Australia’s digital transformation is suffering from uncoordinated initiatives

4 November 2019
From our ‘Thinking outside the box’ series
Ben Fahimnia asserts that Australia needs to take advantage of the multiple opportunities afforded by digital technologies in order to boost the country's productivity and be able to compete on a global scale.

Australia has seen a productivity slowdown since 2010 compared to the previous decade and we are falling behind many other countries in the adoption of digital technologies, despite many digitalisation initiatives undertaken by firms and governments.

Australia is well placed to take advantage of the opportunities created by digital transformation. Most experts agree that digital technologies have potential to provide a major boost to our economic competitiveness by tackling our traditional challenges of high labour costs and long distance to suppliers/markets.

Digitalisation has already influenced almost every aspect of our lives. Consumers use smart devices to research what they buy and to compare their choices. Firms, governments and public organisations cluster and utilise digital data for more informed decision making. However, no organisation is yet at the forefront of digital innovation.

The main reason why Australia has been slow in digital transformation is the lack of coordination and collaboration amongst firms, governments and research institutions. There are numerous examples to illustrate this.

Think about digital identity projects running in parallel. The government’s digital identity scheme – known as GovPass – is running separately from Australia Post’s scheme called Digital iD. Similar projects have been undertaken by other organisations, all aiming to identify individuals and extract basic personal information – a big step toward supply chain digitalisation. So many projects running in isolation are a clear waste of funds and resources, the cost of distrust between organisations and lack of information sharing.

New business models have been developed to support digitalisation initiatives. Research institutes have carried out ground breaking research in this area. But industries are not adequately informed and updated about research outcomes. More importantly, digital transformation research and practice is outpacing the rate at which regulators can review trade policies and privacy legislations.

The type and pace of digitalisation varies from one industry to another, and can even vary from one firm to another within one industry. Firms need to decide which digital technologies to adopt. To do so, they need to understand the potential benefits and challenges of each technology (the role of the research institutes) and have the necessary infrastructure, tools and regulatory support for technology adoption (the role of the governments). Again, collaboration amongst firms, educational/research institutions and governments are essential to develop skills, design and implement technologies, and manage the transition.

Digital transformation comes with significant financial investment. Germany, UK, France and Canada have recently announced their plans to commit massive funds to assist digital transformation. Data processing centres are expensive to build and maintain. Substantial investments are also needed for skill acquisition and organisational restructuring. Close collaboration between research institutions and industry is needed to address the questions of what data processing centres to build, where across the supply chain to invest resources, and what expertise to acquire.

And finally, the greatest barrier to successful digitalisation is a culture that is innately resistant to change. Australian firms tend to be conservative when it comes to technology deployment and adoption, especially when those technologies tend to disrupt operations and require specialised skills. Digital transformation requires systematic change management programs to tackle these behavioural obstacles. Greater cooperation between researchers and firms/governments is needed to understand the behavioural complications related to digital transformation and how best they can be addressed.

Australia’s competitiveness and productivity growth has suffered from uncoordinated digitalisation initiatives. Let us all come to the table and start working together to lift our global standing.