Industry

Industry: demonstrates business digital confidence and builds digital skills

Industry can contribute to Australia's digital economy by growing their online presence and e–commerce facility. Industry can also provide relevant input on its skills requirements and promote the development of digital skills to ensure high levels of professional expertise exists in Australia to support local digital economy companies and attract foreign investment.

Digital confidence

A high level of confidence among businesses in having an online presence and conducting commercial activities via networks such as the internet is another important part of growing Australia's digital economy. Digitally confident businesses will be more efficient. A greater online presence from Australian companies will also encourage more online participation by Australian consumers attracted by better online offerings.

Crucially, if Australian businesses do not build an online capacity they risk losing their existing customer base or missing the opportunity to access new markets. New companies, including those located overseas, are competing for the Australian customer base. As the Australian Industry Group noted, by failing to provide an ability to sell online, traditional retailers were disenfranchising Australian consumers, particularly those in remote areas.⁴⁶

Lack of customer demand or readiness is not identified by Australian businesses as a barrier to the development of a fully fledged e–commerce or online marketing strategy. Instead, businesses cite as barriers to e–commerce concerns about people hacking into the system and the cost and time to introduce a new technology.⁴⁷ Both of these reasons suggest a lack of confidence about security and a lack of appreciation of the benefits, which in many cases may outweigh the costs of adopting greater online presence.

One recent initiative is the Tourism e–kit developed by the Australian Tourism Data Warehouse, a joint initiative of the Government Tourism Organisations from all Australian States and Territories and Tourism Australia.⁴⁸ The kit provides practical advice to businesses in the tourism industry about how to utilise the benefits of the digital economy. Within 14 days of its launch, there were more than 10 000 downloads of the entire program and thousands of downloads of the single tutorials.⁴⁹ This demonstrates that easy–to–understand, short modules highlighting e–business skills may be extremely useful to industry. Industry associations, with their sophisticated understanding of the characteristics and needs of their membership base, are particularly well placed to provide this assistance.

The Government can also assist Australian businesses to identify how to incorporate technology more effectively into their processes. The Australian Government has dedicated $251 million over five years for the Enterprise Connect initiative, which provides business advisory services to SMEs to help increase their productivity, including advice and assistance to create or improve their level of e–business.

To further promote the benefits of the digital economy, the Australian Government announced the Small Business Online Program⁵⁰ in the 2009–2010 Budget through which SMEs can take advantage of e–business opportunities and to expand their online presence.

Digital skills

Equipping Australia with the necessary knowledge and skills base to maximise the benefits of the digital economy also requires a focus on the availability of specialised ICT skills. Ensuring that local and international companies have access to a pool of highly trained ICT professionals is important for our economy. It promotes research and development, generates revenue for Australia and attracts international investment and knowledge transfer.

The Australian Government has various programs designed to allow industry to provide input on its skill requirements so that Australian graduates are suitably trained for the digital economy. Industry can provide input through the Government's Productivity Places Program (PPP), which provides for new training places in skills that employers want.

Industry can also contribute to priority–setting and curriculum development for vocational ICT courses by advising Innovation and Business Skills Australia (IBSA) of their needs.

Industry also has a role to play in providing on–the–job training through corporate training programs and work experience and internship placements. Within Australia, industry also undertakes various initiatives to promote the attractiveness of ICT studies and to encourage the development of ICT training and education. For example, various industry and educational groups participate in the National ICT Careers Week,⁵¹ which promotes the career opportunities available to ICT graduates under the banner Start Here, Go Anywhere.

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Industry: adopts smarter use of technology to improve our environmental sustainability

The deployment of smart technology can enable more efficient use of our resources, systems and infrastructure in areas such as electricity, transport, health, water irrigation systems and high speed broadband infrastructure.

The Australian Government has several initiatives designed to pilot and promote smarter use of technology to manage our environment and infrastructure. It is anticipated that successful demonstration of these technologies will result in significant flow–on innovation and technology uptake across Australia.

Smart technology

One example of smart technology is smart meters, a more advanced meter than the standard mechanical meter, that identifies consumption in more detail than a conventional meter. Smart meters communicate consumption information via a network back to the local utility for monitoring and billing purposes. They can be used to measure household gas, water and electricity and may allow continuous measurement, time–of–day pricing information.

