Australia’s Nobel Laureates Vol III State of Our Innovation Nation: 2022 and Beyond Navigating the ongoing and emergent challenges of energy and water Special Report: Transforming Utilities Brought to you by Information Professionals Group and One Mandate Group
Utilities create the conditions for a sustainable and successful society. However, with many in regulated markets and with rapidly changing customer and stakeholder expectations, digital technology both adds to those expectations and creates opportunities to match them. This selection of articles aims to support Utilities leaders in how to navigate those risks and opportunities. I have selected these articles from the Nobel Laureates e-book, plus written one specifically for utilities and ex clusive to this magazine. I hope you get immense value, insights and inspiration from them.
Mark is at the forefront of digital technology transformation, known for his ability to engage people at every level, and honing in on client priorities to find the right formula for organisations to grow their way. He is a passionate advocate for the benefits that effective digital technology brings to industry, community, and the country, and has seen first-hand the challenges around digital technology that organisations face today.
Page 9 - Cooperation key to Australia’s digital transformation
How well positioned are Utilities after the last few years of rapid change? Are there lessons, has there been a strong legacy created, or are there some hangovers that will require addressing due to the speed with which some change happened? This articles unpacks that question for Utilities.
Written by Australia’s Nobel Laureates Volume III, they introduce the benefits of finding common ground between parties so that greater value can be untapped and more digital investment justified.
Page 7 - AI Reshaping Industry
Page 10 - Revolutionising River Management
Mark Nicholls, CEO, Information Professionals Group.
The Murray Darling basin management can be an area of passionate opinions. It appeals in this case because it is an example of bringing together governance, including multi-jurisdiction agreements, with data, IoT sensors and digital technology to bring about better outcomes, with technology a key enabler to the innovation. IPG has also had involvement at Commonwealth, state and with utilities in supporting these outcomes.
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INTRODUCTIONCONTENTS
How did digital adoption manage to accelerate so significantly through the pandemic? I look back at the dy namics of what happened to create the conditions for this to be achieved, and whether there is some common traits that allow for these to be repeated, by all organisations, with these phenomenon particularly noticeable in smaller and regional organisations.
Mark’s passion is contributed through IPG and its clients and his active role across industry and government with the AIIA, the peak industry asso ciation for the digital economy, where he serves as National Deputy Chair.
https://www.linkedin.com/in/markdnicholls
Page 5 - Digital Services Post Pandemic: The Utilities Perspective
Artificial Intelligence is the much talked about next major area of digital investment and digital innovation in government, industry and utilities. This article by Data61's Jon Whittle, provides some excellent use cases for AI, and while it doesn’t cover ethics which is a whole subject in itself, it does provide some excellent glimpses of the promise that AI brings.
Page 3 - Digital Services – A new level asked from regional providers
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DIGITAL SERVICES - A NEW LEVEL ASKED FROM REGIONAL PROVIDERS By NichollsMark
In my experience in the ICT industry, I have wit nessed many significant changes surrounding mainstream adoption of technologies and have become familiar with the various factors that play a role in the speed of technology adoption, hav ing been engaged in technology adoption for over 3 decades.Around 9 years ago, I published a series of arti cles and delivered several presentations on the topic “The Pressure for Change”. In these talks, I set out to describe the tension created among three par ties, namely digital innovators trying to gain trac tion for new products and services, the communi ty’s ability to change and adopt these innovations and become customers, and government’s abil ity to either de-regulate or regulate to support the change that innovation brings. My proposition was that government is generally the slower of these three, and so those innovations that rely on regulatory change will gain traction late. Next slowest was the community. People need a compelling argument to change their habits, and many innovations simply don’t stack up. Those that did stack up initially, were those where the product or service could be digitalised readily, creating convenience and improved utility for customers. Thus, banking, entertainment (TV/ movies/music), information and knowledge (news papers, magazines, books and directories) were all “first movers”, as governments had a minimal role to play here and therefore weren’t slowing the pro cess by “getting in the way” (or failing to “get out of theOtherway”).innovations were either digitalising aspects of existing physical services, or creating new phys ical services with the help of various digital solu tions. This included ride-sharing services like Uber; food and grocery delivery services; and a number of other improvements when it came to researching and buying products and services, even if the final sale and delivery was done in a non-digital way. In fact, house, car, and many other types of purchases are now performed partly online and partly offline, with some providers having moved (or moving into) fully digital sales models. Some of these generated more interest from Government than others, especially where they conflicted with existing regulation. Ride-sharing is the most notable example here. To their credit, Uber (and others) adopted a “crash or crash through” approach to that problem. It is unlikely they ever would have gained sufficient patience from their New community expectations have all organisations trying to keep up with digital transformation.
