ICT Statistics Review 2014-15 - Home - AIIA · ICT Statistics Review 2014-15 AIIA ... Recommends principles to guide development of an ICT measurement ... As recently as 2015 Seek

ICT Statistics Review 2014-15

AIIA response

March 2015

T 61 2 6281 9400

E [email protected]

W www.aiia.comau

I CT S T A T I S T I C S RE V I E W 20 14 -15

Page 2 of 17 3 February 2015

Contents

1. Introduction 3

About AIIA 3

Overview 3

2. ICT, Productivity and Growth 5

3. Definitions 7

4. Statistical Collections 8

Current Limitations 8

Development of a Principle Based Framework 8

5. Measuring Impact 10

6. Data 16

7. Recommendations 17



1. Introduction

About AIIA

The Australian Information Industry Association (AIIA) is the peak national body representing

Australia’s information technology and communications (ICT) industry. Since establishing 36 years

ago, the AIIA has pursued activities aimed to stimulate and grow the ICT industry, to create a

favourable business environment for our members and to contribute to the economic imperatives of

our nation. Our goal is to “create a world class information, communications and technology industry

delivering productivity, innovation and leadership for Australia”.

We represent over 400 member organisations nationally including hardware, software,

telecommunications, ICT service and professional services companies. Our membership includes

global brands such as Apple, Avanade, EMC, Google, HP, IBM, Intel, Lenovo, Microsoft, PWC, Deloitte,

and Oracle; international companies including Telstra and Optus; national companies including

Data#3, SMS Management and Technology, Hills Limited, Technology One and Oakton Limited; and a

large number of ICT SME’s.

Overview

The AIIA appreciates the opportunity to provide comments to the Information and Communications

Technology (ICT) Statistics Review, 2014-15. The Review is a welcomed initiative. It is AIIA’s strong

belief that you don’t value what you don’t measure. Compared to other industry sectors (e.g. mining,

the financial services sector, agriculture, manufacturing etc.) the measurement of the contribution

of ICT to our national economy is inadequate and requires urgent attention to improve the quality,

granularity and timely availability of data available to inform policy (at all levels of government) and

business investment decisions in a competitive global digital economy.

Currently, routine data collections are narrowly focused on the household and business use of ICT,

internet activity and broad labour market statistics. While there is no shortage of Reports that use

‘proxies’ to measure the impact of ICT, the internet or the value of the digital economy, there is no

nationally accepted and internationally aligned standard or instrument that holistically measures

either the performance of the ICT industry or the overall performance of our digital economy.

The rapid rate of change compels us to do things differently. AIIA acknowledges the difficulty of

measuring and quantifying the contribution that ICT makes to Australia’s economy. However we are

concerned that the ‘search’ for a perfect instrument coupled with the ongoing debate about the

ability (or inability) to quantify the positive impact of ICT on GDP, means Australia does not have

access to the data it needs to inform important policy and business investment decisions. As a result

it is losing precious time in understanding the investment required to leverage technology capability

more effectively to ensure continued competitiveness.

In framing this response AIIA’s view is that, as far as possible, a pragmatic approach to (i) measuring

the contribution and impact of ICT to our economy; and (ii) the way in which relevant measurement

data is collected, must be adopted.

In the absence of well delineated standardised, economic metrics, we advocate the need to identify

and agree ‘proxies’ for ICT driven growth and productivity. To the extent that these can be

benchmarked, change over time can be monitored and measured sufficiently to

inform future policy and business investment decisions.



In responding to the Terms of Reference to the Review, our response:

Overviews the reported contribution ICT/digital technology makes to productivity;

Provides additional comments relating to working definitions;

Identifies key limitations of current ICT statistical data sets;

Recommends principles to guide development of an ICT measurement framework for the

future;

Suggests core dimensions of an ICT measurement framework, having regard to direct,

indirect and dynamic ICT impacts;

Discusses the opportunity to leverage big data and data analytics capabilities of third

parties; and

Summarises our position in a set of recommendations.



2. ICT, Productivity and Growth Notwithstanding the absence of an international standard to measure the contribution that ICT

makes to economies – to productivity and economic growth at both the micro and macro levels,

there is no shortage of ‘evidence’ to suggest that the link between the two is inextricable.

