CSIRO report confirms lag in business internet use

Businesses, government organisations and individuals are not currently well prepared to take advantage of faster broadband, according to the CSIRO. Flickr/HD Zimmermann

Broadband access and coverage may have increased across the country, but businesses aren’t investing in the required skills to facilitate innovation, technology leaders heard today.

The launch of the Australian Centre for Broadband Innovation’s broadband impact and challenges report saw a roundtable of experts discuss how Australian businesses needed the “education of desire”, to educate people to want to use technology more effectively.

Colin Griffith, the director of the Centre, told the gathering that for large corporations, “the rough rule of thumb is for every $1 invested in IT infrastructure, an equivalent $1 needs to be spent in terms of change management in order to get effective use of technology”.

“We can treat this more generally to see if we need a comparable level of investment in innovation and training, which could be provided by private firms, not-for-profits or by government agencies,” Griffith said.

Some training had taken place in areas that were about to receive the NBN, the research found. But Griffith said the scale and reach of existing schemes isn’t enough. “While they may connect to hundreds of individuals, we need to connect to thousands if not 10,000.”

“I know in Korea, in certain sectors, they are in a sense mandating changes. In the education sector, for instance, they’ve made the investment to put the curriculum online and concentrate on digital delivery of education,” he said.

The research found no immediate jump in profitability for businesses who embraced digital technologies enabled by fast broadband, but a long-term reorganisation of business practices that boosted productivity.

Profitability changes over five years, for businesses which reported increased IT investment in 2007 (blue line) compared to those which did not (red line). Australian Centre for Broadband Innovation

Not quite there

The report found the benefits of next-generation broadband and going online were not well understood with some businesses “dealing with fruitless enquiries from overseas, or providing more quotes for poorer returns”.

Businesses, especially smaller firms, lacked the time or financial resources to properly implement online applications, and there was a widespread perception that current business practices were adequate.

Tim Williams, the CEO of the Committee for Sydney, told the panel Australian retailers had existed with basic websites for too long, to the detriment of their business. “All of a sudden there was this digital tsunami that hit and it was panic stations that they hadn’t been doing nearly enough,” he said.

While faster internet had become more ubiquitous since 2007, a related paper found companies with even just a basic web presence had only increased marginally from 47% to 48% in 2011.

Matthew Sorell, a senior lecturer in telecommunications at the University of Adelaide, said the real issue was policy inertia dating back to the early 2000s, where little was done to address connectivity and speed issues.

And he questioned why the percentage of businesses with a web presence was necessarily a good indicator, saying it would be better to work on market capitalisation rather than absolute numbers.

“There are many small businesses and sole traders where the benefits of broadband are marginal or non-existent. I am struggling to see how my hairdresser benefits from any more than having a static website in the next five years,” Dr Sorell said.

The report did find that some sectors would be affected to a greater extent and more rapidly, but Williams said there was not enough information on which sectors would be hit as technology changed.

And while faster internet and greater investment in IT infrastructure would allow Australian businesses greater access to sell their products, they feared it would also open them up to more competition from overseas firms.

Kai Riemer, associate professor and chair of business information systems at the University of Sydney, said, said there was no way of knowing what faster upload and download speeds would do to business practices.

But he said the speed of internet wasn’t what was holding back retail businesses and next generation broadband wouldn’t increase competition from overseas retailers, as existing speeds already facilitated overseas purchases.

“[Faster internet] should be at an advantage to local retailers, because if they have greater upload speed they could work on product presentation that would allow more of a natural presentation. Faster broadband would actually strengthen local businesses because it would open up a fast internet space that’s internal to Australia,” Professor Riemer said.