Supporting small to medium enterprises (SMES).
A robust and creative supporter of business: strengthening and diversifying the local economy
Any economic strategy for the area needs to promote a range of diverse and rewarding employment options with businesses that are future driven, smart, innovative and green – and the local talent able to take advantage of them.
Although many of these will be in existing sectors especially where there are clusters of excellence and specialism which there certainly are in Geelong, a credible digital strategy also needs to support emerging, forward-looking, sectors, have a strong focus on the needs of SMEs and start-ups and indeed target the needs of residents who want employment or self- employment opportunities in the new economy.
Digital Geelong embodies this perspective. In so doing it fits well with the economic development strategies crafted by Council. These have a regional approach to economic development, a strong basis in partnership between the public, private, education and not for profit sectors and a mature perspective that the economic future will not be premised on an ‘inward investment silver- bullet manufacturer with 1000+ employees’ (quote) but rather needs to be based on a further diversification of the local economy and less reliance on traditional manufacturing.
This aspiration is based on the evidence not just that manufacturing jobs are continuing to be off-shored but also, more positively, on recent research showing that there’s very definitely a trickle-down effect whereby the creation of one high paying, high tech job has a job multiplier effect five times that number.
Put simply, nurturing or attracting well-educated and well paid innovators locally can create a myriad of demands in the local marketplace – for doctors, hairstylists, lawyers, financial advisors, fitness instructors restaurants and indeed a range of online jobs (from web-designers, PR specialists and media producers through to market researchers, event- organisers, virtual personal assistants and a wide variety of freelancers and contractors) – because their success leads to the forming of lots of high-paying and sustainable service work.
Digital Geelong - part of Council's holistic approach to economic development
Digital Geelong also fits at the centre of a what the recent Victorian Government Infrastructure and Economic Development Committee inquiry praised as Geelong’s ‘holistic, whole of council approach to economic development that aims to integrate urban planning, infrastructure provision and business support programs with an overarching vision for the future of the municipality’.
That approach will help nurture Geelong’s whole eco-system for innovation and promote its profile and market appeal as an attractor of talent and entrepreneurs. A vital part of that new ‘Geelong Offer’ will be the infrastructure, environment and business advice available to SMEs and start-ups in a digital era – and the digital strategy being pursued by an innovative council in support of them.
The aims of the strategy are clear in relation to business.
They are to ensure that the digital economy is seen as a high priority by – and is part of the mindset of – local
businesses; to ensure digital support activities are in place; to seek to achieve in so doing a local ‘digital premium’ (new jobs, faster growth, greater competitiveness); and above all to position Geelong as a significant, smart, digital city with the right infrastructure and eco-system in place to support and create new business opportunities and to anchor and attract entrepreneurial talent to Geelong. We seek to leverage technology to expand Internet access, support local industry and spark innovation. It is crucial in this process, that the opportunity to make Digital Geelong a magnet for start-ups and innovation-led SMEs must also be seized.
However, bearing in mind that 70% of the companies benefiting from digital media and online trading are actually ‘traditional’ SMEs and not ICT companies, a digital strategy needs to encompass all significant sectors – existing and emergent whether in manufacturing, services or retail. ‘Digital’ must become part of the daily conversation for all businesses in Geelong, all in time developing their own digital strategies as part of their core business strategies. The City will work with a range of partners with the core aim of preparing Geelong for this new digital paradigm and to better support local business for the journey ahead.
Current digital innovation in the region
The strategy does not start with a blank canvas locally. Part of the context for it – and a basis for further development – is provided by:-
The presence of Barwon Health – a recognized national leader in the adoption and implementation of electronic and digital platforms;
A strong Medicare Local – which plays an important role in creating a highly integrated local health system (important in collecting data across the health sector), and in increasing digital adoption and use of enterprise management across health providers;
Research strength across Deakin University & CSIRO with health-based digital applications – there are multiple faculties and research centres with health digital / health analytics expertise
The presence of new and significant health stakeholders – this includes the headquarters of the TAC, Work Cover, DisabilityCare, GMHBA, the National Disablity Insurance Service and the South-West Alliance for Rural Health (SWARH), as well as the future Epworth Hospital, all of which are exploring digital technologies and platforms and the greater use of analytics
The establishment locally of the Australian Sports Technologies Network – wearable computing technologies and digital platforms (to promote health) are two major categories within the sector – hence ICT Geelong’s
focus on building capability in wearable sensor technologies recognized as a focal point for future R&D and commercialisation activities, with health and sport applications. This has led to the Head Start business incubator program
Recommendation 20: Digital Geelong will continue to build on emerging clusters in health, sports science, retail, university capacity and related analytics.
