The subject of information technology (IT) and its application in New Zealand businesses is of widespread interest. The emergence of new technologies has brought some significant changes to the way businesses operate. The aim of this report is to examine the adoption of IT systems by New Zealand firms, and to identify what role IT plays in the operation of businesses.
Most of the information presented in this report was collected in the Business Practices Survey (BPS) conducted in June 2001. The BPS was the first economy-wide survey of business practices in New Zealand and was jointly sponsored by the Ministry of Economic Development; the Ministry of Research, Science and Technology; and Statistics New Zealand. The BPS collected information of three aspects of business activity: use of IT, innovation and management practices.
This report presents information on the use of IT and its role in the operation of New Zealand businesses. Variations in use across industries are examined, as are differences in IT use by firm size.
Firstly, the report looks at the adoption of IT systems by New Zealand firms. The intensity of IT use is explored, as well as the infrastructure that has been employed by businesses to facilitate the use of IT. International comparisons of IT use are provided, specifically with similar surveys carried out in Australia and Canada. The purpose to which IT is applied to production-related activities is examined to identify how firms use IT to improve efficiency and increase productivity.
Emerging information and communications technologies (ICTs), such as the Internet and email, have presented new opportunities for New Zealand businesses, including potentially larger markets in which to sell goods and services, and improved communication with customers and suppliers. The report examines how New Zealand businesses have embraced ICTs, defines the magnitude of Internet commerce activity, and details the use of email and the World Wide Web to facilitate business operation. Barriers to use of the Internet by businesses are identified, including the cost of setting up and maintaining websites.
The use of IT has often been cited as a significant factor in sustaining economic growth. The report investigates what impact the adoption of IT has had on business performance, namely on profitability, market share, and sales; and considers what role IT has to play on the innovative activities of businesses. This is achieved by comparing the performance of low and high adopters of IT.
The report looks at what impact the growth of IT has had on the employment market by examining both post-school qualifications and occupations in IT-related areas from the 1996 and 2001 Censuses.
Finally, the report quantifies the household use of computers and the Internet in New Zealand. These results were obtained from the Household Economic Survey (HES) released by Statistics New Zealand in October 2001, and the 2001 Census.
In June 2001, 88 percent of New Zealand private-sector enterprises regularly used a computer. Forty-four percent had computers connected to a local-area network, while 19 percent had computers connected to a wide-area network. Four out of five businesses used the Internet, the same proportion used email, while just over a third operated a website. In general, IT use increased with business size. Businesses in the services sector were the highest users of IT. Of note, all firms in the insurance industry used computers, and 97 percent of businesses in the accommodation industry operated a website.
Eighty percent of businesses used IT to complete their accounts and 60 percent used IT for business data processing. The application of IT for production-related activities across industries was greatly dependent on the nature of products being sold and the markets in which a business operates. Not surprisingly, the wholesale and retail trade industries were among the higher users of IT for inventory management.
Although over a third of New Zealand businesses operated a website, sales of products over the Internet represented only 0.3 percent of total operating income in the year ended June 2001. The Internet was mostly used as a means of communicating with customers and suppliers, as most firms used their website to provide information about their business. Only a small number of websites had the ability to undertake online payments (11 percent). For those firms with access to the Internet, the most common use of other businesses’ websites was to perform information searches on suppliers’ homepages (68 percent).
The largest single obstacle identified by New Zealand businesses to making more commercial use of the Internet was that it was not seen to be relevant to their business activity (29 percent). Twenty-one percent of firms stated that the risk of viruses or hackers accessing confidential information restricted their use of the Internet.
The adoption of IT appears to have an influence on business performance. The survey results indicated that businesses with a high adoption of IT were more likely to have recorded an increase in market share, profitability, and total sales than those businesses with a low adoption of IT. Business innovation also benefited from the use of IT, with high adopters of IT more likely to have introduced both product and process innovations.
The growth in businesses use of IT is confirmed by employment market data from the 1996 and 2001 Censuses. The number of people with post-school qualifications in the IT area has almost doubled in the five years to 2001, while the total number of people involved in IT-related occupations has increased by 76 percent.
In 2001, 47 percent of New Zealand households had a home computer, and 37 percent of households had access to the Internet.
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