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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 89.3 per cent in 2017–18, up from 82.3 per cent in 2007–08. All other uses were not as well established in 2007–08, but they have grown considerably. Most notable is that workers have become increasingly mobile. Being able to Work remotely from home or other locations has reached 89.3 per cent in 2017–18, up from 36.3 per cent in 2007–08. Over a third of businesses now also use the internet to Communicate, Share information, Receive online training and Assess current products.[20]

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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 51.2 per cent in 2018–19 compared to 33.7 per cent for Non-innovation-active businesses.[21]

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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.[22] The share of businesses using cloud computing has rapidly increased from 19.4 per cent in 2013–14 to 42.4 per cent in 2017–18. For those businesses that used cloud computing services in 2017–18, Software-as-a-service was the most commonly purchased service (88.6 per cent), followed by Storage capacity (61.1 per cent). By business size (data not shown), 35.5 per cent of micro businesses (0–4 employees), 50.1 per cent of other small businesses (5–19 employees), 65.7 per cent of medium-sized businesses (20–199 employees), and 76.4 per cent of large businesses (200+ employees) reported using paid cloud computing services. By industry sector (data not shown), Information media and telecommunications had the highest proportion of businesses using such services (63.5 per cent), followed by Professional, scientific and technical services (58.1 per cent) and Financial and insurance services (55.6 per cent).[23]

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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 (65.7 per cent in 2017–18, up from 58.7 per cent in 2013–14), some businesses have identified limitations, although levels are almost unchanged between 2015–16 and 2017–18. In 2017–18, Insufficient knowledge of cloud computing services (17.2 per cent) was the most common limiting factor, followed by Security breach risk (13.3 per cent) and High cost (11.1 per cent).[24] This suggests that there is potential for wider uptake of cloud computing services by Australian businesses, once these factors are addressed.

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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. Around one third of Australian businesses implemented at least one management practice for the use of ICT in 2017–18 (31.2 per cent), which is a slight increase of 1.7 percentage points from 2015–16. In 2017–18, the most common management practice was Improved security through implementing upgrades to cybersecurity software, standards or protocols (13.5 per cent), followed by contracting external IT consultants (12.2 per cent) and Staff training (10.7 per cent). Other management practices reported include investing in new Digital technologies (9.5 per cent) and introducing Digital strategies (7.3 per cent).[25]

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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).[26]

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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).[27]

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1.2.8 ICT use in business processes

The use of ICT has increased gradually over the last six years. 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.[28]

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