Australian governments must support Australian e-business enterprise

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.

Recommendations for Corporates and Government

Ongoing action from the business community and government is needed to ensure that Australia realises the prize from e-business. This action will need to be sustained for years to come, and strong leadership will be needed.

As a first step, and aiming to complement existing policy, the Business Roundtable has sought to identify a group of achievable recommendations. The recommendations selected are not intended to be exhaustive or comprehensive. Rather, they fill identified gaps in existing policy and reflect the Roundtable members’ areas of concern and expertise.

Encouraging Rapid Adoption by Corporates, SMEs and Government

Accelerating the rate at which e-business technologies are used across the economy will ensure that Australia more quickly reaps the resulting productivity benefits.

1. The BCA should facilitate the establishment of an index to enable e-business benchmarking and assist with e-business education.

The index will significantly supplement existing measures of e-business take-up, which are superficial and do not focus on corporate effort. It will also enable companies to benchmark themselves against best practice in areas such as interactions with suppliers, customers and employees, infrastructure and managing for value.

2. Governments should encourage small and medium enterprises (SMEs) to come online by providing incentives to conduct all their interactions with government via the Internet.

Regular SME interactions with government create an ideal opportunity to encourage SMEs online – examples are the Business Activity Statement and government procurement. Government savings from SMEs’ use of online services can be passed on to SMEs as incentives.

3. The National Office for the Information Economy (NOIE) should monitor state and local government online migration.

Good progress in monitoring online migration at the federal level should be extended to the state and local government levels. By measuring the progress of state and local governments in e-adoption, NOIE will encourage online migration of these bodies.

Using e-business as a catalyst for innovation

As businesses transform their processes for the online world, e-business represents an opportunity for increased corporate innovation. This opportunity should not be lost.

4. IP Australia should establish a campaign among corporates to promote awareness of business process patenting.

The campaign should focus on education to assist businesses; an awards program to raise the public profile of those that are successful in commercialising innovations; and monitoring the progress of IP activity and the extent to which IP-protected innovation is commercially successful.

Developing Australian e-Business Technologies and Services

An ICT sector capable of developing e-business technologies and services will be an important source of growth and value to the Australian economy.

5. Government and business should work together to improve international perceptions of Australia’ s ICT sector with a ‘ rebadging’ campaign in target overseas markets.

Rebadging involves a coordinated set of activities to promote Australian e-business technologies and services to target markets, complementing and expanding existing work in this area. The campaign would increase the visibility of Australian e-business innovators to global buyers and potential partners of Australian innovators.

6. Invest Australia should aggressively target ICT multinationals to undertake R&D in Australia in order to achieve scale in the sector.

The focus should be on building critical mass in value-added R&D intensive activities. Greater coordination of federal and state campaigns to attract multinationals should form part of the undertaking.

Creating an Abundance of People with Relevant Skills

An appropriately skilled workforce is critical to Australia’ s e-business agenda.

7. The Federal Government should fund an additional 10,000 specific ICT undergraduate places per year.

An additional 45,000 ICT undergraduate places over the next 5 years would help stem the shortfall of these skills that Australia now experiences.

8. The Federal Government should go beyond removing obstacles to skilled migration by developing a proactive marketing campaign to encourage people with e-business related skills to migrate to Australia.

The campaign would target overseas skilled IT and e-business professionals, international students studying IT in Australia, and expatriate Australian e-business professionals. The campaign would supplement government steps to remove obstacles to immigration for IT professionals.

Developing World Class Digital Infrastructure

As new technologies emerge, the infrastructure needed to support new business activities and more rapid innovation will be essential.

9. The BCA should set up a taskforce to work with industry and regulators to address the issue of widespread, affordable broadband access.

The taskforce will provide business input into strategies to accelerate access to broadband technologies, and work with other bodies to assess the need for regulatory reform and other appropriate public policies.