For example:

Global output from IT industries more than doubled from $1.2 trillion to $2.8 trillion

between 1995 and 2010 - some 6% of global GDP;1

The direct contribution of the internet to the Australian economy is around $50 billion,

or 3.6% of GDP;2

Between 2006 and 2011 the Internet economy accounted for some 21% of GDP growth in

13 leading economies, Brazil, Canada, China, France, Germany, India, Italy, Japan,

Korea, Russia, Sweden, the UK and the US;3

For every job that is ‘eliminated’ by the Internet, another 2.6 are created because of it;4

Companies that use IT intensively experience three times more growth than non-IT

intensive companies;5

It is estimated that IT workers contribute three to five times more to productivity than

non-IT workers;6

Broadband adoption increases the productivity of manufacturing firms by approximately

5%, of services firms by approximately 10% , and of firms in the information industry by

approximately 20%;7

The probability of a firm developing a product or process innovation increases with the

intensity of the firm’s IT use;8

In Canada, France, Germany, the UK and the US, small companies that adopt Internet

business solutions earn approximately 9% more revenue than other small firms;9

The 38% employment growth in the Australian computer systems design industry since

2008 (compared to 22% in the US and only 10% in the UK), outstrips the overall

employment gain of 8% in the rest of the Australian economy;10

As recently as 2015 Seek has reported that 10% of job vacancies are currently in the ICT

sector;11

Australian research shows that small and medium sized enterprises actively using new

technologies to improve communications and business processes create more new jobs

and generate more revenue than SMEs that use little technology – in fact, between 2010

and 2012 SMEs regarded as leaders in the adoption of technology increased revenues 15

percentage points faster and created jobs at twice the speed of less progressive

companies.12

1 Just the Facts, the Information Technology and Innovation Foundation, May 2013 www.itif.org 2 Deloitte, 2011 The Connected Continent. How the internet is transforming the Australian economy. 3 McKinsey Global Institute, 2011 The Great Transformer. The Impact of the Internet on Economic Growth and Prosperity. 4 Accenture,2014. Remaking Customer markets. Unlocking Growth with Digital 5 The Information Technology and Innovation Foundation, May 2013 Just the Facts, www.itif.org 6 Deloitte, 2013, Connected Small business. How Australian small businesses are growing in the digital economy. 7 The Information Technology and Innovation Foundation, May 2013 Just the Facts, www.itif.org 8 PWC, 2014, Expanding Australia’s Economy, How digital can drive change 9 The Information Technology and Innovation Foundation, May 2013 Just the Facts, www.itif.org 10 Michael Mandel, Progressive Policy Institute, 2014 Jobs in the App Economy 11 http://www.arnnet.com.au/article/566384/ict-leads-growth-aussie-jobs-market/?fp=2&fpid=1 12 Deloitte, 2013, Connected Small business. How Australian small businesses are growing in the digital economy

http://www.itif.org/




http://www.arnnet.com.au/article/566384/ict-leads-growth-aussie-jobs-market/?fp=2&fpid=1



In Australia it is estimated that our industry contributes some 8% of GDP and around $91 billion of

revenue.13 We contribute as much to Australia’s economy as the mining sector and only marginally

less than the manufacturing and finance and insurance sectors.

Estimates are that our internet economy is forecast to grow twice the rate of GDP between 2012

and 2016. By way of example, in 2012 online retail sales were estimated to be around $11.3b (5% of

all retail spending). It is estimated they will continue to grow by about 15% a year – well above the

4% of traditional retail.14

According to these statistics, Australia’s ICT sector is a substantial contributor to Australia’s

economy and high standard of living. The problem – and their weakness, is that they reflect the

conclusions of individual studies taken at points in time using specific, and sometimes limited,

definitions of the market and data.

13 ACS, 2013 Statistical Compendium

14 Deloitte, Digital Disruption. Short Fuse Big Bang. 2012,

http://www.deloitte.com/view/en_AU/au/news-research/luckycountry/digital-disruption/index.htm

http://www.deloitte.com/view/en_AU/au/news-research/luckycountry/digital-disruption/index.htm



3. Definitions The AIIA makes the following comments in relation to the proposed working definitions outlined in

the Review’s Terms of Reference.

ICT Statistics - statistics to inform decision-making for ICT and the digital economy

AIIA broadly agrees with the above definition. For our purposes we have defined this in

terms of statistics that measure the direct, indirect and dynamic impact of ICTs. This

includes measures relating to ICT

Connectivity (infrastructure)

Inputs

Uses – with a focus on the integration of ICTs

Outputs

Outcomes

Digital Economy – markets based on digital technologies that facilitate the trade of goods and

services e.g. through e-commerce

AIIA takes this to include the ‘sharing economy’ – peer to peer products and services,the

‘Apps economy’, APIs and cloud services.

e-business – includes e-commerce as well as processes such as production, inventory

management, product development, risk management, finance, knowledge management and

human resources aimed at achieving cost savings, and improvements in both efficiency and

productivity

AIIA believes that the definition of e-business should also include consideration of data

creation, management, storage and data analytics that play a large part in ICT and the

digital economy capabilities.

