Telstra Productivity Indicator 2010Key Findings

Contents

• The Big Picture

• The ‘Productivity Gap’

• Improving Productivity

1

Productivity overview

3

The Big Picture

“Between 50% and 60% of Australia's economic growth

since 1990 can be attributed to productivity

improvements”.

Australia 2020 Summit - Education, Skills And The Productivity

Agenda

April 2008

“If we boost productivity growth by 2050 every

Australian man, woman and child would be $16,000

better off each year".

Building Australia's future: beginning a building decade for a

stronger Australia, The Hon Kevin Rudd MP, January 2010

4

Productivity trends

AUSTRALIAN PRODUCTIVITY TRENDS

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

80-81 84-85 88-89 92-93 96-97 00-01 04-05 08-09

Source: ABS

Australia's Relative Productivity Performance2000-2008

0

1

2

3

Australia Canada France Germany Ireland Japan New

Zealand

United

Kingdom

United

States

„Lagging….not leading‟

Slowdown

Sources: OECD, Analysis by Telstra Economics group

„Slowing….not growing‟

Australia‟s Relative Productivity Performance

2000-2008Australian Productivity Trends

MFP growth & Communications Intensity

0%

1%

2%

3%

4%

-4% -3% -2% -1% 0% 1% 2% 3%

MFP growth over decade to 2008-09

Co

mm

un

ica

tio

ns

Inte

nsi

ty

Utilities

Mining

Information, Media & TelecomsAccommodation

Recreation

Wholesale Retail

Transport

Finance

ManufacturingConstruction Agriculture

5

Productivity growth is strongest in those industries that are heavy users of communications technology

Sources: ABS and Analysis by Telstra Economics group

MFP Growth and Communications Technology Intensity

6

Telstra’s Productivity Research

Source: ACIL Tasman

Macro-level

Research

Multi-factor

productivity

analysis

Case-studies

and

diagnostics

Telstra

Productivity

Indicator

ICT impact on

productivity

Macro-economic

Industry-level

Firm-level

Work group-level

Individual-level

Telstra Productivity Indicator 2010

Objectives

• Discover how enterprise and government organisations approach productivity

• Investigate the link between information and communications technology (ICT) and improving productivity.

Methodology

• Sweeney Research conduct 300 independent confidential interviews annually to build a statistically representative cross-section of Australian organisations with >200 employees

• Industries follow ABS ANZSIC classifications

• Participants are directors, senior executives and managers who are familiar with the workings of their organisation

7

Telstra Productivity Indicator 2010- key findings

1. Australia‟s „productivity gap‟, the difference between productivity expectations and

action, is significant and has widened.

2. The research shows a clear link between ICT investment and improved productivity.

3. Those organisations that are actively investing in ICT and aligning with worker needs are

driving measurable productivity improvements.

4. To close the gap requires management, measurement and investment.

5. Productivity is a key focus for organisations in 2010.

8

The ‘Productivity Gap’

10

Measure, have a target and

know what it is

Measure and have a target,

but don’t know what it is

Measure but

don’t have a

specific target

Don’t measure

NB: For comparison – where relevant, numbers in (%) are from TPI2009

N.N.B: Due to rounding, the percentages in this chart will not add up to 100

TPI 2009 TPI 2010

Improving customer service 78% 78%

Improving productivity 78% 76%

Decreasing costs 74% 73%

Increasing revenue 76% 72%

Risk management 71% 65%

Attracting and retaining staff 80% 61%

Data source: The Telstra Productivity Indicator 2010 n=300

The ‘Productivity Gap’ is the difference between ‘what is said’ and ‘what is done’

„What is said….‟ „What is done….‟

The Productivity Gap is significant and widening

Five

percentage

points

increase in the

productivity

gap from

2009-2010

11

∆∆

29% 34%

Lack of ownership

Lack of measurement

Barriers to ICT investment

Misalignment of ICT investment

Productivity Gap contributors

12

Assigning specific ownership enables better management of productivity objectives

