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Business Innovation1.2 Digital Innovation

1.2.1 Business internet use

Many Australian businesses have integrated internet-enabled services into their business operations. For the last ten years, the use of these services has steadily increased. By far the most common use of the internet continues to be managing financial activities at 89.3 per cent in 2017-18, which is up slightly 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. Working 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 for the purpose of communicating, sharing, training and assessing current products.[9]

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1.2.2 Business use of social media

Social media channels are successfully used by Australian businesses across a large range of industries for individual marketing and communications. Businesses recognise that social media channels provide opportunities to customise their marketing (81.5 per cent in 2017-18) and their communication with customers (71.7 per cent). Over the last six years, this trend has remained largely consistent with a slight increase in use. The use of social media for recruitment purposes has seen the biggest growth, from 18.3 per cent in 2013-14 to 27.6 per cent in 2017-18.[10]

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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.[11] The number 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 employment size, 35.5 per cent of micro businesses (0-4 employees), 50.1 per cent of 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, 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).[12]

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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).[13] 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).[14]

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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 underpin 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).[15]

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1.2.7 Factors impacting business ICT use

The introduction of disruptive new technologies entails not only opportunities but also challenges. In the course of pursuing productivity gains through the uptake and use of digital technologies, businesses often need to adjust their business frameworks, 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 digital skills and capability (7.7 per cent).[16]

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1.2.8 ICT use in business processes

The use of ICT has increased gradually over the last 6 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 proportion 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.[17]

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