Governments don’t have ‘clear consensus’ to act on digital transformation: IDC

Governments don’t have ‘clear consensus’ to act on digital transformation: IDC

It's a 'harder road' for government, says Joe Pucciarelli

IDC's Joe Pucciarelli: Agencies excel at transformation where they don’t have a choice.

IDC's Joe Pucciarelli: Agencies excel at transformation where they don’t have a choice.

Governments are struggling with IT-led transformations because it’s harder to build a clear consensus for action when there’s no profit motive, according to IDC’s US-based group VP & IT executive advisor, Joe Pucciarelli.

“Change is hard for [private sector] companies and it’s particularly hard for governments that have to try and maintain a social consensus,” Pucciarelli told CIO Australia.

“When you have an economic proposition, you have a clear sense of purpose … to make money and stay within a compliance framework. You don’t have that in government, it’s much harder to build a consensus for action. It’s not a slight in terms of performance [of agencies], it’s just a harder road.

“There’s nobody saying, ‘if you don’t deliver this, then this person is going to take over.' That’s the nature of government. But are leaders in government really holding agencies accountable at a level where they are serious as opposed to just having a conversation,” he said.

Pucciarelli also asked if Australian taxpayers want government agencies to be at the ‘bleeding edge’ or would they rather wait until technologies are more mature?

"This is a reasonable question," he said.

He believes that agencies excelling at transformation don’t have a choice; they are undertaking digitisation projects because they have no other alternative.

He contrasted to the digital transformation efforts of governments to those of private sector organisations where making profits through customer acquisition and retention is the primary motive. He said he’s not surprised about the level of digital competitiveness occurring in the global financial services sector where technology is the business.

“The banks in Australia compete with each other but they are also global companies. You turn on the television and see advertisements from Citibank (which is not one of the big five banks here) offering two years of interest-free credit card roll overs.

“If you are a local or regional company and Citibank – which is based in New York – drops in to compete with a very compelling set of terms, you have to react,” he said.

“You would expect digital transformation to occur in those companies with the broadest view of the marketplace that are participating outside of Australia’s economic sphere.”

Going to the next level

Pucciarelli pointed to several examples of global organisations that have already succeeded in creating new digital ecosystems. One of those companies is Norwegian company Norsk Titanium, which now 3D prints around 18 per cent of the titanium frame for the new Boeing 787-9 Dreamliner aircraft.

“Somebody might look at that a say, ‘golly, those poor Norwegians who were forging the titanium don’t have jobs anymore. And the answer is that it has got nothing to do with that.

“The answer is that the supply chain globally for commercial aircraft is sold out until 2020 – they can’t manufacture enough product to meet the needs of airlines. They are doing this as a way to accelerate the production and it’s more efficient,” he said.

More than three years ago, Schneider Electric’s customers weren’t happy when the mean time to repair escalators was 23.5 hours. To cut the time to repair, the company placed IoT devices on the machines to collect data that will predict when the escalator will fail. When a escalator does fail, the company can now predict with a high degree of certainty which part failed, said Pucciarelli.

“Now they dispatch one technician to the site with an expectation of what needs to be fixed and they dispatch a second person with the part,” said Pucciarelli.

But the interesting part of the story is the next step, he said.

“Some bright bulb at Schneider said, ‘you know we are accumulating a staggering amount of data with this instrumentation – and the resolution [on the cameras] is so high, they know exactly how many people go up and down every escalator and elevator.”

Schneider discovered an opportunity to ‘monetise’ the data it was collecting by selling it to their major customers - building facilities management companies that run shopping malls and office buildings.

“These organisations, Schneider's customers, need to adhere to service level agreements (SLAs). Schneider’s elevators and escalators are a wonderful source of data that building management companies can use to prove their SLAs to the companies they are working for managing the facilities.

“Schneider monetised the data that was a byproduct of the instrumentation that improved the mean time to repair. They’ve seen a whole new way to generate revenue and it’s not from hydraulics, or grinding metal or elevator cables. It’s from selling data."

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