Cross Industry Innovation, The Secret May Well Be in Another Industry

7/29/2019 Cross Industry Innovation, The Secret May Well Be in Another Industry

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CROSS INDUSTRYINNOVATION 2012 THE SECRETMAY WELL BE INANOTHER INDUSTRYA thought leadership report writtenin collaboration with KPMG


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IMAGINE A TRULY

CONNECTED WORLD


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...WE SEE IT TODAY


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FOREWORD 6

INTRODUCTION 7

EDUCATION 9

EMERGENCY SERVICES 11

FINANCIAL SERVICES 12

GOVERNMENT 16

HEALTH 18

MANUFACTURING, TRANSPORT & LOGISTICS 22

MEDIA 27

MINING 31

RETAIL 34

CONCLUSIONS 40

ABOUT THE AUTHORS 41

ACKNOWLEDGEMENTS AND REFERENCES 42


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FOREWORD

CROSS-INDUSTRY INNOVATION IS INCREASINGLY RECOGNISED ASFUNDAMENTAL TO BUSINESS IMPROVEMENT.

The key to predicting the next wave o

innovation, understanding how it mightimpact your industry and reacting to it beoreyour competitors do, could be hidden inanother industry.

Ever changing technology environments,coupled with unstable global markets,are creating change waves with muchgreater requency, intensity and on a globalscale. Just think o the rapid rise (and all)o game changing global players whoseascent occurred in a tenth o the time ittook comparable players o the industrialera. Competitive warming is now a realityo the tougher, more dynamic environment

that denes those who win by the mannerin which they change the rules o the game,more likely rom developments and insightsgained outside o their industry.

As your technology partner, we are delightedto present to you this thought leadershipreport produced in collaboration withKPMG. This report oers insights intohow your organisation can create valueand technological advantage throughunderstanding innovation in otherindustries.

Telstras pioneering heritage and depth

and breadth o contemporary industryknowledge is widely recognised acrossAustralias business, enterprise andgovernment sectors. We welcome theopportunity to collaborate with you toensure your industry evolves itsinnovation advantage.

Rocky ScopellitiGroup General Manager,Industry DevelopmentTelstra Enterprise & Government

Susi Steigler-PetersNational General Manager,

Education Telstra Enterprise & Government

CLOUDAGILITYEFFICIENCY

MIGRATE

CONSUMER

PROVIDERS

GOVERNANCE

SPEED-TO-MARKET

INNOVATIONPRIVATEEVALUATE

APPLICATIONS

CHANGE

CHANGE MANAGEMENT

CRM

E-MAIL

ENTERPRISE

MODEL

SECURITY

SAVINGSTHIRD-PARTY

PUBLIC

SERVERS

TRANSFORMATION

RISK MITIGATION

WEB-BASED

COLLABORATION

MARKETPLACE

SERVICES

FLEXIBILITY

TAX


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INTRODUCTION

WHEN WE FIRST BEGAN DRAFTING THIS THOUGHT LEADERSHIP PAPER, WE QUICKLY REALISED THAT THECONCEPT OF INNOVATION WAS ONLY UNIVERSAL IN ITS PLETHORA OF DEFINITIONS.

Research and Development Indicators

Latest available Australian data Latest available comparative international data

R&D Indicator Reerence year Expenditure ($m)Proportion o GDP

(%)Reerence year

Proportion o GDP(%), OECD Average

Australias OECDranking

GERD 2008-09 28,145 2.24 2008 2.35 12th/21

BERD 2009-10 16,685 1.30 2008 1.62 12th/21

HERD 2010 8,203 0.59 2010 0.50 8th/31

GOVERD 2008-09 3,420 0.27 2008 0.26 10th/31

Private non-prot 2008-09 744 0.06 n/a* n/a n/a

Note: R&D Research and development; GERD Gross expenditure on research and development; BERD Business expenditure on research and development;HERD Higher education on research and development; GOVERD Government expenditure on research and development

* n/a not available.

Source: The GERD and GOVERD statistics co me rom MISTI 2011/12. BERD and HERD sourc es rom ABS cat. no. 8112.0, 2009 10 and 8111.0.2010 and Private non-protrom ABS cat. no. 8104.0, 2009 10.

The term innovationhas become ubiquitousin its application to industry and in doing sohas diluted its meaning and, to a certainextent, redened its useulness as a metric.We have ound that to the extent a companyis innovative, so too must a restaurantprovide gourmet ood and a service providerdeliver bespoke solutions. Pervasiveness

untethered, it appears, has led to overuseand over-infuence.

Whilst there is an argument that theterm may have been overused, there isa stronger argument that without it, theeects to industry are clear; decreased R&Dlevels, productivity and competitiveness,investment and employee engagement.O the Fortune 100, when rst published in1917, 61 o the companies no longer exist.O those remaining, only 18 make the currentlist and o the 18, only two have managedto perorm better than the average over the90 years.

The expectation exists that every companyin the top 100 o every stock exchangeis innovative. Why is it that innovationhas come to be the perceived state ocommercial enlightenment that everycompany seeks?

A denition used by the Australian Bureau

o Statistics and ound in the Oslo Manual(OECD, 1997) states, Innovation is theimplementation o a new or signicantlyimproved product (good or service),process, new marketing method or anew organisational method in businesspractices, workplace organisation orexternal relations.

Australian Bureau o Statistics inormationshows that barriers to innovation have risenbetween the 20082009 data and the latest20092010 data.

For large companies (200 or moreemployees, the largest size category inthe statistics), lack o access to additionalunds has risen as a reason rom 14.5% to15.3% even though cost o developmentas a barrier has dropped rom 15.8% to14.8%. Percentages reer to the proportiono companies reporting this issue. Lack o

skills is the biggest barrier (in terms o thepercentage o companies reporting it as anissue) or companies o this sizei.

Barrier percentages or small companiesshow that lack o unding is decreasing asan issue (18.4% to 16.3%), but is still theirmost signicant barrier.

Lack o access to a skilled workorce, andto knowledge and technology, are the nexthighest leading barriers across all sizes ocompany.

INNOVATION PRE-EMINENTLY DETERMINES OUR PROSPERITY.Terry Cutler (Venturous Australia) 2008


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INTRODUCTION (CONT.)

This is a sel-perpetuating concern

as reduced investment and activity ininnovation leads to a drain in skilled statowards regions where activity is high. Globalmobility o individuals as well as corporatedepartments is now higher than ever.

Adoption o this denition, however, limitsthe use o increasingly evolving orms oinnovation orms that are less abstractand intellectualised, but more ocusedon the actors that infuence todaysbusinesses.

Incremental innovation

Evolutionary innovation

Revolutionary innovation

What are companies doing not only todierentiate themselves, but also ensuretheir competitiveness is sustainable?Remaining productive, viable, and protableand a place where employees wish to workappear to require innovation. Throughoutthis paper, we will show that this is notachieved gradually, in silo, or in secret. Openinnovation across industries is key, ando utmost importance is the way leadersbehave in promoting this. This point eaturedin a survey o 700 business leaders in 2012by Telstra on the topic o productivity. The

research ound that 71% o ProductivityLeaders (those who monitor measureand target productivity) are ocusing onresearching and innovating new productsand services over the coming year to takeadvantage o opportunities, regardless odomestic or global economic uncertainty.

Business priorities over the next 12 months

RESEARCHING &INNOVATING NEW

PRODUCTS & SERVICES

DEVELOPING NEWREVENUE STREAMS

71%

41%

67%

58%

Leaders Followers

Source: 2012 Telstra Productivity Indicator Report.


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EDUCATION

THE YOUTH OF TODAY IS UNLIKE THE YOUTH OF YESTERDAY. THE USE OF TECHNOLOGY HAS INCREASED RAPIDLYAND THE ADOPTION OF NEW TECHNOLOGIES IS SIGNIFICANT. FURTHER, THE INCREASING USE OF SOCIAL MEDIA ISRAPIDLY CHANGING THE FACE OF VARIOUS INDUSTRIES. EDUCATION IS NO DIFFERENT.

IF A MAN NEGLECTS EDUCATION, HE WALKSLAME TO THE END OF HIS LIFE.Plato

The education landscape is continually

changing, rom innovations in teachingmethods using technology, to fexiblecontent, and to new mobile applicationsused by students to enhance their learning.The traditional education ormat is beingquestioned in the 21st century as thepace o change gathers momentum tobecome aster than ever beore. How canthe education sector accept this whilstmaintaining the standards expected, andmake a concerted eort to move away romthe traditional model?

What is happening in education can onlybe described as transormational change.

That is, not simply amending the traditionalmethods o education, but replacing the onesize ts all model with varying solutions andusing dierent tools to deliver educationservices. With the rapid acceleration andadoption o technology, the educationramework has been required to innovateand generate a resh approach to how theindustry operates on all levels.

What are the key drivers infuencing thisneed or change? According to Susi Steigler-Peters, National GM or Education IndustryDevelopment at Telstra, the ollowing driversare guiding the principles towards a model

o personalised learning and can best beachieved through collaborative investmentin disciplined experimentationii.