Encouraging SMES: a key objective of Digital Geelong
Encouraging small businesses in Geelong to build their online capability therefore has the potential to be advantageous both for the SMEs themselves and the Geelong economy as a whole. It can accelerate the growth of both.
The preponderance of smaller companies in Geelong require more information and best practice around what commercial uses can be made of new technologies and interventions which support effective knowledge and skills transfer. These are core goals of Digital Geelong.
The key advantages of SMEs operating online include:
Attracting more customers
More effective marketing
Wider geographic coverage with the potential for customers and partners throughout the world, removing geography from the equation
‘virtual clustering’ of companies in the same market but not physically close
Increased customer interaction, Savings and efficiencies including access to new Cloud services which will reduce business costs and raise productivity
Simplified process of taking payments
Enhanced capacity to access the supply chain of larger businesses and win public sector tenders as digital infrastructure and skills are becoming a standard minimum requirements
Improved marketing with use of rich media, particularly important for retail which operates in a highly competitive environment.
Unsurprisingly in this context, local businesses who have already taken steps to build their online capabilities are keen to develop further.
There is, however, currently a group of local businesses which has not yet embraced online technology. Given international trends and following discussions in the workshops, we conclude that it is likely that well over a third of SMEs in Geelong will not yet have a website. Moreover,
at least one in five SMEs will be at the lowest level of digital awareness and skills – those who are more or less disconnected from the Internet.
These businesses are often older, more established companies run by people who are less convinced of the value of digital development. This means that a considerable number of local SMEs may be putting their future growth at risk by missing out on the potential of digital technologies and platforms to increase productivity further. It is vital they get access to the right help to unlock the digital potential.
Identifying the different ‘digital profiles’ of local SMEs will help sharpen the understanding of the specific support required.
Recommendation 21: The City should prioritise business support and knowledge transfer initiatives for SMEs – and target intervention to match their different ‘digital profiles’
SME digital group profiles
The disconnected: these SMEs have not developed digitally and may have seen a plateau in business growth. They are reluctant to develop their use of digital technology. Typically they have a Lower level or no online use and no website. This group contains a large proportion of older, more established companies.
Digital aspirants: this segment may not be digitally sophisticated but their attitude towards digital development sets them apart from the disconnected – they have a desire to grow digitally and have taken the first steps on this journey. They may vary between those who have moderate level online use but lower level website functionality or lower level online use but have a basic website. Overall; the tasks performed online by this group are relatively basic such as using search engines and email. The ‘digital aspirants’ tend to be younger businesses, although there are some exceptions.
Comfortable surfers: these SMEs are digitally sophisticated already and have developed online in the past, but this has now reached a plateau. These will have high or moderate level online use. Some have become comfortable with the level of development they have reached and do not
wish to pursue this further. Others are at a point where further development is viewed as more costly or outside their areas of expertise, for example, developing a more advanced website. A significant proportion work in primary or secondary industries, including manufacturing and construction.
Digital advocates: the Internet already plays a key role in the businesses of ‘digital advocates’, but there is no sign of them reaching a development plateau. They will have moderate to higher level online use and website functionality. They remain interested in developing their use of online technology further and in this they are second only to the ‘digital stars’.
Digital stars: The ‘stars’ are the most digitally advanced group. They will have higher level online use and a higher level website. They are advocates for digitisation, having seen growth in their business, often as a direct result of the adoption of digital technologies. They do not feel they
have achieved all there is to achieve digitally and the desire to develop further is still strong. They want to grow their business in the next few years, are the most confident personal Internet users and will be committed to further development online in the next few years. Many of the SMEs in this group operate in the retail or service sectors. Their experience and enthusiasm must be harnessed locally as part of the collaboration which will deliver Digital Geelong.