In addition to the above, AIIA has identified the following additional working definitions.

Digital adoption:

The rate of market penetration, extent of adoption and/or level of use of ICT amongst

individuals, businesses, or governments.

Digital disruption:

Changes facilitated by ICT/ digital technologies that disrupt, challenge, and re-shape

established business models and methods of value creation or social interactions.

Digital productivity:

The marginal productivity gains facilitated through digital adoption and the use of ICT

products and services by individuals, businesses and governments in their processes of

value creation.



4. Statistical Collections

Current Limitations

The major limitation of existing measurement approaches is that they focus primarily on the

availability and adoption of ICT technologies. Data collections are narrowly focused on the

household and business use of ICT, internet activity and broad labour market statistics,

supplemented by a biannual ICT Industry Survey.

We note that since the last comprehensive ICT Industry survey in 2006-07, the ICT industry profile

has now been spread across various sections the ANZSIC (Australia and New Zealand Industry Codes)

2006 classification, making it increasingly difficult to capture a holistic view of either the

performance of the ICT sector or the contribution the sector makes to the economy overall.

In 2014 for example, despite its stated objective to collect workforce, financial and product data from information, media and telecommunications (IMT) businesses in Australia in order to measure the size, structure and performance of the industry15, the ABS’ Information, Media and

Technology (IMT) Survey did not include major ICT related components. Computer design and

related services, cloud computing, mobile services and ICT professional services – to name only

some – were excluded from the survey.

While the rapid pace at which ICT is evolving makes developing a measurement instrument for the

digital economy challenging, the need for a multi-dimensional measurement instrument is clear.

This includes the ability to collect and analyse firm level data rather than aggregated data. This is

necessary to surface the raw data that is otherwise hidden in national statistics.

Development of a Principle Based Framework

Australia needs quality ICT statistics to inform better and more strategic policy and business

investment decisions. We need this information to, for example:

Inform telecommunications infrastructure investment such as in the NBN, mobile and wi

fi infrastructure;

underpin national ICT investment decisions, such as in digital technologies skills

development, smart infrastructure investments, ICT innovation and R&D investment;

assess the return on investment in ICT related projects and expenditure;

facilitate business development and investment activities such as in Growth Centres and

national research bodies including NICTA and CSIRO;

share and inform eGovernment, taxation, education, health, employment, industry etc.

policies;

manage an ageing population and shrinking workforce effectively and efficiently;

understand our competitiveness relative to other economies;

develop our export development focus and leverage emerging opportunities;

assess the breadth and scope of the potential digital divide.

In short, the effective measurement and analysis of ICT statistics is imperative to the sound

understanding of economy value. This is not simply a matter of measuring the performance of the

ICT industry.

AIIA acknowledges the complexity of developing a comprehensive, holistic

measurement framework in a constantly evolving and maturing technology

environment. Virtualisation, gamification, convergence of infrastructure,

15 ABS, 2014 Information, Media and Technology Survey



cashless payment systems, new peer to peer business models, the Internet of Things – represent just

some of the emerging new ICT capability that is disrupting all aspects of the economy. It is this

overarching impact of ICT on the economy, productivity, growth and competitiveness that AIIA

believes is of greatest value and must be the focus of an ICT measurement agenda.

To assist this process AIIA recommends this work is guided by a set of overarching principles. At a

minimum our view is that this framework include the following high level characteristics.

1. Internationally comparability:

o To ensure Australian outcomes are comparable with international peers and

competitors and used to benchmark Australia’s international competitiveness.

2. Benchmarked:

o Underpinned by reliable benchmarks against which change and progress can be

monitored, measured and reported

3. Frequent and Sustainable:

o Statistical data is current and relevant, reported frequently and provides the base

for longitudinal analysis over time.

4. Breadth and granularity:

o Adoption of multi-dimensional data elements (to capture for example, the

individual, business, social and economic impacts of ICT). This includes supply

and demand side metrics and granularity to state/regional, industry sector and

firm level.

5. Availability:

o Statistical data is open and available for broader use in real time (or as close to

real time as possible).

6. Adaptive:

o To accommodate the evolving nature of ICT innovation and capability. This may

mean that while measurement dimension remain relatively constant, specific

measurement indicators may change to reflect new circumstances.