Education, research and data

Policy

Technology

Value and benet

I we look at these points, the Telstra

Whitepaper on Personalised Learningiiireleased in November 2011 highlighted thatstudents today, be they engaged at school,TAFE colleges or universities, are seekinglearning experiences that mirror their livesoutside o the institutions themselves.

The primary reason behind this is theubiquitous nature o technology and the21st century student. It is not simply acase o every classroom needing an iPadto unction eectively; it is about acing ageneration where engagement can, anddoes, occur outside the classroom becauseo technology.

Mobility is a theme that runs throughall levels. For example, having access toonline encyclopaedias revolutionisinglesson content. The ability or studentsto search and nd inormation using theclick o a mouse does create challengesor communication providers to be able todeliver quality networks with high-speedinternet. Further, the continued adoptiono mobiles by students o all ages will drivethe education agenda towards mobileeducation.

Already we are seeing the benets omobile education with many educational

institutions using solutions such as TelstrasM-View to allow broadcasting o externallectures into classrooms, university lecturetheatres locally and internationally.

Whilst many would like to retain the status

quo, the pace at which technology is beingdeveloped and the wide application othese technologies to the delivery andundertaking o education needs to beconsidered by those within the sector.Avoiding the adoption and integrationo these technologies leads to the risko alling behind educational providersand institutions overseas. However, theeectiveness o any such technologiesneeds to be addressed beore they areimplemented. For example, the useo laptops and tablet devices in theclassroom has to be continually tested oreectiveness. In addition, when innovativesolutions are used, such as live streamingor collaborative tools or social media orsharing knowledge and educating a wideaudience, the benets can, in part, beassessed rom statistics related to usage.

Teacher

Student


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EDUCATION (CONT.)

When we look at trends in education, we

see the prevalence o digital textbooks,online learning, and campuses in the cloudor tech-savvy students and graduates. Yetthese trends can only sit congruent witheducational reorm that:

Personalises learning within a technologyenabled learning ecosystem

Develops fexible content and deliverynetworks

Builds capabilities within the proession

How does innovation t within education?Innovation can occur at the level opractice, at the level o policy, at the level o

momentum, and at the level o culture.

Policies and practices will need revisionto ensure that the education rameworkis fexible enough to continually evolve inline with the technological changes thatare being adopted by both teachers andstudents. The roll out o the NBN will have asignicant impact on the ability o studentsand teachers to interact and operate onnetworks with incredible speed. Further,the accessibility o inormation via mobiledevices and the increasing use o tabletsmean that education is acing a mobileuture. Universal access to education

through these methods must be considered.Recently, the Centre or Learning Innovationin NSWs Department o Education &Communities partnered with the SydneyBotanic Gardens and Telstra to trial theuse o GPS location-based technology toenhance learning.

Students explored the gardens and learned

about their history through audio, video andtext presentations. At specic locations,students were able to complete challengesbased on their geographical location andlinks with the history o that particulararea. The trial demonstrates the abilityto integrate technologies into learningor students and also demonstrates thewide application o other industry-basedtechnologies to the education sector. Theadvancements signal a new evolution ineducation.

Entrenched policies, practices and beliesare signicant challenges that need to

be overcome to be able to embrace theevolving education ramework. The mindsetthat has prevailed must accede to the ourlevels o innovation and remove the securityblanket o the status quo. Universal accessmust be promoted to a generation that isincreasingly aware that status quo is notnecessarily compatible with their liestyle.The establishment must be prepared orthis generation to voice its concerns not onlyamong peers but also worldwide throughsocial media.

TODAYS YOUTH FEASTON A STEADY DIET OFCOLLABORATION; INSCHOOL, AT WORK, ATHOME, AND JUST FORFUN. AND THEY BRINGTHIS EXPECTATION OFCOLLABORATION INTOTHE SCHOOL

ENVIRONMENT


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The recent foods and cyclones in

Queensland and the Black Saturdaybushres in Victoria are examples o recentevents in which Australias emergencyservices played a pivotal role in saving livesand protecting property.

The emergency services agencies o police,ambulance and re also provide servicesrelating to law enorcement and healthservices. The global environment has seenthese agencies take on broader challengesassociated with potential terrorismand eCrime, and Australias changingdemography, including an aging population.These services are being provided during a

time o higher service expectations rom thecommunity while Governments continue toaddress scal challenges.

Communications are the lieblood o theemergency services rom receiving calls orassistance rom a member o the communityin an emergency through to responding tomajor natural disasters and co-ordinatingthe broader response and recovery eortsassociated with these types o events.Consequently, integrated inormationsharing on a real-time basis between rstresponders and second responders isextremely important.

Organisations such as Telstra workclosely with Australias emergencyservices organisations to provide securecommunications and provide an innovativerange o next generation IP networks andwireless solutions. Telstra has implemented,in partnership with Australias Government,SMS alerting and voice services to orewarnthe community o impending disasters Emergency Alert. This new generationservice provides the community with theopportunity to have access to the latestinormation and make inormed decisionsabout their saety.

Telstra has a committed Research and

Development plan to help develop nextgeneration emergency services technologyand, as a result, the Victorian Governmenthas contracted Telstra to enhance thenational Emergency Alert telephone warningsystem with geo-location technology ormobile users a world rst. Telstra GroupManaging Director Paul Geason said:

New technology introduced by Telstrapinpoints the location o mobile handsetsmaking it possible or emergency servicesto quickly send text messages directly toTelstra mobiles irrespective o their serviceaddress. The ability to provide a more

accurate prediction o the physical locationo a mobile handset via this new location-based technology will signicantly enhancethe capabilities o the emergency alertservice.

The second phase o implementing thisinnovative solution is due in November 2012.

The ocus o new innovations alsoincludes equipping the highly mobileemergency services workorce with ameans o obtaining the latest real-timeinormation in the eld. Historically, mostinormation was generally accessibleonly by voice communications over radio

networks. However, today we see a newgeneration o capability, ranging rom nextgeneration patrol vehicles that have theability to automatically scan thousands oregistrations through to providing real-timevideo rom the ront line to the co-ordinationcentres ensuring the most eectiveresponse through a common operatingpicture.

Innovative solutions such as uniedcommunications services can help toprovide interoperability between emergencyservices organisations that help withcommand and control. As well, mobile

workers are able to access unctions onSmartphones, using mobility solutions thatallow better connectivity to base command.

Other solutions that have been developed

or the industry include interoperablemanaged radio and other networks. Further,the development o new video streamingtechnologies and mobile video streamingtechnologies within emergency servicevehicles and equipment also help improvere and incident management.

The ability o the solutions to be hostedin the Cloud will allow a high level osecurity and also accessibility by relevantparticipants rom various locations.

The signicant steps in innovation inthis area provide greater support to the

emergency services industry, and alsoprovide the community with the means toovercome the signicant challenges thatarise due to emergency situations.

EMERGENCYSERVICES

EMERGENCY SERVICES PROVIDE AN IMPORTANT SERVICE TO THE COMMUNITY. IN TIMES OF NATURAL DISASTER,THE CHALLENGES FACING COMMUNITIES ARE SOMETIMES SIGNIFICANT DUE TO THE SCALE AND SEVERITY OFTHE EMERGENCY.


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All these developments aim to contribute to

a better customer experience and improveproductivity. Furthermore, the innovationsbeing achieved are helping organisationsgain competitive advantages that arecontributing to better perormance, not onlyin Australia but also in the global market.

Challenges acing the fnancialservices industryThe nancial services market has changedmarkedly over the past decade. Increasedcosts o capital and tightening availability,combined with the rise o digital servicesand increased operating costs have orcednancial services organisations to adopt

proactive approaches to stem the reductionin prot margins. Despite these challenges,Australian nancial institutions havemaintained multi-billion dollar investmentsin core IT system and IP networktransormations to broaden their productbase to cover a multitude o nancialservices products.

The rapid adoption o mobile-based servicesthat are now widely reported explain,rstly, the appetite o consumers or newservice experiences and, secondly, thedilemma associated with the pace o changeoutstripping the enterprises ability to

respond. Agility thereore has now becomea distinguishing attribute o innovationleaders. According to Rocky Scopelliti, GroupGeneral Manager Industry Development atTelstra: The market has moved into a newconcentric cycle comprising transormation,innovation and growth. Institutions are tryingto gure out how they stay ahead o thegame, when the game itsel is changing.

Key drivers or innovationThe our main drivers o industryinnovation are:

Productivity reduced operating coststhrough improved processes design andautomating end-to-end processes andworkplace/workorce initiatives

Risk Management using technology andbusiness analytics to assess and bettermitigate risk

Regulatory Compliance new processesand systems to ensure compliancewith regulatory requirements andtechnological improvements to data

quality and reporting Customer Experience designing

experiences that enable the customerto engage, through the devices o theirchoice, the medium o their choice and attheir time o choice.

Underlying these developments has beena drive to improve the quality o customerdata, and reduce the multiple sourceswhere customer data is stored. Further,the incorporation o Business Intelligencetools in bespoke application developmentshas enabled better planning and decisionmaking, and also a better approach to

customer targeting and marketing.The solutions developed around data alsosupport the sel-service models usedby banks and insurance companies ortransactional products such as online andmobile banking and insurance quotes.

