New landmark economic modelling has found Australia’s property and asset-intensive industry could unlock $62 billion by replacing old technology, as TechnologyOne’s Luke Fleming explains…
The technological case for moving to the cloud has been clear for some time, but adoption is still in its early stages in many property and asset-intensive industry organisations.
In fact, almost half of all large organisations in the sector still rely on old-fashioned on-premise software.
According to new landmark economic analysis from IBRS and Insight Economics, Australia’s property and asset-intensive industry could unlock a $62-billion ‘digital dividend’ by replacing old technology with cloud-based Software as a Service systems (SaaS).
That figure is the expert economists’ prediction of the savings to be made over 10 years if operators ditched their data centres and switched to cloud-based platforms to run their operations.
In their report, The Economic Impact of Software as a Service, IBRS and Insight Economics set out to analyse, for the first time, the savings from modernising IT systems across a range of industries.
Using real-world case studies and face-to-face interviews with the leaders of organisations, the researchers modelled both the costs of digital transformation and its direct and indirect benefits.
They uncovered a game-changing potential digital dividend for the Australian economy—$252 billion over 10 years, enough to lift the country’s gross domestic product by 1.3 per cent—all from a relatively simple decision to fast-track investments in a proven, mature technology; SaaS.
Their results were validated using the Monash Multiregional Forecasting model, which is frequently used by state and federal governments to evaluate new policy proposals.
Across each industry sector, they found the benefits of moving to SaaS far outweighed the costs. For the property and asset-intensive industry, the biggest savings came from the reduced cost of buying and maintaining IT infrastructure, increased labour productivity and reduced maintenance.
They found large construction firms can expect Total Cost of Ownership (TCO) savings alone of 14 per cent with SaaS versus an on-premise approach.
Firms which own and operate large infrastructure assets can be expected to achieve TCO savings of 16 per cent on average, the analysis found.
The IBRS and Insight Economics researchers also found labour force productivity improvements of 5 per cent, as well as reduced financial auditing and consulting costs and reduced reactive maintenance expenses.
In addition to the direct benefits, the report suggests switching to SaaS could reduce energy costs and lower Australia’s carbon emissions.
Modelling by E3 suggests an increase in cloud computing from 25 per cent to 40 per cent by 2025 would avoid four million tonnes of CO2 emissions by 2030.
As an industry we have weathered the storm of Covid—now is the time for Australia to build back better and stronger than ever.
The full report is available here.
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