Emergent Markets: Data Analytics

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Data Analytics

As enterprises, governments, and consumers produce more data, it is fast becoming unfeasible for them to manually analyse it to guide their decisions.

Introduction

This is one of the 16 market profiles produced as part of the Economic Market’s foresight study commissioned by the North East LEP. It provides an overview of the future growth prospects for the Data analytics market globally, a summary of the enterprise base serving the market in the North East and relevant regional assets, and an analysis of how the continued convergence of global trends will affect future market development.

These markets were selected as those most likely to present opportunities for future regional growth in the North East LEP. This was done based on a trends analysis conducted by Frost and Sullivan, which identified 37 high impact trends driving continued change and growth in these markets globally. A shortlist of markets from this trends analysis was then cross-referenced against the current North East position by Cambridge Econometrics. This analysis identified the most significant opportunities for the North East LEP.

Each of these profiles also uses findings from the Data City platform to quantify the number of firms serving the Data analytics market in the North East. This platform links companies house data to companies’ websites and uses the website text and machine learning to classify firms into Real Time Industrial Classification Codes, which can allow analysis of markets often too emergent to be precisely measured in SIC codes. The data from this platform has been triangulated against ONS data to consider a variety of perspectives on the market.

More detail about the methodology can be found here for the 16 market profiles

Description and global outlook

As enterprises, governments, and consumers produce more data, it is fast becoming unfeasible for them to manually analyse it to guide their decisions. The amount of data generated is increasing at exponential rate – for example, during 2018 to 2025 it is predicted that the amount of data generated will grow by ten times to reach 163ZB.

Market drivers

Increasing adoption of the Internet of Things (IoT) across several sectors, such as environmental mapping, industrial processes, wearable tech, automotive and healthcare are among the key drivers of exponential growth in data generation. It is estimated that by 2024, 60 billion assets will be connected. However, in 2020 only 5% of data captured by these assets is currently being acted upon in any meaningful way—implying a tremendous future growth potential for solutions that can help customers create value from data across financial services, healthcare, insurance, industrial monitoring and supply chain efficiencies.

The IoT space is particularly attractive for AI-based analytics providers due to the pressing need to automate many processes associated with analysing data from thousands of sensors as well as automate the monitoring and control of sensors and devices.

Another key trend aiding the growth of data was the shift to cloud-based models for data storage solutions. This further enabled the growth of analytics services by the hosts, such as Google, Azure and AWS, with availability of large amounts of data flow and offered it as additional value-add service. However, the data analytics market has several challenges such as:

skill shortage
ensuring data accuracy
data protection
cyber-security
high cost
data management
inadequate capabilities at an organisational level

Scale and scope of global market

The global market size for big data and analytics services was estimated to be US$192 billion in 2019, with growth rate forecast of CAGR 11% for the period 2021-2026. North America is the largest data analytics market with presence of several industries and adoption of application areas with support ecosystems.

In the US, leading markets which present several opportunities include the automotive sector, manufacturing, healthcare, financial services and marketing. The UK is considered to be one of the leading data analytics markets, with a developed value chain and support ecosystem.

Within the UK, support from the government and presence of financial and insurance industries provide lucrative opportunities to grow. Some of leading global companies in the data analytics market are: Tableau, Qlik, Mu Sigma Analytics, Fractal Analytics, Manthan, Alteryx, Centerfield, CB Insights, Salesforce, Teradata.

UK Market

According to Tech Nation UK, the UK has been historically strong in deep digital technology, including: R&D intensive, innovative digital technology developments. Digital technology is becoming more important for the UK economy.

The rate of digital technology GVA contribution to the UK economy has grown on average by 7% per year since 2016. Jobs in the digital economy have risen by nearly 50% over the last fifteen years. Since 2017, the rate of digital technology job creation has picked up and in 2019 represented almost three million jobs, or 10% of the employed population.

$192 bn

Capital flows and FDI

Funding for ICT and Data ventures (VC and PE-based) rose by 183% between 2019 and 2020. This is expected to be higher in 2021, partly as a result of the COVID pandemic, but also buoyed by the increasing numbers of innovative startups and growth companies in the market across the UK. This represented 42.6% of all VC and PE investments made across the nation over the period.

As with other markets, the regional breakdown of this capital liquidity does not favour the North East, with an aggregated 1.1% of all investments made in the North East region. There appears to be significant regional differences in either availability of private capital, or the readiness of regionalised ventures to attract such investment.

Further exploration into the barriers to private capital flows into the region, and how public-sector initiatives can support the crowding-in of such capital, is suggested.

North East presence and capabilities

Regional overview

According to North East LEP, the North East has the 2nd fastest (to London) growing IT and Digital sector in the UK, comprising of 28,000 IT and digital employees, 51,000 students in STEM subjects across region’s 5 universities and 50 specialist gaming companies. The North East is also the location for the Sage HQ – FTSE 100 listed company.