Underpinning all these developmentsis security. The ability to sel serve on atransactional basis, but also view multipleproducts that may not be housed on thesame systems, requires substantial securityto prevent security lapses and detect anypotential areas or raud or misuse. Forexample, NAB has been a pioneer in security

with SMS 2nd actor authentication orinternet banking and the deployment ovoice biometrics or telephone bankingservice.

The use o more advanced nancial services

protocol have seen Australian banks ratein the Top 50 saest banks in the world,according to Global Finance magazinesannual study or 2011.

Tools or innovationThe nancial services sector has gainedstrategic insights rom many otherindustries to inorm its innovation.For example, the use o social mediaas discussed in the Media sectiondemonstrates the ability o organisations toharness a powerul tool to drive marketingand customer loyalty. As well, insightsgained rom the retail sector are inorming

innovative new branch design. In the 2012Telstra report The Digital Media Bank howvideo better engages your customers andworkers, video is eatured as a new ormor creating new experiences that can driveimproved customer satisaction, loyalty andconsideration. This draws upon strategicdevelopments that occurred in the mediaand broadcasting industries to inorm hownew media can be eectively deployed orbanking interactions and engagements.

In the Telstra 2011 report titled MobileInnovation the next rontier or growthand productivity or insurers, Australian

insurers are presented with a range o newinnovative ways to create valued servicesthat are now appearing in other markets.Mobile payments innovation by otherglobal players, including companies suchas Google, will orce the development omore unique payments solutions in theAustralian market. In an Australian rst, in2009, Telstra, NAB and VISA conducted apilot using near eld communications thatwon the Finextra International award orinnovation. Presently, Commonwealth Banko Australia and Westpac are working onmobile payment solutions using near eldcommunications technology.

FINANCIALSERVICES

THE CONTINUING DIGITAL SOPHISTICATION OF CONSUMERS IN THE FINANCIAL SERVICES MARKET HAS DRIVENMANY OF THE DEVELOPMENTS IN PRODUCTS, INFRASTRUCTURE AND PROCESSES.


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According to IDC, Australian nancial

services spending priorities are ocusedaround cost savings, productivity andcustomer engagement, and are refectedin current deployment plans (see chart).In 2012/13, IDC expects opportunitiesin unied comms/video conerencing,social business, advanced analyticsand data management, mobility, uniedcommunications and Cloud computing.

As nancial services in all their orms payments, credit, investment and insurance are so inextricably woven into the abric oour daily lives, the combination o nancialservices and Augmented Reality (AR) is well

suited to be a signicant game-changinginnovation. The willingness o consumersto provide personal inormation to nancialinstitutions creates the opportunity orthose institutions to participate in, andadd genuine value to, the day-to-day liveso their customers. According to KPMG2012 Report Optimizing banking operatingmodels rom strategy to implementation,banks are having to work harder to attractand retain customers. Generation Y willmake up around 33% o the Australianworkorce by the end o the decade, and theyhave very dierent transacting behaviours totraditional bank customers.

Q. Are you currently using or do you have plans to deploy any o the ollowing over thenext 24 months?

UNIFIED COMMS/VIDEO CONFERENCING 37 37 7.4 18.5

CLIENT DESKTOP VIRTUALISATION 40.7 33.3 3.7 22.2

BI/PREDICTIVE ANALYTICS 29.6 40.7 7.4 22.2

SOCIAL MEDIA/NETWORKING 29.6 40.7 3.7 25.9

VIRTUALISATION (STORAGE, SERVER, NET.) 40.7 25.9 18.5 14.8

POLICIES REGARDING BYOD 37 29.6 7.4 25.9

MOBILE BUSINESS APPLICATIONS 37 25.9 25.9 11.1

GREEN IT INITIATIVES 25.9 37 18.5 18.5

MANAGED SERVICES 25.9 33.3 7.4 33.3

NFC/MOBILE PAYMENT SOLUTIONS 22.2 33.3 3.7 40.7

Deployed Planned to deploy 12 monthsPlanned to deploy 24 months No plans

Source: Doc # AU8036612X, Australia Banking, Financial Services and Insurance ICT Market 20112015Forecast and Analysis.


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CASE STUDY: COMMONWEALTH BANK HOME BUYING AUGMENTEDREALITY MOBILE APP

In 2010, CBA launched an augmentedreality mobile app targeting home buyerswith innovative eatures. Supportedby the property site, Realestate.com.au and local property inormation andanalytics company, RP Data, the appuses augmented reality to allow buyersto search or properties on the market.Using a persons location, the app is highlycontextual and delivers a rich visualexperience.

According to Forrester, the success o thisapp exceeded the banks expectationswithin the rst six months and producedthe ollowing results:

Exceeded100,000downloadsbetweenmonths our to ve. Between February2010 November 2011, the app hadreached 212,000 downloads

Theserviceisgenerating25to30calls

and 12 completed online orms perweek

Overall,1%ofthebanksleadsare

generated through the app

Deliveringconveniencethroughin-

application searches, consumers rely on

maps (45%) and AR (45%) equally, with10% relying on traditional text basedsearch.

Source: Forrester, Case Study: Home Buying With Mobile Augmented Reality, December 22, 2011.

FINANCIAL SERVICES(CONT.)

Whilst business models are now emerging

or paid content and advertising, geo-targeted mobile marketing and mCommercewill open up more new commercial modelsand encourage new relationships betweenplayers within the ecosystem. Financialinstitutions will have scope to orm deeperrelationships with industries including retail,travel, hospitality, and inormation providers.Early examples o AR apps in the nancialservices industry are emerging such as thePNC Bank (USA) app or locating ATMs orbranches, the CBA (Australia) app or homebuyers (see Case Study), and the Barclays(UK) app or locating ATMs and countlessretailers throughout the UK.

The advancement o technologies and thepace with which these advancements takeplace will change the nancial servicessector in all aspects enabling them toprovide better service and derive greatereciencies, thereby reducing costs anddelivering greater shareholder value. Forinstitutions, the ability to increase trustand symmetry in the relationship bycreating new, value adding, and augmentedexperiences via advanced digital interactivitywill enable customers to interact in highlycreative, exciting and innovative ways.


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It has promoted innovation in all industries

through a variety o methods, includingtax incentives and concessions, grantunding and joint government and businesscooperative research centres and centres oexcellence.

Although investments in manuacturinginnovations over the past decade havedeclined, there have been a parallelinvestment increases in innovative solutionsor a wide variety o organisations in service-oriented industries. As Australia continuesto build its economy and standing as akey global market player, companies havetaken advantage o the various incentives

and concessions to develop leading edgesolutions such as the infuenza and cervicalcancer vaccines, Wi-Fi technology, variousmining innovations and RFID enabledbaggage tags or air travel.

The experience o organisations in takinginnovation to a new rontier has also had apositive eect on innovations made by theAustralian government. With rapid changesin technology, societal actors and demandsby voters or the government to operateeciently and eectively, there has beena widened ocus on what government cando to meet heightened expectations. Many

government departments and agenciesare currently undertaking signicanttechnological change and innovation toprovide unique solutions to the needs othe organisations that are here to serve theAustralian people.

INNOVATIONS IN THE GOVERNMENTThe Australian Public Service (APS)Management Advisory Committee (MAC)commissioned a report into the currentstate o innovation in the public sector.The resultant report, Empowering Change:Fostering Innovation in the Australian PublicSector (2010) highlighted that innovationwas making a marginal impact on servicesin departments and agencies and that morecould be done to promote and undertakeinnovative developments and solutionsacross APS. Recommendations wereprovided in the report that covered ourkey areas. These areas were highlighted to

ensure that the APS stays with the paceo social and economic change and alsoprovided comparisons with private sectorand their use o technology and availabletools to innovate and develop increasinglybespoke services to their customers. Itmagnied the requirement or the publicsector to aim or the same level o capability,and also recognised that without a culture oinnovation, many o the desired capabilitiesand public sector goals would not beachieved.

The recommendations o the report were

agreed upon by key members representingthe dierent areas o the APS and theimplementation o the recommendationswere included in the APS Innovation ActionPlan. The plan outlines the main areas oraction:

1. Developing an innovation consciousnesswithin the APS

2. Building innovation capacity

3. Leveraging the power o co-creation

4. Strengthening leadership so there iscourage to innovate at all levels.

Source: APS Innovation Action Plan 29 June 2011.

Identication o the key areas helps the APSto hone in on areas that have previouslyhad less ocus and works towards creatingan innovative culture that will allow themto achieve a broader set o successuloutcomes.

While many examples o governmentinnovation appear throughout this reportunder specic domains, such as health,education, or public saety, there are manyothers that cross such boundaries, asillustrated on the ollowing page.

GOVERNMENT

THE AUSTRALIAN GOVERNMENT HAS LONG ACKNOWLEDGED AND ADVOCATED THE NEED FOR INNOVATION INORDER TO GROW THE ECONOMY AND BUILD THE CAPABILITIES OF THE NATION BEYOND THE MANUFACTURINGBASE THAT HAS HISTORICALLY BEEN THE LIFEBLOOD OF AUSTRALIAS ECONOMY.

