Our survey says...

The Connected annual survey of Ireland’s IT landscape in association with Compu b and Red C has proven positive for AI, but has thrown up a massive GDPR surprise, writes Emmet Ryan

Emmet Ryan

Technology Correspondent @emmetjryan
2nd September, 2018
Our survey says...
Ciara Clarke, associate director Red C Research

Every year with the annual Connected survey, in association with Compu b and Red C, we get a surprise. This year’s shocker, however, really took us aback. Before we get to that, some context. Here’s how this survey described the level of preparedness among Irish firms for the implementation of the GDPR this time last year: “[The results] are nothing short of damning. Ireland’s businesses are largely blind to the impact of the general data protection regulation (GDPR).”

Since then, there has been nothing short of a total bombardment of information for companies of every possible shape and size. There were even GDPR memes, because, apparently, everything can get memed these days.

Yet, despite that, over a third of Irish companies surveyed said there was little to no impact by the GDPR on how they operated. This included 8 per cent of all businesses surveyed who claimed to not gather any customer data whatsoever.

“With GDPR, it’s a hot topic. We didn’t ask the same question as last year, we were looking at how people were adapting. Given when it came in, you’d expect people would have adapted by now given the serious potential outcomes if in breach,” Ciara Clarke, associate director at Red C told Connected.

“It’s heartening to see those who have adapted, but it’s such a surprise to see how many haven’t adapted much or at all. There’s a big pool of businesses out there who are very open potentially to being in breach of GDPR.

“Maybe they feel they are sufficiently ready, but we, as a business, had to turn everything on its head to be ready for it. It’s not something you can just do overnight so it was a little startling to see.”

The sheer number of businesses caught security expert Brian Honan, founder of BH Consulting, particularly by surprise.

“It’s not as if there hasn’t been a lot of coverage or awareness around GDPR. This highlights that those organisations don’t understand what personal data is and what personal data they have under their control,” said Honan.

“Under previous data protection regimes, personal data would have been very much focused on customer data and information relating to individual customers or consumers of a service. If you were a B2B business, you probably figured it didn’t apply to you. Under GDPR, personal data relates to any data in a business context that could relate to an individual.

“This highlights that companies don’t understand or appreciate what personal data they have under their control, but they also need to remember that while the core business might not process personal data per se, they also have personal data under their control in relation to their staff. Some of that could be quite sensitive information, such as union membership, sick certs or other personal data. Unless you are a one-person operation that doesn’t trade with anybody else, GDPR impacts your business in some shape or form and you need to identify what data you have, where it is and what responsibilities you have in relation to it.”

For Honan’s business, seeing how companies have adapted to GDPR compared with previous forms of data protection makes him more concerned for those who haven’t taken significant action.

“What we see with GDPR based on how we’ve talked to clients in previous years about data protection, is that many organisations would have said they took data protection seriously. What GDPR has highlighted for us is that many organisations didn’t take it as seriously as they should have. The potential penalties GDPR introduces is making them take it more seriously and not treat it as a box-ticking exercise,” he said.

“The regulations now are stronger, but there is also a much better educated customer base. People are more aware of their rights, what companies can do with their data, and what they can require from a company with regards to their data. We’re seeing that people are now making more subject access requests, using the right to be forgotten, and unsubscribing from lists. Those companies that say it hasn’t hit them a lot, I’d hope they revisit their position.”

Despite the grim reading for more than a third of businesses in Ireland, the sunny side of the data is that 64 per cent of companies have reacted well, according to our research. Jamie Young, corporate sales manager at Compu b, saw positives in this for Irish business as a whole.

“From seeing things like this in the past, that two-thirds of the companies realise they have to do something is positive. Usually, you see a large number of people only starting to comply past the deadlines,” said Young.

“The other side is that so many have chosen to ignore it. Given there has been so much publicity, so much of a run in, so much awareness, it’s worrying that they made a decision not to work towards it.”

The mixed results on GDPR also saw mixed results in how companies were investing in IT. The bulk of results on IT expenditure, both in terms of priorities and amounts, was consistent with 2017, with one notable exception.

Investment in mobile device management (MDM) cratered, dropping from 17 per cent of those surveyed to just 9 per cent.

