Examination of Witnesses (Questions 400-416)
INSTITUTE OF
DIRECTORS
13 JULY 2004
Q400 Linda Perham: I met somebody at
the weekend who gave his profession as a penetration specialist,
but nobody knows what that means so he says he is a legal hacker.
Are we going to need any more of those?
Professor Norton: We are, but
the real killer is this so-called "denial of service"
driven by those rogue PCs. Even if I built the most secure system
in the world, if all my access lines are jammed by billions of
packets of false traffic nobody can get in. It is like a sit down
protest outside my store in the high street, if customers cannot
get in you are out of business. Whilst you are right about penetration
attacks, we are getting better at doing computer security. We
are not perfect but better. Unless we can sort out how to deal
in the network with all that fake traffic before it hits the edge
and blocks people then we will have a really serious problem.
We have already seen it when Worldpay was taken down for a day
or two, crippling the payment arrangements of many e-commerce
users who work through Worldpay, it was taken down by denial of
services. As someone who spent many years advocating e-business
and many years advocating broadband, I think there is a darker
side to this which is a real challenge and that is a challenge
that will have to be met on a global basis.
Q401 Sir Robert Smith: Even if we encouraged
everyone here, would that not be enough?
Professor Norton: No.
Q402 Mr Berry: Could I first of all go
back to this question about ICT investment adding about half a%
to UK growth. Clearly the cost of that investment is the billions
that could have been spent doing something else. The IoD, like
other organisations, comes to this Committee frequently and says
there should be more money in the infrastructure, more money on
basic science, more money on this, that and the other. So what
is the priority? The marginal £1 billion or, if I could scare
you, the marginal £10 billion, where should it go? Should
it go on ICT, on transport infrastructure or energy infrastructure?
Professor Norton: Can I speak
personally and not as IoD because I do not know what their answer
is on that. I would split it and I would certainly put a sizable
chunk into education because unless we crack the people side of
this there is no point in putting in the ICT. The Irish Government
published a paper earlier this week looking at what it needs to
do to get the roar back into its Celtic tiger and it has yet again
focused on education and skills. I can make a copy of that available
to the clerk. I would worry about infrastructure, particularly
about energy infrastructure. I would have serious concerns about
the reliability particularly of electrical infrastructure. There
is no point having the ICT if it is black.
Q403 Mr Berry: In Graeme Leach's memo
he makes a comment about the IoD survey last year when 39% of
respondents stated that the Internet and e-commerce had provided
a significant boost to productivity. 39% seems a bit low to me.
How do you explain that it is a minority of people say it is having
a significant effect?
Professor Norton: 43% said it
had provided a slight boost as well. I remember when I first went
to IoD in 1999 we had 2% of people saying they thought this might
make a difference, which is one of the reasons why we thought
it was quite important to have a crusade about it. IoD has crusaded
on this agenda particularly in the period from 1999 to 2001 and
we have driven up our members" awareness. I am not too despondent
with those figures. They are probably slightly better than I would
have expected.
Q404 Mr Berry: Is there anything that
Government can do perhaps to assist and encourage the improvement
of ICT systems other than the role of good exemplar?
Professor Norton: I think there
is. First of all, it has done some useful things, including the
tax arrangements for computer facilities for small businesses,
but small businesses relate to government through things like
VAT. If it were much easier to submit your VAT online and it was
easy for small businesses to get hold of the software to do it
and it was automatically part of their accounting package, for
example, making sure that the government systems relate to the
systems a small business uses in an easy and straightforward way,
that would make a large difference.
Chairman: On the figure of 39%, I think
we are all very conscious that in the last 12 months there has
been quite a dramatic increase. When was that survey carried out?
Mr Berry: In December 2003.
Q405 Chairman: So we are talking about
four months.
Professor Norton: Let us just
look at what is meant by this. Companies find it quite difficult
to say what caused their productivity improvement, in fact countries
do to the best of my knowledge. I think our members are also being
honest. Can I really say hand on heart that the ICT did this or
the way I changed my business to use it did this, or the fact
that I have changed my business all the time did this? I would
have been surprised if the numbers had been much larger simply
because it is so difficult to put your hand on your heart and
say "The Internet did this".
Q406 Sir Robert Smith: 43% said it had
provided a slight boost.
Professor Norton: That is where
I would fall down. I cannot really put my hand on heart and say
that I think it has improved things so let us tick "slight".
Q407 Mr Clapham: You suggest the Government
be used as an exemplar. One can see perhaps the reasons for that
because, as you explained earlier, parents go into schools, they
come into contact with technology at that kind of level, but the
real difficulty is how do you translate that experience over to
small- and medium-sized enterprises in a way that they can see
that there will be benefit from implementation?
