NZ’s digital divide: Nearly half of small and medium businesses are offline

They are at a disadvantage as firms with websites and social media activities earn more and expect growth, says MYOB CTO Simon Raik-Allen.

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Nearly half - 47 per cent - of small and medium enterprises (SMEs) in New Zealand do not have any kind of online presence, while less than a quarter (22 percent) only have a business website.

Around 9 per cent have a social media site, and 16 per cent have both a business website and social media site.

These are among the key findings of the latest MYOB Digital Nation report, which highlights how the local SME community is still divided by the use of the internet and internet technology.

Simon Raik-Allen, chief technology officer, MYOB, says over the last five years, the survey has consistently shown online engagement represents a clear advantage for local businesses.

“Not only are online businesses enjoying a greater level of increased revenue, local SME operators also report a wide range of direct benefits from being online – from increased leads to heightened customer engagement and a more professional image,” says Raik-Allen. “Being online offers a wide range of benefits for business in the digital age.”

"Unfortunately only around half of New Zealand small and medium businesses have an online presence and when you see in this survey the clear difference that being online makes – it is a big opportunity loss – not only to the businesses themselves, but the whole economy,” he states.

The latest MYOB survey, for instance, finds a marked difference in performance between businesses with an online presence and those without a website or social media site.

The report finds in the past 12 months, 46 per cent of businesses with a website saw an increase in revenue, compared to just 35 per cent of businesses with no online presence.

Over both the next quarter and the full year ahead, online businesses will enjoy an even greater advantage, the report states. Forty five per cent report more work in the pipeline over the next three months, compared to 31 per cent of businesses without a web presence, and 49 per cent expect to see higher revenue in the year to September 2015, compared to 32 per cent of businesses that are not online.

It is a big opportunity loss – not only to the businesses themselves, but the whole economy.

Simon Raik-Allen, MYOB

Raik-Allen says the survey reveals a growing number of businesses are adopting a wide range of internet tools and services.

The report finds significant differences in the levels of SME online engagement across the country. Hawkes Bay is the country’s most connected region and Auckland the leading centre. Of the centres, Wellington is the least connected, with 59 per cent of businesses having no online presence. In the regions, Manawatu / Wanganui (63 per cent have no online presence) and Otago / Southland (61 per cent) have the lowest levels of business internet use.

Across sectors, the survey finds the manufacturing and wholesale industry has the largest online presence; with 60 per cent of businesses operating a website, and a further 13 per cent using only a social media site. Retail and hospitality sector businesses are most likely to operate both a website and a social media site (29 per cent), while a further 25 per cent have only a website and 9 per cent only use social media to promote their business.

The majority of SME operators in the primary sector have yet to move online, with 68 per cent reporting no online presence. Just 14 per cent have a website and only 4 per cent both have a social media site and website.

The use of cloud computing is generally increasing among SMEs, although some business operators are uncertain what exactly constitutes the cloud – pointing to perhaps a higher use than is reported. In the latest survey, a quarter of business operators reported they were using cloud computing. A further 9 per cent of SMEs intend to take up the technology in the next 12 months.

Email and online banking are the most commonly used online services in New Zealand. The growing use of online file sharing, and the increasing popularity of online communication services and VOIP is also evident in the survey. Currently, just 14 per cent of SMEs use an online accounting system.

While 42 per cent of local businesses were using some form of social media, LinkedIn (26 per cent) and Facebook (16 per cent) were ahead of other social media sites in popularity. Importers (60 per cent), manufacturing and wholesale businesses (57 per cent), and business, professional and property services operators (48 per cent) were much more likely to use social media.

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