“Given we talk about GDPR so much, it’s funny to see the shift financially to more traditional solutions. There are a few concerns for me in the results. Last year we saw more investment in security and MDM is down as well. Those two seem like natural investments and closely linked with what you would consider if getting ready for GDPR. I would have 100 per cent assumed for both to have risen drastically,” said Young.

Jamie Young, corporate sales manager, Compu b Picture: Fergal Phillips

His colleague Kieran O’Brien, Compu b’s marketing manager for Ireland and Britain, was equally surprised by the drop off in interest in MDM.

“Everyone, this year in particular, their mind has been in focus around IT infrastructure. The GDPR was influencing that. There was an impetus to make sure everything was right and that’s reflected in people using more back-up and storage with servers on site in Ireland,” said O’Brien.

“What’s interesting and is quite funny about that is the drop in MDM usage. It doesn’t reflect what we are seeing with our clients, as it all ties back in to what you need to keep secure with connected working and mobile working.

“We’re seeing more people coming to us looking for those kinds of solutions. Businesses have people on the road and want to be able to auto wipe or remotely lock down devices. It is a surprise then with the findings given the potential solution MDM offers with those sorts of problems.”

The recent issues experienced by Eir, where data of 37,000 customers was impacted by a data breach, points to the increased need for a clear MDM policy. Honan said he was surprised by the drop-off in MDM investment given the tendency of cases like this to spring up.

“It’s surprising on a number of bases, not just because of the recent story involving Eir and the lost laptop. More and more companies are realising they have data held on mobile devices such as company or staff phones. GDPR has highlighted to many companies that they need to have control of data on mobile devices. If you don’t have a MDM solution in place, how can you verify and attest that you don’t have company-sensitive data on those devices or ensure what data is there is protected properly?” he said.

“From a security and a data protection point of view, I’d be concerned companies are overlooking that aspect of their infrastructure and not investing in protecting that kind of data.”

Brian Honan, information security consultant and founder of BH Consulting

While the drop in MDM investment is a concern, the overall trend around spending was one of consistency. Young sees this as a big boost on the whole.

“We’ve come out the shadow of the recession in the last couple of years. The spend was up this year and it was probably the first year in a while, for a lot of companies, that spending was up. People are looking to be consistent with regards to next year, but attitudes have changed, particularly with hardware, as people want to see they are getting value for money and time from products,” he said.

“Also, with software, a lot of the models have switched to consistent monthly payments as opposed to shelling out annually.”

O’Brien similarly saw the broad trend in spending as one that showed companies were getting smarter around how they invested.

“The lifetime value of what you are getting now lasts longer, that’s why you don’t expect any giant leaps in spend. It’s one thing spending, it’s another thing training people how to use it,” he said.

Spending on skills?

The training aspect was one that brought a mix of results and O’Brien saw plenty for companies to ponder in how they approach training staff to build and plan for the future.

“Everything comes down to time. How much time will a company give to staff, along with their daily duties, to train? That’s reflected in that number where only a third of people are taking the time or have the intention to train up properly,” he said.

Young was more bullish on the results on this front. While investment in training didn’t take a significant leap, it was enough for him to be pleased with the attitudes being shown by Irish businesses towards the importance of having staff up to speed and continually learning.

The gradual movement in investment in training is an area Young sees as being something that can be built on consistently year on year.

“It’s hugely positive and a natural shift. It’s up 4 per cent, we’ll see that gradually go up and up. Think of the way people work nowadays, there are a lot more options in terms of how people work. There’s a lot more independence, with remote working and flexible office hours, it’s prudent that companies have their employees well equipped,” he said.

Clarke sees the increase as part of a broader set of moves by businesses towards how they keep and find top tier staff. The results, while relatively minor in terms of annual change, were enough for her to see a trend emerging in terms of how companies are changing the way they think about staff.

“If you look at training and development, when it comes to hiring and retaining staff, people are taking action and putting budget into their people. It’s not a huge staggering increase, but all you need to see is the steady increase. People are investing in this area and seeing the returns. Because of that, people are more likely to be on their radar. They are getting people into their business and managing to keep them,” she said.

The data round hiring and retention itself was a touch confusing on initial inspection, with businesses finding it easier both to keep existing staff and find new highly skilled labour, but Clarke saw some clarity in the findings.

