Pinsent Masons predicts key trends for UK technology businesses in 2012

“Against a backdrop of challenging market conditions technology businesses need to prepare themselves for an even more competitive year in 2012,” said Andrew Hornigold, head of technology sector, Pinsent Masons. “From our experience and understanding we predict that five key trends around intellectual property, convergence, skills, protecting personal data and incentivising the workforce should be at the forefront of every technology company’s thinking if they are to thrive in the New Year.”

The five trends highlighted by Pinsent Masons, a firm which works with leading technology businesses across the world and helps them prepare for the future through strategic business advice, are:

1. Exploiting and protecting intellectual property
   Intellectual Property is at the heart of tech businesses remaining competitive and will increase in importance in 2012 in two areas – countering infringement issues and effectively exploiting IP. Given the increase in high profile legal cases alleging patent infringement and the growth of patent trolls focused on litigation, tech companies need to ensure that they have full and documented control over the intellectual property within their products and services across the world. With the valuation of IP being more closely linked to overall company worth than ever before, having processes to capture, manage and licence IP will also be vital to company growth and when involved in mergers and acquisitions.
2. Convergence between technology sectors
   While convergence of voice, data and mobile has been happening for a while, we are now seeing a wider convergence of software, networks and the devices used to access information. Technologies such as Software as a Service (SaaS), the Cloud and the use of mobile devices such as smartphones and tablets in business radically change the licencing and business models of technology and telecoms companies as they aim to provide a complete solution on a ongoing basis to their customers. The forthcoming 4G mobile licence auction provides an opportunity for non-telco businesses to enter the market while convergence will drive M&A activity between hitherto separate sectors as companies aim to fill gaps in their wider portfolios.
3. Securing skills in a competitive marketplace
   Innovation-based businesses in the UK rely on access to a skilled workforce, so securing the right staff and skills will be a major focus in 2012. There is still much debate about the potential mismatch between education and employer needs, particularly in the tech sector, which is leading to a skills gap that hits UK competitiveness. How this is addressed, both in the short term and longer term by curriculum reform will be key discussions in 2012. Additionally changes to the visa system for employing non-EEA workers in the UK will potentially have a major impact on innovation-based businesses, mitigating against being able to bring in as many researchers or developers as before. Companies need to look at how to tackle this ‘innovation gap’ either through increased training of UK staff or investment in R&D centres outside the UK.
   
4. Increased focus on protecting personal data
   With social networks now part of the mainstream, 2012 will see an increased consumer focus on privacy and protecting their personal data. With the Information Commissioner’s Office (ICO) now armed with greater powers to punish those who infringe the Data Protection Act, technology businesses need to be alert and take their responsibilities seriously when storing, using and securing personal data to avoid a public backlash and potential legal sanctions.
5. Incentivising the workforce
   Traditionally technology businesses recruited and incentivised staff based on a combination of salary, bonuses and stock options. Low equity prices mean many stock option schemes are currently essentially worthless, with share values below the levels of staff options. Consequently rather than being a spur to achieve targets, they are acting as a disincentive. Companies need to look at restructuring incentive schemes so that they regain their place as a staff motivator, particularly if investors are looking to realise value through an exit.