Data reveals ICT expenditure key to small business sales growth

Wellington – 6 December 2021 – Xero, the global small business platform, today released a new report which shows New Zealand small business ICT expenditure has increased 25 percent compared to pre-pandemic levels - more than the UK (20%) and Australia (13%). Small businesses that had higher levels of ICT spend experienced greater sales and payment outcomes, as well as fewer job losses throughout the pandemic.

These insights come from the latest Xero Small Business Insights special report ‘Picking up the pace: trends in small business technology adoption and use’ which uses anonymised and aggregated data from more than 300,000 small businesses on the Xero platform across New Zealand, Australia and the UK looking into the trends of small business digitalisation.

While New Zealand leads in post-pandemic growth, it falls behind the UK when it comes to the share of expenditure. In the UK, 4.4 percent of total small business expenses go to ICT, with 2.9 percent for New Zealand and 2.4 percent for Australia.

The top 25 percent of small business ICT spenders (from 2019 expenditure) experienced an average sales uplift of NZ$20,400 in 2020. The bottom 25 percent saw sales fall $24,000 over the same period - a difference of $44,400 between the two groups.

Further, the top quartile of ICT spenders were paid 1.1 days faster in New Zealand than the bottom quartile.

Xero’s Managing Director for New Zealand & Pacific Islands, Craig Hudson, says every small business should be reviewing what technology it uses.

“The data in the report is clear - the businesses embracing technology are pushing ahead, while the businesses who don’t are being left behind. Professional services lead the way when it comes to ICT spend, but there are incredible apps and digital tools for every industry, not just for office workers.”

“If you’re a business owner who is feeling a bit overwhelmed when it comes to technology, I implore you to visit the government’s free Digital Boost website or visit Xero’s Why We’re In It guide where we break down the first steps you can take to start your digitalisation journey.”

The Xero data also showed a relationship between small business growth and app use.

In New Zealand, the top 25 percent of app users saw sales growth of 5.0 percent year-on-year (y/y) and jobs growth of 3.5 percent y/y in 2020 compared to a decline of 3.7 percent y/y in sales and 1.0 percent y/y in jobs for non-app users.

This comes on the back of Xero’s behavioural science research study One Step which found those that readily adopt new technology enjoyed, on average, 120 percent higher revenue and 106 percent higher productivity.

ENDS

Media Contact

Natalie Weber-Benning | 021 026 19604 | natalie.weberbenning@xero.com

About Xero

Xero is a cloud-based accounting software platform for small businesses with over 3 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognized by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.