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Australian governments must support Australian e-business enterprise

By Larry Kamener and Scott Reid - posted Thursday, 15 March 2001

The first chapter of the e-commerce revolution is over. The markets have corrected the overvaluations of tech stocks and their providers. Yet most of the valuable work of building an e-business economy remains to be done.

What is ‘e-business’? The Business Roundtable uses the term to encompass two dimensions: the use of e-commerce tools by the broader economy for efficiency and innovation; and the development and production of those tools by the Information and Communications Technology (ICT) sector itself. Defined this way, the e-business prize is large – potentially $30-35 billion annually by 2010 – and warrants major corporate and public policy focus in the coming years.

A National e-Business Agenda

There are three ways in which Australia can capitalise on e-business success: by accelerating adoption of e-business to drive improved productivity; by using e-business as a catalyst for innovation across all industry sectors; and by becoming a greater supplier of e-business technologies and services.


To get there, Australia also urgently needs to develop two key enablers: creating an abundance of people with the relevant skills; and developing world class digital infrastructure.

Australian e-Business Performance: A National Reportcard

The reportcard on Australian e-business performance is mixed, although we are only 10 metres into the race. This has important implications for the direction and urgency of our e-business action agenda.

In e-business adoption, Australia is at the front of the pack in these early stages. In line with our rapid adoption of new technologies – mobile phones and VCRs are often cited examples – Australian consumers are heavily connected to the Internet. In global terms, Australian businesses do well on measures such as Internet access, though small and medium enterprises are behind. There are, however, some concerns about business performance on deeper measures of e-business uptake, such as supply chain integration and online transactions.

Government’ s role in e-business adoption is twofold: to facilitate, where possible, rapid adoption of e-business by the private sector; and to ensure that government itself comes online quickly and efficiently. In both of these areas, Australia has enjoyed strong early leadership, particularly at the federal government level.

In using e-business to drive innovation across the economy, Australian businesses are behind. Corporate value worldwide is increasingly driven by knowledge creation, yet too few Australian firms have used e-business to generate innovations. Australian business R&D intensity is low; and Australia registers few patents in world markets.

And in generating e-business technologies, Australia is well behind the pack, but far from out of the game. By many measures of industry development, the Australian ICT sector is underpowered. ICT employment and output shares are the lowest across the OECD. ICT exports fare poorly. Few of Australia’ s largest companies are in the ICT sector, and the basic R&D that supports e-business innovation is subscale.


In e-business skills Australia has posted a mixed performance. Despite the generally high quality of its education system, Australia faces a skill shortage. While the extent of the shortage is debated, it has been estimated that we need around 90,000 new university ICT graduates to meet forecast demand. This target is unattainable at current rates of graduation. ICT postgraduates are of particular importance to innovation but, while their numbers are rising, they still fall short of anticipated demand.

Our infrastructure base is solid, but faces some specific challenges. Australia performs well on most measures of e-business infrastructure. Telecommunications infrastructure is excellent and the take-up of narrowband Internet access is high. In broadband access, however, we are behind the best practice countries, and there is concern the gap may widen.

Privacy remains a well-founded consumer concern, and security risks to businesses are significant and increasing.

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This is the executive summary of the Business Council of Australia’s Roundtable report. Click here for the full report.

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About the Authors

Larry Kamener is with the Boston Consulting group.

Scott Reid is Managing Director and Regional Executive Australia, New Zealand and Oceania: of J.P. Morgan Chase. He serves on J.P. Morgan Chase's Asian Regional Committees, including Technology and Operations.

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