Business Innovation1.2 Digital Innovation
1.2.1 Business internet use
Almost all Australian businesses now have internet access (97 per cent in 2018–19) and many are transitioning their broadband connection to a fibre connection, especially large businesses (200 or more employees) (data not shown). For the last 10 years, businesses have steadily integrated internet-enabled services into their business operations. By far the most common use of the internet continues to be to Manage financial activities at 90.4 per cent in 2019–20, up from 84.8 per cent in 2009–10. All other uses have also grown considerably and continue to do so. Most notable is that workers have become increasingly mobile with 48.5 per cent being able to Work from home in 2019–20. Over a third of businesses also use the internet to Communicate, Receive online training and Assess current products.[17]
1.2.2 Businesses receiving orders via the internet
The share of businesses receiving orders via the internet indicates the extent of e-commerce as well as the state of business infrastructure necessary to support this. Since 2006–07, there has been a consistent increase in the share of businesses, both innovation-active and non-innovation-active, selling goods and services online. Innovation-active businesses are significantly more likely to do so, reaching 58.2 per cent in 2019–20 compared to 40.6 per cent for Non-innovation-active businesses. In 2020, the industries with the largest increase of orders received via the Internet were Accommodation and food services (13.0 percentage points), Retail trade (12.6 percentage points) and Professional, scientific and technical services (11.2 percentage points). SMEs also enjoyed increases in orders received via the Internet, with a 9.0 percentage point increase, while large businesses fell by 5.1 percentage points.[18] This shift towards e-commerce was heightened by the COVID-19 pandemic.[19]
1.2.3 Business use of cloud computing
Cloud computing is a relatively recent technology focused on delivering ICT resources (e.g. software, storage or processing capacity) as a virtualised service over the internet on an on-demand or pay-per-use basis.[20] The share of businesses using cloud computing has rapidly increased from 19.4 per cent in 2013–14 to 55.4 per cent in 2019–20. For those businesses that used cloud computing services in 2019–20, Software-as-a-service was the most commonly purchased service (80.4 per cent), followed by Storage capacity (55.2 per cent). By business size (data not shown), 48.7 per cent of micro businesses (0–4 employees), 64.8 per cent of other small businesses (5–19 employees), 76.1 per cent of medium-sized businesses (20–199 employees), and 80.6 per cent of large businesses (200+ employees) reported using paid cloud computing services. By industry sector (data not shown), Professional, scientific and technical services had the highest proportion of businesses using such services (72.9 per cent), followed by Information media and telecommunications (67.1 per cent) and Mining (67.1 per cent). Note that survey response options for questions regarding the use of cloud computing have changed since the previous survey period.[21]
1.2.4 Barriers to business use of paid cloud computing
In the presence of reliable high-speed internet, cloud computing can deliver a number of benefits that amount to a superior ICT service at lower cost compared to traditional models. While the majority of surveyed Australian businesses increasingly report that no factors are limiting their use of paid cloud computing services (70.7 per cent in 2019–20, up from 58.7 per cent in 2013–14), some businesses have identified limitations. In 2019–20, Insufficient knowledge of cloud computing services (13.5 per cent) was the most common limiting factor, followed by High cost (11.7 per cent) and Security breach risk (9.6 per cent). While the perception of barriers fell in general, businesses increasingly reported the high cost of cloud computing services as a barrier.[22] This suggests that there is potential for wider uptake of cloud computing services by Australian businesses, as these factors are addressed.
1.2.5 Management practices for business ICT use
Digital technologies offer substantial productivity gains to businesses and their employees, as well as flow-on spillover benefits in terms of skill and capability development. The size of those gains relies in part on the effective management of ICT assets, skills, training, and support services. About half of all Australian businesses implemented at least one management practice for the use of ICT in 2019–20 (43.3 per cent), which is a large increase of 12.1 percentage points from 2017–18. This rapid uptake is led by a 7 percentage point increase in investing in new Digital technologies to 16.5 per cent of all businesses in response to the COVID-19 pandemic, driven by the Rental, hiring and real estate services and Administrative and technical services industries. Other common management practices include Improved security through implementing upgrades to cybersecurity software (20.1 per cent) and contracting external IT consultants (17.5 per cent).[23]
1.2.6 Digital technologies of major importance
Mobility and operational flexibility are increasingly important to business performance. Digital technologies can facilitate this flexibility, for instance, through remote access or convenient service delivery to customers and end users. In 2017–18, more than half of all businesses with internet access reported that Mobile internet access was of major importance to their business (57.8 per cent), followed closely by High-speed broadband internet access (50.4 per cent). Further, Cloud technology (27.0 per cent) is becoming increasingly important. Whilst the importance of each type of digital technology has increased since 2015–16, many technologies continue to not be ranked by businesses as being of major importance, for instance, Intelligent software systems (7.2 per cent) and Data analytics (5.2 per cent).[24]
1.2.7 Factors impacting business ICT use
The introduction of new technologies entails not only opportunities but also challenges. In pursuing productivity gains through the uptake of digital technologies, businesses often need to adjust their business practices and resources to complement their ICT assets. The evidence suggests that these factors do not represent substantial obstacles for Australian businesses. The vast majority of businesses surveyed (72.3 per cent in 2017–18 and 74.5 per cent in 2015–16) did not identify any obvious factors as having fundamentally changed their use of ICT. In 2017–18, when they did identify some factors that changed their use of ICT the most commonly reported ones included Spam (7.6 per cent), Lack of access to digital infrastructure (7.7 per cent), and Enhanced need for digital skills and capability (7.7 per cent).[25]
1.2.8 ICT use in business processes
The use of ICT has increased gradually between 2013–14 and 2017–18. In 2017–18, Australian businesses used ICT most extensively for Accounting (66.8 per cent), followed by Invoicing (60.5 per cent) and Human resources (48.1 per cent) purposes. On the other hand, only 17.0 per cent of businesses use ICT in Stock control. The share of businesses using ICT extensively tends to increase with business size (data not shown). For example, in 2017–18 in the case of ICT use for Business planning (20.4 per cent), business proportions were 16.5 per cent for micro businesses (0–4 employees), 22.0 per cent for small businesses (5–19 employees), 38.1 per cent for medium-sized businesses (20–199 employees) and 61.5 per cent for large businesses (200 or more employees). This pattern may in part reflect differences in business requirements at different scales of operation.[26]
1.2.9 ICT capital investment
The digital economy is underpinned by advances across a range of digital technologies, facilitated by sustained rapid growth of investment in ICT capital goods and services over the past decades. A useful measure for this type of investment is the aggregate spending on Computer software, Computers and peripherals, and Electrical and electronic equipment. The data shows the disproportionate contribution of computer software investment, pointing to the importance of the application of knowledge and the accumulation of intangible capital more broadly. Over the last 20 years, investment in computer software increased more than five-fold in chain volume terms, from $4.3 in 1999–00 to $23.5 billion in 2019–20. At roughly 1.16 per cent of GDP, computer software currently accounts for nearly two-thirds of total investment in ICT across the three assets.[27]
Footnotes
[17] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[18] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[19] OECD (2020), E-commerce in the time of COVID-19, OECD Publishing
[20] Jadeja, Y & Modi, K (2012) Cloud computing – concepts, architecture and challenges, Article
[21] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[22] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[23] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[24] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[25] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[26] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[27] ABS, Australian System of National Accounts, Cat. No. 5204.0