Widespread deployment of smart meters has the potential to significantly reduce the amount of energy used by Australian households.⁵² In addition, studies show that visibility into energy consumption assists in reducing greenhouse gas emissions.⁵³

To demonstrate the ability of technology to utilise our existing energy infrastructure smarter, the Australian Government will invest $100 million in 2009–10, as the National Energy Efficiency Initiative (Smart Grid, Smart City⁵⁴). Through this initiative, an integrated, commercial scale, smart grid will be constructed in one Australian city, town or region. This smart grid will see the electricity transmission and distribution network equipped with digital sensors and remote controls; with integration of renewable energy sources such as solar and wind and smart meters communicating information to and from the household. Such a self–aware energy network will enable greater energy efficiency, reduced emissions and better use of renewable energy sources such as solar power.

Intelligence can also be built into our physical infrastructure. 'Smart infrastructure' is capable of ongoing monitoring so that changes in physical structure or their environment are identified before a crisis occurs. As Infrastructure Australia notes in its recent Report to the Council of Australian Governments, making the most of existing infrastructure can avoid many of the negative environmental and amenity costs associated with building new infrastructure. In particular, 'technology can provide opportunities to unlock capacity in existing assets'.⁵⁵ In Minnesota, US, for example, the St. Arthur Falls Bridge, which collapsed in 2007, has been rebuilt with sensors and other technology that constantly monitor the concrete for any weakness or structural damage.⁵⁶

Teleworking and video-conferencing

Advanced communications technologies, including videoconferencing, allow people to communicate as effectively and efficiently as face–to–face communications. These technologies make it unnecessary to commute to the office everyday, drive or fly for a face–to–face meeting.

One of the primary benefits of teleworking is that it enables greater workforce flexibility. It allows employers to attract and retain skilled people who may live in another city or people who are unable to be at a central work location due to family responsibilities or a disability. However, teleworking also offers environmental benefits. By decreasing the need to commute, it can reduce greenhouse gas emissions.

Similarly, video conferencing can remove the need to travel for face–to–face meetings, and increase productivity by saved travel time. The Australian division of Cisco claims that it achieved a 16 per cent reduction in air travel in a single year after it adopted videoconferencing and other telepresence facilities.⁵⁷ In 2008 Microsoft Australia saved $18 000 on a single quarterly management meeting of 130 people using its videoconferencing products Live Meeting and Roundtable.⁵⁸ In addition, in February 2009 the Australian Government announced that TelePresence technology⁵⁹ would be deployed across 20 Australian Government and state government locations for use in inter– government meetings such as the Council of Australian Governments and Ministerial Councils. The purpose of this deployment is to reduce costs and greenhouse emissions.

While many aspects of this technology have existed for a while, it appears that knowledge and organisational attitudes may stand in the way of their more widespread adoption. A report by the Economist Intelligence Unit, based on a global survey of 345 private sector senior executives, noted slow adoption of telework despite the availability of the required technologies to achieve it.⁶⁰ In addition, the Sensis Insights Teleworking Report June 2007⁶¹ surveyed the use of teleworking in SMEs in Australia and found that while 22 per cent reported the use of teleworking, they cited technical, administrative and supervisory issues as presenting barriers to greater adoption of telework.

Awareness raising may assist in addressing organisational and behavioural issues. The guidelines for implementing telework policies on the Telework Australia website⁶² may be useful for industry to overcome current barriers to greater adoption of teleworking.

Minimising the environmental impact of ICT

While technology can facilitate more environmentally sustainable ways of doing business, it also raises new challenges. One report estimates that the ICT sector is responsible for about two per cent of global greenhouse gas emissions.⁶³ ICT devices also comprise an increasingly large proportion of the world's waste. These impacts need to be addressed by coordinated strategies that minimise the potentially adverse environmental consequences of the success of the digital economy.

Steps need to be taken to reduce the impact of data centres, which are part of the key infrastructure that enables the digital economy. Data centres are energy–intensive and savings are possible both in the power used to run the computer equipment and the equipment used to keep the data centre cool. Already various industry participants are incorporating techniques to run data centres on a more energy–efficient basis.⁶⁴

E–waste (consumer electrical and electronic equipment waste) is also a growing problem. Product stewardship can assist in minimising e–waste. Product stewardship recognises that manufacturers, importers, governments and consumers have a shared responsibility for the environmental impacts of a product throughout its full life cycle.