“Both are making steady improvements and significantly so as well. Last year we had 24 per cent of businesses saying it was very easy to get people, that’s jumped up to a third of businesses now. Not only that but they are managing to keep them,” she said.

Young, however, was surprised by the broadly relaxed views by companies with regards to being able to attract and retain. With the demand in the market for high-end staff, he expected more respondents to feel under pressure when it came to hiring and retaining the best people.

“It’s much more competitive. We’re essentially, as a nation, at full employment and that gives people more opportunities when looking for work. There were a few points in the responses I found contradictory, particularly that companies found it easier to find highly skilled professionals, but also to retain them. One would suggest a lot of movement, the other would suggest the status quo,” he said.

“When you get to full employment it offers stability, but it also offers choice for those who do want to move.”

That stability also has an impact on motivation. Staff don’t just want to clock in and get paid, they want to be challenged, they want to change things, and many want to be a force for more than just ticking a few boxes.

That’s influencing how companies interact with staff once they are within an organisation. O’Brien sees the role of corporate social and responsibility (CSR) programmes as vital to hiring and retention policies going forward.

The ability to use a brand to do good in the world and, from that, make the staff feel part of that effort is an area that is changing the thinking beyond historical approaches to CSR. O’Brien sees more companies going beyond writing a cheque and slapping a logo on a good deed as they strive to use CSR as a tool for HR.

“We’re seeing that there’s a definite will from top to bottom in companies to get involved in projects. The bigger a company gets, the more it can do. It’s built around what staff want as much as the business. If someone has a link to a cause, it can help show support for them. If you are keeping the staff happy by supporting their wellbeing, you can also do more as well and get more out of your CSR,” he said.

The big switch

The technologies impacting businesses in their day-to-day operations showed one massive outlier this year compared with all previous years we have conducted this survey. It felt for years like artificial intelligence (AI) was going to have its breakout moment at any time.

Turns out its time is now.

Our results showed more than half of businesses took an interest in the role of AI, particularly with regards to the benefit it can provide in terms of marketing. The potential for this to be seen by businesses was always there, but this year, because it’s as good a time as any, there’s been that movement. Young was particularly excited by this finding.

“It’s a turning point that people are seeing actual uses for it, that it’s impacting their businesses. What surprised me is that it’s through marketing that they see that first, in terms of how it cuts down on interaction time with customers,” he said.

While the area that led to the shift in attitudes surprised Young, he found the results to be a great sign for how Irish companies are adapting to AI and seeing the opportunities within the technology.

“Over half of Irish businesses seeing that is really positive. That’s a really big number, much bigger than I would have expected. That’s really positive, it shows how in tune we are in this country with AI,” he said.

The simplicity of how AI integrates with marketing functions may be at the heart of the jump this year. The rise of chatbots has brought the usefulness home to those who make the decisions around IT purchases. Much like with iPhones leading the way for smartphones to become normal in businesses, it’s the interaction of those purchasing decision-makers with consumer technology that’s making them think about how to implement it at a business level.

“From a marketing perspective it’s a huge advancement. Simple things like chatbots, from a customer service perspective, the way people ask queries now and how they are dealt with is a huge development. People want to get answers quicker, everyone is time sensitive, and it’s also easier now to work out what these customers want,” said O’Brien.

The broader impact of AI still appears to be some way off, but even then technologies which aren’t available yet, such as self-driving cars, aroused some interest from respondents to the survey.

The more direct the business impact of a technology to a company, the quicker they are to see the potential of it. That was the core and, frankly, unsurprising takeaway from this aspect of the survey.

“We are seeing those who see AI having no role in their business, but when you start to get into machine learning and marketing, it’s absolutely there and playing a role with a positive impact. There is a lot of training involved and nobody likes change, but it’s overwhelmingly positive in terms of the impact seen,” said Clarke.

While AI is having a big impact on marketing, there are other high-profile technologies with a way to go before they get mainstream approval from Irish IT decision-makers. The release of Amazon’s Echo and Google Home into the Irish market this year, coupled with the roles of Apple’s Siri and Microsoft’s Cortana, means voice technology has generated plenty of media buzz.