Digital infrastructure to support momentum
The strategy envisages the Council taking all opportunities to promote the further strengthening of local digital infrastructure to support this momentum, to support businesses, improve public services and build local community capacity. There are several key opportunities to do so:
The presence and future growth of the City’s Wi-Fi capacity, expanding beyond the established projects within Central Geelong and the Waterfront
The advent of high speed broadband via the NBN (whose uncertain arrival has caused some delay in local business planning, as elsewhere in Australia)
The further upgrade of mobile and wireless services (which are partly substitutive of fibre optic based technology but mostly complementary with fibre enhancing capacity of fixed and mobile devices and mobile enabling creative applications)
The prospect of new development and new infrastructure investment enabling the installing of fibre optic cabling (whether the NBN or an alternative)
The advent of the new digitally enabled library in the city centre
The potential for greater exploitation of what fibre optic capacity currently exists, under-utilised, in various parts of the public sector (schools, TAFE, University, some healthcare providers and VicTrak for example)
The potential for local companies to collaborate to jointly purchase enhanced broadband capacity from private Internet Service Providers
The City of Greater Geelong needs to understand deeply and continue to advocate for the digital infrastructure needed by the businesses (and the community) of Geelong.
Going digital: the premium for - and challenge to - SMES
However, the challenge for the strategy is not just that of strengthening digital infrastructure, though that will be an important component also in the broader objective of attracting inward investment of both capital and talent and developing Geelong as a magnet for start-ups. It is about supporting local businesses, with its dominance of SMEs, and retail – experiencing considerable ‘digital disruption’ globally – to acquire the skills and mindset to exploit opportunities in the digital economy.
SMEs are a hugely important part of the Geelong economy, and though there are a growing number of digitally enhanced and progressive enterprises, it was clear from local workshops and interviews that many are not making full use of digital tools. Many small businesses typically lack the resources, time or capacity to explore the potential of, adopt and maximise the benefits of, new technologies and applications.
This market failure needs addressing as there is a significant ‘digital premium’. Research shows that those SMEs who are confidently operating online are more likely to have grown in the past few years and can be optimistic about future growth. There is a strong link between online development and turnover growth. SMEs making frequent use of the internet have been found to be more than twice as likely as those who used it less often to have recorded an increase in turnover since the GFC – and they are the companies anticipated to grow even further going forward.
Developing tools to assess digital awareness and participation
Develop or identify a tool to help benchmark the relative uptake and sophisitication of business enterprises and organisations within the City of Greater Geelong against other centre. A tool such as a ‘participation barometer’ could measure the level of digital engagement in the Geelong economy.
The ‘barometer’ would reflect progress towards more sophisticated digital use and identify a key checklist of applications to improve the success of organisations in the region. Such a tool is a very useful device for individual organisations or companies to assess where they regarding participation in the digital economy and what uses they might explore to increase their participation and indeed efficiency and productivity The aim of organisations and policy in the region must be to move from the bottom to the top of the chart over time – and for the Council and partners to assist.
Recommendation 22: Use and promote a digital benchmarking tool as indicated and/or work with ICT Geelong to develop such a tool for local use.
Challenges and targeted interventions
Even though use of the internet has increased substantially in most enterprises there are still large numbers of SMEs (and retailers) who do not complete simple business tasks online such as using search engines, communicating with customers and suppliers online, providing information via a website or making transactions. Many SMEs and retailers still have not found an effective way of using social media to benefit their business.
One of the largest challenges will of course be engaging the ‘disconnected’ group who currently see little value inthe Internet. Support for this group needs to start at a very basic level, with messages around the time saving benefits most likely to resonate. As business owners in this category are also often less confident Internet users personally interventions aimed at greater digital literacy need to be appropriately personal. The strategy accommodates this.
However, a key opportunity for developing online use amongst local SMEs lies amongst those who have already started along the path of digital development, have seen the benefits and are now keen to do more. By engaging with SMEs during the early stages of digital development, reinforcing positive messages about growth and signposting them to relevant services, there is an opportunity to accelerate momentum amongst this group.