The North East has established strengths in software development, programming, service centres and gaming. There is a rapidly growing North East FinTech sector, MedTech, GovTech, Connected Construction expertise; and AI / VR / Augmented Reality technical expertise.

R&D strengths

R&D strengths include IC3 (the International Centre for Connected Construction); the Digital Catapult, the National Innovation Centre for Data (Newcastle Helix); and the Centre for Public Health Data. University specialisms include Computing at Durham University, Northumbria University’s BIM Academy, and the Faculty of Computer Science at the University of Sunderland.

The North East Centre of Excellence in Satellite Applications

The North East Centre of Excellence in Satellite Applications, based at UKSPA member North East Technology Park (NETPark) in Sedgefield, has played an important role in the growth of the region’s space sector. It champions space opportunities within the region, and connects businesses to bring new expertise into the sector.

Business Durham, the business support service of Durham County Council, has led the North East Satellite Applications Centre of Excellence since April 2014, engaging with over 670 organisations, establishing links between 277 business and universities, and helping companies secure £9.2M worth of funding.

The centre, which is supported by the Satellite Applications Catapult and UK Space Agency, is focused on using satellite applications to create a safer world, addressing challenges including sustainable living and climate change, security of supply chains and resilience in infrastructure and assets.

Stellium Data Centres

In the field of data in particular, the North East LEP area has a rapidly developing data centre and connectivity role. Stellium Data Centres is the UK’s only cable landing station for the new North Sea Connect cable and the UK’s newest Internet Exchange Point, and it can transfer data at 30 terabits per second. The Stellium campus comprises 12 IT halls within three separate data centres of Tier 3 standard.

The National Innovation Centre for Data (NICD)

The National Innovation Centre for Data (NICD) was created in 2019 with £30 million of funding from the government and Newcastle University. Based in the state-of-the-art Helix science district in Newcastle, its mission is to transfer data skills to the UK workforce.

Its team of PhD and Masters-level data scientists work to ensure that organisations across the country are equipped to reap the benefits of the global data-driven revolution. The Centre for Doctoral Training in Cloud Computing for Big Data at Newcastle University is an innovative and highly prestigious programme. Newcastle University also offers a PG Cert, PG Dip, MSc Data Science course.

Data Analytics at Durham University

Durham University has several departments and centres for data analytics:

The Institute for Data Science (IDAS) is a multidisciplinary platform for new ideas in Data Science, cutting across the silos of subject-specific knowledge. Its mission is to provide a central hub for high-quality research in Artificial Intelligence (AI), Machine Learning (ML) and Data Analytics (DA), seed opportunities for inner-disciplinary and interdisciplinary research across faculties within the University and collaboratively with external partners, focus expertise in Data Science and to cater to specific needs for industrial growth in the North-East and beyond, and establish a credible, strong, multi-disciplinary umbrella structure supporting large-scale projects, at national and international level.
Its Master’s Degree in Business Analytics is a collaborative programme bringing together the expertise and knowledge of Durham University Business School and the Department of Computer Science.
Data-intensive science courses such as the PhD in astronomy or particle physics with emphasis on large data, MSc Scientific Computing and Data Analysis (Earth and Environmental Sciences) and MSc Scientific Computing and Data Analysis.

Data Analytics at Sunderland University

The University of Sunderland offers a BSc Honours degree in Business Intelligence Data Analytics, an MSc in Data Science, and MSc in Computer Science with Data Science, and an MSc in Applied Data Science.

Data Analytics at Northumbria University

Northumbria University offers a Data Science MSc, a combined Computer Science with Data Science MSc, Information Science (Data Analytics) MSc and a Business Analytics MSc.

Key business and industry networks

Key business and industry networks include: SunderlandSoftwareCity, Digital City, Digital Union, Dynamo, VRTGO Labs/Proto Lab, and Thinking Digital. Analyst Network North East (ANNE) is a network (part of the Operational Research Society) where analysts from the academic, public & private sector can connect & exchange ideas on analysis (quantitative and qualitative).

Analysis of GVA and employment by SIC sectors

The tables below summarise the findings from socio-economic data and economic forecasts, presenting headline findings for both the IT services and other professional services industries. These are the most relevant SIC classification industries for data analytics.

The IT Services industry employs 24,400, with a similar share of regional employment to nationally. This sector is highly productive, and has experienced a steep increase in employment and GVA. The economic forecast is for a further increase in jobs and GVA growth.

The "other professional services" sector is more productive than average and employs 11,400 in the North East. This sector is less of a specialism for the North East than it is nationally. The sector has experienced a significant increase in jobs and GVA over the past 38 years. Future projections show continued job and GVA growth.