Sharing technology platforms, digital skills, and inter nal technology capabilities all offer accelerators for regional providers. Cloud technologies offer capabilities that support this. Commonwealth and state governments have been quietly adopting various forms of shared tech nology provision for some years now. This lowers the cost of digital service delivery, allowing scarce funds to be redirected into improving services. That investment in improvements also goes further with shared use of the same capability. While traditional “shared services” delivered some unfulfilled promises over a decade ago, the new shared models supported by new technologies are now gener ating many benefits for the clusters, consortiums, and alliances that adopt them.
Mark Nicholls is a partner and CEO of Information Professionals Group (IPG), as well as National Deputy Chair of the Australian Information Industry Association.
Our building body of case studies are increasingly reflective of the quiet promise that is delivering results across Australia.
4 Australia’s Nobel Laureates VOL IIIWebsite EmailInformation Professionals Group4 investors and achieved success if they waited for every government to go about due consideration and change. They created a problem and forced governments to address it. It worked, but was not without damage. A number of legacy license holders were big losers and various governments, even today, are still taking rear guardHowaction.hasthe pandemic affected this dynamic? Firstly, community priorities have changed. The general pub lic needed better ways of going about their lives due to enforced lockdowns or self-imposed restrictions on movement. Industry (and Government) service provid ers needed new ways of delivering services to custom ers, citizens, staff and students. And Government, in their regulatory role, wanted to facilitate many of these as it helped to minimise the impact of restrictions on phys ical movement by supporting as much economic and community activity as possible.
As a result, the interests of all parties aligned, and we gained massive acceleration in digital adoption across so many sectors. Many of the technologies adopted have been around for many years, even decades, so it was not a question of whether these were new, but whether they were being newly adopted. These technologies created the ena blers, the pre-existing capability that could be scaled. This included cloud technologies - allowing services and systems to be accessible anywhere and scaled immediately – as well as video conferencing, which was already gaining wider adoption with Zoom making the services provided by Cisco and others more accessible. Microsoft was already well advanced on its Teams solu tions, although they did accelerate their development through the pandemic, as did many technology provid ers. Even QR codes, first used by millions through the pandemic, have been around for over 25 years - it was defined as an ISO (International Standards Organisation) standard 22 years ago. As we move slowly (hopefully) out of the COVID-19 pandemic and into an endemic phase, what have we learned in digital innovation adoption and where are the opportunities today/tomorrow?
What is the solution to all this unfulfilled digital trans formation ambition?
In many cases, community expectations for digital ser vices are moving faster than some organisations can pro vide. Those organisations most challenged are smaller organisations, those that operate in regulated environ ments with restrictions on revenue growth, and this also tends to be regulated service providers in the non-met ropolitan regions of Australia. This may include local gov ernment, utilities, healthcare, community, and aged care providers. Furthermore, skills are a big challenge generally, and in regional areas this is an even bigger issue.
If we align the interests of regional service providers, how can they better collaborate, and potentially create economies of scale to digitise more quickly? And with their customers geographically distributed more than most, they have an even more compelling argument to provide digitised services.
One answer lies in the lesson of the pandemic. As stated above, “the interests of all parties aligned and we gained massive acceleration in digital adoption across so many sectors.”
