Wednesday, 04 September 2019 10:33

Growing digital divide between small business and larger enterprises

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There’s a growing digital divide between small businesses and large enterprises, with smaller businesses gaining an advantage by their adoption of new technology, according to a new report.

And the report from accounting software provider Xero says that Australian small businesses that increase their investment in technology grow their revenue and create jobs faster than other businesses.

Trent Innes, Managing Director, Xero Australia and Asia says that small businesses have an advantage over larger enterprises in being agile in adopting new technology.

Innes warned of the growing digital divide – based on new data from Xero Small Business Insights - when speaking at the company’s Xeron conference in Brisbane.

The data update - ‘Wired for Success: the impact of technology spending on small business’ - is based on anonymised and aggregated data from Insights and was prepared by AlphaBeta Advisors.

The data also finds that small businesses:

  • That increase their spend on information and communications technology (ICT) are 68% more likely to be growing
  • With higher ICT spending growth grew revenue 3.5 percentage points faster than those with lower ICT spending growth
  • With higher ICT spending growth grew employment 5.2 percentage points faster than those with lower ICT spending growth

According to the report, on average, Xero subscribers in Australia spend less than 1% of total revenue on ICT each year, with this expenditure relating to categories including Internet, telephone, mobile, computer, telecommunications, broadband, NBN and ADSL.

Xero says the roll out of the NBN is also helping businesses to access faster broadband, and driving greater levels of digitisation and growth opportunities – with Insights data revealing that, among businesses on Xero, those in mature NBN regions grew employment by one-third more (2.6 percentage points) than businesses in non-NBN regions in 2017.

“In Australia we are at an inflection point for technology adoption for small business and we have to ensure that they surf this wave,” says Innes.

“Small business is best placed in terms of size and agility to take advantage of new ways of working. Australian ranks third in the OECD in terms of the percentage of small businesses purchasing cloud computing services.

“This gives them a powerful start, and Xero’s data indicates a direct link between technology investment and growth.

“Xero is calling on small business to take a fresh look at their investment in technology to ensure they are in lock-step with big business, taking the first mover advantage where possible.”

According to Innes, access to advanced technologies has also never been “more prevalent or democratised” - from cloud computing to digital ecosystems -- putting powerful services and tools into the hands of anyone with a mobile or laptop”.

“While we see large enterprises well on their way to digital transformation, taking advantage of a range of powerful new technologies from AI to blockchain, we have to avoid the dangers of a new digital divide -- one between small and big business.

“Having a two-speed tech economy would be a disaster for Australia’s productivity and growth, particularly given small businesses generate a fifth of GDP and employ nearly half of all workers.”

“Small businesses have a huge opportunity to take advantage of increasing broadband connectivity and harness cloud-based business productivity tools,” says Andrew Charlton, Director, AlphaBeta Advisors.

“Among Xero users, 35% of medium sized businesses and 44% of larger small businesses are connected to third party apps delivering valuable insights and time savings to business owners.”

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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