North East Technology Sector
1.0 Introduction
1.1 The technology sector consists of businesses creating, researching and/or
distributing technologically based products to businesses and/or consumers. There
is a growing cluster of technology businesses in Newcastle supplying software
solutions to a wide range of businesses and organisations including banks,
engineering companies (including control systems), accountants, GP surgeries,
NHS (data investigation), housing associations (management systems) and public
sector bodies.
1.2 Evidence suggests that despite the current economic climate, these businesses are
in growth mode, developing niche markets with some employing over 100 staff.
These businesses have the potential to offer great employment opportunities,
investment and wider economic development benefits to the region as other
businesses are looking to new software solutions to generate savings and access
wider markets
1.3 National research suggests that this sector is still in its infancy and is key to
supporting the economy out of recession. Currently many businesses in this sector
are not reliant on public sector subsidies – the sector has few links with development
agencies and is under-represented in regional economic development research.
2.0 National Context
2.1 The UK is one of the strongest markets in the world for cloud computing and data
centre companies. The UK is Europe’s leading market for software and IT services
with a market value of £58 billion pa. Independent research by Microsoft has
indicated that the market could drive the creation of 3,000 new businesses and
78,200 new jobs by 2013.
2.2 The UK’s success is built on several key strengths:
 The UK is a powerhouse for software development attracting £930 million pa
software R&D investment from international businesses.
 The UK is home to over 100,000 specialist software companies and all the major
global software companies such as Microsoft, IBM and HP have sizeable
operations here.
 Cloud Services – The UK cloud computing annual market value is the largest in
Europe and is predicted to grow from £2.4bn to £6.1bn by 2014. Currently 18%
of UK SME business use cloud solutions but a further 30% plan implementations
within the next year. By 2015 half of all new IT spending by the public sector is
predicted to be on public cloud services. The opportunities that this public sector
investment presents are significant.
 Data Centres – The UK data centre market, is the largest in Western Europe and
the growth in the amount of data and new services such as cloud computing is
creating new sources of demand. Gartner predicts a rise in overall hosting and
cloud services from £21.2bn in 2008 to £70 billion in 2013.
 The UK government has committed to further improving the UK’s IT
infrastructure. The 2012 budget pledged to develop a number of superconnected
cities including, Newcastle which will have 100Mbps citywide
networks in their urban areas.
2.3 There are therefore strong opportunities for growth in the UK and regional economy
through to the 2020s if businesses can harness scientific and industrial capabilities
to take advantage of technology-enabled transformations in manufacturing,
infrastructure and the internet (Government Office for Science: Technology and
Innovation Futures: UK Growth Opportunities for the 2020s).
3.0 Sector Characteristics and Contribution to the Economy
3.1 The region houses FTSE 100 software company Sage plc’s global HQ, Leighton,
one of the UK’s foremost digital consultancies, Indian company 5th Generation
Technologies’ European base, Ubisoft, the largest independent game publisher in
Europe, games developer Eutechnyx and CCP Games, the Icelandic games studio,
among thousands of flourishing software technology, electronic gaming and creative
businesses.
3.2 The Ministry of Pensions, Virgin Money, Tesco Bank, Insure the Box, British
Airways and the AA all have ‘back office tech functions that bring significant
economic benefit to the region. Many ‘so-called’ call centres actually have IT teams,
e.g. Tesco Bank, Newcastle Building Society and Insure the Box The supply chain
includes HP, Accenture and 45 independent software vendors employing 25,000
staff. There is real potential to attract technology back from India.
3.3 In recent years the region has seen more new technology company start-ups than
any area of the UK outside London. The North East has emerged as one of the
world’s leading centres for digital games development and start-ups, with a dynamic
cluster of firms and university courses acting as a magnet for entrepreneurs and
students.
3.4 The area is rapidly emerging as a hotbed of creative talent, with extensive linkages
between innovation centres, universities, incubator facilities and an excellent range
of high-tech business parks.
3.5 Newcastle provides an ideal place for innovative and creative technology based
business development with its exemplar facilities and its diverse business base.
The city has been selected as a UK super-connected city and has been awarded
investment of up to £6m in the existing infrastructure, including wireless
connectivity, to achieve ultrafast broadband by 2015.
3.6 The region benefits from a selection of world-class universities and collaborative
networks mean accessible and successful business connections are ever growing.
Local universities have good computer science courses. Newcastle University is a
centre of research excellence in Computing Science, operates CultureLab and is
developing a course in cloud computing. From Northumbria University
approximately 100 students graduate each year in Animation and Special Effects
and leading research takes place at all our Universities. Specialisms include
Deleted: 2,500
eScience and the Grid, Informatics, Digital Technology and Media, Software
Evolution, eBusiness and Virtual Reality. Sunderland University has the UK’s
largest ICT training facility and supplies more computer graduates to Microsoft UK
then any other British University. These computing specialisms are supported by
University Business Schools at Newcastle, Northumbria, Sunderland and Durham.
3.7 Average salaries in the sector are growing, with day rates range from £450 – £1200
4.0 Issues to Address
4.1 The sector is currently ‘under the radar’ from a public policy point of view, and I
would urge the LEP to broaden its vision beyond manufacturing, which is unlikely to
be witnessing, or have the opportunity looking ahead, for a similar growth trajectory.
4.2 There are real issues to address if the region is to maximise the benefits from the
growing technology sector:
 Technology is the future and growth is considered to still be in its infancy. The
North East has a more credible story than is currently captured and this needs to
be addressed by the LEP and partners.
 More support is required to maximise the potential inward investment
opportunities in the technology sector, selling the local message to potential
relocators. For example, the region is in a position to attract outsourcing from
London companies who are reaching a size where locating IT departments in the
NE would be a more viable option. Companies like Betfair and Wonga are
potential targets. These are the sort of firms that could/should reach a point of
maturity where they don’t need all their team in one place and might be
persuaded to consider Newcastle to locate a service centre, team, call centre, IT
department.
 The links between the LEP, NGI’s Business Winning Team, Newcastle Science
City and research contacts within the local universities need to be exploited to
maximise potential inward investment and indigenous growth opportunities.
 There is an opportunity to develop more effective networking to strengthen the
sector. A networking group, nominally called Dynamo, with the key players in
some of the companies mentioned in this submission has been put together.
 There is a skills shortage both nationally and locally and there is a growing
demand for people with hybrid skills such as technology and design.
4.3 The potential benefits of promoting and supporting the technology sector are
significant, both in terms of job creation and economic development of the region. If
this agenda is not embraced the region will lose out to other areas of the UK and
the local economy will suffer.
4.4 The sector can work with other partners in the NE area to maximise economic
performance by putting more effort into promoting the area to attract back office
functions here, promoting business messages such as lower cost operations as well
as quality of life issues.
4.5 The cross cutting issues that matter most to the sector’s growth potential are
training, skills shortage, bandwidth, sector champions.
5.0 Reasons for Further Public and Private Sector Investment
5.1 There are good examples of successful companies in this sector which could be
replicated with further investment, e.g. Orchard Systems, Scott Logic now
employing 100+ PhD programmers working on dealing room systems across the
world and Opencast Software which looked after Deutsche Bank’s global
settlements with 80m transactions per week from an office in Collingwood St with
170 staff in Newcastle and 400 in China. For 10 years.
5.2 The information revolution is still in its’ early stages but the transfer to knowledge
work has already begun providing high value jobs. Mobile is early-stage but will be
bigger. Newcastle needs to develop a coherent marketing message about the
opportunities in this sector or miss out on the growth.
5.3 Training entry-level, apprentices as well as PhD’s is important to develop a healthy
digital economy.