INNOVATION IS AT THE HEART OF GOOD PUBLIC ADMINISTRATION. A HIGH-PERFORMING PUBLIC SERVICE IS RELENTLESS IN ITS COMMITMENT TO

CONTINUOUS IMPROVEMENT. IT NEVER ASSUMES THAT THE CURRENTPOLICIES, PROCESSES AND SERVICES ARE THE BEST OR ONLY SOLUTION.Terry Cutler (Venturous Australia) 2008


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Key examples o recent innovations inGovernmentiv

National Broadband Network (NBN)The National Broadband Network (NBN) isone o the Australian governments biggestever inrastructure projects. Its designedto ensure all Australians can choose highspeed broadband, no matter where they live.Australias a big place. Rolling out the newnetwork across the country is expected totake NBN approximately 10 years. A networko bre to the premises services will berolled out on a region-by-region basis, to93% o Australias premises. Where NBN Codoesnt roll out bre to the premises (7%o premises), xed wireless and satellitetechnologies will be used to deliver high-speed broadband services.

Electronic payment at MedicareThe Department o Human Services rolledout an innovative, ast, electronic paymentsystem as a move towards cashlessMedicare oces.

The removal o cash rom oces means that

transactions are processed aster, leavingmore time to help customers who requireextra support. Furthermore, introducingthe ability to make claims at the registeredMedicare practitioner or online, instead oat the Medicare oce, creates ecienciesin both time and number o sta required atMedicare oces.

Smart Forms business.gov.auThe development o the Smart Formssolution by business.gov.au allowsgovernment agencies to be able to replacestatic orms with automated online ormsthat are streamlined and allow automated

submission. The success o the solution hasbeen outstanding, with around 46 agenciesusing the orms in their processes.

e-Vanguarde-Vanguard has been developed to assist inacilitating secure business to governmenttransactions using a range o securee-Authentication services.

The development and adoption o this

service has highlighted the ability togain signicant eciencies in relation toautomating payments and reducing thecomplexity o requirements by dierentagencies. Removal o duplication oauthentication oers signicant benetsand centralises the unction to one area,rather than being the responsibility oindividual agencies.

National TelePresence SystemLed by the Department o Finance, theAustralian Federal Government looked orways o leveraging technology to do thebusiness o Government more eciently.

As part o its overall ICT strategy, Financeworked with Telstra to create the NationalTelePresence System, which providesgovernment agencies a suite o securestate-o-the-art video-conerencing roomsacross the nation, enabling quick, ecientuse o resources and generating signicantproductivity improvements, and savings intime and travel costs.


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The pace o technological advancement

in the health industry is as signicant asit is ast. The development o innovationsin patient care and delivery are a result oincreased demand or new technologiesand also the drive to accept and incorporatetechnologies that have been used in otherindustries. Advancements in health have notbeen limited to the equipment used to treatpatients, but also extend to the developmento more sophisticated treatment and patientcare options.

The impact o innovation in the healthindustry is wide-ranging rom innovationsin the design and development o world

leading medical acilities, such as those atSydney University, to innovations in medicaldevices such as surgical and imagingequipment and unique applications otechnology or the better care o patients.

e-HealthFrom electronic medical records toelectronic prescribing systems, e-Healthis helping to provide insight-driven healthsolutions. In particular, the use o technologyto improve data accessibility and collationhas helped to dene new ways o deliveringmore eective, ecient and aordablehealthcare. The application o e-Health

helps to ensure that the right inormationis available at the right time and placeto optimise the quality and eciencyo healthcare delivery. As shown in theollowing table, e-Health is rstly beingdriven by the patients demand or betterinormation and aster access to inormationthat may help with diagnosis. Secondly,the importance o improving eciency inhealthcare provision has been a driver inthe many developments that have beenundertaken in Australia and overseas. Whilstnot always successul, as with the NationalHealth Service (NHS) in the UK, the benetshave encouraged Australian companies

and the government to invest in innovativee-Health solutions.

The prevalence o technology-basedsolutions has resulted in many private

and public enterprises working in tandemto develop innovations. For example, theQueensland Government and CSIRO havepartnered to orm the Australian e-HealthResearch Centre (AEHRC), which has madea signicant investment in inormation andcommunication technologies (ICT) to improvehealthcare and clinical treatments or allAustralians. Examples o recent innovationsin the e-Health space have includedthe Federal Governments personallycontrolled electronic health record project,development o tele-opthalmology systemsto assess the eyesight o people in ruraland remote areas o Australia, surgical

simulators or colonoscopies, and healthdata management and care assessmentplatorms or patient care and eectivedisease management.

The emergence o e-Health and telehealthas key ocus areas or the industry, not only

here but overseas, has seen more directedinnovation in patient care. In Australia, thebenets are particularly pronounced due tothe geographical spread o the population.Telehealth has been seen to oer hugebenets with the Australian governmentinvesting over hal a billion dollars intelehealth initiatives.

HEALTH

AUSTRALIA HAS HISTORICALLY BEEN A MAJOR PLAYER IN TERMS OF INNOVATIONS AND INVENTIONS FOR THEGLOBAL HEALTH MARKET. A RICH HISTORY IN MEDICAL RESEARCH AND PRODUCT DEVELOPMENT HAS PAVED THEWAY FOR A WAVE OF INNOVATIONS THAT HAVE BEEN EXPORTED TO THE REST OF THE WORLD.

Key drivers or e-Health

PATIENT EXPECTATION

INCREASE IN EFFICIENCY

DEMOGRAPHICS

INCREASE IN DEMAND

GOVERNMENT MANDATE

AVAILABILITY OF TECHNOLOGY

SAFETY & QUALITY

SHORTAGE OF STAFF

GLOBAL INITIATIVES

ABSCENCE OF LEGACY SYSTEMS

MEDICAL TOURISM

61%

58%

37%

34%

29%

29%

29%

26%

18%

8%

5%

Source: Accelerating Innovation KPMG International/Manchester Business School, 2011.

KPMG International (2012, January). Accelerating innovation: the power o the crowd Global lessons ine-Health implementation.


19/4419

TelehealthTelehealth is the delivery o health-related services and inormation viatelecommunications technologies. TheAustralian government has allocatedsignicant unding to telehealth to overcomethe challenges o providing healthcareacross signicant geographical distances,and also to help reduce the pressure onthe health system as the population agesand the prevalence o chronic diseasesincreases. The National Broadband Network(NBN) will also assist in the ecacy otelehealth as an alternative to the traditionalhealth system. In a report by the Australiangovernment titled Australian telemedicineopportunities in the context o the NationalBroadband Network, the NBN will provide aunique opportunity to catalyse change in theway healthcare is delivered.

The NBN will provide a platorm that allowshomes, doctors, other medical providerssuch as aged care providers, pharmacists,allied health proessionals to connectto aordable, reliable, high-speed andhigh-capacity broadband. This is a majoropportunity to improve the way healthcare isdelivered in Australia.

Telstra is harnessing its innovative

capabilities to bring telehealth to the widercommunity. Through a high denitionsolution, containing high denition audio/video conerencing and imaging equipment,it has helped enable improved healthcaredelivery via virtual collaboration betweenpatients in remote and rural areas withdoctors and other medical proessionals.The act that it can be done in real timerom separate locations oers very tangiblebenets to healthcare management.Combined with e-health solutions that storepatient inormation that can be accessedanywhere, the total care or the patient isar greater than previously provided e.g.obtaining expert advice to provide asterdiagnosis or diseases. Moreover, healthcareproviders and organisations can deliverbetter care and reduce the operating costsinvolved with traditional patient care. Thegovernments medicare rebate is alsomaking it easier to transition to using thistechnology.

The work done overseas has demonstrated

the signicant benets o usingtelemedicine and e-Health as techniques tohelp alleviate already burdened healthcaresystems. The National Health Service in theUnited Kingdom has instituted a strategicvision or the innovation and adoption otelehealth. This has demonstrated theocus on this area as a consideration orgovernments as the global populationcontinues to grow.


20/4420

HEALTH (CONT.)

Impact o social mediaThe popularity o social media withAustralians has been a key driver behindthe social media solutions that are beingused by healthcare providers to promoteengagement, provide detailed inormationon treatment, and oer a support network.As detailed below, the statistics relatingto use o social media in healthcare aresignicant.

In the UK, various NHS trust sites areusing social media as a means to extendthe care to patients via a support network.In Birmingham, social media has givenpatients the tools required to take control

o their own records and wellbeing. Whilstsome o these are intangible benets, theuse o social media demonstrates the wideapplication o the medium as a means tobroaden traditional methods o patient care.

Moreover, the consumers increasing desireor on-demand healthcare and transparencyin cost and quality has also seen theincreased use o social media.

Recently in New York, a not-or-prot

organisation has set up a Facebook page onPatient Harm Community so that memberscan provide eedback on harm they mayhave received rom healthcare. Whilst it canbe used incorrectly and has the potential toattract emotionally charged patients, thewider benets o understanding patientexperience may outweigh the potentialcosts as it is open to patients, regulators,doctors and medical establishments. Thepotential to discuss patient harm, its causesand solutions, may provide more inormedanswers and links to reports, researchand policies that are easily accessible orparticipants o the Facebook page.

The Australasian College o HealthService Management has said that, inAustralia, many health organisations haveyet to embrace the potential o socialmedia to oster innovation, transparency,communication and collaboration inhealthcare, but indicates that overseasexperience may help to promote this as auture strategyv.

