ICT sophistication leads to business innovation: Bureau of Statistics

A report released this week by the Australian Bureau of Statistics (ABS) has found a direct link between the “sophistication” of a business’ use of ICT and its ability to innovate in improving its products and processes.

ICT’s ability to improve internal efficiencies, communication, collaboration and other forms of productivity are key to its enabling ability for businesses to better innovate, the report found.

In forming the report (PDF), ABS explored demographic, innovation and ICT use data taken from 6442 business between 2005 and 2007 to take a snapshot of “ICT sophistication” which encompassed broadband speed, Web presence, use of e-commerce and automatic links between internal and external systems.

Of the businesses who said they used computers in surveys conducted by ABS, 51 per cent said they had undertaken innovative activity during the period. Broadband use elevated innovation to 54 per cent, while those who combined all levels of sophistication – including having a Web presence with links to external systems and an online ordering facility – were most innovative at 69 per cent.

In addition, those with internal IT support, rather than external, were more likely to innovate at 57 per cent of survey respondents.

“Businesses using successively more sophisticated types of ICT are each found to be significantly more likely to undertake some type of innovation,” the report stated. “The existence of automatic links between internal systems and customer or supplier systems, in particular, is strongly associated with innovative activity… businesses are likely to undertake more types of innovation, more novel innovations and are more likely to develop their innovations in-house.”

However, of the 6442 businesses used to collate data for the report, some 48.8 per cent of respondents said they had no Web presence, while up to 80.6 per cent did not take order over the internet in the 2005-2006 financial year.

“Those businesses which use sophisticated types of ICT are significantly more likely to undertake innovation, when considering either any type of innovation, or a specific type of innovation,” the report reads.

“In addition, more intense ICT users are likely to undertake more types of innovation, more novel innovations and are more likely to develop the innovations internally. The effect of ICT on innovation holds when controlling for a range of other business characteristics, such as employment size and industry division.”

The findings from the bureau, which itself has recently extended its Lotus contract to deploy social networking internally, come amidst concerns blocking social networking could halt innovation among businesses.

The Federal Government recently took to educating businesses about e-commerce as well, establishing an online retail forum in which successful online businesses shared their experiences.

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