In November 2008, Australian governments, through the Environment Protection and Heritage Council (EPHC), agreed to develop a new National Waste Policy for Australia to 2020. This policy, which will be finalised by November 2009, will provide a framework of guiding principles and relevant strategies, such as a national product stewardship framework. To assist discussions, the Australian Government released a National Waste Consultation paper in April 2009,⁶⁵ which includes consideration of the issues of product stewardship and e-waste.

There are some industry–led schemes that promote the recycling of e–waste. For example, the Australian mobile industry runs the MobileMuster scheme which offers free recycling for all mobile phone brands in Australia. The industry claims that more than 90 per cent of the materials in mobile phones, batteries, accessories and chargers can be recovered and the small amount of potentially harmful substances safely treated. For 2007–08, the scheme collected an estimated 755 196 handsets and batteries.⁶⁶

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Industry: develops sustainable online content models

Online content serves an important role in the digital economy in several respects. As the OECD notes:

'digital content can provide new impetus for the digital economy, encouraging innovation, raising the level of skills, triggering dynamic developments and innovations in existing industries and creating new markets.'⁶⁷

While content is a key driver of digital economy growth, technology has a disruptive effect on the entertainment and media industries. The array of entertainment options available is fragmenting the market and the trend to digital teaches viewers new habits. These challenges are being felt by the content industry globally and in Australia. This is reflected in comments made during Disney Corporations' first earnings call for 2009 when Chief Executive Officer Robert Iger announced the company's first–quarter profits fell 32 per cent on lower DVD sales and a drop in advertising at its broadcast and cable properties. He noted:

'Competition for people's time is increasing…[t]his clearly has had an impact on broadcast television and may have a long– term potential impact on the DVD business. We don't believe the changes we are seeing in consumer behavior can all be attributed to a weak economy, and we feel it is important for us to address them as more than just cyclical issues.'⁶⁸

This trend towards digital is also reflected in recent figures released by the Australian Recording Industry Association which shows that in 2008, while physical sales were down 12 per cent, digital album sales were up nearly 100 per cent in dollar value and 261 per cent in unit terms over the year.⁶⁹

The digitisation trend is changing customer habits and expectations. Increasingly, they expect an on demand experience, that is, the ability to enjoy what they want, when they want, on the device they want. This has been facilitated by digital video recorders and music and video sites that offer on–demand content for streaming or downloading.

Another disruptive impact from the digitisation of media has been on business models and revenues. Online revenue sources are increasingly contributing to the content industries bottom line. However, as Jeff Zucker of NBC Universal has commented, sustainable, long–term business models may not be possible if analog dollars are replaced by digital pennies.⁷⁰ This reflects concern that the current rates of return for online content are not matching offline figures.

The development of new and successful business models for the online environment is primarily an industry responsibility. Internationally, new models are emerging including, movie studio Warner Bros' shrinking the release windows between DVD and online versions of its movies,⁷¹ the development of the streaming video site Hulu⁷² and the hybrid model adopted by Nine Inch Nails with their album Ghosts.⁷³

There are several examples of Australian online content providers competing in this difficult environment. Examples are, the music and video downloads from Apple iTunes store and BigPond Music and BigPond Movies as well as the music discovery site bandit.fm.

The popularity of the online content offerings of the Australian Broadcasting Corporation (ABC) and Special Broadcasting Service (SBS) provides further examples of successful forays by Australian organisations into digital content. In 2008, the ABC had 49 million audio podcasts downloaded, another 18 million video podcasts were downloaded and an average of 2.3 million users a month visited its websites.⁷⁴ Similarly, from the SBS website 887 000 radio and television programs were downloaded in 2007–08 and an average of 598 000 unique users per month visited the SBS websites.

The Government's significant investment in building Australia's world–class digital infrastructure, such as the National Broadband Network, provides a critical platform to enable Australian content companies to complete in this online world.

In addition, the Australian Government's Creative Industries Innovation Centre provides business advisory services to SMEs in the creative industries sector such as music, visual and performing arts, graphic design, games and interactive media.

