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A new report from Deloitte highlights that the small and medium-sized enterprise (SME) segment of the Australian economy is growing in its digital sophistication, with its use bringing a number of benefits to their operations. More than half of the SME sector is now at a “high” or even “advanced” level of digital engagement.
Opinions on digital integration have been mixed, not just in Australia but around the world. For the SME sector, the biggest barrier to digital engagement has traditionally been high costs. In Australia, some businesses are weary of additional risks that digital engagement brings with it, and this interest outweighed the perceived benefits.
Deloitte’s latest survey of the digital environment in Australia’s SME sector reveals that most businesses appear to be overcoming these barriers to engage in the digital realm, just like others. Australian market. However, according to DeloitteThe level of digital engagement is critical to determining the true value it can create for a business.
To crystallize the different levels of benefits, the Big Four accounting and consulting firm outlined four levels of digital engagement among SMEs, namely “basic”, “intermediate”, “high” and “advanced”. As I quote from the report, SMEs in the “Essential” category are “businesses that only have a business email address and use traditional marketing methods (eg mail, newspapers). No social media or website,” the firm said.
The “Advanced” category consists of “Businesses that have a website and may also be listed on an online marketplace or third-party e-commerce platform (e.g. eBay). Some use of social media and basic online marketing (eg banner ads on websites).’
SMEs with “high” levels of digital engagement are “businesses with mobile-responsive websites that may also have e-commerce or booking capabilities. Extensive use of social media and higher level online marketing methods (eg search engine optimization, search engine marketing).’
Finally, the “Advanced” category in the report refers to “businesses that use data analytics to analyze customer information and inform decisions. Using advanced online marketing tools such as search engine marketing, social media advertising and video advertising.” Distribution across all of these categories is increasingly promising.
According to analysis by Deloitte, 55% of SMEs in Australia are currently at a “high” or “advanced” level of digital engagement. In 2017, this figure was just under 40%. Among those who have worked to increase their level of digital engagement, the firm says the benefits have been significant.
Those who have moved from “Basic” to “Advanced” in recent years have seen their revenue per employee increase by up to 60%, while their overall revenue growth has increased by nearly 30% over the past year. Those who haven’t worked to increase their digital engagement are unaware of these potential benefits.
According to John O’Mahonnny, partner at Deloitte Access Economics, these businesses are likely to struggle in the near term. “Different businesses will engage with digital technologies in different ways, but if they do so only at a basic or intermediate level, they risk lost opportunity, stagnation and even failure in the face of competition,” explains O’Mahonny.
However, for some it is not a lack of awareness that prevents digital engagement, but the high costs associated with it. Cost remains the biggest barrier to digital engagement for SMEs, according to Deloitte. However, the overall outlook is promising, which bodes well for the Australian economy as a whole.
Small and medium-sized businesses are the backbone of the Australian economy. Last year, this segment contributed more than $390 billion to the country’s gross domestic product, a number that is still growing.
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