5Australia’s Nobel Laureates VOL III State of our Innovation Nation: 2022 and Beyond B uilding further on the article series inspired from that published in Australia’s Nobel Laureates Volume III, where we highlighted the amazing speed of technology adoption through the pandemic and then considered the sectors that we work with at IPG. The broad view was very positive on how technology, community and government interests aligned to accelerate technology adoption and create many benefits. As we consider those sectors we work with at IPG, in Government, Local Government, Utilities, Health and Community Services and Growing Companies, this article unpacks the Utilities sector. The phenomenon put forward previously and well unpacked by Scott Galloway1, Professor, NYU Stern School of Business, is also very true of Local Government. The pandemic accelerated pre-ex isting trends, underway prior to the pandemic. The pandemic accelerated digital technology adoption. But it was not all equal, and the experience across Utilities is a case in point.
1 Author
DIGITAL SERVICES POST PANDEMIC: THE UTILITIES PERSPECTIVE
By NichollsMark of Post Corona: From Crisis to Opportunity (2020).
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• Field operations and works management
The 2022 inflationary and supply chain impacts are also pressuring regulated provid ers in their price constrained world, and all pro viders to vary degrees, even if some can pass on costs to customers. This in turn is creating significant market volatility. Those providers setup with contemporary enterprise technol ogy platforms, and the capabilities to enhance those platforms are best equipped to deal with these challenges. This is consistent with all otherThosesectors.utilities that are more advanced and able to deal with these challenges are doing this via some combination of:
7. Workflow and automation, that help end to end processing across the organisation and limit the manual steps necessary to progress work, plus use of AI and Machine Learning to augment existing analysis and decision making. Each of these have the potential for savings in costs, increase speed of execution, may lift customer satisfaction, and reduce risks.
As capabilities develop, new business mod els, including circular economy models cannot just be talked about but also implemented and potentially monetised.
Central to this, is establishing the digital platforms to support the organisation working effectively with itself, and building the capabilities to take advantage of what your digital platforms can then do.
Consistent with all sectors, existing trends have accelerated for Utilities. Remote working for staff and increased access to digital services by customers are two areas impacting on utili ties. As we emerge from the pandemic and the economy gains pace, increased demands for energy and water follow, in an environment where even more requirements are being asked to meet sustainability expectations.
2. Integrated asset management and mainte nance that integrates asset performance, finance, supply chain, inventory, and pro curement perspectives.
4. Customer Service systems that support dig itised service delivery, pro-active customer communication and self-service.
Utilities are generally adopting the following min imal set of platforms such as:
6. Data management and Business Intelligence to leverage from the volumes of data that can be available.
1. More integrated information technology and operational technology, that supports the ability to view integrated whole-of-or ganisation performance.
Utilities create the conditions for a sustaina ble and successful society. However, with many in regulated markets and with rapidly changing customer and stakeholder expectations, digital technology both adds to those expectations and creates opportunities to match them.
3. Use of IoT and sensors to provide the data to optimise operations and asset management.
5. Field operations systems which empower and support remote workers and provide in-time two-way data feeds.
• Billing and customer service platform
To achieve these, it will require building the cul ture and capability as well as the digital technology platforms to support Utility objectives.
Other needs that could form separate platforms, or could be integrated into the above platforms include:
To achieve these outcomes, it requires assets and operations teams to work with finance teams, and dig ital technology teams and others to participate in the decisions that generate these whole-of-organisation outcomes and benefits.
• User collaboration platform
• Laboratory management and smart metering
We would welcome your views and input on all aspects of this article, so please get in touch to share your views. For more on getting the building blocks of innovation delivery in place, see this article, by IPG CEO, Mark Nicholls
• Asset management, finance, and supply chain platform
• HR, payroll, workforce planning, learning and development, safety • BI and analytics • GIS and Spatial data, integrated into one or more of the above platforms
If you have multiple unintegrated applications within any of the above groups, or major parts of these areas without adequate systems support, then this is the first priority to address.
From systems embedded into smartphones to detect skin cancer, to autonomous cars with driver fatigue detection and pedestrian avoidance systems, artificial intelligence (AI) is rapidly transforming the world we know.
