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Australia celebrated 26 years of continuous economic growth in 2017, but enterprises will need an innovation rethink for the country to continue its run of good fortune into the future.
Citing a McKinsey study released in May 2017, Steven Worrall, managing director of Microsoft Australia, noted that Australia has slipped from the 17th to 21st position in terms of competitiveness, and 17th to 27th for business efficiency.
The study indicated that digital innovation could have a A$250bn (US$191bn) impact on Australia’s economy by 2025, effectively adding 15% to the country’s GDP. But that won’t transpire without more innovation and transformation by enterprises, Worrall said.
“One of the primary reasons is we have not transitioned the workforce fast enough into new digital roles,” he added.
Investment in digital technologies by enterprises has remained constrained over the past year. A Gartner survey of 173 Australian and New Zealand (ANZ) CIOs found that growth in IT budgets was expected to be lower in 2017 than in 2016, dropping from 2.9% to 2%. This was lower than the global average of 2.2%.
Questioned on how they were planning to invest, Australian CIOs said their plans largely dovetailed with global trends.
Business intelligence and analytics investments ranked first, followed by cloud computing, which more Australian companies are now using to improve business and IT efficiency.
In July 2017, the Australian Bureau of Statistics released its second biennial survey of how enterprises were investing in cloud computing. The bureau found that just 31% of businesses were paying for cloud services, mostly cloud-based applications and storage services.
Australia’s appetite for cloud computing commensurate with the size of its businesses – just 25% of small and micro businesses are using cloud services now compared with 60% among larger companies with at least 200 employees.
Cinema and theme park operator Village Roadshow, for example, has moved its SAP environment to Microsoft. It is also using cloud services from IBM, which opened a cloud datacentre this year.
Meanwhile, Salesforce has gone live on Amazon Web Services (AWS) in Australia, with telco Telstra and insurance provider iCare among the first users of the local offering.
Both AWS and Microsoft also stepped up to offer cloud services from Canberra that were aimed at the needs of the federal government, while local cloud providers Macquarie Telecom, Vault Systems and Sliced Tech had their clouds certified to be able to hold protected government data.
Although cloud computing was originally embraced for its potential to rein in costs, it is the agility it permits and ability to scale that increasingly drives demand. In their search for more comprehensive offerings, Australian enterprises have spent 2017 leveraging multiple cloud services, rather than expecting a one-size-fits-all cloud service.
Les Williamson, Citrix’s vice-president for Australia and New Zealand, said 2017 had been marked by organisations looking at things from an IT architecture perspective, rather than implement bespoke IT products and services, that had required suppliers to work together, and to interface with other partners.
The same goes for cloud-based services, particularly hybrid offerings with application programming interfaces (APIs) and microservices that enterprises rely on to ensure rapid integration and software iteration.
Steve Rayment, a Deloitte Consulting partner, said: “Leaders and CIOs understand they need a deliberate innovation response to keep relevant and give their businesses greater freedom to move.
“We are finding our Australian CIOs and businesses using cloud-first strategies and systems that are loosely coupled and automated to be self-learning and self-healing.”
Patchy cyber security
Another significant issue on the minds of Australian enterprises and the government through 2017 has been cyber security.
Greg Medcraft, the outgoing chairman of the Australian Securities and Investments Commission (AISC), said: “I think cyber security is quite patchy in terms of consistency. Despite the many warnings we make, many companies are very underprepared for an attack and until some companies get attacked, they are not engaged enough. Unfortunately, I think cyber is going to be our next big black swan.”
The Australian Cyber Security Centre’s 2017 Threat report identified 47,000 cyber incidents affecting local enterprises – up 15% from the previous year. Although ASIC’s 2017 cyber health check of Australia’s largest listed companies found that some progress had been made, Medcraft said, “there is a long way to go”.
The advent of mandatory data breach notification commencing in February 2018 might jolt many organisations to get cyber security in better order following recent high-profile data leaks at organisations, such as the Australian Broadcasting Corporation.
Online retail boost
A further spur for improvement – at least for one sector of the economy – came in late 2017 with the arrival of Amazon retail in Australia, providing a wake-up call for the nation’s 140,000 retail outlets.
While many may seize the opportunity to participate in Amazon’s marketplace, large department stores and grocery retailers are anxious about the impact that the retail behemoth might have.
The most recent online retail sales index from the National Australia Bank estimates that in the 12 months to November, Australians spent A$23.4bn on online retail – around 7.6% of traditional bricks-and-mortar shopping.
The next 12 months might shift the dial on that as Amazon takes hold, edging Australia closer to international markets where online retail shares tend to be in the low teens.
Mobile marches on
Like all areas of the economy, retailers are mindful of the strong march to mobile. According to Deloitte Consulting, 88% of Australians currently own a smartphone, and use of these devices for shopping has surged 25% in the past year.
Smartphones are also being embraced as digital wallets, particularly by younger consumers. While ANZ remains the only one of four major banks in Australia to offer Apple Pay, many other smaller banks have followed suit. The major banks have also started offering their own digital wallet services.
But it is not just the private sector that has been tapping this massive democratisation of technology to innovate. The New South Wales and South Australian governments have also started testing the use of smartphones as digital wallets for drivers’ licences in a year that could be summed up as “cloud-first, mobile always, but don’t forget security”.
Read more about IT in Australia
- As one of the most progressive markets in the Asia-Pacific region, Australia is taking a more proactive approach towards enterprise mobility.
- Australia’s Commonwealth Scientific and Research Organisation has upgraded its high performance computing infrastructure to keep pace with global research.
- DXC Technology plans to open two digital transformation centres in Australia in 2018 that will be co-located with leading universities.
- With nearly 40% of jobs expected to be automated, Australians need to develop additional skills to take on roles like robot teachers and empathy trainers.