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SMELLIE SNIFFS THE BREEZE: She’ll Be Right still reigns

SMELLIE SNIFFS THE BREEZE: She’ll Be Right still reigns when it comes to IT

By Pattrick Smellie

Feb 14 (BusinessDesk) - Among the many irritating truisms parroted in corporate life, near the top of the list must be the refrain about the empowering potential of digital technology.

The claim is obviously true for many businesses. It’s just that the implementation is so often a vale of tears for the technologically ignorant business owner.

The BusinessDesk news service, for example, couldn’t have existed 20 years ago when it would have had to distribute its stories by fax, telex or posted newsletter and at a cost exponentially higher and a speed impossibly slower than the email, RSS and XML messaging we use today.

Our competitive advantage comes from combining experience with low overheads, compared to traditional media companies, loaded as they are with substantial legacy costs like printing presses and the trucks and warehouses needed for physical distribution.

But BusinessDesk’s staff are journalists, not information technology specialists. We still ask Brian in the office next door to switch on our wireless broadband because no one can remember how to do it.

However, we did spend a small but significant sum, and many long and confusing months, getting a content management system built. After throwing out the bits that tried fruitlessly to customise Microsoft software, it works pretty well and squirts news stories to all our customers at the stroke of an “Enter” key.

We fervently hope that not only will this bind us more tightly than ever to our valued customers, but that it will also save us the time, hassle and heartache of using someone else’s system to publish our news. We also hope not to have to do it again in a hurry.

Our small business story seems in some ways typical and in other ways ahead of the pack, when placed against the results of a survey conducted for the Productivity Commission by pollsters Colmar Brunton of 1,526 senior decision-makers in New Zealand businesses of all sizes, bar sole traders.

Among the most remarkable of the survey’s findings: nearly half of those surveyed (47 percent) took the view that investing in information and communications technology to improve business systems and efficiency simply wasn’t worth it.

To the gritty individualist streak in the New Zealand small business owner, this could be evidence of good sense prevailing over theory. It brings to mind the tale of the founders of road-building empire Fulton Hogan, who refused in the early days to buy a mechanical digger unless it could beat them in a drain-digging race.

However, to the head of the Productivity Commission, Murray Sherwin, this relatively high level of indifference to investing in ICT suggests one of the reasons for New Zealand’s stubbornly poor productivity performance.

That is, that New Zealand’s small and distant domestic commercial environment is far less competitive than in other parts of the world. Businesses of similar scale in North America or Europe face dozens, if not thousands, of competitors, who are but a state line or a European Union visa-free border away. They adopt efficiency-enhancing technologies or they go to the wall.

In New Zealand, small and medium-sized businesses might be less profitable than they could be, but they’re not nearly as likely to be driven under by larger competitors. In such enviroments, mediocrity reigns.

To opponents of rationalist commercialism, this may be welcome. After all, one of the key examples used in the Productivity Commission’s interim report on how to improve productivity in the services sector is WalMart – the giant American version of The Warehouse.

Simultaneously held responsible for making just about anything affordable to a low income family and destroying main street shopping, WalMart is unquestionably an example of the power of constant innovation and investment in ICT.

Its latest innovations are especially instructive, since they suggest a return to Main Street. Beaten by $2 Shops in central city locations and facing a backlash from customers not wanting to walk miles in a warehouse to buy a couple of towels, WalMart is moving to smaller stores and more online retailing, backed by new investment in even smarter back office logistics than it has already.

While New Zealand’s wholesale and retail sectors have tagged along on these trends, the Productivity Commission says “productivity levels in both industries is significantly lower than in Australia, and for the past 15 years has shown no sign of catching up.”

“The New Zealand market is small, competition is restrained and road infrastructure is less developed than in Australia, Europe and the United States.”

On top of that, the commission finds anecdotal evidence that the quality of labour relations management in this country – an area where ICT investment can be particularly powerful – is unsophisticated.

Likewise, decision-makers told Colmar Brunton that too many job-seekers have either ICT or business skills, but that too much have both.

The problems are greater, the smaller the business, the survey found. New Zealand is a nation of small businesses, so the problem by definition must be great.


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