7. Multi-source and multi-use:

o ICT statistical data can be sourced from third parties or as a by-product of other

data collections. This includes federated data from levels of government and

industry and from multi sources, including sensors, wifi networks etc; from all

levels of government,



5. Measuring Impact As noted earlier, notwithstanding the profound impact ICT has on shaping our modern society and

acknowledgement by policy makers of its increasing economic and social importance, there is no

accepted or consistent methodology for assessing its impact or value on Australia’s economy or

competitiveness.

Conventional measurement approaches such as measuring supply side (hardware, software,

connectivity, some services) on the one hand and use (by individuals and businesses) on the other,

has provided a useful but narrow and increasingly limited view of the impact of ICT.

With the diffusion, convergence and pervasiveness of ICTs making it difficult to isolate the direct

impact of ICT, there is general acceptance across our industry that a multi-dimensional approach to

measurement is required. This needs to take into account:

The direct impact of ICTs: essentially encompassing supply and demand side

components;

The dynamic impact of ICTs: the impact ICT has on productivity, efficiency, profitability

of businesses, translated to a net growth impact on the economy; and

The indirect impact of ICTs: on the overall economic and social gains/improvements of

an economy/society.

As outlined below, this requires a broad and multi-dimensional approach and, in the absence of

clearly delineated measures, use of proxy indicators. It also requires a focus on firm and state

based data to inform and influence State based policies and industry program development.

While the framework we have developed confirms the complexity of the task at hand, the aim is to

demonstrate how the various elements of ICT impact measurement can be delineated. By looking

at the results holistically, we are then able to form a more robust view of Australia’s performance

as a digital economy, including the impact of ICT on overall productivity, growth and

competitiveness.



Dimension Sub-Dimension Potential Scope of Measurment

1. CONNECTIVITY

Measures the scale, take-up, performance and affordability of the infrastructure that supports economy wide digital enablement.

The purpose of the measurement is to:

Inform coverage, take-up, access and affordability related policy

Inform infrastructure planning and investment decisions

Identify potential structural barriers to digital transformation

Inform e-waste approaches

International comparisons and benchmarks could be made.

1a. Fixed Broadband

1b. Mobile Wireless

Coverage (geography)

Take-up

Speed

Affordability

Geographic reach

Per capita take up (households and business)

Price

Product speeds/performance

Coverage (schools, communities) Coverage communities (wi-fi)

Coverage schools

1c. Devices Device penetration and

replacement patterns

Smartphones

Tablets

Laptops desktops

Wearables

Penetration/Use Sensors/sensor networks




2. USE: INTEGRATION OF ICTS

This measures the extent to which, and how ICT is used, patterns of adoption and penetration and integration.

This would capture the direct and dynamic impacts of ICT.

The purpose of the measurement is to track the pervasiveness of ICT take-up and use and the extent to which it is changing behaviours and

individual, business, government and community practices.

It would be the basis for efficiency and productivity analysis.

2a. Individuals

Online activities

Content use (e.g. video, music, games, IPTV)

Communication (e.g. social media, email, video calls)

Transactions (e.g. shopping, banking, micro-payments)

Smart home adoption

2b. Business ( Firm level, by

State and aggregated)

Online activities

ICT investment

XaaS

Mobility

SMEs

eBusiness

eCommerce

ICT investment

Cloud service use

Telework/mobility

SME use

2c. Government eGovernment

Service Delivery

XaaS

Procurement

Mobility

Data as an asset

Online communication

Online transactions

Online service completion

Open data availability

Cloud service use

Telework/mobility

2d. Communities Whole of community

adoption/integration

Smart cities




3. INPUTS

These measures aim to track the supply side inputs required to build competitive capacity in a digital economy. The purpose of the

measurement is to:

ensure a focus on developing the capability necessary to participate effectively in a digital economy;

track investment in ICT capability development;

inform investment, assess return on investments and identify potential investment gaps.

3a. Skills

Digital inclusion

Access and use equity and differentials

Skilled migration 457 and relevant visa classes

3b. Education STEM

ICT skills (Tertiary/TAFE)

ICT related occupations/

employment

STEM students and graduates

ICT undergraduate course take up and completion

ICT related jobs

Online education services

(universities & courses)

MOOCs

Availability, scope

Use

Recognition

3c. Innovation ICT patents

Collaboration

Start-ups/Incubators

Numbers

Growth trajectory

Commercialisation outcomes

3d. Research & Development Government supported R&D

Academic based R&D

Firm based R&D

ICT enabled R&D by industry

Investment $$s

Commercialisation outcomes

PhD students




4. OUTPUTS

These measures aim to assess and quantify the outputs of ICT capability development and investment and assess resultant growth and

productivity. These measures would inform the impact ICT has on productivity, efficiency, profitability of businesses, translated to a net

growth impact on the economy.

