NatWest & SBT Roundtable: Growth and Innovation in Technology & Professional Services

 

NatWest Bank and Sussex Business Times has come together to bring a dedicated series of roundtable discussions to the Sussex, and surrounding community and this month we headed to Crawley to discuss professional services, and the growth of technology

Panel:

Jenny Ardagh, Editor, Sussex Business Times (Chair)

Daryl Gayler, Regional Director, Corporate & Commercial Banking at Royal Bank of Scotland/NatWest

Andrew Clinton, Managing Partner, asb law

Matt Turner, Founder – Young Start-Up

Richard Heap, Partner, Head of Technology Media & Telecoms, South Region, RSM

Steve Arundale, Head of Professional Sectors & Financial Institutions, Commercial Banking, RBS/NatWest.

Jason Fry – MD of PAV IT

Jonathan Grant, Partner, DMH Stallard

James Wright, Partner, Deloitte

 

 

Professional Services in Crawley

What is the current climate in Crawley within the professional services sector?

Richard Heap: I can obviously talk well on the accountancy market – there are the big four based here, so it’s very well serviced by the big accountancy firms as well as some local firms. This means that, although different firms have different focuses in the market (local or international), it’s competitive; more people have come into the market in recent times, particularly on the smaller end of the market.

Andrew Clinton: I think Crawley is clearly the heart of Sussex. We have offices in Kent and it’s a completely different environment there. Most of the professional services organisations that service this region will be based in Crawley. In terms of Law, you’ve even got two very good firms represented here. Until fairly recently, there hadn’t been a big law firm in this region, but there’s been a recent merger announcement which will create a top 20 Law firm on our doorstep – that’s quite an interesting move for the South East. It is indeed a competitive market and one of the issues for us is the proximity to London. Individuals can go to London easily from here and earn a lot more money. Now, this can work both ways: you can lose talented people to London, but you can also pick people up who wish to come out of London.

Do a lot of professionals come specifically to Crawley over going to London? Is it attractive for young professionals?

Matt Turner: I would say, no. The interesting thing is that around 95% of professional services in Crawley don’t actually promote the fact that this is where they’re based. Crawley seems to have this stigma attached to it from a professional services perspective because everybody is scared to call in Crawley, so they call it Gatwick.

Steve Arundale: Mainly because Crawley was never a big business centre on its own. It’s a relatively a new hub, so we don’t have hundreds of years of history as a business community in the centre of town. That’s, I think why that stigma is there.

Daryl Gayler: I am a Crawley boy born and bread, so I feel quite passionately about Crawley. I merrily commuted into the capital for 23 years before realizing there was such a vibrant professional services community in Crawley itself, because you only really heard about Crawley when people were talking about Gatwick or perhaps some of the inner more challenging neighbourhoods. But trying to run a banking business where you have the major accountancy firms, the major legal firms, the valuation firms and indeed the competitor banks on your doorstep, does make it a lot easier actually – I think it’s a fairly unique scenario and something which Crawley should really shout about more.

 

Isn’t Crawley in fact quite ideally placed, between Gatwick and Brighton, with an easy commute into London?

 

Daryl Gayler: Certainly communication-wise it is, yes. It’s about half an hour on the train up to London, and now with the motorway down to Brighton, it’s all very easy if you choose to drive also. There’s also always been that benefit of having Gatwick so close – you can fly in and fly out to wherever you need to easily. So, geographically, it is very well placed. The challenge is more around some of the stigma associated with the Gatwick area but I think the professional services market here is a really strong suit for Crawley.

Matt Turner: It’s different though. If you compare it to say the northern industrial towns, like Leeds and Manchester – which have a similar centre – they would have most of the businesses based in the town itself. We don’t have that. Crawley works as a professional business centre because people build bigger teams here, have their central resources, do their training, their IT, but if you look at where the business is actually done, it’s spread around quite a wide part of the region. So, if you need to get to Surrey, you need to get to Brighton, the south coast, Hampshire, Kent – it’s a big area to cover.