Healthcare social media engagementsignifcantly lags behind overall useOnly 17% o US online consumersreport engaging in social media orhealth at least monthly or more. Thissignicantly lags behind general socialmedia adoption levels o 86%. Themajority o social-or-health usersread social content (13% o onlineconsumers), while much small numberscreate it.

Newly diagnosed patients are among

the most engagedConsumers who have been diagnosedwith a serious or chronic condition withinthe past six months as well as patientswith a short-term or non-seriouscondition are the most likely to createsocial media content. The chronically illshow lower engagement levels.

Early successes point the way tohealthcare social medias utureDespite the low numbers, consumersare engaging in social media orhealth although today engagementis sporadic. Successul endeavoursby Aetna, Blue Shield o Caliornia,Radboud, Regence, and The ClevelandClinic show how social adds value whenplaced in the right context.

Boehm, E. (2012, March 13). Should Social MediaBe Part o Your Healthcare Customer Experience?Forrester Research Database.


21/4421


22/4422

However, with the impact o a fat retail

sector, volatility in commodity prices andmarkets, and seesawing exchange rates,manuacturing is being impacted on a scalenot seen in the last decade. As detailed in theKPMG report Global Manuacturing Outlook:Fostering Growth Through Innovation, worldmanuacturing output has reduced to 4.2%in the ourth quarter o 2011 against thesame period the previous year andrepresents the lowest quarterly growth ratein 2011. Australia has remained somewhatsheltered due to the growth in resources andthe related downstream manuacturing.However, manuacturing not related tomining, has seen businesses have to ndalternatives to maintain growth in toughbusiness conditions.

Lean times oten call or prudence, whichmeans cost cutting and operating moreeciently. Australian manuacturers have towork smarter and be more ecient in orderto compete in both Australian and globalmarkets. To this end, businesses are lookingto achieve these objectives as well as striveor growth through innovation.

The Prime Ministers ManuacturingTaskorce Report o Non-GovernmentMembers (August 2012) again stressed

the importance o manuacturing statingthat A dynamic and thriving Australianmanuacturing sector is critical to thelong-term health o the economy and thenation. The report goes on to describethat innovation will underpin the strategySmarter Manuacturing or a SmarterAustralia.

As noted in the Future Manuacturing

Industry Innovation Council discussionpaper Trends in Manuacturing to 2020,the ocus on innovation in manuacturingis not siloed and developments are alsoundertaken downstream in the supply chainand logistics space. Similarly, innovationsundertaken in other industries will alsocontribute to growth and strength inthe manuacturing industry such as ICTinnovations that can be applied acrossmanuacturing, transport and logistics.

Challenges acing the manuacturingindustryManuacturers are currently being impacted

by both cyclical and structural infuence.These include scarcity o resources andreduced availability o skilled labour alongwith increases in operating costs such asuel and carbon tax increases in electricityand gas prices.

Trends in the manuacturingThe use o technology is driving much o theinnovation in the manuacturing arena asbusinesses strive or operational eciency,cost cutting and competitive advantage.Technology has been a means to provideopportunities or product and productioninnovation, and process innovation using

leading-edge devices in new and novel ways.Taking a proactive stance to innovation canhelp businesses obtain productivity andquality gains that translate into improvedresponsiveness to customer demands,reduced turnaround, reduced waste, higherproduct quality, increased capacity andbetter supply chain and logistics solutions.

One o the key ndings rom the KPMGreport Global Manuacturing Outlook:Fostering Growth Through Innovation, isthat there is a trend or unprecedentedcollaboration in innovative solutions acrossthe value chain. Manuacturers have set up

rameworks and tools to improve processesand mitigate risks across the supply chain.

The key types o innovation can be classied

broadly under the ollowing categories:

1. Innovation in sourcing

2. Innovation in manuacturing processes

3. Management innovation

4. Innovation through technology

The ollowing examples demonstrate thewide range o innovation solutions thatare being developed in manuacturingprocesses through ICT driven innovation.

Advances in computer integratedmanuacturing (CIM) have helpedorganisations to allow fexible

manuacturing o more than one productline and thereore both reduce the size otheir manuacturing acilities and automatethe process.

Siemens, the German electronics andelectrical engineering company, envisagesthe actory o the uture as being one thatoptimises all production processes usinginnovative sotware systemsvii. Their ocusis integrating existing technologies withcompany systems to build an innovativebespoke solution. Signicant advanceshave been made in computer modellingthat enable whole product, processes

and production lines to be simulated. Thisvirtual prototyping can optimise solutionsand ensure eciency in making changes.Further, the time to market or products canalso be reduced and this helps overcome thechallenge o skills and resource shortages.

MANUFACTURING,TRANSPORT & LOGISTICS

AUSTRALIAN MANUFACTURING HAS PLAYED AN IMPORTANT ROLE IN AUSTRALIAS ECONOMY OVER THE LASTCENTURY. THE INDUSTRY CONTRIBUTES ONE THIRD OF AUSTRALIAN EXPORTS AND IS AN IMPORTANT DRIVER OFINNOVATION AS THE INDUSTRY INPUTS A QUARTER OF RESEARCH AND DEVELOPMENT AMONG BUSINESSESVI.


23/4423

The application and use o leading-edge

technologies to drive manuacturinginnovations can help to move large amountso inormation and allow manuacturersto operate remotely rom the productionlocation or the markets in which theyoperate. Manuacturers demand high-speedmobile data services or running largeand complex enterprise systems acrosssophisticated data networks. Manuacturersalso run sophisticated asset, vehicleand inventory tracking and managementsotware across an array o devices andpotentially across dierent geographies.The requirement or enhanced deliveryo real-time inormation and enhancedcommunication between operationalcentres and plant, the value o advances incommunication and mobile technologiescan be harnessed to deliver value-add tomanuacturers.

The NBN will be the key piece oinrastructure that will allow or processimprovements within each manuacturersown operations, but also with otherparticipants in the supply chain. The abilityto operate with ast network connectionswill urther encourage the use o CIMacross and within organisations and alsohelp evolve the use o mobile devices in

manuacturing.

Furthermore, the continued evolutiono technology such as Cloud computingprovides opportunities or enhancingproductivity, marketing and product andservice delivery. It will also aid innovation incompanies seeking to meet sustainabilityand environmental targets and potentiallyhelp with their carbon ootprints and ensuretheir long-term viability.

A report produced by the UK manuacturersorganisation, EEF Limited, in conjunctionwith Barclays Commercial Bank, suggeststhat businesses spend around 5% oturnover on waste, including unusedmaterials, deects, energy and water, andalso notes that 90% o materials usedin production do not appear in the nalproductviii.

The ability to adopt technology to improveexisting processes and drive eciencyshould to build sustainable organisationsand also sustainable supply chains.

Also aiding manuacturers to drive thetechnology innovation agenda is theincreasing prevalence o collaborationacross the industry. Research is increasinglybeing shared across a wider network opartners to enhance competition andgrowth, and accelerate knowledge and skillstranserix.

Leading companies have long recognisedthat collaboration on certain types oinnovation can reduce costs, spread riskand get products to market aster thanwould otherwise be possible. The tableabove demonstrates the increased ocusby companies on collaborative innovation,which should enhance not only the value oeach manuacturer but also the value chain.

Q. Do you intend to collaborate in innovation more or less with the ollowing externalgroups over the next 12 to 24 months?

KEY CUSTOMERS (E.G. FOR BESPOKEPRODUCT DEVELOPMENT)

SUPPLIERS (E.G. TO CO-OPERATEON PRODUCT DESIGN)

PARTNER COMPANIES (E.G. TO PROVIDEA COMBINED PRODUCT/SERVICE)

TECHNOLOGY PROVIDERS(E.G. IT OR PLANT SPECIALISTS)

GOVERNMENTS/PUBLIC-SECTORORGANISATIONS

ACADEMIC INSTITUTIONS

COMPETITORS (E.G. TO REDUCECOSTS, BENEFIT FROM COMPLEMENTARY SKILLS

AND SPREAD THE RISKS OF DEVELOPMENT

61%

60%

50%

46%

41%

39%

24%

31%

32%

41%

46%

46%

46%

56%

8%

6%

6%

6%

8%

10%

12%

1%

2%

2%

2%

5%

4%

8%

Much greater/greater collaboration Same level of collaboration

Much less/less collaboration No collaboration

Note: Graphs may not add up to 100% due to rounding.

KPMG (2012, February): Global Manuacturing Outlook: Fostering Growth through Innovation. Global researchcommissioned by KPMG International rom the Economist Intelligence Unit.


24/4424

MANUFACTURING, TRANSPORT& LOGISTICS (CONT.)

However, the level o collaboration will

be dependent on the willingness o eachorganisation to retain its intellectualproperty and thereore, its competitiveadvantage.

The technological advances will also drivea service-oriented manuacturing industry.In the US, manuacturing output (in dollarvalue) is about the same as Chinas but isachieved with only 10% o the workorcedeployed in Chinax. The reduced requirementor labour will help overcome the shortagesand also help with protability andshareholder value.

