If local small-to-medium enterprises (SMEs) with low levels of digitisation took action to digitise just one or two business activities, according to new figures from MYOB, benefits could provide a significant return to the New Zealand economy.
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 New Zealand'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 NZ$100 invested in incrementally improving the use of digital business tools in a small business; the return would be NZ$240 - $310.
Overall, the new modelling reveals that improving digitisation amongst New Zealand’s SMEs could equate to a gross benefit of NZ$8.5 billion 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% still use manual tools or methods for tracking payments. Only 35% of SMEs currently use online software for crucial business processes like invoicing, impacting cash flow 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 the lowest in the APAC region for using 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 Tozer.
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 NZ$1.7 billion.
“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,” adds Tozer.
“Further financial investment to support their efforts to improve digital adoption would 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."
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. This initiative will ensure that for every NZ$100 an SME spends on SaaS-based business tools, they can claim NZ$120 back in their tax rebate at the end of the financial year.