Richard Heap: It makes it quite unique. I’ve been in London for the past 15-20 years and Gatwick is very different to anywhere else. When we talk about Northern towns, or even Southampton, Reading and Guildford, they’re all their own little centres. But here, I find myself driving all over the place.

 

 

Andrew Clinton: From a client perspective, I think London is less relevant than it was perhaps 10 years ago. One of the interesting things we were talking about yesterday is why do we call ourselves a regional firm? We have an office in the region but actually our client base is national and international, and so its convenient to be here, with the industrial estate and the airport, but if you segmented our client base, a large proportion of it would have nothing to do with what is 5 miles from this office.

Daryl Gayler: Sometimes, we find that it’s a lot easier to attract people at the later stage of their career because actually the work-life balance is so much better than in London. We do lose a lot of people in their young adulthood who do want to go and have that London experience – and we would actively encourage that – and when looking at the more senior roles, we find that people having worked in London are blissfully unaware of some of the opportunities to work regionally in meaningful roles. It’s finding those people and unearthing that talent that’s the issue. When we do find those people, they really enjoy the mix of client contact, having a meaningful role whilst still striking a good work-life balance.

James Wright: I actually chose to come down from the north and came to Crawley. I get a far wider breadth and depth of things to do here in Crawley than I did in the north, because of that regional client base. However, how do we attract people and let people know that this is the case?

 

Well, that’s the question. How would we encourage people to choose Crawley over say London or Brighton? What benefits would you showcase?

 

Jonathan Grant: A rebrand. There was a plan for the redevelopment of the town centre, which got pulled. The idea of that was a good one, trying to get more restaurants, bars, venues for young professionals, so I think there are some fairly straightforward things like this that could happen that would start to raise the quality perception of Crawley as a place to live and work. That would take time though.

Daryl Gayler: The heart of it is the town centre, and the Queen’s Square does look pretty tired now. You can see the way it has changed over the past 30-40 years, but when you go to other areas you can see that they have done it better. Somehow Crawley has got to find a way to rejuvenate the square because I think that will make a big difference, as that will permeate out. Anyone looking to find employment, or looking to live might well be put off by the way it looks now – it’s not the best advert for the area, and that’s a shame because there are a lot of good opportunities here.

 

The Hyper Connected World

 

How important is superfast broadband?

Jason Fry: I think it’s safe to say that pretty much every business relies on some kind of connectivity: to be able to share and trade information, and to be able to interact with its customer base. Over the last couple of years, we’ve seen improved internet connectivity around the country for people living at home, but it hasn’t necessarily seen an improvement for businesses in a lot of areas. I know that Crawley has been subjected to the struggles as well. As the world moves more into a hyper-connected state, the importance of having good quality infrastructure in place, to be able to access data and communicate, is vital.

Jonathan Grant: We tend to now have our servers and Internet connections looked after centrally, so it’s less of an issue for us, but it is a definite issue for the business that we look after. As far as I gather, the Manor Royal businesses use their own superfast broadband – they went and found the sites where they needed masts, they negotiated with the landowners and they got it sorted. Businesses in Burgess Hill, for example though have a real problem because they don’t have that access to superfast broadband and it really inhibits them.

 

 

Matt Turner: My business is in Manor Royal and residing there, you all pay into a kitty, meaning you do get extra infrastructure and services and can accelerate a lot quicker than elsewhere. It means that everybody in that district is paying into a business BID fund, but they exist across the country and it’s a really good way of getting things done in unison.

Richard Heap: The biggest impact I see is that people work from home, and if they’re in the countryside, they often just cannot connect to the internet. Even I was surprised at that, but actually there’s a lot of Sussex that are affected by slow internet speeds and inefficient connections.

