Computers and artificial intelligence have come along at an exponential rate over the past few decades, from being regarded as oversized adding machines to the point where they have played integral roles in some legitimately creative endeavours.
Australian businesses are behind global competitors when it comes to digital technology usage, according to recent figures released by Accenture.
The consultancy’s latest Digital Density Index Report showed Australia could boost its economic growth significantly by lifting digital performance. For example, if Australia improved its digital performance by just 10 points, it could lift annual GDP growth rates by 0.25 per cent over the next five years, Accenture said, resulting in an estimated $34.5 billion of additional economic output (GDP) in the year 2020, measured in 2014 prices.
The findings are based on the ‘Accenture Digital Density Index’, a tool that measures the extent to which digital technologies penetrate companies and national economies.
Despite the slow digital progress, the report showed Australia has high Internet usage, at 87 per cent of households, and also leads the world in telecommunications investment per head. However, the country scored poorly on creating and exploiting digital markets.
For example, only 2.3 per cent of retail sales were online, compared to 10 per cent in the UK and 13 per cent in South Korea.
When compared with the digital performance of international peers on scores of one to five, Australian companies achieved an average of 2.5, behind their global peers on 3.1. Consumer-facing sectors including insurance, retail and communications, were the country’s worst performing sectors by international standards. Only mining outperformed international peers.
Australian enterprises also proved inconsistent in their application of digital technologies to drive efficiencies. While the data showed Australia leading in cloud and analytics use, the country lagged behind in the use of RFID, knowledge management and crowd sourcing.
Australia came second place in the use of digital to source finance, but scored the lowest among advanced economies in the use of digital to source and manage labour.
The report also included an analysis of the ASX 126 companies and categorised 30 per cent as digital leaders, with the remaining 70 per cent digital followers.
According to Accenture, leaders combined strengths in creating and exploiting digital markets, providing digital products and services, and in applying digital within their enterprises.
“Australian companies have advantages and strengths when competing in the global digital economy”, Accenture Strategy Australia digital strategy lead, John Cassidy said. “But our analysis shows that being competitive requires committing to digital in all aspects of economic activity. “That means going beyond merely digitising existing processes and customer channels. Companies need to reinvent processes and develop entirely new digitally enabled products, services and customer experiences.”
The Accenture Digital Density Index took into account 50 measurable factors that impacted digital performance of a company or economy. These were grouped into four categories: Making digital markets, running enterprises digitally, sourcing outputs and fostering enablers.
“The value of these digital measures comes not just in helping companies track their own performance at home, but in guiding investments abroad as Australian companies extend their global presence," Cassidy added. "It is important to be granular and to identify digital hotspots around the world that can support the various operations that underpin international growth.”
The report recommended Australian companies close shortfalls in the online retail sales and the use of digital for enterprise efficiencies and inter-company collaboration.
More broadly, Accenture Strategy also pointed to five principles that should guide Australian companies as they commit investments to digital technologies in the future:
- Focus digital investments on growth oriented initiatives and avoid using new technologies merely to improve efficiencies;
- Design for new digital customer experiences by going beyond simply digitising existing customer channels;
- Use data to improve customer insights;
- Build digital into operating models and nurture skills in all aspects of internal operations;
- Take digital risks: experiment and be flexible in the use of new technologies.
Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu