Technological innovation has brought efficiencies and powerful disruption to a host of major industries and for many, complacency had left them unprepared. Australia hasn’t been immune to the rise of software and tech solutions and over the past fortnight some major players have discussed how they see the Australian marketplace evolving and they’ve offered stark warnings to those industries sitting on oversize profits.
Last week Deloitte released their annual Tech Trends report titled Inspiring Disruption. The consulting firm’s Robert Hillard, analysed the trends that will have unavoidable impacts on all companies, both large and small. The report looked at the growing role of Chief Information Officers whose role is quickly becoming that of strategist and incubator of innovation - moving beyond their traditional role as operational managers of technology assets.
Also, this week Fairfax Media and Macquarie Bank held their Future Forum with panel discussions from Seek
(ASX:SEK) founder Paul Bassat, Australian Facebook managing director Will Easton and Atlassian co-founder Mike Cannon-Brookes. These business leaders are at the forefront of Australia’s tech evolution and they all emphasised the growing importance of software and technology no matter what industry you’re in.
Commonwealth Bank
(ASX:CBA) was an early adopter of digital systems. These major investments have paid off and it has steeled the company against the threat of innovative and agile start-ups poaching their profits. This week the architect of the bank’s tech evolution Michael Harte announced his retirement, handing the reins to David Whiteing who will start in July.
The finance sector is ripe for disruption and in a bid to counter the onslaught banks are positioning themselves to harness innovation before it begins to compete directly. Westpac Bank
(ASX:WBC) has developed a $50 million investment fund called the Reinventure Group; while ANZ
(ASX:ANZ) has launched the Innovyz Start accelerator and mentorship program.
Regulatory News
May’s Federal budget outlined the cutting of a number of innovation programs to replace them with the $484.2 million Entrepreneurs Infrastructure Program. A discussion paper was released last week for the program, which aims to support businesses to improve their competitiveness and commercialise new ideas.
Commentary
Finance News Network spoke to Robert Hillard who led the research for this year’s Deloitte Tech Trends report. Mr Hillard is Managing Partner of the Technology Agenda at Deloitte and while he emphasised the importance of technological developments, he suggested Australia needs to focus on its competitive advantage.
“All over the world industries that are disruptors realise it. The majority of industries that are starting to feel the edges of disruption are usually slow to really understand the extent to which digital disruption is going to affect them. For some firms it may not be too late to survive, but it is almost always too late to lead the disruption, to be the disruptor. It’s certainly a good opportunity to reinvent.”
Some firms have outsourced innovation.
“Telstra
(ASX:TLS) and Westpac have done some very interesting things by taking stakes in interesting companies experimenting with different technologies. Westpac has spoken of the importance of not being a fast-follower and instead, aiming to shape the change.”
Companies are adopting the venture capital model.
“You need to be constantly experimenting because every stage offers a lesson. Even though every experiment won’t become the next-big-thing, it will often move you forward. They make your organisation more nimble, more agile and they can actually unlock new revenue streams. They will lead-on to what is naturally the next thing. We’re seeing companies exploring lots of small ideas and seeing which ones take off and which are most successful.”
Which Australian companies have made gains?
“Telstra talked to us in the report about the way they’ve engaged their digital customers which was well received. While, Suncorp Group Limited
(ASX:SUN) has spoken publicly about its approach to incorporating digital into its technology systems.”
Australia needs to focus on its competitive advantage.
“One of the things we’ve called-out before is that every country needs to pick its area of competitive advantage. In Australia we have a very strong superannuation system and a strong wealth management capability. Tech start-ups that enhance those elements are going to be able to ride the slipstream of Australia’s wealth management capability that’s moving through the Asia pacific region.”
“Australia is a leader in Agri-business, we’ve got large parts of our region and globally looking to us in terms of agribusiness technology.”
“I think it’s very popular to say that Australian companies are very slow to pick things up, but I think the evidence shows this is not true. There’s a lot of experimentation going on with fundamental changes to the way IT is managed.”
Inking deals
Service Stream Limited
(ASX:SSM) has extended its contract with Telstra Corporation Limited
(ASX:TLS) for the National Wireless Construction project. The two year extension will see the network services provider working on upgrades and construction of base stations for the Telstra wireless network. Managing Director Leigh Mackender says this is the third consecutive renewal between Service Stream and Telstra and that it represents the continuation of a strong working relationship.
Satellite communications company Newsat Limited
(ASX:NWT) has attained a $US10 million dollar loan facility and will launch the Jabiru-2 in September. The short-term loan facility will come from Ever Tycoon and will be used for the company’s teleport business.
The news comes on the back of the company reporting challenging business conditions and forecsting a net loss for the year.
Growth through acquisition
Data#3 Limited
(ASX:DTL) has secured an option to invest in, and potentially acquire, the WiFi analytics company Discovery Potential. The option will give the IT services company a minority shareholding in Discovery Technology, with the ability to extend this into a controlling stake by June 2015.
Tech IPO
Digital CC Limited
(ASX:DCC) (trading as digitalBTC) says it has become the world’s first Bitcoin focussed company to start trading on a major stock exchange after debuting on the ASX. The company was previously known as Macro Energy Limited
(ASX:MEJ) and first announced its intention to list through a reverse takeover process in March. At the time Macro told the ASX it plans to enter the digital currency sector through the acquisition of Bitcoin mining and trading company digitalBTC.
-- John Treadgold