Unsurprisingly, SMEs with the highest current levels of digital maturity are amongst the most likely to fully appreciate the benefits of going online. They are also more likely to want to look for further help and guidance. This largely means that those that can potentially benefit the most from Digital Geelong initiatives are also likely to be the most challenging group to target. Digital Geelong will require targeted interventions and targeted support for the aforementioned specific digital profiles and levels of capacity to be found in local SMEs.
Offer more support to start-ups: focus on website development and social media
It is especially important for Digital Geelong to support businesses when they start trading, as it is at this point where uncertainty is at its highest. As so many businesses close within the first year of trading, well targeted support for start-ups could also have a positive effect on the economy as a whole. Early momentum will allow SMEs to see the benefit of online development, making them more likely to continue on this path in the longer term.
Although current start-ups will tend to be more digitally savvy than previous generations, the evidence is that they are keen to benefit from online support initiatives and sees this as important for their growth. Although two thirds of today’s start-ups will have a website, many will still provide low level website functionality with only basic information about the company. Research indicates that across the range of needs of this group, website development and use of social media are key elements that such enterprises are keen to improve.
More broadly, start-ups increasingly look, when making decisions on business location, to the digital infrastructure – such as the availability of fibre optic networks such as the NBN, mobile reception, access to free Wi-Fi – but also to what has been called the ‘eco-system supporting innovation’. This can include more holistic issues of city management and the agglomeration and concentration of businesses in an area, enabling companies to access talent, knowledge spill-overs and indeed business collaborations. CoGG has influence over the delivery of these services even if they are not in direct control of implementation.
An innovation eco-system can vary but may also include workspace initiatives, business incubators or co-working spaces – possibly in collaboration with a local university, or in a technically enabled central library as a ‘knowledge hub’ (with perhaps its own 3D printer available to SMEs).
Increasingly, research is showing a shift to preferences amongst employees and businesses for what has become known as an in-town innovation district with cafes, bars, restaurants and that urban vibe sought by the key demography of 25- 34 year olds at the heart of innovation globally. Retaining and attracting that demography of talent and entrepreneurship to Geelong must be a core objective of a broader Council-led approach to the renewal of Geelong of which the Digital Geelong strategy is a cornerstone.
Attracting and anchoring University students with digital or science, technology, engineering and mathematics (STEM) qualifications must be a focus. If successful it will also attract relocations of companies as well as start-ups as the top priority for companies when comparing eco-systems for innovation is the availability of talent locally. The existing or emerging foci around health, sports science, advanced design-based manufacturing, construction and indeed retail can provide new job opportunities and sectors to attract and anchor the pool of talent required.
To this end, it is important that the local university offer around data analytics, data visualisation, Big Data and perhaps also Building Information Management be further developed. The City should lobby for a Chair in the digital economy, or analytics, to be inaugurated locally by the University, as part of a Data Research Centre for Smart Analytics, also offering training; consultancy services high quality digital learning materials and continuing professional development opportunities to local business. This would put Geelong on the national data analytics/digital economy map. Existing computer science and STEM students at University locally should be enabled to volunteer to help local young people of school age -or older people seeking re-skilling opportunities – to acquire basic or more advanced digital skills (including coding) as part of a wider ‘Get Geelong Online’ initiative envisaged by the strategy.
Recommendation 23: Partner with tertiary education institutions to attract talent, develop skills – and seek to create a Research Centre for Smart Analytics.
Digital jobs for all!
Contained within the digital opportunity arising from up- skilling is of course a threat of there being a digital skills gap in Geelong unless action is taken. On current trends there may be a digital skills shortage over the next decade that may hold back economic growth. So nurturing coding and programming skills in our young people will improve future employability and provide a talent pool upon which local businesses and the regional economy as a whole can draw
Of course, much of the discussion about the digital economy implies that the only jobs which matter are those of ICT professionals, software engineers, programmers or coders. Whilst these jobs are important and create most multipliers in the local economy, there will be an increasing number of people with jobs based on digital technologies who themselves are not ‘hard’ technical specialists of these kinds. There will also be more jobs for individuals who are free- lancers, self-employed or on part-time/short-term, project based, contracts, working for themselves or for others.
They may be digital media workers, designing websites, providing social media platforms or other creatives supplying digital content. They may be researchers or specialists
in analysing or visualising data. They may be online accountants or social marketers, educationists/coaches or event organisers, virtual project managers or providers of HR or PA support online.