A I uses data-driven algorithms to autonomously solve problems and perform tasks without human guid ance, enabling productivity gains for almost every industry. In fact, the adoption of AI is estimated to be worth $15.7 trillion to the global economy by 2030, presenting signifi cant opportunities for Australia, enabling us to perform tasks faster, safer and cheaper. However, as the technology leverages data to create algorithms, ultimately, it can only be as good as the data. While the algorithms that underpin the technology have been around for decades, exponentially growing volumes of data, as well as cheap and readily available comput ing infrastructure, now mean it can operate at scale and speed like never before, creating a host of applications across multiple sectors.
AI INDUSTRYRESHAPING
By Jon Whittle, Director, CSIRO’s Data61
7Australia’s Nobel Laureates VOL III State of our Innovation Nation: 2022 and Beyond
Take healthcare - research has shown that artificial intelligence can reduce costs, improve wellbeing and make quality care accessible for all Australians. It has also become a key part of everyday food security and quality, energy resources, future indus tries, transport and infrastructure, playing a key role in transforming economies, unlocking new social and environmental value as well as accelerating scientific discovery. In 2019, the Australian government released its Artificial Intelligence Technology Roadmap, which was developed in partnership with CSIRO’s Data61 to identify strategies to help develop a national AI capability to boost the productivity of Australian industry, create jobs and improve the quality of life for current and future generations. Looking at the use of this technology within key Australian industries, it’s clear that some have been more enthusi astic adopters than others. In 2019, the introduction of a new global accounting standard IFRS16 required report ing of all leases, affecting $US3 trillion of assets. Legal and accounting firms worldwide were challenged by this new requirement to change their practices to lease abstraction, a time-consuming, error-prone task that man ually extracts key information from a lease contract for reporting. Through a CSIRO KickStart project, natural language processing approaches, based on machine learning, were used to enable software to learn from large datasets of leases, find the patterns in the contextualised text data and code the data for use downstream. This resulted in the development of Accurait, a world-first automated solution for accurately extracting, storing and classifying information from com mercial leases and exporting it to other man agement systems, including account books.
Kakadu Park Rangers Serena McCartney (left) and Annie Taylor (right) use Artificial Intelligence to manage environmental threats.
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This technology has since been trialed and demonstrated on more than two million doc uments, driving productivity through higher rates of error detection, faster turnaround times and lower labour costs. Adoption of artificial intelligence is not just limited to industry. We’re also seeing it have a significant impact on our envi ronment and the natural world, specifi cally Australia’s National Parks. In Kakadu National Park, concerns were raised when para grass, an invasive weed, began chok ing precious wetlands. The impact of this was vast. It began displacing native plants and reducing the habitat of magpie geese, a dwindling population considered to be a key indicator of ‘healthy country’ by tra ditional owners. Park rangers were strug gling to monitor and manage the weed and had limited resources. In a bid to protect the natural habitat, researchers at CSIRO designed an AI tool, which, paired with Indigenous Knowledge, improved man agement of the area, resulting in the mag pie geese population increasing from 50 to 1,800 birds — a 3,500 per cent increase. Such examples of artificial intelligence serve as a reminder of the good this tech nology can do — creating value that didn’t previously exist and profound benefits to the economy, society and environment. While this technology does indeed have the potential to drastically reshape indus tries, social and economic structures, the focus should be on creating real value. If we lay the right foundations, AI has the poten tial to boost productivity, grow the econ omy, generate jobs and create entirely new industries.
COOPERATION KEY TO AUSTRALIA’S TRANSFORMATIONDIGITAL
A pandemic has required Australian industry and governments to work in concert like never before, with better community outcomes. While the coronavirus may not be as “novel” as it once was, the remarkable advancements in applied digital innovation during the pandemic are. Several technologies and processes, for example, QR codes, online shopping, at home video conferencing and eLearning, have become part and parcel in the daily lives of so many Australians. Time travel back to 2019 and anyone invested in digi tal transformation, whether in the private or public sector, would have suggested that these examples were margin ally useful additions to the lives of Australians, and perhaps some years away from becoming mainstream.
