Businesses that take advantage of superfast broadband are more profitable and successful, research shows

15 May 2018

Superfast broadband

Independent businesses that have fully adopted Superfast Broadband have seen real performance improvements according to research by Cardiff University.

A survey of over 450 SMEs across Wales was conducted by Cardiff Business School’s Welsh Economy Research Unit in their annual Digital Maturity Survey.

Along with rolling out high speed broadband to business premises via the Superfast Cymru programme, Welsh Government has been providing support to SMEs to understand, adopt and exploit the benefits that fast broadband provides through its Superfast Business Wales scheme. The results of the 2017 Digital Maturity Survey showed that “digitally embedded” firms used a high number of digital applications and secured the majority of their sales online, with 70% of these firms seeing sustained increases in their profitability.  

In comparison less than 22% of those classed as “digitally disengaged”, or those who tend not to use digital technologies and report no sales online, reported a rise in profits.

The report states: “Digitally embedded SMEs reported greater increases in business performance, measured in terms of turnover, profitability, and introduction of new products, processes or services than their less digitally mature counterparts.”

“…The substantial differences between Digitally Embedded as opposed to Digitally Disengaged SMEs serve as a real warning for businesses.”

The report recommends SMEs should connect with the Welsh Government support that is available to assist them in adopting superfast broadband and using digital technologies.

Professor Max Munday, of the Welsh Economy Research Unit and one of the report’s authors said: “Our research demonstrates that the more digitally engaged a business is, the more likely it is to succeed. There are clear differences in the performance and growth of firms that are using digital technology every day compared to firms that are slower to take it up.

Leader of the House with responsibility for digital Julie James, AM, said: “Accessing superfast broadband and taking advantage of digital opportunities can make a big difference to businesses.  With our Superfast Cymru programme combined with commercial rollout the vast majority of Wales can now access superfast broadband.  In Wales we also have the Ultrafast Connectivity Voucher, which can provide businesses with even faster ultrafast speeds and we have the Access Broadband Cymru voucher for businesses and premises which cannot access superfast broadband.

“We want businesses to find out more about the opportunities available and to make the most of them, and one way they can do this is to contact Superfast Business Wales and take part in one of their workshops.  Over 3000 businesses have already participated.

“We are now looking at the next stage of rollout for faster broadband, so that even more businesses can benefit.”

Other key findings from the report include:

  • 66% of Digitally Embedded SMEs which integrate digital technologies into their work see increases in turnover, of which a quarter saw an increase in turnover of greater than 50%.
  • In contrast to a widespread conjecture that extensive use of digital technologies is likely to substitute for labour, 46% of the more Digitally Embedded firms reported an increase in employment. This compared to 11% of Digitally Disengaged Businesses.
  • The adoption of superfast broadband is high in sectors such as Transport and storage (79%), Manufacturing (52%), and Information and communication (50%) sectors. The Construction sector had a relatively low take-up of superfast broadband (20%). Accommodation and food services sectors had the highest share of SMEs choosing not to adopt any broadband at all (6% each).

Professor Munday added: “Improving the performance of our Welsh SMEs is a key means of strengthening regional economic prospects. The ability of SMEs to capitalise on the opportunities leveraged by superfast broadband is vital to their performance improvement.”

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