IT services

Other professional services

The Data City findings

The Data City provides company data based on an AI-driven taxonomy search of terms and content on company websites. This is then connected to companies house data for each company – and allows an aggregate analysis for new industry and market definitions. The data captures the number of business branches in the North East LEP area.

The Data City suggests that there were 44 active data analytics firms with a location in the North East LEP area in June 2022 – 2.2% of the total UK firms operating in this sector.

Location quotients

North Tyneside and Sunderland both had strong location quotients for data analytics, ranking in the top 40 LA’s. Newcastle also had a moderately strong location quotient. However, the rest of the local authorities in the North East LEP area had location quotients below one and Northumberland and South Tyneside did not have any locations for firms in this sector.

Out of region locations

The locations data from the Data City suggests that North East LEP firms are much more likely to have locations in more than one NUTS region than UK firms overall. 57% of firms with a location in the North East LEP area had at least one out of region location, compared to 24% of UK based firms having a location in more than one NUTS region.

Over 10% of firms in data analytics in the North East LEP area also operate in London, the North West, Yorkshire and the Humber and Scotland. Despite being the most common out of region location for North East LEP firms, North East LEP firms were less likely to have a location in London than UK based firms overall. In contrast, firms in the North East LEP had stronger links to the North West, Yorkshire and the Humber, Wales, Scotland and Northern Ireland.

Sector crossover

One of the innovative features of the Data City methodology is that it allows firms to be classified in multiple sectors. The platform does so through real time industry classifications (RTICs), which are constantly evolving classifications generated by an AI from companies’ websites. Firms can be classified under multiple RTICs at any one time.

This means the data can be used to demonstrate interdependencies where sectors overlap. Over 10% of firms in the North East LEP area in data analytics also operated in data landscape, advanced manufacturing, artificial intelligence and software as a service. However, the proportion of firms working in all these sectors is slightly lower than the UK percentage, which may suggest that the data analytics sector in the North East LEP is not quite as well integrated into other sectors as the rest of the sector in the UK.

Overall, UK firms operated in 42 different RTICs, 15 of which were also operated in by firms with a location in the North East LEP area.

Subsectors

The Data City methodology also includes individual subsectors within the RTIC taxonomy which allows detailed analysis of the North East LEP’s focus within data analytics. The data suggest that the North East LEP has a focus on data services within advanced manufacturing and software as a service, but relatively few firms operating in data landscape users and machine learning related to artificial intelligence.

Overall data analytics firms in the UK operated in 163 different subsectors, of which firms with a location in the North East LEP area operated in 36.

Locations map

Data analytics firms were mostly concentrated in the urban parts of the North East LEP area, especially in the city centres of Newcastle and Sunderland. There were relatively few firms in more rural areas and none with locations in Northumberland or South Tyneside.

Regional prospects

A critical part of this study is to shortlist which emergent markets represent “hot prospects” for the North East economy in the future. Using the findings from the study, and the assessment framework below, Data Analytics is rated as a market with:

Emergent status in the North East
National scope in terms of firm activities and ownership
Moderate presence in the North East with 2.2% of firms in this market having a location in the North East (slightly more than 2% of firms in all sectors)

Existing regional specialisms

Moderate: average location quotient; some employment and firm presence

Firms

Low: small number of SMEs

Value chain cluster

Low: small number of SMEs

Innovation / technology

Moderate scale of R&D activity, with national leadership

Skills and human capital

Directly relevant: foundation and specific skills, with infrastructure and provision

Local institutions

Related: can be adapted

Local assets

Relevant minor assets: of regional significance

Click here to download the full assessment framework.

Strategic commentary

Data analytics and associated capabilities around the processing, quality management, validation and structuring of large datasets is now fundamental to the success of the digital economy. Innovative data platforms are in high-demand and this demand is expected to grow as the complexity of data produced and consumed across the nation’s digital landscape grows.

The North East region already enjoys a strong position in what is a highly competitive national race to attract talented data scientists, architects and engineers. Key regional assets such as the National Innovation Centre for Data based on the Newcastle Helix site mean this is a market where the North East has an established strategic infrastructure.

The broad range of markets enabled by Data analytics highlighted in the table below means that the North East’s strengths are of significant value. Almost all forms of digitally enabled business models rely on data analytics services and platforms to operate and evolve. This means maintaining a strength in Data analytics is of vital importance for the North East as it seeks to maintain is position in markets such as Fintech, Immersive technology and Robotics.

Much of the North East’s data analytics expertise resides within academic or R&D-related initiatives, so strong cross-sector working will be essential in utilising the depth of expertise available in the region. In addition, the markets own dependencies need to be addressed too. The table below highlights that Data analytics both enables and is dependent on developments in Cloud computing, Cyber security and 5G. The North East needs to ensure it has the skills to develop a broad suite of digital capabilities to benefit from the increased importance of the data economy.

Introduction