With the Channel Islands both hoping to build a strong digital future, Kirsten Morel takes a look at how the islands compare to each other, where their strengths and weaknesses lie, and how they match up to the rest of the world
It"s two years since Jersey announced with some fanfare that it would set up an agency, Digital Jersey, to champion the island as a digital centre. It aims to do this by developing on-island digital capabilities and attracting foreign businesses to its shores. The move is part of the island"s push for greater economic diversification as it seeks to reduce its reliance on the financial services sector.
The reality is that the initiative is not dissimilar to those seen in other jurisdictions and cities around the world, as they look to adjust their economies in the face of an ever-expanding digital culture. But it is seen by those in Jersey as a definitive first step on the road to a bright digital future.
Ten miles across the water, Guernsey already has a thriving e-gaming industry, having worked with its sister island Alderney to provide facilities and a legislative framework that are attractive to online gaming businesses.
There"s no doubt Guernsey stole a march on Jersey, having moved over a decade ago to bring e-gaming business to the island. Jersey was slow to react, only changing its gambling legislation in 2012, since which time, little business has been forthcoming. However, despite this success, many feel Guernsey has lost its way a little since then and fallen behind Jersey in the digital race.
The islands may be neighbours, but they are both at different stages of their digital development. Here we analyse how they are faring as they try to gain fitness for the digital age.
The islands as digital centres
The creation of Digital Jersey may, in part, be a sign that Jersey learnt from its salutary e-gaming lesson. Like the daily ins and outs of the islands" tides, progress in digital technology waits for nobody and while there"s realism about how quickly the island can catch up with the rest of the world, Paul Masterton, Executive Chairman of Digital Jersey, is in no doubt that this is possible.
“What we"re seeing now is good momentum in creating the necessary conditions that will support growth,” he explains. As an example, he cites the importance of the skills pipeline that"s being developed in conjunction with a range of coding programmes and classes, as well as community building, which has been helped by a range of events and regular meet-ups, a business incubator, and Digital Jersey"s role as a facilitator between business, society and government. According to Masterton, all of these are crucial when developing a "technology ecosystem".
As well as skills development and its exploration of the e-health, financial technology and cryptocurrency sectors, Digital Jersey also launched its Hub earlier this year. This is a space open to anybody in the sector to use for developing their business and holding meetings and workshops. Importantly, the Hub includes a co-working space, which enables start-ups to help each other through collaboration, and the first signs are very positive, with, at the time of writing, 78 businesses having used the centre since it opened.
It"s a pretty impressive statistic for a facility that is only a few months old, and it shows the importance of the Hub as a focal point for the community.
These early initiatives are part of Digital Jersey"s attempts to build a digital ecosystem for the island, something that"s crucial if the Channel Islands are to succeed in the digital sector. While Guernsey has yet to create a central agency in the mould of Digital Jersey, there are already a number of initiatives and groups working to develop such an ecosystem.
“We have Startup Guernsey, which is more focused on the start-up ecosystem,” says Sasha Kazatsaneva, Director of the organisation. “We also have the Chamber of Commerce technology and digital sub group, and Creative Guernsey, which is a committee representing the creative professions. There"s also BeerCodeDesign [a regular get-together].”
The range of groups is important because, according to Kazatsaneva, only an effort across both the public and private sectors will work. “I think it"s these initiatives, which are privately led and bring together the developers, agencies and people working from their bedrooms that will make the most difference. It can"t be just government.” It"s a theory echoed by Marc LainÉ, Managing Directorof C5 Alliance Guernsey, in our interview on page 18.
At the moment, Guernsey lacks the central space that Jersey has created with the Hub - however a similar area is likely. Indeed, the island is currently in the process of trying to raise funding for an innovation centre, currently known as "The Digital Greenhouse". The intention is to go further than the Digital Jersey Hub and incorporate start-ups, the GTA University Centre, and the coding academy, while hosting meetings, seminars and co-working - and also be a home to Startup Guernsey.