Matt Turner: I think for the SME sector in particular, when your ISP has a problem, the business literally stops. One afternoon, our internet at Basepoint went down, and every business’ account systems, CRM, marketing platforms, emails and HR platforms are all in the Cloud, so the businesses just ground to a hault. We take it for granted.

 

How big is the issue of cyber security and how can we tackle online fraud?

 

Matt Turner: People don’t realise how big cyber security is and that wiping your data sometimes doesn’t really mean its wiped. This is just going to become a bigger and bigger problem, and it’s the client’s data that they want. But it’s little things also like educating your staff. I don’t allow my staff to put on social media that they’re going on holiday because in a bigger business, someone on the outside could use that information to gain trust and infiltrate.

Jason Fry: The human factor is the biggest issue at this point. The security systems and technology are actually quite good at standing up to an awful lot and most businesses have a good level of defense. The biggest challenge though is that their staff are being duped into handing over sensitive information quite easily, which then leads to some sort of fraudulent activity. We are getting quite a lot of reports of this from our customers: fishing and whaling.

Daryl Gayler: The level of sophistication is really quite concerning. We used to get maybe one issue with fraud every 3 months, but now we are getting 4 or 5 a month. We host regional customer service days and we would pick topics such as the international trade, where you’ll struggle to get 20 clients to a meeting. But when we ran one on fraud awareness, we had 97 clients attend and we have since run them across each of our commercial offices. We always get between 80 and 100 clients – so the level of interest is incredibly high.

Matt Turner: Has anyone heard of Cyber Essentials? It’s a government run scheme to get you accredited for cyber security. Any business in the UK that trades with central government has to be Cyber Essentials approved. Within the next 12 months, any business working on any local government projects will have to be approved too. From every point of view, even if just for insurance purposes, this is a great scheme.

Jason Fry: I think the government does have a bigger part to play. The report last year was that the UK lost £27 billion to financial crime. I don’t really see much central government activity though, which is a huge shame because they could communicate to all businesses quite easily, and create a simple audit for businesses to check how secure they are and actually a lot of firms invite third party vendors into their systems also, so it needs to extend to them.

There’s a large discussion around employee status as well from a legal perspective because at the end of the day it’s the employee that’s being duped and where do they stand from a legal perspective within that business? Is the organization providing enough awareness to that employee about how they should be acting with information?

 

 

Andrew Clinton: A recent survey of the top 200 law firms asked the question, ‘have you suffered an internet security issue?’ and 66% of them responded yes. If two thirds of top 200 law firms have suffered an incident, that really gives you an indication of the scale of this. The vulnerability goes beyond employees – you’re absolutely right about educating them, but as we move forward, we need to think about collaboration on the internet. You’re going to have third party suppliers and a whole network of other people, so the whole issues spreads.

Daryl Gayler: I think for me the big concern is not so much for the bigger businesses, and the damage it does to their brand because they will survive. But it’s actually the SMEs that tend to get done for £25,000 and that could potentially spell collapse. Small businesses really come under pressure on the back of mistakes that staff have made, and even with the best efforts to educate them and build security into the systems, there is still that element of human error.

 

Do professional services need to up their game in terms of investment in technology (R&D)?

 

Andrew Clinton: Yes, certainly they do. If you look outside of professional services typically people spend quite a lot of money on research and development. Most organisations have an R&D budget, but there won’t be many law firms that do, so there’s a mindset shift required and an issue within the model itself. There’s a difference between the mindset of an investor and the mindset of a partner, and I think for professional services – particularly law firms moving forward – we will have to think about our business a lot more as investors. One of the real disadvantages that has come to light when you research it is LLPs don’t get tax credits on R&D and the amount of time we are spending on innovation, new ideas, new services and new products equals a lot of money without tax relief.

