Digital Jersey Business plan – executive summary - Digital Skills - Research - 18 September 2013

STRATEGY & BUSINESS PLAN

Executive Summary

x5 GVA

2,200 new jobs

x3 school leavers into digital employment

400 new jobs

e-Government as a platform for growth

10 VC-funded Jersey companies

10 new digital companies

Digital learning hub

Events

Tech talks

Outbound missions

Space Programme

100% high-speed wireless in schools

Jersey Digital Ideas Marketplace

Jersey Tech Growth Fund

PURPOSE

The purpose of Digital Jersey is to act as an accelerator for the digital economy and as an accelerator for a digitally enabled and connected society. The digital economy includes both the digital sector itself and the application of technology across all sectors.

DIGITALLY ENABLED

SOCIETY

DIGITAL JERSEY

AS AN ACCELERATOR

JERSEY S THE

DIGITAL  DIGITAL SECTOR ECONOMY

OBJECTIVES

Digital Jersey has three primary objectives:

1  To support sustainable economic growth in Jersey s digital industry, as measured by sector

contribution to GVA, job creation and the number and health of digital businesses.

2  To enable a connected, digital society and enhanced quality of life in Jersey, as measured by an

increased provision of online services by government, changes in the IT education curriculum, improved skills and awareness in the general population, and the development of essential digital infrastructure.

3 To establish Jersey as an internationally well-regarded digital centre , as measured by ranking in

key indices, recognition in target media and online statistics, the results of industry surveys and sector-specific inward investment.

These objectives flow into the four priorities established by the States of Jersey s Economic Development Department (EDD) Enterprise Strategy:

1  Improving the productivity of business in Jersey and reducing dependence on inward migration. 2 Support for high-growth firms in high-value activity.

3 Attracting inward investment in high-value-added activities.

4 Ensuring that regulation does not impede business.

Digital Jersey s primary objectives translate into the following SMART targets:

By 2020, the digital economy will have grown by a factor of five from its 2013 level

By 2020, employment in the digital sector will be increased by 2,200 four times higher than its 2013 level of 560

By 2016, there will be 400 new jobs in the digital sector in the island

By 2018, there will be five times more Jersey students finding work in Jersey s digital sector than in 2013

Jersey will have a reputation as a preferred jurisdiction for investment target sectors, including e-health, e-government, data ownership and other strategic areas

By 2017, Jersey residents will use innovative services that will enhance their well-being, delivered over an e-government platform that gives equal access to all

Digital Jersey will establish an impact evaluation framework, along UK Treasury Green Book guidelines, in order to measure the impact resulting from the activities deployed to reach these targets, their outputs and outcomes.

DIGITAL JERSEY S STRUCTURE

Digital Jersey is comprised of:

A board, combining on- and off-island Non-Executive Directors, giving a strong base of knowledge and experience to facilitate sector growth and export business.

An executive who, with the guidance of the board, devises and executes activities intended to meet its primary and intermediate objectives.

Technical Action Groups, which engage with the communities who will experience growth and benefit from Jersey s evolution towards being a digital island . These communities include the private sector, the public sector, students, and residents. The TAGs are substantially responsible for developing and delivering work streams around: developing Jersey s competitive propositions, education & skills, business development, regulation & legislation and government & infrastructure.

BACKGROUND

Digital Jersey is an independent organisation, funded by the States of Jersey and responsible for promoting Jersey as a leading centre for digital excellence. Digital Jersey became operational in February 2013 with the appointment of Chief Executive Officer Ted Ridgway Watt.

Working alongside government and industry, Digital Jersey coordinates activities that improve the environment for digital business and individuals in Jersey; these activities include skills development, technical innovation, legislative and regulatory change, social connectivity and research & marketing.