While the central space may currently be lacking, one private initiative from Channel Island IT consultancy C5 Alliance has created a low-cost incubator for aspiring businesses - although there is definitely space for more. “The lack of such a facility was holding back the island, and the reasons for basing it here were compelling,” explains LainÉ. “You"re removing barriers to things such as access to IT people and decent bandwidth.”
Whether it"s a business incubator or a multipurpose hub, one of the key reasons that both islands see for creating these spaces is to bring people with an interest in the industry together - particularly those with skills, because it"s readily acknowledged in the islands that there"s a digital skills shortage. However, no number of coding classes will turn all islanders into developers, which is something LainÉ is keen for people to understand.
“There"s a lot of media hype around skills. There"s this myth that"s been generated that everyone needs to code, but that"s not true,” he says. “Yes, we need developers, but software development is a science.”
Chris Clark, CEO of Channel Island IT consultancy Prosperity 24.7, goes further, suggesting that islanders need to change their culture as much as their skills. “Islanders need a willingness to engage, take risks and embrace the opportunities that technology can provide. This isn"t about technical skills, but about a change in mindset,” he explains.
Which island to choose?
There can be no question that the islands are still young in their development as digital centres, although Jersey appears to be slightly ahead of Guernsey, if only because Digital Jersey has, through the Hub, been able to effectively take on the role of facilitator and coordinator for all kinds of public and private initiatives.
However, that doesn"t mean Guernsey isn"t stronger than Jersey in a number of areas. E-gaming has already been mentioned, and Andrew Scott-Miller, Founder of Jersey start-up Race Nation, believes Guernsey could be better placed to help new companies develop.
“Guernsey has a bit of an advantage because they have some big, world-class companies operating there. Those names are eyebrow raisers, and this gives Guernsey a marketplace advantage in the investment world,” he says.
E-gaming is one reason for this, with big names like Sky and Genting registered via the Alderney Gambling Commission, and they have well known e-commerce firms such as Specsavers and Healthspan operating there. There are also venture capitalists and investors such as Jon Moulton and Guy Hands. All of this helps to give Guernsey an advantage should it seek to provide a platform for business investment.
Of course, you"d expect there to be natural parallels between the islands" existing financial services industries and a digital sector hungry for investment, but it"s not as simple as that. Scott-Miller isn"t sure Jersey is quite ready to become a hub for start-up investment.
“Jersey"s investors, even the entrepreneurial ones, have a Jersey perspective, and the game of investing in start-ups requires a completely different profile. The Jersey mentality is very much to stay in that safer, middle ground, but if we"re serious about being a tech island, then we"ve got to break out of that.”
Scott-Miller should know - he has successfully secured initial investments in Race Nation, but found it difficult on-island, and had to look elsewhere.
One man who"s chosen Jersey is Mike Ross, Founder of Tap Tap Boom, a creator of gaming apps, for whom the tax environment was just one reason among many that he brought his company to the island in September 2012.
“The fact that Digital Jersey was being talked about and the recognition that technology was becoming increasingly important, as well as the wider environment, were key factors in my decision to relocate to Jersey,” he says. And while he believes that “overall, the business environment is good and has a high standard of professional services,” he feels the main downside is regulation, which can slow down business.
With a combined population of just 160,000, the Channel Islands will always struggle to make their case against larger, better known jurisdictions. Scott-Miller and Ross do, however, show that both Jersey and Guernsey have something to offer both home-grown start-ups and companies looking for somewhere to flourish.
Transforming government
Business may form a key part of the Channel Islands" move to develop their digital capabilities, but it"s about much more than that. The digital revolution is transforming societies, and the islands" governments have been quick to see that there are opportunities to offer more services more quickly, more cheaply and in a more individualised manner by moving public services onto a digital footing.
“E-government is the opportunity for the States of Jersey to provide its services to island residents digitally rather than over the phone, on paper or face to face,” explains Digital Jersey"s Masterton.
Naturally, the island"s government has to take the lead in moving to a mainly digital interface with its people, but Digital Jersey has a facilitating role to play, particularly in bringing business and government together.
