If local small-to-medium enterprises (SMEs) with low levels of digitisation took action to digitise just one or two business activities, benefits from these changes could provide a significant return to the New Zealand economy, according to new figures from MYOB.
Conducted by Infometrics on behalf of MYOB, new modelling examining MYOB and external data, reveals that action to address a digital lag and improve digitisation in Aotearoa’s SMEs - shifting from no to low levels of digitisation, or low to moderate - would result in a benefit-cost Return on Investment of between 2.4 – 3.1 to 1.
When realised, this means for every $100 invested in incrementally improving the use of digital business tools in a small business, the return would be $240 - $310.
Overall, the new modelling reveals that improving digitisation amongst New Zealand’s SMEs could equate to a gross benefit of $8.5bn (NZD) to New Zealand’s economy and a 2.6% contribution to GDP.
Despite recent efforts, data shows that local SMEs still suffer a digital lag. Around 80% are still using manual tools or methods for tracking payments, and only 35% of SMEs currently use online software for key business processes like invoicing – impacting cashflow and hampering already poor productivity. This supports insights from the 2021-2022 CPA Australia Asia-Pacific Small Business Survey which highlighted that New Zealand’s SMEs track amongst the lowest in the APAC region for their use of digital business tools and processes.
MYOB spokesperson - Jo Tozer, says the new figures show the time for more action is now, if the Government hopes to future-proof the success of SMEs and ensure they remain connected to an increasingly digital global economy.
“Many of New Zealand’s SMEs have taken great strides to digitise some of their operations, but what this latest modelling shows is that engagement with digital business tools and solutions remains fairly limited in scope and application.
“It’s clear there’s a real opportunity to build on efforts to date and initiatives like Digital Boost, by introducing measures which address existing barriers to digitisation for some SMEs, like cost. Taking action to facilitate a better pathway for more of our local businesses to improve their digital fluency will be crucial in ensuring their sustainability, growth and wellbeing,” explains Jo.
Exploring additional potential gains from the digitisation of key business processes, the new insights also reveal that businesses could reduce their invoicing time by around 5.7 hours per month using eInvoicing, resulting in a potential productivity cost saving worth approximately $1.7bn.
“We know that a digitised economy is a strong progressive economy, and the returns are significant. These figures offer a glimpse of this. However, these benefits are being enjoyed directly by some SMEs too. One of our recent Snapshots revealed that of the local businesses that had digitised, 69% believed it made them more profitable.
“Further financial investment to support their efforts to improve digital adoption would not only help to boost the performance, productivity and resilience of our SMEs - it could also enable more SMEs to capitalise on opportunities for growth in a challenging economy where every dollar counts,” says Jo.
The call for more support follows a recent announcement by the Australian Government to continue momentum around the digitisation agenda with a Technology Investment Boost – an initiative which will ensure that for every $100 an SME spends on SaaS-based business tools, they can claim $120 back in their tax rebate at the end of the financial year.
Read the full report here.
About the data
The MYOB ‘Economic Gain from Digitisation’ modelling was conducted by Infometrics (www.infometrics.co.nz) from 10th August – 8th September 2022. This research used New Zealand Government data as well as MYOB’s latest (2021 – 2022) data to determine the economic impacts of low digitisation amongst New Zealand’s SMEs, and the potential gain to the economy from introducing measures designed to increase digital adoption.