Challenges acing the transport andlogistics industryTransport and logistics companies are alsoacing signicant challenges o their own.Around the world, these challenges includeincreased uel and energy costs, intensecompetition driving lower margins, surpluscapacity driving lower yields, complexinormation technology requirementsand increasing government regulation. InAustralia, there are the added challengeso access to ports, congested reight routesand the dispersed geographical distributiono markets.

The growth o online retail is having a

disruptive impact not only on the last-miledelivery but also through the whole o thesupply chain.

Zero to low productivity improvements in thetransport sector is a major issue within thetransport industry and is a key issue beingreviewed by the Australia Logistics Council.

The value and number o logisticstransactions has steadily declined as shownthe ollowing graph. Companies are reactingaccordingly by investing signicant amountsto nd better ways to undertake business.This has included consolidation and

collaboration eorts that will be discussedon page 24.

Transactions in transport and logistics

H12008

H22008

H12009

H22009

H12010

H22010

H12011

H22011

0 0

10

20

30

40

50

60

100

200

300

400

500

600

544

525

417439

449

552

484496

3231

12

14

48

31

34

18

Transaction value (US $bn) Number of transactions

TR

ANSACTION

VALUE

(US

$BN) N

UMBER

OFTRANSACTION

S

Source: Thomson Financial Database.


25/4425


26/4426

MANUFACTURING, TRANSPORT& LOGISTICS (CONT.)

Trends in transport and logisticsAmong the major trends in logistics are themove to capitalise on emerging markets,growth niche markets, and e-commercesolutions that ensure time- andtemperature-sensitive deliveries as well asmeeting secure delivery requirements. Theincreasing scale o transport requirementsand the variety o transport has alsoimpacted the sector. Uniquely in Australia,the geographical distribution o thepopulation has produced challenges thathave been overcome through innovativeapproaches to transport and logisticssolutions.

The congestion o existing inrastructure andthe associated costs, and increased labourcosts, means that businesses are looking atsmarter ways to operate, drive eciency andreduce costs.

Advanced inormation technology solutionshave been used to acilitate real-timeaccess to shipment data, reporting andtransactional data. This has helped withthe changing dynamic o the industry rombeing a B2B ocus to a B2B and B2C mixdue to the increasing popularity o onlineshopping. The use o RFID, bar coding andscanning, voice control, light control and

automation tools have all been examples othe IT innovations that have been developedin recent times. Further, advances incommunications technologies have allowedcompanies to introduce new products andservices, including mobile applications usedor reporting o transactions, delivery statusand shipment statisticsxi.

For vehicles, there are new developments

in on-board telemetric, electroniclogbooks and improved vehicle-to-vehiclecommunications that are helping deliveriesto be more accurate and ecient.

Telematics-based Fleet managementsolutions allow companies to address thechallenges o compliance and Chain-o-Responsibility where speed, atigue and loadmanagement are key concerns throughoutthe supply chain.

Mobile telephony and wirelesscommunication are also enablers or theuture o transport and logistics systems.

Remote telemetry solutions using satellitetechnology and the management omachine-to-machine (M2M) devicesand solutions help with the geographicalchallenges o Australia.

For the rst time in the transport andlogistics sector the power o mobilemachine-to-machine solutions underpinnedby Cloud computing capability that can scaleprovides the technological oundation toinnovate.


27/4427

MEDIA

THE MEDIA LANDSCAPE CONTINUES TO CHANGE AND EVOLVE AT A RAPID PACE. IT WOULD BE FAIR TO SAY IT HASPROGRESSED MORE IN THE PAST FIVE YEARS THAN IT HAS IN THE PREVIOUS 30 YEARS - AND FOR IT IS NOWVERY MUCH A WHAT I WANT, WHEN I WANT CONSUMER ENVIRONMENT.

These changes are a refection o how

quickly technology develops theintroduction o video-capable mobiledevices, tablets, personal video recorders, aswell as network technologies such as 100Mbcable speeds, 3G, 4G LTE and FTTH. All thesecontinue to contribute to media innovation.

Consumer mediaConsumers are spoilt or choice in howthey access and consume media in manyhouseholds, there are connected TVs, AppleTV, XBOX, Playstation, FOXTEL IQ, TelstraT-Box, Boxee, Roku, Google TV, laptops,desktops, tablets and Smartphones. Eacho these devices now has access to endless

amount o content such as BigPond TV,BigPond Movies, Netfix, Hulu, BBC iPlayer,ABC iView, Plus!7 Catchup TV, FixplayCatchup TV, SBS On Demand, FOXTELDownload and multiple channels o ree-to-air television. Not to mention contentrecorded on personal video recorders (PVRs).

With so much choice, the battle or theeyeball is becoming increasingly competitive one key area or innovation is thereorehelping consumers with the discoveryo content. This could be through newelectronic programming guides (EPGs),personalised home pages or intuitive search

capability.The other area o innovation is around thedelivery o media over technologies suchas Telstras Content Delivery Network andDigital Video Networks. These networksbring video closer to the customer in order toimprove the customer experience.

Enterprise mediaNot only is the ocus on consumer media,but enterprises are looking at innovativeways to use media to grow their businessand communicate with sta.

With the rising cost o uel, companies are

looking at new technologies to acilitatecommunication. It is becoming more cost-eective to use video-conerencing toenable collaboration than holding a realmeeting.

And with aster network speeds, it is

possible to have ull high-denition clarityvideo so it seems like you are actuallysitting across the table rom the meetingparticipants. There are also other channelssuch as Skype, Oce Communicator,Messenger, gTalk, Netmeeting, Go-to-meeting the list continues to grow.

Companies are also looking at leveragingvideo as a means or corporatecommunications e.g. or deliveringCEO messages and annual companyperormance reports over their internalprivate networks. They are also using videoto promote their brands and products to the

public using channels such as YouTube,a companys reach has extended rom themillions aorded by traditional media suchas print and TV to a global audience obillions!

ConvergenceThe distinction between service providers,content owners, equipment manuacturersand content indexers is getting blurred. Eacho these players continues to look at wayso dierentiation. For example, Samsung,Sony, LG, Panasonic are moving rom beingmanuacturers o televisions towards beingcontent aggregators where consumers areable to access a plethora o content romapplications that reside on the television,such as YouTube, ABC iView, etc. Moviestudios too are moving towards direct-to-consumer via their portals and tabletapplications such as hulu.

Overall, companies continue to be morestrategic in their partnerships to spreadthemselves across multiple marketsegments.

CONTENT INDEXER CONSUMER ELECTRONICS/DEVICE MANUFACTURER

SERVICE PROVIDERS/TELCO CONTENT OWNER/AGGREGATOR


28/4428

MEDIA (CONT.)

97%

#

@94%

84%79%

22.65

OF SOCIAL NETWORK USERS ARE FACEBOOK

OF SOCIAL NETWORK

USERS ACCESS SOCIALNETWORKING SITES TOCATCH UP WITH FAMILYAND FRIENDS PERCENTAGE WHO ACCESS THEINTERNET EVERYDAY

AVERAGE NUMBER OF TIMES PER WEEKSOCIAL NETWORK USERS ACCESS TWITTER

OF LARGE BUSINESS HAS ASOCIAL MEDIA PRESCENCE

AIMIA (2012, June). Yellow Social Media Report What Australian people and businesses are

doing with social media.

Social mediaParticipating in social media has becomea business imperative. More than 70% oorganisations operating around the worldare now active on social media.

A recent report rom Yellow Pages highlightsthat social media and networking play anincreasingly dominant role in Australia.

Not only is internet usage pervasive, butalmost everyone uses a social network,specically Facebook.

OUR ANALYSIS HAS DEMONSTRATED THAT WE CAN LOOK AT THEEXPERIENCES OF BOTH EARLY BUSINESS ADOPTERS AND OUR OVERSEASCOUNTERPARTS, TO LEARN FROM THEM. IF BUSINESSES DO NOT GET ONBOARD QUICKLY, THEY MAY VERY WELL BE LEFT BEHIND.Malcolm Alder, Partner Digital Economy, KPMG Sydney


29/4429

Interaction between social networks

and television continues to increase andcompanies are looking at ways to leveragethis or example, Seven Network hasreleased a mobile companion applicationcalled Fango that allows viewers to vote,comment, chat and play games related tospecic television content.

The expectation is that businesses willcontinue to invest in social media at thedemise o traditional marketing spend suchas print media. However, consumers needrelevant incentives to interact and engagewith businesses and brands to maximisetheir return on investment.

Plans to use social media to drive innovation

PLANS TO USESOCIAL MEDIA TODRIVE INNOVATION

30.6%

26.4%

14.1%

5.5%

9.0%

7.1%

7.3%

Expanding

Initiating now

Initiating in next 12 months

Interested but no plans

Not interested

Dont know

Initiating in more than a year

Managers, n=1850.Source:Going Social, KPMG International, 2011.

KPMG (2011, December). Going Social How businesses are making the most o social media.


30/4430

MEDIA (CONT.)

ContentDespite technology innovations, content willalways be king. This means that i there iscompelling content, consumers will alwaysbe driven to consume this irrespective othe channel. Examples o these include TheVoice and Masterche which continueto draw large audiences and, given theircurrency, have to be watched at a certaintime and place.