It has not, however, been a big difference maker for Irish businesses. Only 16 per cent of Irish businesses saw this technology as being relevant to them, but that’s likely to change. As with AI and marketing, the real question is when, and Young thinks the next couple of years could see a big change in attitudes.

“Voice technology is going to make some big leaps in the next 18 months. There has been some major groundwork put in over the last few years, but it’s yet to really capture the imagination in the consumer space. We’re getting closer and when that happens it will shift to the corporate space,” he said.

The more exposure different workers get to voice technology, the more likely it is to become a more mainstream part of Irish working life. O’Brien is already seeing that with remote and mobile workers in particular.

“It’s funny as, if you talk to mobile workers, a lot of them live and breathe by talking to Siri. You don’t see it as much from deskbound employees at the moment. It’s a slow-burner. You can even see that in terms of the Irish market, it’s very much the people in the car using Siri. Everyone else is waiting for the next incarnation of software developed around it,” he said.

Welcome to normality

The purpose of this annual study is to assess what is impacting Irish businesses right now and what is going to impact them in the near to medium term. That means that, eventually, some topics simply have to evolve beyond a point where they bear little recognition to what they focused on a mere two or three years earlier.

While we’d love to be confident that this will be the case with the GDPR this time next year, let’s not get ahead of ourselves. Fortunately, however, one particular technology has blossomed to such a point that we now must rethink for 2019. Contactless has truly become conventional based on our results.

“Purely on a personal level, I like to see things reflect how I act. I am Mr Contactless, if somebody asked me for cash I’d almost react unsure of what they are saying to me. It’s great to see something so popular with consumers feeding its way through retail channels, we’re moving slowly but surely to a cashless society,” said Young.

Clarke was impressed, but far from surprised by the results around the role and prevalence of contactless payments.

“It is very high, definitely, but we haven’t seen much change from last year. Those who are using it are still using it, but it’s not growing significantly. There’s still a quarter saying it’s not reducing the time spent by customers at checkouts, that portion is not seeing the impact of the technology,” she said.

“Even with the Visa contactless outage during the summer, people didn’t care. It was an attitude that these things happen, very few saw it as something that would impact their attitudes negatively.”

As it stands, Jimmy who runs my local off-licence, may be the last person to finally give in and introduce the technology. For most stores, it’s as normal as having a till these days.

“It’s becoming part of the furniture, it’s changed the dynamic, and these things change quickly. It’s no different to when the euro came in, we had the few months where we were still allowed to use punts, but within no time people had stopped using their old punts,” said O’Brien.

“If you go into a coffee shop now, it’s not untoward to pay for your cup of coffee with your watch. Even when in Britain now, you might not even get an Oyster card for public transport because you can tap your bank card. All of that is a huge sea change from 24 months ago when we were going in to a lot of retailers and finding contactless wasn’t accepted. That’s virtually gone.”

Two sides of the Summit

With Paddy Cosgrave announcing a rental subsidy for staff of Web Summit living near the firm’s headquarters in Dublin, we wanted to find out what impact and influence decision-makers in Ireland felt it might have on the rental market in the capital.

While a comparatively small employer in Dublin, Cosgrave’s office is near many of the multinationals employing thousands competing for accommodation with his workers. Our respondents had a breadth of views of what the subsidies would mean for the broader area and sector impacted by Web Summit.

Three in ten felt such subsidies would have a positive impact on foreign direct investment, while four in ten thought subsidies could aid in the retention and acquisition of highly skilled workers. The more concerning result, however, is around rentals, with three in ten believing it would have the unintended consequence of further encouraging an upward-only approach towards rent reviews.

The employee paradox

This year’s edition of our annual survey threw up some truly challenging numbers for Irish businesses to digest. Some, however, will require deeper analysis over the course of the next 12 months due to the muddied picture they present.

Nowhere is this more prevalent than in the research around gaining and retaining skilled employees. The total finding it easier to attract skilled employees was up from 24 per cent in 2017 to 32 per cent in 2018.

On its own, that’s just a nice and pretty number, but it’s the staff retention change that makes it perplexing. In 2017, 37 per cent of companies found it either very easy or quite easy to retain existing staff, but that jumped to 46 per cent this year.

Essentially this means that Irish businesses have found it easier both to attract and retain staff, numbers that could be contradictory in direct comparison.

