One of last year’s most high-profile Scottish tech deals saw Glasgow-based digital transformation and data analytics company Incremental acquired by Spanish giants, Telefónica Tech, in a deal worth up to £175 million.

It was an incredible vindication for a company only launched in 2016 – showing just how much traction it had made in making itself visible among the litany of transformation and digital-first consultancies.

The addition of Incremental’s business applications, data analytics and management capabilities to Telefónica Tech UK&I’s cloud services portfolio put the company in the position to enhance its end-to-end cloud offering for mid-market, large enterprise, and government customers.

However, aligning a European multi-national with a burgeoning Scottish firm is no easy task, especially when you consider that Incremental Group has two key specialised business areas: It is one of the leading Microsoft Dynamics Partners in the UK and is also a major player in the data and analytics market. It’s also been a Microsoft Business Applications Inner Circle member for the past three years.

With that mind, how does it play out when an acquisition like this happens – rolling out a high-level of service with regards to Microsoft’s Dynamic suite to a whole new roster of clientele, backed by Telefónica Tech, who have well-stated ambitions to be an ever more proliferate player in end-to-end cloud services?

To answer this and much more, we spoke to Incremental CEO (and Telefónica Tech UK&I CTO), Mark Skelton.

Overseeing Scale

While it might seem like a daunting task, taking on the aspirations of a company on such an upward trajectory as Incremental, and aligning it with the ambition of Telefónica Tech UK&I, it’s something Skelton has had years to prepare for.

He says: “I’ve been in the organisation (Telefónica Tech UK&I) for quite a long time through various incarnations and I think that history and experience of the heritage parts of organisation has put me in good stead for the leadership role of these latest acquisitions we’ve made.

“It’s always been in my sights to elevate the business outside of IT infrastructure, core infrastructure-based services and moving more into the data and apps space, so I was leading the charge on that strategy. So as part of the mergers and acquisitions team, I went out to market looking for particular expertise that we’ve found in Incremental Group, and ultimately, the subsidiary brands that sit as part of that organisation.”

Telefonica Tech’s move to acquire Incremental was one to ‘enable the group to make strategic and long-term investments in recruitment and development at scale’ (quoting from a press release at the time). Almost a year on, Skelton considers what progress has been made in this regard.

He says: “With any acquisition, there is a period of post-acquisition where you want to maintain a steady state, with regards to business performance – which we achieved for the first six months. Subsequently, we have now started to accelerate growth. We’re taking on staff faster and more new business than we ever have done, so we’re really starting to achieve some of those key growth metrics.”

Furthermore, Skelton hopes to achieve core synergy between Incremental and Telefónica Tech UK&I by opening up the latter’s “900 UK customers to the Incremental business, because all of those customers need these apps and data services.”

Digital Transformation

The question of assessing the digital transformation landscape is one that’s on the mind of anyone with even a peripheral interest in technology. It’s so fundamentally set the discourse for enterprise over the last decade, especially recently – from the rush to digitise and relative IoT mania at COVID’s peak, to something of a sense check, after the dust has somewhat settled.

Now, the key word is value, finding insight in data that provides something tangible to an organisation. It’s a question that Skelton has pondered at length.

He says: “Fundamentally, for me, digital transformation is taking traditional processes and ways of doing things and then turning them into a digital solution.”

By way of a case study, Skelton talks about Virgin Money, who had a “very manual process for onboarding their customers in their b2b banking process.”

He adds: “We took that process; we built a solution on the Power Platform from Microsoft, and we automated that process end-to-end. So, the outcome to the customer is the process, where it took three days to obtain a new client, this was now done in minutes.

“That’s what digital transformation is. It’s taking something time-consuming and complicated for humans and automating it, putting it through a digital programme. Ultimately then, you can feed that into data platforms and start to do some really clever stuff with things like ML, AI, and start to predict business change and all those types of things.”

Digital Disruption and Cybersecurity

A recent Bain & Company survey stated that 85% of business leaders believe that digital disruption will continue or accelerate over the next five years.

It’s an interesting stat for a number of reasons, but when you consider the expense of transformation projects, at a time when tech is going through something of an economic reckoning, it raises the question of why so much onus is still put on digital disruption despite these strong economic headwinds.

“Businesses are under constant pressure to find better answers to serve their customers,” says Skelton.

He adds: “Technology has accelerated at such a pace that it can really do some great stuff for businesses and help them compete in the turbulent times. For that, simply, I don’t see disruption changing over the next five years, in fact, it will likely accelerate – there’s always something that crops up.”

At the heart of digital disruption, inevitably, you have cloud – such has been the case for almost a decade, now more than ever, however, businesses are looking to cloud to lower the cost of bringing technological innovation to their organisation. This is illustrated in a Gartner study that stated that global public cloud spending is set to hit $600bn this year.

In another study by Check Point Research, they found that in 2022, there was a reported 48% increase in cloud-based cyber-attacks. Between these two stats, we see a picture of a proliferating but vulnerable proposition. Considering Telefónica Tech UK&I’s ambitions in the cloud market, it’s something Skelton has to reconcile and naturally, has a lot to say on.

Speaking about why he thinks cloud’s proliferation is accelerating in the way it is, he says: “Every single CIO in every business is looking to cloud as a platform to help them enable a load of tech in their business to help them compete.

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“You can enable AI, as part of your infrastructure, enable machine learning, all of these lovely technology buzzwords can be turned on in cloud environments, as opposed to a more traditional way of doing things on-prem, that would have cost you millions.

Moving into how this invariably affected the number of cloud-based cyber-attacks, Skelton says that “the problem with all of this innovation in this space is, every time something new is released, it creates another sort of attack vector.”

He adds: “The problem is that the cyber-technology providers have just not kept up with the cloud innovation cycles. It does help that the likes of Microsoft and other hyper scalers, have started taking security very seriously. Amazon is doing something very similar. Google is slightly behind, but it will catch up.

“And that gulf between cyber technology and cloud – exacerbated by geo-political issues like the Ukraine war – has shown that there’s a bit of catch-up to do on the cyber side.”