Several rightsholder groups in Australia argued that a role for Government exists in addressing the apparent popularity of peer–to–peer file sharing of music and movies, without the necessary permissions of the relevant copyright owners. File–sharing is cited by the content industry as a barrier to further investment in sustainable and innovative content initiatives in Australia. However, some of the solutions proposed by rightsholders to address file-sharing have been criticised as raising issues of due process and consumer rights.

The Australian Government recognises a public policy interest in the resolution of this issue. The Government is currently working with representatives of both copyright owners and the internet industry in an effort to reach an industry–led consensus agreement on an effective solution to this issue.

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Return to Elements of a Successful Digital Economy

[46] Australian Industry Group, Future Directions – Digital Economy Consultation Paper, (Feb 2009) p.15 (last accessed: 25 June 2009).

[47] Sensis, e-Business Report: the Online Experience of Small and Medium Enterprises, p. 30 (June 2008) (last accessed: 25 June 2009).

[48] See www.atdw.com.au/tourism_e_kit.asp

[49] Stan Beer, 'Government funded e-marketing kit hits 10,000 downloads in days, iTWire 21 October 2008 (last accessed: 25 June 2009).

[50] The Hon Dr Craig Emerson MP, 'Budget Boosts Small Business Incentives and Support by More Than $500 million' Media Release 12 May 2009 (last accessed: 25 June 2009).

[51] See www.acs.org.au/ictcareersweek/

[52] Department Resources, Energy and Tourism, 'Smart Meter Decision Paper MCE' 13 June 2008, (last accessed: 25 June 2009).

[53] M. Dennis & H. Jones, 'Broadband Communication Enables Sustainable Energy Services', Telecommunications Journal of Australia, vol 57, no. 2/3, 2007, 25.1, at 25.7.

[54] A Sustainable Nation, p.10

[55] Infrastructure Australia, A Report to the Council of Australian Governments, December 2008, p 29-31 (last accessed April 30, 2009).

[56] Steve Hamm, 'The Bridge to Smart Technology,' BusinessWeek Feb. 19, 2009 (last accessed June 22, 2009).

[57] Climate Risk, Towards a High-Bandwidth, Low Carbon Future, (2007) p 46 (last accessed: 25 June 2009).

[58] Microsoft IT Showcase, 'Microsoft Uses Roundtable to Improve Productivity, Lower Costs and Reduce Carbon Footprint', October 2008 (last accessed: 25 June 2009).

[59] The Hon Lindsay Tanner MP, 'Australian government signs teleconferencing deal with Cisco and Telstra', Media Release, 27 February 2009 (last accessed: 25 June 2009).

[60] Economist Intelligence Unit, Managing the company's carbon footprint (February 2008).

[61] Sensis, The Sensis Business Index: Teleworking, (July 2007) (last accessed: 15 April 2009).

[62] Case studies and other information about teleworking are available at Telework Australia and Department of Innovation, Industry, Science and Research website, viewed 15 April 2009

[63] Gartner, 'Green IT: The New Industry Shockwave', presentation at ITXPO Conference, April 2007.

[64] See, for example, Google Data Centres and MacDataCentre

[65] See www.environment.gov.au/wastepolicy/index.html

[66] See www.mobilemuster.com.au/annual_collection_figures

[67] Organisation for Economic Co-operation and Development, Digital Broadband Content 19 May 2006, p 6 (last accessed: 25 June 2009).

[68] R. Scott Raynovich, 'Disney Dinged by Flight from DVDs, Economy' Contentinople, February 4, 2009 (last accessed: February 25, 2009).

[69] Australian Recording Industry Association, 'ARIA releases 2008 wholesale sales figures', 11 March 2009.

[70] Michael Learmouth, 'Zucker Says Apple Deal Rotten', Variety, 27 October 2007 (last accessed: 25 June 2009).

[71] Saul Hansell, 'Warner Brothers to Rent Movies Online Sooner' New York Times 30 April 2008 (last accessed: 25 June 2009).

[72] See www.hulu.com/

[73] Michael Masnick, 'Serving Your Fans: The Trent Raznor Case Study', (February 2009) (last accessed: 25 June 2009).

[74] Paul MyIntyre, Media Held Back by Download Limits, Sydney Morning Herald, 19 February 2009, (last accessed: 25 June 2009).