New report shows Internet economy is thriving in Australia

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Fifty-five percent of Australian companies are now part of the country's $28 billion a year Internet economy, according to a new report. It forecasts that Internet economy revenue in Australia will increase in real terms to $49 billion per annum by 2003-04, or 6.7 per cent of GDP.

Carried out by The Allen Consulting Group, the study is the first of its kind for Australia. It was commissioned by Cisco Systems and designed in consultation with business and government representatives.

Terry Walsh, managing director of Cisco Australia & New Zealand, said the report showed Australian industry was readily adopting Internet solutions. "This report proves that the Internet is critical to conducting business in Australia."

Internet economy companies have adopted the Internet for business operations, or provide goods and services that support the Internet in Australia.

Internet-related spending at these businesses reached $28 billion during 2000-01, or 4.3 per cent of Australia's gross domestic product (GDP). This compares to an estimate of US$524 billion in the United States' Internet economy during 1999, or 5.6 per cent of GDP, as reported in a Cisco commissioned study by the University of Texas.

"The Internet economy is prospering in Australia," said report author Kerry Barwise, a director at The Allen Consulting Group. "It is made up of real companies that make real products. Companies which have adopted Internet business tools are profitable and forecast substantially faster growth than their offline peers."

The study showed that participation in the Internet economy is widespread throughout all major industries and has penetrated all major geographic areas of the country. The communications industry is the leading participant in the Internet Economy. Agriculture and mining have a 40 per cent participation level.

Firms surveyed said that the most significant benefits to business from using the Internet included incremental productivity and process improvements. Internet economy firms were 50 per cent more productive per worker than non-Internet economy firms.

One fifth of small businesses estimated that their overall revenue would increase by 20 per cent in the next three years as a result of using the Internet.

Sixty-two per cent of firms surveyed estimated that the Internet provides them with cost savings. A tenth of those said that the savings were 15 per cent or greater.

"Large and small firms report similar cost savings on a percentage basis. This means that both large and small companies can use the Internet to manage business costs," Barwise said.

About The Allen Consulting Group
The Allen Consulting Group is a strategic consulting firm working at the interface between business and government and specialising in public policy and economic analysis

The Allen Consulting Group

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