This is only a short-list of the variety of jobs which are emerging to service the digital economy. This is a core part of its attraction. But it also goes to the point of having a focus in the digital strategy not just on the needs of companies but on individuals and the skills, training and knowledge needed to access opportunities by the local community. Ensuring these are in place – are they being imparted at school, TAFE/ University or by employers and relevant not-for-profit, skills- trainers or business support organisations in this space? – is an important issues for the strategy.
It is not the responsibility of the Council to directly deliver the training and skills inputs required – though there may be
more opportunities for the Council to create relevant graduate work experience or internships to improve industry linkages and development. But it should, as a convenor of local alliances and as an advocate for the local community, ensure its partners to the strategy – in government, the start-up community, business and community organisations schools, hospitals, training organizations, digital inclusion activists, the local Digital Stars and Digital Advocates -are doing so.
Recommendation 24: Formally recognise that a wide variety of jobs and employment scenarios will be created in the digital economy. Ensure that partners are designing and delivering appropriate training and skills programs to service those job opportunities.
The City's role: a digital advocate for local business, supporting knowledge transfer - as well as an enduring infrastructure is in place
The strategy envisages the Council, either through its own activities or through partnership with other key forces, promoting the knowledge transfer, skills and infrastructure required by business and the workforce in the digital era. The City should create a Digital Partnership – which includes ICT Geelong – to bring together the various relevant players from the private, public, education /Tafe/University and not-for- profit sectors to promote this agenda. The existence of such an initiative would not simply help coordinate activities but give a strong message to existing business and those Geelong seeks to attract, that the digital economy is a core focus of a unified forward-looking community.
The City will continue to be the advocate of local community and business in seeking to ensure that the NBN is delivered in as timely and as extensive a fashion as possible, locally. It will play the same advocacy role in relation to the provision of mobile services locally and the resolution of any mobile ‘black-spot’ or reception issues.
The uncertainty and delays surrounding the NBN have caused problems in business planning and in any shift from fibre to the premises to fibre to the node – the new approach of NBN – needs to ensure sufficient fibre access is available locally. That will also involve the Council taking a lead on mapping the availability of fibre cabling via other
bodies (such as exists in health and education providers and VicTrak) and how local business and public services might access them(see below). The same advocacy and brokering role will be needed in relation to mobile service providers and how their provision might be improved locally and ‘black spots’ reduced.
Recommendation 25: The City should maintain its brokering role on behalf of the local economy in discussions with
the NBN as to its roll-out schedule and locations – and in relation to mobile services.
COGG as an ambitious digitally enabled council will create local business opportunities via its open data policies - and attract enterpreneurs to the area
We have seen how COGG will seek to lead by example locally, showing how digital platforms and the digital economy can drive more productive use of its own assets, improve services and deepen engagement with the private sector. The workshops and interviews indicated awareness locally that there was a culture shift underway in the Council towards this leadership role and that with the new mayor as himself a ‘digital champion’ the strategic direction of travel was now clear.
The very fact that the Council is highlighting its digital ambitions, both in terms of its own corporate development, service design and provision and engagement with the community and business, will be a positive signal to the talented and innovative – whether here already or potential re-locators, to explore new possibilities in Geelong. Another key part of this ‘open for digital business’ message is a commitment to Open Data.
We have seen how the significant quantities of data the public sector and governments produce are set to
revolutionise the way we manage our public services, engage with and are accountable to our communities and design and build our cities (These issues were dealt with further in the section above on the ‘Council as a digital leader’. ). But an ‘Open Data’ approach by the Council can also do more
for the economy than inform better civic insight. It can help create products and services for markets and develop new opportunities for local SMEs.
The City can spark an innovation ecology through identifying the range of data sets it has produced/will produce and making them readily available online so that local companies are able to build relevant applications and offer services by using the data or by presenting key data in more user-friendly ways: there is no reason why Council data cannot be every bit as easy as navigating Google or Facebook.
Further, access to council research and data can also help local SMEs access vital leaning and market-relevant
information at low or nil cost. The approach, subject to the right controls and regulatory framework, has a significant potential economic value, creating new business.
