Chief Digital Officer role quickly enough.

The recommendations in the report to drive business transformation are:

  • Digital should become integral to overall strategy and delivery in government, business and public services to capture the productivity gains (such as deeper understanding and engagement with customers) which can only happen if business models change, services are redesigned and if there is an understanding of the technology and leadership at the most senior levels
  • The first Chief Digital Officer for Scotland should be appointed to progress Digital Scotland development from infrastructure to economic growth and public service improvements
  • Chief Digital Officers should be appointed in all public bodies
  • The Scottish Government’s Digital Transformation Service should be mandated to work with all public bodies and not just central government
  • Scotland should have clear targets (measured in 2017 and 2020) to develop businesses towards the upper end of the Digital Economy Maturity Index. The aiming point should be for all businesses in Scotland to be at ‘Enthusiastic Explorer’ level or above
  • The role of the Digital Scotland Business Excellence Partnership should be enhanced (or a new Digital Scotland group created) to identify and drive where smart utilisation of digital technology can increase productivity across all sectors and sizes of business (whether private or public sector)
  • Digital Champions should be appointed to all of Scottish Enterprise’s Industry Leadership Groups and more businesses should be encouraged to consider appointing Chief Digital Officers
  • A Scottish Productivity Commission, modelled on the international best practice such as those in Australia and New Zealand, should provide independent research, advice and performance monitoring to government and all sectors, under the direction of the Council of Economic Advisers 

Ross Martin, SCDI of Chief Executive, commented: “Poor productivity performance compared to our pre-financial crash record and to many other economies has bedevilled the Scottish economy in recent years, holding back growth and prosperity. Substantial leaps in productivity are difficult for a developed economy to make, so it will be key to seize this opportunity to work smarter, innovate and internationalise by transforming Scotland into a fully digital nation. 
“This report proposes how the Scottish Government and all sectors can bring the same focus to realising the potential economic growth and public service improvements of digitalisation in the next five years as there is on digital infrastructure. We recommend the appointment of the first Chief Digital Officer for Scotland to provide leadership, advice and challenge at the most senior levels of government on the frontier of technological progress and similar appointments across the public and private sectors. 
“There is a range of positive work in progress on digitalisation and some great examples of businesses  using digital technologies to better meet the needs of their customers. However, with economic headwinds strengthening, becoming a digital world-leader is essential if Scotland is to transition from a fragile to an agile economy.” 

Member of the SCDI’s Digital & Productivity Forum, Mark Dames, Head of Policy & Public Affairs for BT Scotland, commented: “We are now at a critical point in the development of Scotland as a digital nation. Access to high-speed internet has greatly increased in recent years thanks to commercial and publicly funded investment in fibre broadband. However, the success of exploiting digital technologies will be a decisive factor in whether Scotland achieves its economic growth objectives. 
“Digital leadership is required to drive innovation in the private and public sectors; leadership to shift the agenda beyond infrastructure to focus on economic growth and improved public sector delivery; and leadership to ensure that the next generation of school leavers have the digital skills necessary to contribute to the future success of the nation and prosper in the global economy.”

In addition to the recommendations on business transformation, the report makes recommendations on future-proofing infrastructure, big data and skills development.


  • Everyone should have access to a minimum broadband speed of 10Mbit/s and 4G mobile coverage, and, after the current programmes, ultrafast broadband at 500Mbit/s and 5G mobile should be rolled out by 2025. Should there be market demand, this ambition should be raised to 1Gbit/s for key economic locations


  • Government, following widespread consultation, should develop a long-term framework which allays public concerns about data sharing and encourages an open, joined-up and industry-friendly approach by public bodies
  • A lead partner should be appointed to make recommendations on access and utilisation across data streams to drive productivity and innovation
  • More open innovation forums should be established where anonymised data on challenges can be analysed by industry and solutions developed


  • The national shortage of Computer Science teachers should be addressed with action to recruit, train and continually develop specialist teachers. The attractiveness of teaching careers, resources and profile of computer science should be raised so that the curriculum can be fully delivered, more young people study the subject and the gap in performance with leading countries closed [6]
  • Digital should be infused into teacher training and in-service CPD for every teacher to pass skills to the next generation as developing a digital literacy for all should be integral throughout the Curriculum for Excellence
  • Work-based skills development should be strengthened to capture the potential productivity gains from digital technologies by ensuring that staff have the range of coinciding digital, analytical and ‘soft’ skills, for example through ‘super users’ in SMEs and the wider use of the Scottish Union Learning course on basic digital skills

The participants in the Digital & Productivity Forum were from the following organisations: 
Bank of Scotland; BT Scotland; CGI; City of Edinburgh Council; CodeBase; Comhairle nan Eilean Siar; FSB Scotland; Grayling Public Affairs; Heriot Watt University; Interface; KTN UK; National Library of Scotland; NHS Health Scotland; Ofcom; Oracle Scotland; Royal Society of Edinburgh; Scottish Agricultural Organisation Society; SCDI; ScotlandIS; Scottish Cities Alliance; Scottish Courts and Tribunals Service; Scottish Enterprise; Scottish Environment Protection Agency; Scottish Government; Scottish Social Services Council; Skills Development Scotland; Smarter Grid Solutions; Virgin Media; and VisitScotland.

[1] OECD: The Future of Productivity, 2015


[3] and Notes to Editors


[5] PwC Strategy, 2015 Chief Digital Officer Survey

[6] Computing at School Scotland, Briefing on Computer Science Education in Scotland, February 2015

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