Daryl Gayler: My concern with the idea around R&D is that it does take investment in technology and people’s time. Both of those cost money, so in an environment where costs are challenging, some of those budgets around investment could be under pressure. It worries me that the kind of issues that what we’ve been talking about today, particularly around cyber security and online fraud, and around the need for R&D investment is happening whilst the economic climate is actually quite good. If the economy gets worse again, some of these budgets will be cut back and this could lead to an even greater level of exposure. That’s an issue for a start up, for an SME and for a larger business.

James Wright: Just to put some of that into context, we run a CFO survey where we look at bigger businesses to get a tone of what people are doing. Over the last 12 months or so, this appetite for things growing the balance sheet is down to 35% from 70% – so halved in terms of capital spend etc. When you look at the priorities of these businesses, 44% are looking to reduce costs whereas only 17% are looking at more investment – which is now, so as you say, that’s worrying. There is some level of uncertainty at this point in time, but actually generally we are in a good market however already things like payback times are stopping people from investing.

 

The Changing Future

 

With the immediacy of technology, customer demand is essentially 24/7 – how can businesses continue to keep up with the 24/7 demand whilst still providing an efficient and personal service?

 

Daryl Gayler: Equipping your team to work smartly and remotely is key. Businesses must invest in decent mobile handheld devices to give their employees access to customer queries and information out of traditional office hours – that’s a base level requirement now. Customer demand isn’t getting any easier and they want access to your teams when they want or need it. Even for our sector, which has more traditional hours in terms of the way people work, there is regularly demand out of hours and our staff need to be able to turn it around very quickly, particularly with exclusive transactions with tight deadlines. So, good quality IT support, good quality handheld terminals, the ability to log on when needed and high speed internet access are all things that are key for staff to be able to provide that 24/7 customer service. On another note, the single most important thing for any of our customers though, is having that face-to-face contact with their relationship managers. What has always been important to our customers is exactly that. It does depend on the business, but for our customers, being able to talk through their personal accounts with someone they know and trust – despite all the things we’ve been speaking about – is still the single fundamental most important thing that drives their satisfaction with us as an organization.

Jonathan Grant: What you can’t do, I think, is have experienced people in the field talking to clients, giving them what they need in terms of a direct answer or advice without good systems behind them. The systems need to be fast and efficient – there’s a much more flat system now in law. You don’t have half a dozen lawyers between senior partner and client, you typically have one or two, but you have a bunch of processes that allow you to deliver the service much quicker. I think that’s really where the customer demand is.

Andrew Clinton: It has to be personal; it has to be bespoke. The demands are now significantly more onerous and the whole world has changed. As a law firm, we used to expect our clients to fit around how we did things, but there’s a fundamental shift that’s occurred which means that we must fit round the buyers of legal services now and so people are starting to consider things like service design and delivery. There’s not one answer, but the complexity of it is the driver for consolidation because there’s a lot of cost that goes into a fragmented market and if you consolidate that market, the unrealized profit tied up in all those duplicated processes will be huge.

James Wright: I think the consumer is dictating the price now. That’s fine but I think businesses have to have predication almost based on the price point and customer demand. In the UK, the average person doesn’t hold legal services, they don’t hold a will; they see lawyers as being expensive. There’s a massive untapped opportunity there if you can get the price point and delivery right.

Jonathan Grant: I think lawyers are becoming a lot more similar to banks now, as we’ve got a group of relationships managers (or similar) who are customer facing and who talk to clients and try to open up the process a bit. They encourage clients to talk to them whilst reassuring them that their not charging until something has been agreed. To engage with clients and be available 24/7 is what we want. But, behind that there is a system that’s running – and the banks do it on a much bigger scale.

 

 

Developing and Sustaining Talent

 

How do we keep the skills required in the rapidly developing world up to date – filtering through from businesses to education bodies and vice versa?

 

Jason Fry: As a country, we are very good at producing talented people out of university – they are all very technically capable but actually that type of work will be industrialised through IT, or at least part of it. So, we need to focus more on educating our children to do different things in different ways. The mundane work that people do now won’t be done in the future, which will actually free up lots of time for people to interact with clients, work towards prospects and business will be done in a different way. We will pay far more attention to training people in the right way, in social skills rather than technical skills.

