My presentation to the Innovation Partnership's launch of research into the business impacts of the Internet in New Zealand.
See http://www.innovationpartnership.co.nz for more.
4. 4
…especially among businesses
Source: Statistics New Zealand Business Operations Survey 2012
Proportion of firms saying they are connected to the Internet
100%
98%
97%
98%
100%
98%
97%
96%
97%
96%
100%
97%
91%
98%
98%
98%
84%
91%
60% 80% 100%
Professional, scientific & technical services
Financial & insurance services
Information media & telecommunications
Education & training
Wholesale trade
Health care & social assistance
Administrative & support services
Rental, hiring & real estate services
Retail trade
Arts & recreation services
Other services
Transport, postal & warehousing
Mining
Manufacturing
Electricity, gas, water & waste services
Construction
Accommodation & food services
Agriculture, forestry & fishing
5. 5
96%
90%
77%
77%
45%
30%
69%
62%
19%
12%
34%
11%
10%
0% 20% 40% 60% 80% 100%
At all
For finance
For making government payments
For online ordering
For receiving orders
Using email
At all
With information on goods and services
Ordering goods and services
Taking online payments
At all
Internet is more than 10% of total sales
Have sales outside New Zealand
UseinternetHavewebsite
Making
internet
sales
We wanted to understand the impacts of use of
Internet services
Source: Statistics New Zealand Business Operations Survey 2012
These are firms with more
than 6 staff. Figures for
smaller firms are (usually)
lower.
Use firms make of online services
6. 6
We were interested in firms outside the ICT sector
Tourism
Retail trade
Dairy/Agriculture
Professional services
Four focus sectors
Use
Greater than 80% of staff
have access to internet
Website
Whether firm has a website
or not
Procurement
Purchase goods via the
internet
Sales
More than 25% of sales via
internet
Connectivity Used a fibre connectionVarying industry structure,
sophistication online,
exposure to competition
Five questions
7. 7
What we did
Quantitative analysis
• Internet use plus financial
performance data for 5,589 firms
from Stats NZ to quantify impacts
Interviews
• Interviews with 76 firms in sectors
of interest to understand why
Case studies
• Four articles to give practical
examples of firms doing interesting
things
Scenarios • What if for the future
8. 8
High users of Internet
services are more
productive than the
industry average
6%
What we found (1)
• Compares the productivity of firms who
make significant use of internet services
with average industry productivity
• The productivity gap between heavy users
and low users is more pronounced
Previous broadly comparable studies
calculated 5-10% impacts from
connectivity to fast broadband
(Fornefeld 2008,Grimes 2012)
• All interviewees in all sectors
said Internet services were
important and will be more so
• Just about all (6+) firms have a
website and are buying online
• Hugely diverse impacts, from
simple social media for retail, to
automated milk-testing and
reporting on water usage
• Some firms getting started on
transforming their business
processes – this is where the
value comes
9. 9
What we found (2)
A maturity journey
Can the internet
help
• Basic connectivity
• Phones to VOIP
• Email communications
• Website, basic social
media
How can I make
it more useful
• Online sales and service
• Analysing website and e-
commerce data
• Cloud services for systems
• A single backend
Can I get
sustained
competitive
advantage
• Sophisticated online
campaign management
• Data analytics
• New organisational forms
If low-users became as
productive as high-using
firms
34bn
• A ballpark estimate of the future
benefits to give a sense of scale
• Not a forecast or prediction, nor any
particular timeframe
• General point: substantial
opportunities available for the nation
10. 10
So what
• No one needs to be convinced of the economic importance of
the Internet itself
• Much to do to help businesses figure out how best to take
advantage of the opportunities (and minimise the threats)
• A challenge for business, especially sector organisations
13. 13
How we calculate economic impact
Greater than 80% of
staff have net access
Have a website
Purchase goods via
the internet
Make more than 25%
of sales via internet
Use a fibre
connection
BOS questions
Value-add per
employee in firms
answering yes
Value-add per
employee on
average in industry
AES questions
divided by
• Novel to look at use
(rather than just
connectivity) and at
industry-level
• We try to control for
selection bias by
comparing heavy
users with industry
average productivity
14. 14
Tourism – descriptive statistics
Variable Measure Tourism All sectors
Use
Greater than 80% of staff
have access to internet
40% 42%
Website
Whether firm has a
website or not
82% 81%
Procurement
Purchase goods via the
internet
88% 81%
Sales
More than 25% of sales
via internet
28% 7%
Connectivity Used a fibre connection 24% 27%
Tourism has
reasonably
typical internet
use figures, but
buy and sell
more online than
others
15. 15
Tourism – what we see from interviews
• Some tourism businesses exist solely because of the internet and rely on it
entirely
• Internet is empowering to some small-to-medium sized operators,
improving geographic reach, tailoring of offer and trackability
• Some concerns about new costs of online marketing, but overall online
booking engines and channel managers save time and cost
• Clear sense of positive impact on marketing and on operations, but
interviewees generally struggling to quantify
• Main barriers to adoption are knowledge, time to get up to speed, and
network coverage (for some)
• Start with online inventory and move to a single system
