As our recent Regional Economic Outlook suggests, 2022 holds the promise of growth for the UK’s private businesses. Here’s an outline of the key issues they will do well to pay attention to as they pursue their ambitions.
This is the year that many privately owned businesses will transform to become digital first. With the pandemic survival measure wave of digital transformation behind us, the development of digital backbones throughout businesses is now underway.
- Retiring legacy systems – A particular trend in digital investment needs to happen, and is doing so, in long established firms with legacy IT systems, sometimes 20 plus years old. The technology underpinning the operations of these companies has been incrementally updated to the point they now have a spaghetti junction situation that can only be navigated by people who know the systems intimately. Many management teams now recognise the need for a transformation programme to secure systems that better and more efficiently support their operation in a new competitive landscape.
- Futureproofing fast growth businesses - Fast growth businesses face the challenge of thinking ahead when it comes to making investment decisions in systems. Leaders in those companies are looking at systems that fit what they anticipate needing in five years time, with those graduating from the outsourced tools of their start-up, skipping over the obvious next step to avoid requiring a further upgrade in the medium term. They are investing in what they will need for where they are heading.
- Cyber resilience – just like night follows day, so resilience must follow tech investment. In a digitally enabled operation, threats to cyber security are threats to growth. Organisations in 2022 will have more complex communication tools, consumer pathways and employee working arrangements than businesses before them ever did. The resilience of the systems relied upon and the security of the data shared are critical risk management issues. Addressing them needs to be part of the company culture and working habits.
The abundance of capital available in 2022 will create more opportunities for acquiring and refinancing businesses and conversely buyers for those spinning off legacy or non-core operations. Plentiful funding is also key to the development of fast growth businesses with accelerated life cycles. With the growth companies of today often knowledge and people based, and traditional asset light, there is potential for rapid scaling.
However, there’s a swathe of early-stage businesses looking to raise money and grow, particularly in the tech space that will benefit from further support. Looking at the fundraising market for these businesses indicates there’s a growing need to develop stronger infrastructure in the UK to help them realise their ambitions.
Almost regardless of sector and from SMEs to larger businesses, firms will find their wider stakeholders challenging them on their ESG credentials. From their bankers and investors to customers and employees, having and communicating a clear view on their business’ role within the wider world, the ways they impact it and in which it can impact them, will be necessary. It will become an increasingly commercial issue as a deciding factor for where funding and talent move.
Talent and skills
The workforce will be a key concern. Private businesses may need to change their approach to not only attracting and retaining talent but also developing it. From Brexit and pandemic related labour shortages in some sectors, to impacts of the trend towards shorter careers and responding to the opportunities and challenges of increased flexible working, employers will be focusing hard on people issues this year. They will be helped by being clear on their employee value proposition, explicitly bringing soft skills into recruitment, leveraging their culture and exploring their options for developing the technical skills they need.