As we manoeuvre out of this pandemic (albeit there may still be a way to go), the best legacy seems to be the contin ued collaboration for the greater public good. This working together in harmony is vital when considering the number of other significant challenges Australia is facing (not lim ited to climate change and growing external geo-political threats as two examples) that require the country’s best and brightest minds to work together.
While we hope it is a long time before the next crisis of pandemic proportions, we know that this spirit of collab oration can undoubtedly go a long way to tackling other complex challenges. It is in this vein that we should col laborate: understand the strengths and constraints of each other and, in concert, devise and implement solutions accordingly – for the betterment of the country and for the life of each citizen.
The Federal Government is also moving quickly and has set its plan to be one of the top three digital governments in the world by 2025. Meanwhile, industry is getting on with the job of continually improving and refining their digital capa bilities for their clients, their staff and other stakeholders.
9Australia’s Nobel Laureates VOL III State of our Innovation Nation: 2022 and Beyond
We have seen the government’s ability to pool and direct resources, industry’s ability to deliver at scale and quite often at pace, and lastly, we see the community’s ability to adapt and adopt, if there is a sufficient reason for them to do so. When combined, these newly adopted technologies illustrate how governments, industry and the commu nity can work together to innovate, adapt, adopt and ultimately make everyone's lives better by solving com mon challenges. It has been good to see what can hap pen when these three forces collaborate to the extent we haveNewexperienced.SouthWales, Victoria and ACT governments vie for being the leading jurisdiction in the country when it comes to digitising everyday interactions between citizens and their government. This is according to the recent history of Telstra’s Digital Inclusion Index, Cisco’s Digital Readiness Index and Intermedium’s digital government report card.
For more than 20 years, Information Professionals Group has supported growing companies, councils, government, utilities and health and community organisations, to nav igate the complexities and sensitivities associated with implementing change in challenging environments. The company’s leadership has always informed its work by asking “How does the customer benefit?”
The key innovation steps in addressing the simultaneous issues of ecological decline, increas ing competition for scarce water resources and emerging climate change were: capping consump tive water use (1995) and later setting a basin-wide Sustainable Diversion Limit (SDL) (2012); establish ing a water market to facilitate water trading (1990s on); designing a Basin Plan for integrated water management, including environmental water ing (2012); reduction of consumptive water enti tlements (2012); and implementation of sub-ba sin water resource plans (2019 on). As an aside, Australia has been successful in managing river salinisation through building 18 salt interception schemes.Thecentral plank to this major river basin inno vation was building a ‘cap and trade’ system that is unique globally. The 1995 cap to surface water diversions was a critical first step to preventing further over-allocation. Setting up a water market then allowed the trading of water among users in the Basin, with the market setting the price of water at any given time. The key objective of the The world sees Australia as a leader in water management, with the iconic Murray-Darling Basin a standout example of its prowess.
Australia is recognised as a leading water-pol icy innovator and sophisticated river-ba sin manager. We are best known for our management of the iconic Murray-Darling Basin (MDB), which covers one seventh of the Australian continent, is home to two million people, is the centre of our irrigation industries and supports over 30,000 wetlands, sixteen declared interna tionally important under the Ramsar Convention. The Basin covers five jurisdictions (four states and one territory), with the Australian Government playing an important role through its responsi bilities defined in the Water Act 2008. Hence, the MDB is also an exemplar in inter-jurisdictional waterOvermanagement.manydecades the ecological health of the MDB declined due to over-allocation of water resources, pollution arising from land conversion for agriculture and urban development, and cli mate change altering rainfall patterns and enhanc ing extreme weather events. The ecological decline has been seen in increasing river salinisation and sedimentation, algal blooms (the world’s long est being recorded in 1991-2), loss of riparian vegetation, including river redgums, declining biodiversity and increased closure of the mouth of the Murray River.