The twosome won rave reviews from critics in this country, getting their music played on BBC Radio 1, XFM and Artrocker Radio. Even more impressive, they did live sessions for all three stations. Music Giants NME are big fans of the band – listing them number 8 in the 50 best new bands in 2011, and rating them number 4 the following year in the 20 most exciting bands of 2012.

They always get an amazing reception when playing live- probably why they were chosen to play at some amazing venues this year such as Parklife and Reading festival. It’s a rare chance to see such a popular band play in a unique and intimate setting, the only way the Think Tank can be described. For times and to buy tickets visit www.ssdconcerts.co.uk

Supporting the DZ Deathrays, are local band The Prison Library, who have also been receiving some great reviews. Their single ‘love sick’ which was released on the 12^th November has had airplay on Amazing radio, XFM and BBC Newcastle. It’s been awarded single of the month by NARC Magazine and single of the day by Von Pip Musical Express. The band release their 4 track EP in February, so come down to the Yard and see what the band has to offer.

Vitra design museum – a virtual museum where you can customise your experience

http://www.hidden-heroes.net/

Very clever virtual museum, choose your own tour, slick design, and find out who invented the paperclip.

Shop floor design & Ikea

http://bit.ly/hMm5pI

Professor Alan Penn discusses the resonance between a physical shop floor plan and UI design for ecommerce. Why is it that you go into Ikea and come out with a trolley of random household goods? Ikea creates an experience that completely disorientates you… and this invokes a phenomenal buying success rate!

Writing error messages for human beings

http://bit.ly/hkd9lV

Error messages are still prevalent in sites worldwide and everyone will be familiar with the old ‘404 error’ that used to rear its head time and time again! Why this fundamental customer experience issue needs to be tackled…

Digital ad spend to take over newspapers by 2013

http://bit.ly/f7GMH2

Zenith Optimedia have predicted the value of the digital ad market will hit £57.7 billion in 2013, beating newspapers £55.8 billion. Wowzers.

