Slow tech adoption ‘costs business $9m a day’

New research has shed light on what slow tech adoption by small businesses is costing the Australian economy.

According to a recent study, slow tech adoption by small businesses costs the economy more than $3 billion a year, or $9 million a day, while another highlights concerns about how far the sector trails its Asia-Pacific counterparts.

Firms had to reinvent themselves and increase investment in both technology and training, said the interim CEO of RMIT Online, Claire Hopkins, commenting on the first report, but it would repay the spending rapidly.

The report from RMIT and Deloitte Access Economics found the price of reskilling was dwarfed by the cost of under-investment.

“Now is the time for businesses to invest in skills and development capabilities if we are to grow a resilient and competitive workforce,” said Ms Hopkins.

“As demand for digital skills continues to grow, the cost to businesses will also grow if decisive action is not taken to address these gaps.”

Ms Hopkins said that closing the digital skills gap and the subsequent technology uptake would be expensive but it would be more costly if businesses did nothing.

“While the upfront cost to solve our upskilling and reskilling crisis may seem high, our research shows investing in training is necessary for Australian businesses to reap substantial and long-lasting benefits, and to mitigate the impact of the digital skills gap.”

The study found the technological skills gap was costing Australian firms up to $3.1 billion annually – $9 million a day – but could be closed through a $1.5 billion investment.

Partner at Deloitte Access Economics John O’Mahony doubled down on the findings and said firms were losing money through a lack of investment in technological expertise.

“If businesses underinvest in digital skills training it can result in a loss of revenue, additional costs of outsourcing work to external staff or contractors and reduced productivity,” said Mr O’Mahony.

“That’s why training is an investment, not just a cost.”

While a lack of digital skills was hindering businesses, CPA Australia’s recent Asia-Pacific small business survey found that Australian organisations were also significantly lacking when it came to the use and application of technology.

Australian businesses were the least likely to say their firm had been impacted by internet connectivity issues but for the wrong reasons, according to CPA Australia.

CPA Australia attributed this to a lack of use: “Rather than reflecting the reliability of their internet connection, service and speed, this result is most likely due to low technology adoption among small businesses in those markets.”

For the same reason, Australian businesses were least likely to expect a cyber attack, at less than 27 per cent.

“Given the low digital uptake of many Australian small businesses, it’s not surprising that they have the lowest percentage expecting a cyber attack this year,” said the association.

While Australian small businesses have improved in the use of some technologies such as social media, increasing from 49 per cent usage in 2014 to 66 per cent today, the industry still lagged its Asian counterparts on 88 per cent.

A concern raised by the survey was that when local firms did invest in technology only just over 30 per cent said their investment increased profitability compared with 80 per cent of Indian firms reporting an increase.

“Even when Australian small businesses do invest in technology, they underperform their regional counterparts in selecting technology that improves profitability,” said CPA Australia.

“Australia’s lower technology adoption rates and an older demographic profile is likely contributing to that result.”

“As with selling online and using social media, older respondents, older businesses and micro businesses continue to be significantly less likely to be investing in technology that improves profitability.”

Australian businesses were also found to be investing heavily in outdated technology, with firms putting the most funds into websites at 18 per cent, computer equipment at 16 per cent, and accounting software at 9 per cent.

By comparison, fellow Asia-Pacific nations were predominantly investing in artificial intelligence, enterprise resource planning software, customer relationship management software, and even mobile applications.

The lack of technological adoption also carried over to small business innovation with CPA Australia revealing local firms were the least likely to innovate while Indian entities were most likely.

CPA Australia’s senior manager of business and investment policy Gavan Ord said bringing through younger business owners would improve innovation.

“A lack of innovation is a drag on economic growth and productivity that we will feel for years to come,” said Mr Ord.

“Encouraging new talent to launch small businesses can boost long-term innovation.”

This article was originally published on HR Leader's sister brand Accountants Daily.