Andrew Clinton: I agree entirely. We have a responsibility to engage with the people who are educating young people, to make sure the skills that they’re learning are relevant for not just today but for the foreseeable future.

Matt Turner: Even if you look at the here and now with education, what students are being taught at school level is often completely irrelevant to what actually happens in business. One of the biggest issues with say 15 – 16 year olds is that they’re not well versed in using a telephone because they haven’t needed it. Now, although it is technically more advanced for them to text or email you, it is still vital for them to be able to pick the phone up and speak to you. You can teach them industry specific skills, but not the more personal things.

Jason Fry: I would like to see the universities and colleges reaching out to some of the local businesses. I have tried to engage with certain colleges, to give talks to students, as I feel like that’s an opportunity to go in and look for talent as well as educate. But I would like to see more effort on the education body’s part in connecting with businesses, understanding what they do and paving the route for their students.

Daryl Gayler: I think it’s improving. Universities do recognise the importance of turning out graduates who have that blend of skills. They have far more placement courses that ever before now, where you have to do a year in industry. Similarly, in the professional services industry, there’s much more open-mindedness in taking school leavers rather than university leavers. Certainly this year, I have 9 apprentices coming into my business, and we haven’t done that for a number of years. I’ve also done some work with Coast to Capital, they really strive to connect business and education so I think there is willingness – it’s bridging the gap between the two, and apprenticeships and placement schemes are a way of doing that.

James Wright: We are a pretty big employer of graduates and school leavers. We do summer vacation schemes and we have recently partnered with Thomas Bennett community college, to do just the things that you’re talking about: careers fairs and letting students know what business actually looks like and what the difference is between modern day business and what you learn in the classroom.

Jonathan Grant: The old regime where people used to spend the first 5 years doing accountancy audit and spending a lot of time doing through people’s records and gradually learning is gone. It’s all going into the artificial intelligence and clever technology systems that gives you a very quick summary of information. So I think that the way that we train our staff is going to change rapidly and people aren’t going to be able to just tick along because the demand for rapid development within the company will grow.

 

Does AI present a real threat to jobs?

 

Jonathan Grant: One way or another, it’s the same thing being done with a different tool. So, one of the ideas of artificial intelligence in Law at the moment is that bigger companies are keen to establish a series of precedents and standard contracts which they can exchange together, negotiate and change. So, you almost don’t need a lawyer stepping between you as someone supplies one series of changes and you have a standard series of responses. Now, somewhere along that path someone needs to make a decision, so you do still
need a level of human contact, advice and experience but you can cut out a lot of the time consuming costs.

Richard Heap: Personal tax returns are all going online, so there’s going to be a lot more people doing their own personal tax. In the next couple of years we have a lot of junior staff that will process tax returns – they won’t be needed anymore, but you still need that higher level of advice for the more complex situations.

Andrew Clinton: A lot of what lawyers do is putting structure into unstructured environments, reading and understanding things. So if computing can do that for us, then there’s a whole raft of things that traditionally junior staff do that will disappear. But the advisory part won’t go anywhere, as that experience and judgement can’t be looked up on the internet and it’s too high level for computers. But then where do those people come from at the top if there aren’t any juniors?

Jonathan Grant: The job profile in 20 years time will just look completely different.

 

 

Which Roundtable Topic is Next?

 

Entrepreneurship and StartUp Business Ventures: Supporting Us, Supporting Them

 

When?

 

Friday 13^th May

 

Where?

 

Brighton Entrepreneurial Spark Hatchery, Preston Road, Brighton

 

Get in touch with us on 01323 819007 if you’d like to be involved in the next roundtable. We are also looking for audience members, so email jenny@lifemediagroup.co.uk to show your interest