Although Jersey has not moved too far down the road to e-government, it has been clear about its aspirations. “Jersey has a good vision of what e-government could be and how to get us there, including aspirational but achievable targets, such as having 75 per cent of government interaction online by 2018,” says Masterton.
Jersey has opened consultation with local businesses about their plans for e-government and is encouraging local suppliers to work with them, something Masterton believes is critically important. “Everywhere else we"ve seen the move to e-government, it"s been an important catalyst for the local technology industry.” However, it"s not simply a case of handing out contracts for local businesses to fulfil - the private sector also has to step up.
Jersey may be just starting to look towards e-government, a programme that will take the best part of a decade, but Guernsey is farther behind.
“Jersey"s ahead of Guernsey in e-government,” says LainÉ. “However, the Guernsey Government, driven by Deputy Kevin Stewart and [Chief Executive] Paul Whitfield, is changing that. But don"t underestimate the size of the task.”
Chris Clark agrees Jersey is leading the way, but sees the journey to e-government being a long one for both islands. “Jersey is further ahead regarding a single citizenship record. Historically, if you look at where they"ve come from, the States of Jersey had about 40 different websites. The aim is to get them all onto a single platform.”
Of course, public administrations developed over centuries can"t be changed overnight, and the cost will be considerable. “There"s a lot of commitment and planning, and it will cost tens of millions over a period of time, but as things are automated, the cost of running government will be a lot lower,” adds LainÉ who also sees ways for those costs to be reduced.
“There are opportunities to collaborate and save money in the design and support of digital services. At the moment, we"ve got both islands doing things separately, whereas we should be writing it once and branding it differently so we effectively get it for half the cost.”
The islands vs the world
LainÉ is not alone in his calls for more collaboration. Kazatsaneva reflects the thoughts of all the commentators when she says: “We"re not competing against each other, we"re competing against the world.”
The islands don"t have to look far to see how similar jurisdictions are doing. The Isle of Man, like Guernsey, has developed a healthy e-gaming industry, which in 2010 contributed eight per cent of the island"s economy and has been used as a platform to push further into the digital sector.
The island has learned to be quick to say the right things to attract the world"s attention, as was seen recently in the cryptocurrency sector, an area of interest to both Channel Islands. Manx regulators and government all issued pronouncements stating their attitude, which is welcoming to digital currencies. They"ve even laid out a time frame for enacting cryptocurrency legislation.
Similarly to the Channel Islands, the Manx Government sees diversification as key to its economic future, and digital technology is at the heart of its plans. It does however, share one major problem with Jersey and Guernsey - the lack of skills.
One country that"s spent the last 15 years addressing the skills problem is Malta. Also an island, it"s considerably larger than the Channel Islands with a population of over 400,000. Having identified the digital sector as one of five industries it wanted to develop for the new millennium, Malta set about building its educational capabilities.
Today, Malta"s education system delivers 700 IT graduates per year, and even this isn"t enough to feed industries such as e-gaming, which delivers double-digit growth to the island"s economy, or software development, which is being actively encouraged.
Malta has also sought external investment to fund infrastructure developments such as Smart City Malta, which it is hoped will create 5,000 jobs.
The Channel Islands have a lot to learn from similar jurisdictions, and they"re very open to this, as was shown by the recent Digital Jersey visit to Estonia to examine their advanced approach to e-government.
The Channel Islands" basic infrastructures are in good shape and being improved - both islands are set to see 4G delivered within the next 18 months and Jersey is rolling out fibre to the home, which will also enable companies to use the island as a test bed before rolling out products and services on a global scale. This should help raise the island"s profile, particularly in areas such as e-health.
There are, however, limits to just what the islands can do right now, and the biggest handicap is the lack of skills, something which can only be expected with such small populations. However, things are moving, and in perhaps the first sign of inter-island collaboration, Jersey"s slowly building momentum seems to be helping to move things in Guernsey.
Mike Ross neatly sums up the need for a collaborative attitude between the islands: “The spirit of the tech industry is about collaborating, and I don"t see why Jersey and Guernsey can"t work together.”