REVOLUTIONISING RIVER MANAGEMENT
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By SchofieldNick
It is fair to say that this Australian innovation in the MDB, using a scientific underpinning and market-based instruments, has not pleased every one. In any major policy adjustment, there will always be winners and losers, and trade-offs have to be made. Some stakeholder groups have felt under-represented. Others point to the relatively small gains made to the environment. Water theft and extreme drought have caused issues.
Implementation through the Murray-Darling Basin Authority, and individual jurisdictions, has, how ever, attempted to balance social, environmental and economic outcomes. As with any innovation, listening, learning and adapting is an ongoing means to future refine ments and improvements.
11Australia’s Nobel Laureates VOL III State of our Innovation Nation: 2022 and Beyond cap was to retain sufficient water in the river for its environmental needs. The key objectives of the market were to facilitate the migration of consumptive water to higher value uses and to build resilience during drought by allowing enti tlement owners to sell precious allocated water into the market for others to use, while retaining an income from selling water. The 1995 cap on surface water use was found in subsequent studies to be insufficient for two reasons: first, the amount left over for environ mental water use was insufficient to maintain a healthy river system; and second, increased groundwater use was being substituted for the loss of access to additional surface water. The next round of innovation sought to address these problems, firstly by scientifically determining how much water is needed to maintain a healthy aquatic environment in the MDB. This led to the concept of quantifying the SDL – the total amount of water that could, over a given period of time, be sustainably extracted for consumptive pur poses. The SDL, when calculated, was below the 1995 Basin Cap, which then required a per manent reduction in water allocations to water entitlement holders to meet the new SDL. The second step was to treat surface and groundwater as one water resource, which in practice meant setting SDLs for both surface water and ground water independently but in a way that could be aggregated. While one overall SDL was set for the Basin, each surface water sub-catchment and each groundwater unit had their individual SDLs scientifically determined. These results were pub lished in the comprehensive Basin Plan in 2012, which required each sub-catchment to develop its own water resource plan that demonstrated adjustments to their local SDLs by 2019. To help irrigators adapt to lower water entitle ments, the Australian Government provided funds to improve the water efficiency of the irrigation sector. This included upgrading systems of deliv ering water to farms, such as lining canals, using piped water where cost-effective and expanding telemetry control systems. There was also fund ing provided to irrigators willing to upgrade their on-farm water application, on the basis that a pro portion of the water savings would be made avail able to the environment, while the remainder of the savings could be used to expand the irrigation enterprise. This irrigation modernisation process has put Australia at the forefront of efficient irri gation practices, which are now being adopted in countries like Vietnam with AWP support. Through this innovation period, Basin water users have modified their behaviours significantly. Driven by water-market dynamics, there has been a significant move to higher value uses of water. For example, the almond industry has grown sub stantially. The water market has also increased resilience in the irrigation industry, with produc tion revenue not falling during severe droughts by nearly as much as would have been the case without a market mechanism, and most irrigators remaining in business despite not always farming. To enable the wise use of releasing more water for the environment, the Australian Government established the Commonwealth Environmental Water Holder (CEWH), which has the responsibil ity of managing the environmental water gained through lowering the cap to the Basin SDL. In practice, the CEWH has created its water holding through purchasing water directly in the water market with government funds, and through the accession of water savings made by irrigators who utilise government funds to improve their on-farm water-use efficiency by deploying more efficient technologies. Through well-organised stakeholder consultation processes, the CEWH delivers environmental water to maximise eco logical outcomes across the Basin.
Nick Schofield is the Chief Executive of the Australian Water Partnership, with over 35 years’ experience in the water and natural resource management sector.
Australia’s Nobel Laureates VOL III
Australia’s Nobel Laureates Vol III
State of Our Innovation Nation 2022 and Beyond
Email: business@informpros.com Website: www.informpros.com
Tel: 1300 738 054 Mark Nicholls Partner and Chief Executive, Information Professionals Group National Board member and Deputy Chair, Australian Information Industry Association T: 1300 738 054 E: mark.nicholls@informpros.com LinkedIn: https://www.linkedin.com/in/markdnicholls/