The area or innovation here is theproduction o content, whether it be server-based production instead o tape-basedproduction, or the eective use o metadatato tag and describe every rame or use on

TV or online a task which would call oran extremely robust content managementsystem to aid with the end-to-end mediaworkfow.

Business modelsIn the media sector, innovation comes notonly rom technology, but the underlyingbusiness models. In order or companiesto survive in an ever-ckle consumerenvironment, they need to look to newrevenue models. Examples includeinnovative bundling, subscription all-you-can-eat, clip-o-the-ticket, advertisingunded, reemium or pay-per-channel.

What do customers want rom businesses or brands ollowed?

DISCOUNTS

GIVE-AWAYS

PRODUCT INFORMATION

TIPS/ADVICE

COUPONS

INVITATION TO EVENTS

FEEDBACK FORUMS

INFORMATION ABOUT THE COMPANY

INDUSTRY INFORMATION

NONE OF THESE

64%

54%

48%

41%

41%

38%

31%

30%

30%

22%

AIMIA (2012, June). Yellow Social Media Report What Australian people and businesses aredoing with social media.


31/4431

Recently, this has been largely driven by

the resources boom, as companies haveinvested in developing new techniques toharness best value in the extraction andprocessing o natural resources. However,innovations have not been conned to theextraction and processing areas, but havealso extended to the mining services thatsupport the whole sector. Innovations rangerom sophisticated satellite explorationtechnology to specialised equipment thatimproves productivity and saety.

In KPMGs 2011 report, Australias resourcesboom: the inrastructure ripple eect, therapidly increasing thirst or Australian

resources by emerging market economiesis driving the need to expand and developsolutions. Issues such as inadequatetelecommunications inrastructure, andinadequate energy and water supplyare plaguing mining operators, and withmarkets such as China and India drivinggreat demand, companies are seekingeective and ecient solutions that are notcost prohibitive to supply. Similarly, manycompanies have investigated eciencygains to maximise extraction and processing.Further, the ocus on sustainability hasgenerated a wealth o developments andtailored solutions that benet not only the

environment, but also the economy throughthe export o these services.

Challenges acing the mining industryThere are signicant challenges currentlyacing the mining industry. Escalatingoperating costs, inrastructure needs,increased government involvement andregulation, access to new projects andskilled labour shortages are some o thekey challenges acing miners. Accordingly,much research is underway into solutionsand alternatives that will improve eciencyand thereore costs, and also reduce therequirement or labour on remote sites.

MINING

AUSTRALIA HAS LONG BEEN AT THE FOREFRONT OF GLOBAL MINING INNOVATION AND IS INTERNATIONALLYRECOGNISED FOR ITS DEVELOPMENT OF ADVANCED MINING SOLUTIONS AND TECHNIQUES.

Research and Development Activities by Sector

0.0

0.5

1.0

1.5

2.0

2.5

BUSINESSENTERPRISE

SECTOR

$2.34bn

Other InnovationSupport

Other R&D Support

R&D TaxIncentives

HIGHER EDUCATIONSECTOR

$2.36bn

Other

UniversityBlock Funding

AustralianResearch

Council

MULTI-SECTOR

$1.95bn

NHMFC &Other Health

CRCs

RRDCs & otherrural support

Energy &Environment

Other ScienceSupport

MAJOR AUSTRALIANGOVERNMENT

RESEARCH AGENCIES

$1.72bn

Other ResearchAgencies

CSIRO

OSTO

Law, J. (2012, January 21), CSIRO: Global Mining Innovation Do we have the mix right? Inormation sourced romAustralian Government Science, Research and Innovation Budget Tables, 2011-12.


32/4432

MINING (CONT.)

Research and Innovation in Australiaand overseasResearch and development activities in thesector have been shared between publicand private enterprises. As demonstratedin the previous table, a signicant amounto investment is made between privateand public sector with the majority opublic sector work being undertaken byuniversities.

Some o the signicant researchers inAustralia include:

The CSIRO (Commonwealth Scienticand Industrial Research Organisation)

is Australias national science agencyand undertakes research into innovativesolutions or the mining sector, includingmining exploration, extraction andprocessing.

CSIROs Minerals Down Under Flagshipworks with industry and partners inthe Australian Innovation system toocus on opportunities in the resourcesdomain

The CSIRO has entered an alliance withcollaborative research alliance betweenCanada, South Arica, Australia, inassociation with the USA

CRC Mining (Cooperative ResearchCentre or Mining) is a research centrethat combines private and publicenterprise to undertake coordinatedresearch into unique mining solutionssuch as automation, equipment andpower management, drilling processes,sustainability and minerals processing.

Mining company, Rio Tinto, has invested

in a number o research centres with linksto universities as part o its Mine o theFuture program. The Rio Tinto Australiaor Mine Automation (RTCMA) researchcentre at the University o Sydney isunded by Rio Tinto. Research at RTCMAocuses on robotics, sensing technologies,data usion and systems engineering.The Rio Tinto centre or Materials andSensing is based at Curtin Universityin Western Australia and the Riot TintoCentre or Advanced Mineral Sorting atthe University o Queensland undertakesresearch in the areas o mineral excitation,non-destructive sensing, mineral sortingand ore body classication.In the international arena, it has set upthe Rio Tinto centre or Advanced MineralRecovery at Imperial College in Londonto research improved undergroundblock caving methods, aster tunnellingand enhanced metal recovery rom thefotation process. Many o these designsare being trialled across the globe atvarious Rio Tinto mine sites, includingLatrobe University in Victoria.

How Inormation and CommunicationTechnologies have impacted the miningindustry

The drive or automation has increasedthe ocus on how Inormation andCommunications Technologies (ICT) canassist in innovative mining solutions. ICThas been recognised as a key component omining activity, and its power can be seenin solutions being implemented around thecountry that better service the mining sector,automate both extraction and processing,and also integrate systems that provide thelink between the mining pit and the portor export.

The geographical remoteness o many mine

sites means that the ecacy o technologiesemployed is all important. Seamless,contiguous networks are required, whichrequires signicant investment in leadingedge internet and voice wireless solutionsand satellite service solutions or internetprotocol connectivity at extremely remotelocations. In response, telecommunicationsproviders have developed solutions to cateror these requirements, including secure andassured networks and wireless capabilities.Bespoke Cloud applications and storage orprivate sites have also been developed to aidin the management o technology.

Examples o ICT related mining solutionsinclude:

A CSIRO-developed sensor that helps withextraction o ore as it distinguishes highgrade rom low grade ore on a conveyorbelt

CSIRO-developed location and guidecutting equipment or long wall minesthat automates the extraction processand is designed to reduce the numbero personnel operating in a potentiallyhazardous working environment

Mathematical equations and algorithmsused in modelling drilling and processing

technologies

Robotics used in exploration rom aremote location, now being trialled by RioTinto in the Pilbara, Western Australia

Wireless technology or use inenvironmental monitoring and saety

Mine Point a mining ERP solutiondeveloped by Australias EclipseConsulting that was developed inAustralia and is now used around theworld.


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The impact o sustainabilitySustainability and environmentalconsiderations have had a signicant impacton mining operations globally and havecreated opportunities or innovative miningdevelopment. The CSIRO has been workingon sustainable development in Australiaand overseas. For example, there has beensignicant research into alternatives or oildrilling fuids that have been historicallyused to prevent wellbores rom collapsingand lubricate drills. The result has been anon-oil based fuid that does not containhydrocarbons and is water based. Thisfuid not only reduces the costs involved indrilling, but also improves the perormanceo the wells in relation to environmentalconsiderations. Further, miners such asNewcrest Mining have developed techniquesto prevent artesian fow rom drilling aterdrilling is completed. This technique wasdeveloped as part o Newcrest Miningscommitment to sustainability.

Another unique use o technology in

mining has been the use o GPS tracking(using mobile technologies) to help withgeotechnical drilling with more preciselydirected drilling helping reduce the wastagethat oten occurs in oil drilling. Otherresearch is currently going on into thedevelopment o water reclamation plantsthat treat polluted water rom mining.

The more eective mining techniques andequipment are, the more environmentalimpacts are reduced and ecienciesincreased. There remain many othersignicant opportunities or the miningsector to use advances in communications

technologies to gain sustainableeciencies.


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RETAIL

INNOVATION IS PLAYING A KEY ROLE IN BROADENING OPPORTUNITIES FOR RETAILERS IN AUSTRALIA. IN THE PAST,MANY AUSTRALIAN RETAILERS WERE PROTECTED BY A LOW EXCHANGE RATE, GEOGRAPHICAL ISOLATION ANDTECHNOLOGICAL BARRIERS TO PURCHASING GOODS AND SERVICES ANYWHERE OTHER THAN THE TRADITIONALSHOPFRONT.

However, a strengthening exchange rate,

the globalisation o traditional retailing andthe wide availability o high speed xedand mobile broadband internet accesshas meant that retailers are acing a muchmore vigorous competitive environment. TheAustralian consumer can now shop with thebest retailers in the world, either in person atthe mall or online.