13

Investment in ICT is the priority investment to realise productivity gains

ICT investment is

seen as the most

important

contributor to

improving the

productivity of

organisations

14

ICT Investment is not sufficiently aligned with the needs of workers - suggesting significant opportunity

However,

only 34%

believe that

ICT

deployment

is greatly

aligned with

the needs of

worker

groups to

maximise

their

productivity

15

Opportunity

exists

Top 5 ICT Investments for Improving Productivity

Extremely/Very important to improving productivity

In last 12 months

In next 12 months

% Difference

1. ACCESS - Providing better access to information and resources for all people within your organisation through networked computing

69% 74% 5

2. WIDE AREA NETWORKING - Using broadband/IP network to deliver your necessary applications such as email or other common applications to other sites including remote sites and users

70% 71% 1

3. NETWORK COVERAGE AND SPEED - Improved capabilities through higher network speeds and broader network coverage

65% 70% 5

4. INFORMATION AND RESOURCE SHARING -Creating opportunities for employees to share resources and information electronically across offices in different locations

64% 69% 5

5. FLEXIBLE/REMOTE NETWORKING - Creating opportunities for employees to remain effective when they are on the road or out of the office by providing remote email, PDAs, mobile phones, SMS, text messaging

62% 66% 4

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Improving Productivity

Ownership

Measurement

Technology Investment

Alignment

Improving Productivity – Closing the Gap

18

ICT to drive productivity

Manage

InvestMeasure

Specific accountability

is critical

Clear and accurate

measures are required

Aligning ICT investments

with worker groups needs

Realising the productivity

benefits vs cost of capital

investment

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• 95% of appointment date and times met

• 15% reduction in return visits to customers within seven days

• 43% increase in communication technician productivity

• $39.5 million of productivity savings per year, including $14 million from fleet vehicle savings

• 9,500 tonnes of estimated annual CO2 savings due to driving avoided and fleet reductions

• 23% reduction in overall monthly travel expenses

compared with 2007

• 10% reduction in domestic flights per month

• 55% reduction in car hire

• Reduction of over 2.5 million kilometres in

distance travelled

• Estimated 1,132 tonnes in annual CO²savings

Telstra Communication Technicians Telstra Country Wide / Telstra Enterprise & Government

Telstra Productivity demonstrated

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G&S Engineering Services – Mick Crowe, Chief Operating Officer, on how the Telstra

Next G ™ network helped G&S Engineering Services to cut costs, maintain growth

and deliver on time: “There‟s just no question that it‟s made our executives and our

senior staff more efficient. The Next G™ network solution has made those people at

least 20% more effective while they travel, helping us realise a productivity benefit

of approximately $600,000 per year for the company.”

Ricoh Australia – Rob Livingstone, Chief Information Officer, on how high definition

video conferencing solution helped Ricoh enhance productivity and customer

relationships, while reducing cost and environmental footprint: “We‟ve achieved a

15% reduction in air travel; approximately 27 tonnes in CO2 emission avoidance;

also, a $40,000 direct cash saving by not having to fly and incidental travel

expenses. In addition to that, we have gained about 300 hours of direct staff

productivity time.”

EB Games – Sean Glenn, Store Manager, on how Telstra Internet Direct helped EB

Games grow, cut costs and improve customer service in a highly competitive

environment: “Telstra Internet Direct helped us by minimising our staff requirements

and still giving a maximum possible customer service. This has equated to a saving of

$20,000 to $30,000 per year per store.”

Customers realising the productivity benefits

Telstra Productivity Indicator 2010 - summary

1. Australia‟s long term prosperity is dependent on increasing productivity. For business and government

organisations the focus is improvements at the individual, work group and organisation level

2. Telstra‟s ongoing research into productivity shows a clear link between ICT investment and improved

productivity. Those organisations that are actively investing in ICT, and aligning ICT to individual and worker

needs are driving measurable productivity improvements.

3. The Telstra Productivity Indicator 2010 identifies a significant and widening gap between productivity

expectations and actions.

4. Closing the gap requires management, measurement and investment.

5. Telstra is focused on providing network based ICT solutions aligned to worker needs to improve the productivity

of Australian business and government organisations.

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