Digital tech has no impact on nearly a third of small and medium firms

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Nearly one-third of New Zealand small and medium-sized enterprises say digital technology has had no impact on their business over the past five years and 27 per cent don't expect it to in the next five years.

That's one of the findings of the 2015 Westpac Grow New Zealand survey of nearly 1200 SMEs ranging in size from $250,000 to $5 million in turnover.

About 38 per cent had bought new hardware or software in the past five years and 36 per cent intended doing so in future but less than a third had used that new technology to change their marketing approach or online processes and 10 per cent and under had changed their logistic and distribution processes, organisational structure, or suppliers as a result.

About 10 per cent had hired new staff as a result of the new technology and a further 13 per cent expect to do so in the next five years while 3 per cent had laid off staff as a result.

Westpac chief economist Dominick Stephens said the lack of impact from digital technology was surprising, as was the fact many SMEs were also not confident about securing the right staff to capitalise on it.

"In the US, productivity gains have been made by altering business structures to suit the new technological reality," he said.

There did not seem to be as much pressure for New Zealand firms to adapt quite as quickly.

The Productivity Commission's report into New Zealand's productivity, which has improved of late but remains low by OECD averages, said that was due to weak international connections and companies underinvesting in knowledge-based capital.

"There's no point just buying a computer, having a website or buying a smartphone, you have to also look at technology and what opportunities are presented by this stuff and completely re-engineer your business," said chairman Murray Sherwin.

A report last year by the Innovation Partnership, a group of private- and public-sector individuals facilitated by Google that want to drive greater innovation in NZ through the internet, said the capability of the internet could be at the centre of the drive for economic growth.

Businesses should be making effective use of the internet to add billions of dollars of productivity and export gains to the economy, it said.

It pointed to businesses that make substantial online sales being up to 25 per cent more productive than the average firm in their industry, yet only 12 per cent of firms are taking online payments via their website.

The Westpac survey also showed only 56 per cent of respondents have a website, 60 per cent were using social media, and 82 per cent had a smartphone. Only 15 per cent had dedicated apps for their industry and a similar number used other cloud-based products or services.

The survey also found more than a third of Kiwi SMES hadn't improved the position of their business in the past four years.