How to boost productivity through innovation and IT

Productivity across Australia has decreased over the past 12 months, however, IT investment and innovation have been identified by workers as a key opportunity to improve productivity.

A research report found that 35 per cent of workers reported being hindered by issues with legacy IT systems, while 70 per cent said their productivity would improve if they had faster access to more accurate data and analytics, allowing them to make better business decisions.

The EY Australian Productivity Pulse found that on a ten point scale, Australia’s average productivity has settled at 7.6, down from 7.7 at the end of last year.

Increased absorption of technology change will produce significant gains in productivity improvements, according to EY Oceania advisory leader Bill Farrell.

However, without investing, training and shifting workplace behaviour to encourage early adoption, he said many Australian organisations will fail to take advantage of the next wave of IT driven productivity.

Technology to reinvent jobs
The research, which took in approximately 2,100 employees across seven industries, also found that a third of workers believed their role is unlikely to exist in 20 years’ time due to emerging digital technologies and automation.

The more innovative the sector, the more likely workers are to believe their roles will soon be extinct.

“The days of a ‘job for life’ are gone, with many Australians holding a variety of roles during their careers,” said Farrell.

“Workers understand they need to adapt and reskill continually to remain employable in a rapidly changing labour market. The real question is how.

“Clearer guidance and communication to assist workers to develop more skills and experience is required from employers and governments so that workers have newer, broader and more market relevant skills than ever before.”

Farrell said displacement due to new technologies is likely to be an issue in sectors where innovation drives automation, outpacing the rate where we can find new uses for labour.

“This contrasts with the last wave of technology change in the workplace,” he said.

“For the past three decades, technology has replaced lower skills and repetitive tasks, but hasn’t reduced the demand for jobs in itself.

“Instead it has increased the intensity of work and the demand for skilled jobs.

“Similar to what we saw in the 1990s with a surge in productivity in the services sector due to technological advances.

“However, the advent of emerging digital technology, with the capacity to automate processes, may not just replace skilled people but actually reduce the demand for certain jobs.

“This could be a game changer in our ability to gain productivity improvements,” he said.

Poor skills development
As organisations adopt new technologies, adapt and innovate, they need to equip workers with the new skills needed to remain employable.

However, the research found that less than one in eight workers believe their employer is developing the skills they will need for the future.

Workers cannot be expected to adapt their skills on their own, and Farrell said Australians are unaware of where the likely jobs of the future will be.

The workforce still largely believes our economy will continue to be driven by construction and mining, with little appreciation of the contribution of services,” he said.

“For example, respondents rated financial and insurance services – vital to jobs and our economy – as unimportant to Australia’s future economic success.”

However, between 2000 and 2013, ‘services’ grew the Australian economy from $400 to $620 billion.

One element of the services sector, financial services grew $55 billion over the same time period, close to the mining sector which grew by $60 billion.

Getting to grips with data
On the face of it, Australian organisations are investing in leading technologies to make their business models more efficient, and to keep up with the evolving demands of well-informed consumers, who are driving new business models from the outside in.

Australia is a big spender on IT in the Asia-Pacific, relative to population, third behind China ($124.5 billion) and Japan ($211.4 billion), but many workers aren’t seeing this spending filter through to the operational level and how it helps them become more productive.

The research found 35 per cent of workers were being hindered by issues with legacy IT systems (a combination of hardware and software issues).

Hardware issues such as their PCs not being powerful enough to run the latest software smoothly and custom software solutions not being developed to fully take into consideration the needs of the business.

The vast majority of these workers said they lacked access to the right information and did not have the right level of skills and training to be able to effectively analyse the data.

Farrell said fewer than half of the respondents believe emerging digital technologies, data analytics and mobile computing would improve their personal productivity.

“This is despite the fact that these people, as consumers, almost certainly rely on emerging digital technology for their internet banking, google maps, online grocery shopping, and music, video and TV streaming,” he said.

“In the workplace, these technologies have barely touched our workforce, which is still struggling with basic issues such as internet speed, legacy IT challenges, mobile devices and poor quality data.”

Information overload
Easy access to the right information, in the right format, at the right time is becoming increasingly critical for workers, with the research finding that 70 per cent of workers said their productivity would improve if they had faster access to more accurate data and analytics, allowing them to make better business decisions.

Only 6 per cent of respondents said they have satisfactory access to data analytics, yet more than two thirds said that better data and information driven by analytics would increase their productivity through improved fact-based decision making.

On average, workers estimated their productivity would rise by 16 per cent, if they had access to the right information faster through data analytics and improved technology for the aggregation and delivery of results.

The next wave of technology-led change
Farrell said the research highlights the role for governments and employers in communicating where they see the jobs of the future, identify at-risk jobs and support people to make a timely skills transition.

“If we don’t do this, we stand to have continuing generations of older workers who find themselves redundant,” he said.

“Currently, Australia has low rates of participation from age 55. Unless we address the growing issue of skills transition, particularly for older workers, this problem will get more acute.

“Focusing on developing a fully-equipped, skilled, capable and contributing older population is critical to ensure we make the productivity gains the economy needs.

“Otherwise, we will see an increasing divide between skilled older workers who continue past the retirement age and unskilled older workers claiming the aged pension.

“Supporting workers to make productivity improvements throughout their entire career will create the talent pool needed to adapt to the changing labour market and lift productivity.”

The research also found that workers aged 25-34 believe innovation would increase their personal productivity by 27 per cent, compared to 16 per cent for 55-64 year olds.

Further 44 per cent of Australian workers continued to experience cost cutting and redundancies. Mining remained the worst affected sector, with two thirds of workers in this industry experiencing some form of cuts.