• Majority of Australian Firms Participating in Internet Economy
• Internet-related business spending $28 billion pa, rising to $49 billion by 2004
• Australian companies using Internet technology to gain competitiveness

SYDNEY, 25 July 2001 - Fifty five percent of Australian companies are now part of the country's $28 billion a year Internet Economy, according to a major new report launched today by Cisco Systems and the Hon. Senator Richard Alston, Minister for Communications, Information Technology and the Arts.

The study, from The Allen Consulting Group, is the first of its kind for Australia. It was commissioned by networking leader Cisco Systems to address the question, 'How large is the Internet Economy in Australia?' The study was designed in consultation with leading business and government representatives.

Cisco Australia & New Zealand Managing Director, Terry Walsh, said the report showed Australian industry was readily adopting Internet solutions to improve its competitive position. "This report proves that the Internet is critical to conducting business in Australia," Mr Walsh said.

Senator Alston said; "Australia's place at the leading edge of the Internet economy has been re-affirmed by this report, which shows the extent and breadth of the Internet's role in the overall economy. At a range of levels, the Howard Government is playing a key investment and facilitating role in the advantages the Internet offers Australian business and consumers."

"The Internet Economy" comprises a group of companies that have adopted the Internet for their business operations, or provide goods and services that support the Internet in Australia. The Internet Economy was divided into four layers for the purpose of the study.

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 Allen Consulting Group study 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.

"The Internet Economy is prospering in Australia," said Mr Kerry Barwise, a director at The Allen Consulting Group and report author. "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," Mr Barwise said.

About Cisco Systems

Cisco Systems is the worldwide leader in networking for the Internet. See www.cisco.com for further information.

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

Cisco, Cisco IOS, Cisco Systems and the Cisco Systems logo are registered trademarks of Cisco Systems, Inc. in the U.S. and certain other countries. All other trademarks mentioned in this document are the property of their respective owners.

The Report can be found at www.allenconsult.com.au or at either:
www.cisco.com/asiapac/oz_ieconomy/report/or
www.cisco.com/asiapac/oz_ieconomy/summary