Scottish rural businesses see digital technology as key to growth

11th December 2017

Scottish rural businesses see digital technology as key to growth but face skills and training barriers.

· New research by Scotland's Rural College and Rural England finds nearly four in five rural businesses say digital technologies like cloud computing, 5G, Internet of Things and artificial intelligence are important to their growth.

· E-commerce plays a big role in helping rural businesses to export, with 80 per cent using digital tools and services to trade goods and services around the world

· However, over half of rural businesses say recruiting people with appropriate tech skills and accessing training for their workforce is a barrier to digital adoption

Rural businesses are embracing the digital economy but face barriers to digital adoption due to a lack of skills and access to training in rural areas, according to new findings from Scotland's Rural College (SRUC) and Rural England commissioned by Amazon.

A consultation of over 800 rural businesses by SRUC and Rural England found that almost four-in-five rural business owners believe digital tools and services are important to their future growth potential. Cloud computing is seen as the biggest driver (62 per cent), closely followed by 5G mobile networks (54 per cent), the Internet of Things (47 per cent) and Machine Learning/Artificial Intelligence (26 per cent).

Rural business owners who export say e-commerce plays a big role, with 80 per cent using digital tools and services to trade goods and services abroad. The top export destinations for rural businesses are the EU (84 per cent) followed by the U.S. (45 per cent). In addition, 43 per cent of all rural businesses specifically sell online through their own site or via a third party site, with the top two sectors using e-commerce being retail (80 per cent) and the accommodation & food sector (71 per cent).

"The research finds that rural businesses are typically family-run, home-based, owned by people aged over 55 years old and employing fewer than ten people - exactly the type of businesses that can gain from using digital technology to expand their productivity," said Doug Gurr, UK Country Manager, Amazon. "Every day, we see digital technology levelling the playing field between businesses operating in urban and rural parts of the country, whether that's exporting locally produced goods or using cloud computing to scale their business."

Three-in-five (62 per cent) say they use cloud computing for their rural business. One example is IceRobotics, who provide data collection and analysis products for monitoring dairy cow behaviour to the farming sector. IceRobotics harness cloud computing and sensor technologies to monitor the fertility and health of cows used in dairy farming, enabling farmers to see alerts and visualisations of how their livestock are moving so they can manage their herds more productively.

"Cloud computing provides compute power, storage, analytics, content delivery and other functionality to help farmers move faster, lower IT costs, and scale globally in minutes, so it's key to driving innovation in business," said Douglas Armstrong, CEO of IceRobotics. "The growth potential cloud computing brings to the agricultural sector is significant, so the faster we get rural businesses adopting new technology, the more globally competitive rural Britain will be."

However beyond issues with internet reliability and speed, over half (52 per cent) of rural business owners say they face a variety of skills-related obstacles to adopting digital to unlock more growth, such as recruiting people with appropriate skills to finding training for their existing workforce. Almost a third (30 per cent) have difficulty finding external or outsourced digital connectivity support, 14 per cent have difficulty accessing appropriate external digital training for the existing workforce and one-in-five (20 per cent) say their existing workforce lacks sufficient skills and struggle to recruit people with appropriate digital skills.

Dr Jane Atterton of the Rural Policy Centre at SRUC, said: "The research has shown us that rural businesses are already making use of connectivity where they can, something which is bringing business benefits and improving the global competitiveness of our rural economy. However, it's clear they want to do more and can be better supported to do so, whether that’s through skills training or with digital support. Our report will help to identify some of the ways in which this support can be appropriately tailored and delivered for businesses in Scotland’s rural areas."

An example of one Scottish digital savvy company is ‘Second Nature’ - a Fairtrade home furnishings company in Dumfries run by Karen Riddick. She left her job after 16 years of employment when her online business really took off. Evolving from being a Fair Trade B&B owner, buying furnishings from wholesalers to then selling its own Fair Trade home furnishings, Second Nature now exports homeware products around Europe through Amazon Marketplace and generates roughly £350,000 annual turnover. Second Nature capitalised on Amazon’s global digital and logistics infrastructure to access hundreds of millions of customers. Karen’s success shows that if you have a laptop, internet connection and a great product, you can now live rural and sell global.

SRUC and Rural England, with funding from Amazon, will publish their final report - Unlocking the Digital Potential of Rural Areas - in 2018. The report aims to understand:

· How to grow the digital economy in rural areas through e-commerce, exports and productivity gains

· The level of digital skills and capabilities in rural areas and how to further improve them

· What digital business tools and services best support rural businesses

· What enables businesses to successfully relocate from urban to rural areas

· The business sectors emerging in rural areas likely to gain most from digital technology

· The best rural locations to set up a digitally empowered business.

More information is available on Rural England’s report consultation website - https://ruralengland.org/unlocking-the-digital-potential-of-rural-areas-research/