Professor Norton: Can I give you
one example? One of the examples I always use when I talk to small
businesses is that one of the great tricks of e-business is to
move the costs out of your business into somebody else's and if
you can do it whilst making them happy it is even better. Let
us assume that you are a small manufacturer. If you can open up
your design systems securely to a limited range of your customers
so they can come in and do their own design and configuration
then you have chopped a huge amount out of your cost of sales,
you have locked them in and you could probably transform your
business. Let me give a silly example. One of the winners in an
IoD competition was an application printing business cards where
most organisations take about three weeks to produce a business
card because it goes through a print shop. There is an application
on the Net for a small company in Leeds where you go in, they
have got 100 different profiles, you choose one you like, you
fill in the information—therefore if it is wrong it is your
fault—and they print it for you in 24 hours. It has transformed
their business card business because they have chopped out the
cost of sales, they have chopped out the costs of preparation
and there is no proofreading because I am proofreading it myself,
but they are still charging X for business cards. It is that sort
of approach, and I can argue that with any small business. That
is one of several typical arguments that prevail.
Q408 Mr Clapham: How should we facilitate
better engagement with small business? For example, would Business
Link be the way?
Professor Norton: It would be.
I am out-of-date on Business Link. I know there have been some
refreshers of skill but I am not entirely sure they have been
refreshed in business terms rather than technology terms. If I
go into that small card company and say, "What you really
need is computer preparation of these cards," they are going
to say, "Come on", but if I go in and say, "Why
don't you get your customers to prepare the input for the card
for you?" they will think that makes sense. So it is the
issue of how you translate technology into business capability
and that is difficult.
Q409 Sir Robert Smith: You mentioned
earlier about the role of Government as purchaser, exemplar and
sponsor as well and changing the psychology around projects rather
than ICT. From your experience inside Government can you tell
us how that role could be changed?
Professor Norton: I am going to
get very controversial. It was the recommendations from my team
that created the e-envoy office via the Prime Minister. We put
it in the wrong place. It should be in the Treasury. As to my
experience of other administrations that have got this right,
Canada would be a good example, Finland is another one. Our logic
in putting it in the Cabinet Office was straightforward. This
was supposed to be a progress chaser, a programme manager, not
an implementer. It is 30-odd people bringing down prime ministerial
wrath on under-performance, not doing it themselves. It has grown
over time into part of the problem rather than part of the solution.
It is an implementer. It should not have been implemented in the
Cabinet Office anyway. It becomes a rival. It is one thing to
be hated but it is another thing to be a rival. I would cut it
right back and put it into the Treasury where there is a significant
power base and use it in the context of transforming the Green
Book to say you do not get approval unless you are showing the
proper business change processes and funding. I would staff it
now primarily with Business Change skills.
Q410 Mr Clapham: You do not think it
is too late?
Professor Norton: No, they could
do that today. It might even be the salvation of the extremely
good man who has been recruited as the replacement e-envoy, but
I think he is in an invidious position.
Q411 Chairman: You must appreciate, Professor
Norton, that there is a predisposition within all of our Select
Committees to concede nothing more to the Treasury who think that
they rule the world anyway.
Professor Norton: I did say it
with some trepidation, Chairman.
Q412 Chairman: You will be quoted! You
have spoken about the 1% difference in productivity and things
like that. You have suggested and some commentators have given
weight to the proposition that online education could become a
major growth opportunity. How do you think we are positioned as
a country at the moment? Are we taking advantage of this in comparison
with other countries?
Professor Norton: I think we are
poorly co-ordinated. Having just offended almost everybody this
morning, I will now offend the final constituency which is universities.
Our universities are too small. I think inevitably we will see
over coming years major amalgamations, very painful as that may
be, but I think we are subscale in this. Our universities are
not big enough to make this happen on a global basis.
Q413 Chairman: What about the OU which
(a) is a distance learning institution, (b) is quite large in
terms of a student body, and (c) is relatively well known?
Professor Norton: It is a mystery
to me, Chairman, why there has not been more exploitation of that
and I am not sighted on the subject properly. All I would observe
is the same as you, that it appears to have all the preconditions
for success, not to mention 20 years of experience, but I do not
observe it in that space, whereas I do see lots of universities
rushing into that space usually on too small a scale to be useful.
MIT is planning to put all of its lecture notes on the web for
free, which is a kind of pre-emptive strike.
Q414 Chairman: Do you think the Government
has a potential coordinating role here or do you think the dead
hand of the DfES would be exactly the wrong prescription?
Professor Norton: I am in grave
danger of stepping outside my brief. Speaking personally, my feeling
is that HEFCE has a role. The funding arrangements do not encourage
the sort of consolidation that I would certainly like to see and
will get me banned from every single senior common room in this
country.
Q415 Chairman: We appreciate that Professor
Leach is not with us today, but if there is anything that he would
like to add to your evidence or if there is additional information
which you would like to bring to bear, we would be very grateful
to have it. Thank you very much for your evidence this morning
which has been very stimulating and useful.
Professor Norton: Thank you, and
thank you for your understanding on behalf of Professor Leach
who would very much have liked to have been here.
Q416 Chairman: If there is anything you
have said that he would like to say in a supplementary sense,
we are more than happy to receive it from him. Thank you very
much.
Professor Norton: Thank you.
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