Wellington — 15 May, 2023 — Xero, the global small business platform, has today released research from NZIER that reveals a 20% increase in the number of businesses adopting cloud-based business tools in the future could add up to $7.8 billion to Aotearoa’s annual GDP through improved productivity.

The research identifies steps taken by the top digitalised countries to inform future New Zealand business and Government decisions on digitalisation actions and policies.

In the 2022 IMD World Digital Competitiveness Rankings, New Zealand ranked 27th out of 63 countries, down from an overall ranking of 19th in 2018.

Xero Country Manager, Bridget Snelling, says both Denmark and Singapore are key examples of what strong, committed government investment into digitalisation can do for an economy.

“We know digitalisation is a key factor for improving productivity, giving businesses the tools they need to thrive in the modern era.

“While COVID expedited digitalisation rates as Kiwi small businesses swiftly figured out how to run our businesses remotely, there are still phenomenal opportunities for us to take this adoption further. Aotearoa can become a world-leading digital nation and add billions to the economy,” says Snelling.

Key areas for Government focus

The NZIER report recommends a road map for the New Zealand Government to consider for improving the digitalisation of Aotearoa. Key areas of focus in the short term include:

1. The development of a New Zealand Productivity Solutions Grant and foundation plan for setting out the road for successful digitalisation of small businesses in a range of industries
2. The establishment of a chief technology officer-as-a-service to allow businesses to identify needs, access market-proven solutions and engage digital consultants for customised advice and industry-specific step-by-step guides
3. Establishing an integrated digital public service system to enhance productivity and trust among users

Looking towards the future, the NZIER report suggests that in the long term the Government needs to:

1. Actively invest in digital literacy at all levels of society
2. Promote and subsidise the acquisition of digital skills as part of continuous learning in the workforce and education
3. Review the level of investment and regulatory frameworks of government research and development of digital technology
4. Improve the competitiveness of tech sector immigration policy
5. Continue to invest in digital and urban infrastructure while also improving the efficiency of local and central government to enhance the productivity and attractiveness of cities for digital business leaders.

Digitalisation payback period for Kiwi businesses

“When it comes to digitalisation, we know there are several key barriers for business owners, including cost and time investment,” says Snelling.

“After all, it can be daunting to commit to overhauling all your processes without knowing what the outcome will be. However, the Government can create policy and encourage digitalisation investment to improve our local economy by billions.”

Further NZIER research recognised there are costs to digitalisation but the payback period for businesses is relatively short, typically less than two to three years before they start seeing an ongoing positive return.

“In as little as two years we can help rejuvenate the economy, potentially adding billions of dollars through the improved productivity delivered by the increased uptake of digital tools,” says Snelling.

“Economies around the world are rapidly digitalising and businesses in Aotearoa need to recognise the risk being left behind. The Government needs to do everything it can to support our digital progress. In an election year, this should be a priority for all parties.

“We need policies that encourage the expansion of Aotearoa New Zealand’s digital economy by addressing the key barriers many business owners face including financial constraints, skills gaps, attitudes and awareness.”

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