4a. Products

ICT products

ICT related employment

Applications

Games

Content

APIs

4b. Services ICT services

ICT related employment

Cloud market

Data storage

Open Data

Location services

4c.Trade/Export (includes by

State and aggregated)

Trade/Export

Sales (e.g. hardware/software/professional services)

Imports (e.g. hardware/software/professional services)

Import/export ratios

Market reach




5. OUTCOMES

Measures the impact of ICT diffusion. These measures aim to collect and analyse the broad and in many instances, ‘indirect impact’ of ICT.

The purpose of the measurement is to inform (in combination with the above dimensions) the overall economic and social impact of ICT.

The environmental impacts are also assessed.

5a. Economic

Growth

Competitiveness

Impact of new business models

E.g. peer to peer services such

as AirBNB, Uber

Cashless payment systems

Productivity

Profits

Growth (size)

Efficiency gains

5b. Social Health

Social equity

Cost reductions in operating the health system

Cost reductions in health treatment management

Improved health outcomes

Reduced social disadvantage

5c.Environmental eWaste

Energy Efficiency

eWaste targets/Volumes

Energy efficiency



6. Data The collection of relevant, quality data is essential to any measurement methodology.

Given the diffusion and pervasiveness of ICT, across all sectors of the economy, a multi-dimensional

approach to ICT measurement - data sourcing, collection and analysis – is required.

With the emergence of automated data collection from source, big data, data analytics and internet

of things capability, there are already large data sets accumulated by government (different levels

of government), research bodies, the private sector and social media. Telecommunications

companies, insurers, banks, retailers, infrastructure owners for example, increasingly hold large

volumes of data and have analytics capabilities that could be leveraged and extrapolated to inform

ICT measurement. This can be done without compromising privacy and security standards and

community expectations.

More broadly there is an opportunity to exploit ICT research capabilities, such as NICTA and CSIRO

to provide advice on innovative methodologies to collect, analyse and interpret data. Machine

learning capability for data analysis is also available from these organisations.

AIIA is strongly of the view that the traditional approach to statistical data collections and analysis

is outmoded: it is costly, resource intensive, typically takes an extended period of time to

complete, is generally static, does not manage dynamic data sets and is narrowly focussed – analysis

is limited and inevitability retrospective.

Through partnerships and collaborations with academia, industry and business, data can potentially

be captured and interpreted dynamically, with minimal additional effort and used for multi-

purposes.

With the growing sophistication of machine learning, the internet of things, big data, data analytics

and predictive analysis capability, ABS must do things differently to deliver meaningful information

and acquit its responsibilities.



7. Recommendations AIIA is cognisant of the complexity of the ICT measurement agenda. However it is imperative that

we forge ahead. Australia cannot afford to defer this task or wait for the ‘perfect’ measurement

instrument to be available, while our peers oversees aggressively exploit the potential of ICTs to

drive profound transformation of their economies - thereby also their productivity and

competitiveness.

Taking the measurement agenda forward AIIA recommends that:

1. As a matter of priority, development of the ICT measurement framework is guided by a

set of principles, as outlined by AIIA in this response. This will ensure adoption of a

holistic and sustainable approach to ICT measurement and avoid fragmentation and ad

hoc survey and measurement exercises.

2. The holistic approach to ICT measurement includes, for example consideration of the

direct, indirect and dynamic impacts of ICTs.

3. The key driver of ICT measurement is to measure, monitor and report the impact of ICTs

on productivity, growth and competitiveness.

4. ABS partner with bodies such as NICTA, CSIRO, universities and other relevant research

institutions to:

o seek advice on measurement methodologies and innovative ways to capture and

analyse data; and

o use the existing capability and tools of these organisations.

5. ABS engage with industry to identify and exploit existing data capture processes and

information stores – having strict regard to appropriate privacy and security

considerations.

6. Australia ensures international comparability of its measures.

It is AIIA’s firm view that ICT measurement must be a priority for the current Government. The

reduction of funding support for ABS in recent years is reflected in Australia’s very limited ability to

understand the impact of ICTs on our economy, productivity and competitiveness. This needs to be

addressed as a matter of priority to position Australia positively in the global digital economy.

AIIA is committed to improving ICT measurement in Australia and looks forward to working with the

ABS to take this agenda forward.

Documents

ICT Statistics Review 2014-15 - Home - AIIA · ICT Statistics Review 2014-15 AIIA ... Recommends principles to guide development of an ICT measurement ... As recently as 2015 Seek