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Widespread cloud adoption in Australia could add between $2 and $3 billion to GDP via cost-savings.

In this June 2014 report, Grattan Institute investigates the ways in which policymakers and business can expand the use of cloud computing among small and medium enterprises (SMEs) in Australia.  It is estimated that the cost savings achieved by widespread adoption of cloud computing in Australia could generate $2 to $3 billion extra GDP per year. This is equivalent to around 0.15% - 0.2% of GDP.

The report notes that Australian productivity growth has been low since the early 2000s and that innovation through the adoption of technologies will be key to improved productivity growth in future. In particular, increased adoption of technology among SMEs will be vital according to the Grattan Institute as these firms constitute 70 percent of private sector workers and 57 percent of private sector output. This large section of the Australian economy is less innovation-active than larger firms, with only 51% of small firms estimated to be innovation-active compared to 69% for large firms. The Grattan Institute believes closing this gap will be essential to boosting Australian productivity growth.

The cloud offers great opportunities to improve technology adoption and innovation among SMEs as it is a cheaper and more flexible technology than traditional IT. The report states that SMEs that use the cloud (or ICT more broadly) grow faster and also innovate more. Therefore the Grattan Institute emphasises that it is important to understand the reasons for and existing barriers to cloud-adoption among SMEs to improve uptake in future.

The Grattan Institute finds five main obstacles to cloud-adoption among SMEs: knowledge and awareness; setup and transition costs; concern about lock-in and data extraction; privacy and security; and network quality. Of these five areas, knowledge and awareness are believed to be the major adoption barriers. In order to eliminate these barriers the report emphasises improving SMEs awareness of cloud computing and that in particular, industry should take the lead ahead of policymakers. According to the Grattan Institute policymakers should focus on expanding the use of cloud computing in government and publicising how existing regulations apply to cloud computing to remove uncertainty in the industry.