Mobile UX Design – striving to get that 5 star rating

http://bit.ly/gljaVU

Alan Tifford, the principal interaction designer in Intuit’s consumer group says the mobile revolution is here. He argues to create a 5-star app for customers, designers need to work extremely hard to delight them, and stress over every detail.

We’ve moved into fab new offices in Smithfield and plan to host a few debates with our network. Our first breakfast is for senior Creative Directors. We already have about 20 CDs signed up, including folk from AKQA, Sky, Sapient, BBC, Haygarth, Fortune Cookie and Virgin Media.

Topic: User Centred Design and Agile
Discussion leader: Rhys Davies, Head of Creative, Detica
Where: Futureheads HQ, 5-6 Newbury Street, London EC1A 7HU (nearest tubes: Barbican, Farringdon, St Pauls)
When: 8.30-10am, Tuesday April 19, 2011

Rhys has extensive experience in managing digital design teams who adopt a UCD approach and work as part of Agile teams so has some interesting experiences to share. The discussion is going to be around UCD and Agile – how the 2 are working together, any challenges faced and general thoughts and insights, and then another more general talk around 2011 digital trends/emerging technologies.

You may not be able to make this event, but it’s always good to be networking with your peer group – do let me know if you would like future invites.

And, of course, I must introduce you to Meera McCann – she’s focused in this front-end design niche for years, so knows the terrain, the hot issues, the balance of a good skillset and where to pick up the hot talent.

Happy Easter, all. Long live the future king…

I’ve mailed you because, perhaps, you can add sector expertise, finance or acumen…

It’s a chance for you to help a digital start-up and network with other advisers/investors.

Full details and registration for Sunderland by clicking here.

Full details and registration for London by clicking here.

Or, RSVP to me and Caroline Theobald.

Lots of people talk about incubator programmes. Few start them with such success as The Difference Engine, which ran its first bootcamp last year – with 5 of the 9 teams raising £500-1m overall. One startup, Screenreach, picked up investment and non-exec help from a founder of Sage Software – plus this week it won Best Mobile App at the Texas geek fest SouthBySouthWest.

The Difference Engine 2 is about to finish its 13 week incubation programme.

Why attend the Investor Day?

You will hear 5min pitches from 9 start-ups. They went thru a rigorous selection process to get onto the course and have spent 13 weeks intensely distilling their ideas. You will get a chance to input to the concepts, join the team and invest. And, you will meet a host of fellow dragons.

What will you see?

– online market for local food producers (www.loveyourlarder.com)

– app for 360 views of hotels, stadia and tourist destinations (360 Revelations)

– social media index/library (http://www.pinevio.com/)

– online employee reference library (EvalYou)

– a tool to create and manage complex web pages (Impress Pages CMS)

– content-heavy  file sharing (Wedding Tales)

– hospitality marketing platform (Party Shouts)

– analysis and visualisation tool (Construqtive)

– interactive digital publishing  platform for kids (Fuboo)

Event specifics

North-East Investor Day

Thompson Suite, NE-BIC, Sunderland SR5 2TA

London Investor Day

Brewin Dolphin Ltd, 12 Smithfield Street, London EC1

However, I am extremely busy on delivering things:

Support for Futureheads, the rapidly growing staffing specialist recruiting web/ux architects, web designers and project managers. ww

Repositioning Hoults Yard, Tyneside’s creative hub. h

And starting a cultural programme around Warehouse34 and ThinkTank gallery at HYBY.

I am doing a spot of consultancy in building business plans and raising finance through introductions.

And I have a back-burner startup project to develop a modular media engine that will revolutionise the newspaper and trade press markets globally… if only I could get it off the blocks, of course.

The only enemy is yourself. It’s not how good you are, it’s how good you want to be. Dar-de-Dar-de-Dar…

When i think about Breakthrough Companies, I’m thinking about founders who have a ‘big picture’ perspective – that’s not regional thinking, it’s international thinking… that’s considering the business foundations, but also a scalable model to become a major player… that’s understanding the competitive framework and taking things to the next level.

So, I was interested to see a US business blog feature an article recently entitled Six Secrets of Breakthrough Companies. Click MyVenturePad here.

I can’t say I’m bowled over by Skip Reardon (author)’s insights… but it goes to show that synchronisity is out there… and there are more than 2 of us probably considering how to break into the big time.

C-21 Media aren’t just innovative with their format, they are absolutely first class with their news angles and content. This is a ‘no mean feat’ thing. So much of blogging tools or self-publishing of music is shockingly bad and just gives the masses the capacity to bore and bug us. Not C-21.

I’ve just been blown away by the line-up of their latest conference on marketing. It ain’t a line-up that is purely film focused, though there’s a slant. It looks like a must-attend event for anyone in digital and media.

Check out the agenda here – http://www.c21media.net/shop/detail.asp?article=55800&area=109:

Dynamite. Well, and here I must declare an interest, it was until I got asked to be a compere to help host the event. But, that aside, the speakers speak for themselves.