The City should progress Open Data initiatives through a modern open data platform and sharing Application Programming Interfaces (APIs) to enable developers
producing online systems to link up with Council systems and provide useful applications for the public.
Material should be released in machine readable form on an open source website with clear policies on reuse. And no user should have to have a degree in social geography or have a post-graduate experience in research techniques to be able to understand the data sets supplied. However, the Council will have to consider how local business newly exploring Open Data can access the skills, knowledge and support to use data. And of course, though there are plenty of excellent tools out there for people who are already very
into their data, but there’s very little available to data novices.
Recommendation 26: The City should iteratively release all relevant datasets digitally to help local business development.
Initiate series of 'Hack Days'
The City should also set up a series of ‘hack days’ or competitions to engage local SMEs /software developers and coders in developing new or better uses of the data that they are releasing addressing specific problems facing Geelong. These may involve prizes for the best, most innovative,
web or mobile applications, resources or toolkits or even or help in securing funding from sponsors to turn ideas into functional products. Hack days can also be used to trial any new products and services and the Council could itself consider procuring and implementing preferred high-impact innovations to improve services and cut costs. The City could
in this partnership with local business develop the ‘Geelong data store or dashboard’ recommended elsewhere in the strategy.
The deeper message of such an approach is also that Geelong is signalling that it is opening up its administration and services to local businesses and entrepreneurs and wants to accelerate local innovation while leveraging public spending more effectively to deliver better services. It
also shows a culture actively supporting the research and development of new applications by partnering for innovation with business.
Recommendation 27: The City should create local business opportunities, ‘hackathons’ and other incentives using its own and other government agency data to develop digital applications.
Co-working space - and other digital workspaces
The workshops and interviews supported the concept of dedicated, serviced ‘co-working’ spaces with best in class connectivity as being highly relevant locally, given its proximity to Melbourne alongside the attraction of not having to commute every day to Melbourne if possible.
There is a spectrum of such spaces and business models to be found in other cities with some being privately provided, others being partnerships between the public and private sectors and others being publicly provided (such as via libraries). Some are for self-employed ‘mobile workers’ and others are essentially back offices for major companies. There is appetite for some design thinking to be applied as to what needs to be nurtured locally and we recommend the Council and ICT Geelong further develop a proposition for a digitally enabled co-working centre in a suitable location to study the effectiveness of the centre in reducing commuting and encouraging collaborative working.
However, given Geelong’s desire to see Digital Geelong as part of a broader strategy for renewal and given the recent research showing that innovation favours in-town districts which combine accommodation, densities of companies, talent, sources of investment and advice, digital infrastructure and urban attractors such as cafés, bars and restaurants, it is important that in addition, a network be mapped /created of what might be called ‘Geelong’s public digital and Wi-Fi workspaces for mobile workers’. These might in case of the new library be a more formal ‘knowledge hub’ in strategic location but they will also be more informal venues such as cafes, hotels and retail outlets.
The creation of ICT Geelong gave an early indication of the importance to the Council and the area of the emerging digital economy and the need to equip local companies with appropriate knowledge and skills to take advantage of it.
It remains close to the local market and undertakes ‘grass roots’ presentations on the digital economy with local SMEs. It has recently researched and published a report on the digital activities in the region with a number of illuminating case studies. It has a directory of local digital providers. It helps bring the public and private sectors together around this agenda and is playing an active role in the development locally of digital clusters around sport science and health.
A key decision for the Council to take relates to the role it sees ICT Geelong playing in delivering the broader ambitions of Digital Geelong. Whatever the specifics of the decision made – and there is a spectrum of choices possible – there should be even greater collaboration and shared learning/ projects going forward and with ICT Geelong playing a prominent role in any Geelong Digital Partnership: whether it should in a sense become the secretariat for the Partnership is a key matter to be explored though it is vital that Digital Geelong be seen as a core strategy for the Council’s strategic centre to have oversight of, in association with the heads of the various departments/directorates and Geelong’s dedicated economic development agency, Enterprise Geelong. Digital Geelong is a Council led ‘digital masterplan’ and central to the Council’s vision for Geelong
Recommendation 28: The City should clarify the role it wishes ICT Geelong to play as part of the digital partnership for Digital Geelong.
Next section: Implementation considerations