A few possible explanations could come through here. The quality of the graduate pool coupled with its increase size in terms of Stem graduates could prove a factor in enabling acquisition more without necessarily hurting retention. Similarly, trends in immigration should also be examined as this too might be leaning more towards what Irish businesses currently need.

Contactless is conventional

Visa contactless dropping for a full day during the summer did nothing to dampen interest in contactless technology, with 87 per cent of respondents saying the incident would have no impact on their approach to accepting contactless payments going forward.

By and large the results for those in payments and banking from this survey were positive, albeit, for the most part, expected.

Some 66 per cent of relevant businesses found an impact from contactless payments in terms of point of sales transactions, with 61 per cent finding it had reduced the amount of time customers spend at checkouts.

Recent advancements in business banking, such as Apple Pay, were also warmly welcomed, but the more striking aspect was how little had changed from 2017 to 2018. All results here were within the margin of area compared with a year ago on the positive side, while the only noticeable switches came from those who had a negative view.

A year ago, between 6 and 8 per cent of businesses surveyed found some kind of negative impact depending on the service, from transactions, to account management, and overall ease of use. This dropped to 1 per cent each for transactions and ease of use this year, while only 2 per cent found any kind of negative impact for account management.

A constant splash

Consistency was the big trend in IT expenditure across the board from businesses partaking in this year’s survey.

Infrastructure service usage was up by 9 per cent from 77 per cent to 86 per cent, security services and video conferencing held firm, but the big drop came with mobile device management (MDM).

The impact of GDPR was expected to be a boon for the MDM market, but usage dropped by almost half year on year, from 17 per cent to 9 per cent.

Compliance expenditure was up, however, compared with expected spend for 2018. A year ago, it was only seen as likely to be a notable expense for 25 per cent of businesses, but that ended up rising to 29 per cent.

The overall trends through to 2019, however, point to huge waves of consistency with similar spending on similar services, most notably software, the key takeaway.

The GDPR gap

The biggest shock from this survey was undoubtedly around the general data protection regulation. Having been hammered home from more groups and government organisations than can be counted, the GDPR still has work to do in order to get the full attention of Irish businesses, according to our results.

The findings showed that 28 per cent of businesses felt the GDPR had not much or no impact whatsoever. That’s a worrying result, but more alarming is the additional 8 per cent that claimed to not deal with personal data, a situation that is beyond implausible based on the definition of said data under the GDPR.

The flipside is that almost as many businesses as those apparently unprepared for the impact of GDPR had seen a big impact from the regulation. The study found the 31 per cent of all businesses surveyed had seen GDPR impact them a lot.

An artificial boost

The most positive results from the study came around artificial intelligence, where support is rocketing in terms of its impact on marketing. A total of 53 per cent of those surveyed felt it would have a positive impact on company marketing.

The figures drop to 37 per cent for those who believe machine learning is going to hold a positive impact, but, again, this is higher than was anticipated by our experts prior to commissioning the study.

Somewhat less surprisingly, voice technology is still a long way from having a noticeable impact on Irish business. While consumer usage is growing, only 16 per cent of those surveyed see it as having a noticeable impact from a business sense.

That’s lower than a technology that isn’t even available yet, namely self-driving cars, where already 18 per cent of businesses surveyed can see this automated form of transport holding the potential to positively benefit them.

Training on the rise

The 2017 survey was a cause for significant concern when it came to how well trained Irish employees were on the IT systems their businesses used. This year’s edition shows a positive switch in the other direction, albeit with work still to do.

The 2018 study found that 49 per cent of companies were training staff in new hardware, compared with 36 per cent a year ago. That jump was greater with software, with 61 per cent of companies training staff in 2018 compared to 39 per cent in 2017. The tally for apps used, however, showed the lowest increase. Only 31 per cent of companies trained staff on new apps a year ago, and, while up, the figure was only 40 per cent for 2018.

The amount being spent by businesses in training, however, remains a concern despite the overall trends improving in terms of getting staff trained.

Last year’s survey found that 45 per cent of firms invested some or a lot of money in professional development of IT and technology staff. That was up to 49 per cent this year.

The more positive signs were at the bottom of that table, where 22 per cent said a year ago that they invest no money in such training. That has nearly halved, down to just 12 per cent avoiding investment in 2018.

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