Digital Jersey coordinates strategies and activities that enable:

Jersey to develop and attract digital businesses

The digital sector to create sustainable employment

Digital businesses to make substantial contributions to the island s economy and diversification strategy

A connected digital society

CHALLENGES

To succeed in this endeavour, Jersey faces serious challenges, including the island s late entry to a digital strategy, major competition from other jurisdictions and the significant incentives provided elsewhere, the lack of critical skills available in Jersey and long-term challenges in IT education, not least the lack of a university. Low levels of local innovation and a small, though excellent, IT sector focused on services rather than IP creation are also factors. Fewer than 600 people work in the independent IT sector, with the majority of these delivering services to the financial and public sectors. Furthermore, there is little track record for tech start-ups, diversification or collaboration. Finally, the high cost of data connectivity is perceived to be an obstacle to growth.

ADVANTAGES

Jersey has a good proposition for broad inward investment projects, with quality of life, a light tax regime and robust legislation examples of attraction factors.

However, the island also has two good enablers for growth in a knowledge-driven economy: a bold plan for total connectivity and strong social capital; the latter a proven ingredient of success in sustainable centres of excellence and the hardest to create quickly.

SWOT

The characteristics of Digital Jersey are shown below as a SWOT analysis. Note that this applies to both the community of businesses, students & residents and to Digital Jersey Limited.

STRENGTHS WEAKNESSES

DJL is a well-conceived and   Low numbers in digital sector supported project Small cohort in education

Strong early engagement with DJ Limited capacity for population and good access to government increase

High-calibre board Existing digital capability inward focus

Jersey strengths (tax, finances, Slow rate of change in States of Jersey skills, legislation and regulation, quality of life) Lack of appetite for diversification

Social capital Low entrepreneurial activity

Offshore reputation

Geographical location

OPPORTUNITIES THREATS

Gigabit project and walled garden   Lack of engagement by industry test bed proposition Constraint on inward migration

Focused development of new Global competition in new markets sectors (data, e-health, social gaming, e-government) Other jurisdictions earlier positions

Competitive regulation and/or   Data/IP legislation too slow legislation Data connectivity cost

University of Jersey

Well-integrated skills pipeline fit for Jersey s employment needs

Tech investment from Jersey

Potential to move quickly

CRITICAL DEPENDENCIES

Delivering Jersey s bold but achievable targets requires the following critical dependencies to be in place:

No barriers to inward migration of essential skills and talent. Development of on-island skills is a key priority but will take time to gain momentum. In the early years of the plan, these skills will need to be imported

An education programme that accelerates employment of students and re-skilling of employees towards the digital sector

The communications environment must be exceptional in terms of service reach, domestic and business capability and competitive data pricing

A compelling inward investment proposition for digital companies, financed by the States of Jersey

A funding regime that encourages investment in the digital sector

The effective development of an e-government platform that delivers improved services to citizens and facilitates the development of new services and business opportunities

Continued support by the States of Jersey for Digital Jersey Ltd

SKILLS, GROWTH AND FUNDING

As Jersey must engage in diversified business and new enterprise to grow, the sector needs new talent. To embark on new endeavour, Jersey has four sources of skills:

The independent developer community: numbering fewer than 50, these have a higher than average overseas business and generally have greater agility than companies

Students of ICT-related subjects: approximately 25 per annum come into employment or job seeking from Highlands College, whilst around 15 per annum return to Jersey within 10 years of graduating in the UK

Imported, licenced professionals: the fastest way to establish new competences in the island. This has been a consistent strategy across other jurisdictions intent on driving growth in a new sector

Diversification by existing businesses and re-skilling of workers for digital endeavour. In Jersey, many existing ICT businesses have focused on the domestic market with marginally differentiated products and have not demonstrated an appetite for diversification

To meet the employment demands implicit by the factor five economic growth target, we note that:

Early activity increase in the sector will come primarily from imported talent

Students effectively make continuing education choices at an early stage and so any strategy, policy or incentive applied now will still see a delay before significant changes can be effected amongst school leavers - although the Digital Learning Hub (DLH) could accelerate digital sector employment amongst those choosing not to go to university

Hence, in the initial stages of growth, the prime source will come from imported skills and the secondary source the migration of locally employed people to the digital sector, then school leavers and graduates. Enacting an achievable growth in these employment sources could give 2,200 new jobs by 2020.

