Are we on the right path to boosting productivity for SMEs?

by Bailey Amber
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Achieving greater productivity – doing more with less, more quickly and efficiently – is what drives business decision-making. Yet productivity growth in Australia has slowed to its lowest rate in 60 years.

The Productivity Commission has been tasked with solving Australia’s productivity puzzle and recently released an interim report on the role of new technologies in business and economic growth.

The 104-page report delves into the use and impact of technology and data, the barriers to adoption, and makes recommendations on government policy interventions and investments to ensure Australia realises ‘’the productivity dividend’’ from digital transformation.

Two new opportunities are already in play that, if leveraged by businesses, could deliver a productivity pay-off. The first is the dedicated effort to build Australia’s IT skills base and expand our talent pool. At the conclusion of the Jobs and Skills Summit, the Australian Government committed to alleviating Australia’s immediate workforce shortage, in key sectors such as IT, by increasing the number of skilled workers through the permanent migration program, clearing the visa backlog and extending post-study working rights for international graduates. 

There was also a welcome and much-needed focus on growing our local IT talent pipeline in the medium and long term through new digital apprenticeships and a free virtual work experience program. Lack of access to IT skills is one of the top reasons businesses nominate as a barrier to their digital transformation as well as inadequate internet speed. These were among a range of insights the Australian Bureau of Statistics (ABS) gained from 7,000 Australian businesses in 2019-2020.

The report found that while 69 per cent of businesses said they used one or more ICT, just 55 per cent said they used cloud computing services – arguably the most affordable and game-changing technology that could improve business agility, scalability, productivity and resilience.

The advantage of cloud-based software for SMEs is they’re available via a subscription and remove the need to purchase expensive software or invest in on-site servers to store business data. This means the software can grow and be scaled back according to business needs.

However, some industry sectors have a long way to go before they are cloud-enabled. In the transport, postal and warehousing, agriculture, forestry and fishing, retail trade, and accommodation and food services sectors, less than 50 per cent of businesses reported using paid cloud-based services. 

Unfortunately, Australian SMEs are less likely than larger businesses to be cloud-enabled, even though research shows that cloud services deliver improved operational efficiency, productivity growth and access to new customer segments.

In positive news, though, uptake has been increasing, with COVID-19 being an accelerant for cloud adoption. In 2019-20, 49 per cent of businesses with 0-4 employees used paid cloud computing services, followed by 65 per cent for those with 5-19 employees and 76 per cent for those with 20-199 employees. The Australian Government’s new technology and skills training tax incentives should further accelerate this uptake by a second initiative now in play.

The new Small Business Technology Investment and Skills and Training Boost announced by the previous Morrison Government, which is now out for community and business consultation, should support improved business productivity.

The most exciting prospect for SMEs is the Skills and Training boost, which will provide a tax reduction on the upskilling of staff via a training provider. 

Research shows that upskilling staff produces a competent workforce and happy and loyal employees – critical behaviours employers want to encourage in a tight labour market. Businesses that employ deskless workers, who make up around 80 per cent of the workforce in professions such as construction, logistics and hospitality, and training providers who manage apprentices, are reaping the benefits of using cloud-based training software to train and upskill their employees.

They enjoy the flexibility to manage online and face-to-face training activities while using today’s smart devices, by far their workers’ devices of choice. It enables deep learning through planned exposure to practical activities over a defined learning journey, which engages employees to do a better job.

The opportunity now exists for SMEs to examine and leverage the expanded opportunities and avenues being created to ignite their digital and workforce skills transformations or to take them to the next level. It takes just one step to start or resume your digital and skills evolution.

There is no real destination when it comes to digital transformation; it’s a continuous journey. We must keep adapting and continuously improving to survive and thrive in this rapidly changing post-pandemic economic landscape.

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