In the third such ranking, the company said it took into account seven factors to determine digital readiness: basic needs, human capital, business and government investment, ease of doing business, start-up environment, technology adoption and technology infrastructure.
The study was conducted globally and the global details for 2019 and the 2020 results for Australia were released on Tuesday. The global study looked at 141 countries, and Australia ranked 12th among them.
Cisco said the score for a state or territory was derived from standardising the seven components and summing them up to obtain an overall digital readiness score measured out of a possible total of 25 points.
Cisco Australia and New Zealand vice-president Ken Boal said: "Digital readiness is a defining characteristic of successful 21st century societies. It describes the level of capability that a society possesses for extracting value from digital technology and its capacity to share those benefits equitably. Understanding our digital readiness at a country, state and territory level provides further understanding and supports decision making in key areas where further investment or acceleration of capabilities may be required.
"When we released the first Cisco Australian Digital Readiness Index in 2018 it was an opportunity to applaud the hard work that had led to Australia ranking amongst the top 10 most digitally ready countries globally, and to encourage business and government leaders to double down on their investments to maximise future returns.
"Two years later the value of those investments have been repaid many times over and has provided Australia with a robust and comprehensive digital capability that has been essential for navigating through the COVID-19 crisis and building economic recovery post-pandemic.
"However, it is important that we don't become complacent with Australia's digital readiness. The report highlights the need for accelerating new investment with a focus on improving Australia's global competitiveness and bridging the divide between states to build further societal resilience. Digitally advanced countries such as Singapore, which ranked first in the global Index, should help Australia to set the ambition for its digital readiness."
Cisco Australia and New Zealand director of Government Affairs Tim Fawcett added: "It is important we salute all the great efforts made by each state to improve their digital readiness and capabilities. However, growing digital divides within and between states need to be addressed for Australia to really unleash all its digital potential.
"Government, Industry and Academia will have a key role to play in empowering our country to become a global digital leader, and build resilience for our economy."
Graphics courtesy Cisco