DIGITAL EMPLOYMENT GROWTH & COMPOSITION FORECAST

700 600 500 400 300 200 100

0

2104 2015 2016 2017 2018 2019 2020

LICENCES LOCAL STAFF UNIVERSITY STUDENTS STUDENTS FROM DLH

Looking at the composition of employment growth, we see the s-curve, below, reflecting a slow start in both new employment and graduating students. This represents the difficulty in migrating skills to new endeavour in the digital sector and of the early career choices made by students, many of whom who will have made decisions now that will affect their education choices in 2017.

GVA x5

(pinned to  

2013 values) Productivity increases of 20% in

the strategic propositions gives x4 employment for x5 GVA

EMPLOYMENT X4

Inward licences to locally qualified staff ratio, 2014 - 2020 1 to 1 - 1 to 4

2013 2014 2015 2016 2017 2018 2019 2020

MEASURE PROCESS AND ACTIVITY EMPLOYMENT

ECONOMIC VALUE ADDED

GROSS VALUE ADDED

The critical dependencies will determine how quickly employment and then economic returns will flow from activities and processes to stimulate growth.

Growth needs to be underpinned by a thriving investment market

The complementary resource required to drive the sector growth is funding. As a major player in financial services, Jersey should be ideally placed to position itself as a centre for tech funding.

Businesses require a complete pathway of funding and this need presents a specific opportunity for Jersey with its deep expertise in financial services.

Initial start-up funding should be complemented by assistance from the Economic Development Innovation Fund this mechanism has been in preparation for some time but must now be made available immediately.

FUNDING

Digital Jersey is grant-funded by the States of Jersey s Economic Development Department. The level of funding required to support the processes and programmes to meet its SMART objectives is £916K in 2014 and £1116K for 2015. It is intended that, in future, funding could be supplemented by membership fees.

KEY PROGRAMMES AND NEAR TERM DELIVERABLES

The primary objectives will be met against these challenging and prevailing conditions through programmes and projects that set out to build capacity and enhance capability, with Digital Jersey acting as an accelerator for the digital economy, Jersey s digital sector and our digitally enabled society. Outcomes will include:

A JERSEY TECH GROWTH FUND

providing small/mid-cap and up to growth equity investments from the island, managed by the private sector

AN EDUCATION PROGRAMME

that complements the schools and Highlands College s provision of services and includes a Digital Learning Hub, a five-year Space Programme and a 3D printing programme

THE DIGITAL LEARNING HUB

will help students, school leavers and others to acquire the skills and knowledge needed by Jersey s growing digital sector, directly contributing to the drive to reduce dependency on inward licences. Local businesses will need to support the hub with course material and mentors

COMPETITIVE PROPOSITIONS

that support Jersey s strengths in areas of high opportunity and provide a focus for investment, pre-competitive collaboration and training

TARGETING THE CREATIVE SECTOR

to create and deliver more digital content from the island, through seminars, training and outbound missions

CONCLUSION

The digital sector represents a clear and compelling opportunity for economic diversification for Jersey, offering the potential for high growth with relatively low capital expenditure.

Jersey is late to the gate and faces stiff competition from jurisdictions able to offer compelling incentives around taxation and resource mobility.

Digital Jersey has developed long-term objectives for a five-fold increase in economic activity by 2020, supported by a four-fold increase in employment and definable social benefits. These long-term objectives are founded on, and complemented by, detailed and cohesive programmes and near-term targets and attainments. Given that the critical dependencies will be in place, with the aligned support of all stakeholders, the digital sector can become a vital pillar of Jersey s economic and social strength.