Retailers are now realising that pricediscounting has a negative impact on bothprots and consumer condence, and haveturned to developing and incorporatinginnovative solutions in an eort to maintaincompetitive and increase operational

eectiveness. Much o the innovating withinthe industry is helping retailers to copebetter with the current external challengesand to set the oundations or operationalexcellence when consumer condence isonce again restored.

The Australian experienceAustralian shoppers are among the mosttech savvy in the world. Ranked by internetusers as a percentage o total population,Australia has the th highest level ointernet penetration in the world. 51% oall online Australians aged 16+ owned aSmartphone in 2011. This compares withpenetration rates o 45% in the UK and 38%in the USA. Australians also use social mediamore than any other developed country.Because o these developments, retailershave had to recognise the importance ohaving an online presence and a digitalstrategy. The increasing prevalence ointernational retailers capturing part o theretail spend in Australia has demonstratedthe power o the global retail industry andthe ever shrinking barriers that were onceable to protect Australian retailers. Thepenetration o international retailers intothe Australian consumer psyche has shownthe depth o investment that is requiredby Australian retailers to gain competitiveadvantage.

Consequently, Australian retailers have

invested heavily over the last ve yearsto keep up with the speed and security opurchasing online, supporting inrastructure,and ensuring that their digital strategyextends beyond merely providing an onlineshopront. The use o social networkingand mobile devices, and the importance othe customer experience and loyalty are allplaying a big part in the overall innovativesolutions that are being developed.

Overseas retailers enjoy a much higherproportion o their sales online than theirAustralian counterparts. UK departmentstore John Lewis reports over 20% o their

sales rom online while our local departmentstores are currently reporting less than1% rom online sources. The wide gapbetween overseas and domestic online salesdemonstrates the investment and workrequired by Australia retailers to developnew and innovative strategies and adoptleading edge technology to meet the growingconsumer demand or 24/7 availability anda wide variety o products across dierentgeographies.

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Overseas retailers have also been quicker

to embrace Omni-channel retailing. Omni-channel retailing is the blending o theonline and in-store experience to create ashop thats part physical and part virtual,and which customers can move aroundseamlessly. Omni-channel retailers havegreat websites, but more importantly, theyhave tangible links between the onlineexperience and the physical store so that,or example, goods bought online can bepicked up in a store, Wi- hotspots allowcustomers to shop online when in a store,and in-store kiosks oer online advice to thephysical shopper. Retailers like John Lewishave proved that an Omni-channel strategyworks:

27% o John Lewis customers researchwhat they want in store and then purchaseit online

Over 60% o customers research onlinebeore going to the store

More than 20% o John Lewis customersbuy online and collect in-store

40% use their phones to interact with thebrand when in a store

The Omni-channel shopper is John Lewismost valuable customer. On average, theOmni-channel customer spends 3.5 times

more than the customer who shops instore or online exclusively. Quite simply,access to an Omni-channel shoppingexperience encourages more spending.

Some key examples o retail innovations

in Australia and overseas show the depthand breadth o technologies and digitalstrategies that are now being used:

Kiosks and sel-serveSel-service and kiosks are now ound inthe majority o supermarkets in Australia.Their use has reduced the number o starequired and has also allowed a greaternumber o transactions to be generated atany one time. Kiosks have been installedat airports or passengers to sel check-inand some airlines, such as Qantas, havedeveloped a bespoke solution or luggagesel check-in using innovative baggage tags.

Such innovations are being extended to thePoint o Sale (PoS) systems being developedor traditional shopront stores such asMyer. The investment made on the newMyer myPOS system has reaped signicantrewards in operational eciency, improvedcustomer experiences and benets in thelinkages with its merchandising system. Theremoval o batch data updates on inventoryrom transactions has allowed ecienciesto be gained in merchandise planningand allowed POS users to quickly identiyproduct locations.

QR reader and bar code technologiesQR codes and bar codes have beeninnovatively used by many retailers inAustralia to help them communicate withthe customers in an interactive way. Thelink between the QR codes, which can beeasily read with mobile devices, with socialmedia sites such as Facebook or Twitter isa powerul marketing tool, but can also beused to provide product inormation or amobile site to purchase goods. Examplesinclude:

Sportsgirl, a ashion retailer, uses QRcodes in its stores as an additionalchannel to attract customers

Coles supermarkets mobile applicationhas bar code sotware that enables thecustomer to scan codes as they walkthrough the supermarket and collate theirweekly shopping list.

Improvements in supply chainRecent innovations in supply chaintechnologies have allowed retailersto improve the speed to customer oproducts and services. Combined with theadvancements in payments technologies,security and connectivity, retailers havebeen able to move rapidly to improve thewhole customer experience whilst improving

costs and operational eciency.

Inormation sharing through improved datanetworks and data fow through the supplychain will provide eciencies that can betranslated to greater prots or retailers.


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Mobile applicationsConsumers increasing use o mobile devicesto search, purchase and pay has orcedretailers to look beyond extending theirtraditional shop ront to just the internet.The advancements in networks, includingincreased speed through products such as4G, provide an exciting new landscape inthe world o mobile applications in retail.Mobile applications are being used morerequently by consumers to buy itemson-the-go. Fashion retailers like CountryRoad have a specic mobile applicationthat has been developed to not only showthe latest collections, but also allow thecustomer to be able to select specic itemsin the collection and purchase directly romthe mobile application. Linked in with thesecure payment system and loyalty system,a purchase can be made within a quicktimerame and allows the customer to shopanytime and anywhere.

The use o mobile applications as paymentgateways has also changed the paymentslandscape. Git cards have been convertedinto a usable ormat that can be accessedthrough mobile apps as either QR codesor barcodes, or unique number identiersthat can be used at the point o sale. Morerecently, the innovative Google wallet is

currently being oered as an alternative toPayPal in the US. The innovative eature othe Google Wallet mobile app is its abilityto securely store credit cards and collatestore coupons and loyalty inormation on themobile. The customer then uses the mobileas a wallet when in a traditional bricks andmortar shop by simply tapping the phone atthe point o sale. This marks the beginningo a rat o innovative new mobile paymentsolutions or the industry.

Loyalty and rewardsThe increasing prevalence o loyalty systemsin Australia ollows the lead overseas, whereloyalty and rewards have had a big impact onthe success o retail strategies. The use osophisticated business intelligence and datamining tools with loyalty inormation andschemes provides retailers with a signicantadvantage in being able to develop specicand targeted marketing as well developand implement digital strategies directedtowards the end customer. KPMGs reportinto the increasing use o loyalty marketingdemonstrates the wide application o loyaltyschemes and systems, and the increasingimportance o being able to build andmaintain the digital relationship with thecustomer.

The many applications o innovativetechnologies relating to loyalty arehighlighted in the report, which details thesuccess o overseas retailers in using loyaltysystems to build customer relationships.In recent years, loyalty programs in theAustralian retail industry have increasedmarkedly and at speed, as more and moreconsumers show their willingness to builda relationship with retailers. Coles was oneo the rst in 1994, when they implementedtheir Fly Buys program.

A all in the programs popularity orcedWesarmers to review the program andthey have invested signicant amountsin renewing both the program and thetechnological solutions that support it.Meanwhile Myers loyalty scheme, MyerOne,involved not only the marketing anddistribution o loyalty cards, but involved asignicant investment in the POS system,including the development o bespokesolutions to link the POS and loyalty systemto allow the use o Business intelligencetools and data mining tools or targetedmarketing.

RETAIL (CONT.)


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CASE STUDY: COCA-COLA AMATIL GOES OMNI-CHANNEL IN AUSTRALIACoca-Cola is one o the best-knownbrands in the world and here in Australia,Coca-Cola Amatil (CCA) is licensed tomanuacture and distribute Coca-Colaproducts. Terry Davis has been GroupManaging Director o CCA since 2001. Inthat time, hes presided over a dramaticchange in the CCA business overseeingits transormation rom an old school,carbonated beverages business to adiversied, premium beverage businesswith a product range that now includescoee, water, juice, tea and alcohol, aswell as traditional Coca-Cola carbonatedproducts. The results have beenimpressive, with the return on undsemployed increasing rom 7.6% to 24%and returns to shareholders running atalmost double the rate o the ASX 100.CCA and Telstra are long-term partners indeed, CCA signed an exclusivepartnership agreement with Telstra in 2009 and, in 2011, Telstra was CCAsIT supplier o the year.

Terry Davis attributes part o CCAs successto keeping abreast o consumer trendsand keeping their marketing relevant to

the changing world: Weve spent a loto time understanding our consumer,understanding how music has changed inparticular, how ood styles have changedin each o our marketsAnd, o course, youhave to use technology somewhere in thatprocess to understand what consumersare actually doing. Generational relevanceis critical or any consumer brand.

You dont want to get to the stage wherea customer says Well, I dont drink thatbecause my dad does.

CCA saw an opportunity to communicatemore eectively with their customers andto drive brand preerence by combining thetwo key acilitators o an Omni-channelexperience Digital media and Wi-Fihot spots with the key Omni-channelshopping companion, the Smartphone.Telstra partnered with CCA to develop thesolution.

Today, CCA uses digital screens in pubsand clubs to display advertising or theirproducts, with rich content delivered toindividual screens via the internet. Thismeans that the content

Cross Industry Innovation, The Secret May Well Be in Another Industry

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