Uploading the economy

Glen Paul: G’day, and welcome to CSIROpod, I’m Glen Paul. The internet has transformed the way we do business in the world today, and decision makers in business and Government are now reaching an understanding of the new environment, albeit by the hard way for some. The music industry, the publishing industry, the entertainment industry, the retail sector, and old media, are just some of those who have, or are now having the digital economy impact their business.

With service sectors accounting for about 80% of Australia’s gross domestic product, CSIRO has established a new Flagship that aims to change the way people engage with technology. Joining me on the phone to discuss the new Digital Productivity and Services Flagship is CSIRO’s Doctor Ian Oppermann.

Firstly Ian, you’d better explain what a Flagship is, and where does it sit within CSIRO?

Dr Oppermann: Sure. Absolutely. Flagships are CSIRO’s way of addressing national challenges. We have now 11 Flagships addressing things like manufacturing, minerals, mining, the environment, the oceans, and Australia’s waterways, and when a problem is this big it tends to not be something which will yield to simple domain expertise from maths and stats, or from ICT, or from water(?). So they tend to be very, very large problems which have a long term impact on Australia’s wealth and prosperity, and which really require multidisciplinary skill sets to address them, and that really is one of the strengths of CSIRO, the fact that we can bring to bear people from a wide variety of different domains, and different backgrounds, and different disciplines.

Glen Paul: Right so what is it then you’re trying to achieve with this flagship?

Dr Oppermann: So in this case what we’re looking to do is address primarily productivity in the digital economy. Now, CSIRO as a whole looks at productivity across a number of different domains. We’ve got a focus in mining, in manufacturing, in energy, and agriculture – each one of these different Flagships is looking at how they can drive productivity in those different industry sectors, those different domains.

What we’ve said here is that there are some cross cutting issues which look at some of the newer activities, such as cloud computing, such as cyber security, and trust and privacy. There are a couple of things which cut across those different domains, but there’s also an opportunity to address very substantial sectors of the Australian economy, in particular health, smart infrastructure, the Government services, and commercial services, which would benefit from a substantial focused effort from an innovation perspective, but bringing to bear those same multidisciplinary capability sets, ICT, maths and stats, but also behavioural sciences, e-research, and economic evaluation, to really help lift those particular parts of the Australian economy.

Glen Paul: What’s the main thing then these sectors are doing wrong now in the digital economy?

Dr Oppermann: Look, I think it’s fair to say that they’re not doing anything wrong, but when you look at productivity improvements in the previous decade, and the decade before that, these areas have slowed in terms of the uptake of new technologies, or the way that they’ve been able to improve their total productivity.

In general, when you look at all industries in Australia, and we compare ourselves to the OECD countries, Australia is doing actually quite poorly compared to these countries, and there was a report released last year, the Grattan report on productivity, which showed that not only do we do poorly compared to one of our favourite benchmarks, which is the U.S., and we peaked at around about 80% of the productivity of labour in the U.S., but when we look at the OECD countries we’re in the bottom four OECD countries. It’s not the bottom 25%, we are the bottom four.

So the whole performance of our economy has actually been masked by the fact that we have a boom in the mining sectors, resources sectors, and on aggregate Australia’s doing quite well, but you look at every single other sector, there’s a very substantial opportunity, so we’re doing poorly, which means hopefully there’s an opportunity to improve.

The approach we’ve taken really is that we’ve looked at those sectors of the economy which are big, those which would actually yield to innovation, so where we could actually do something to make a difference, and also those areas where we either have, or could credibly build the capability to address them.

So what they’re doing wrong, it’s really about lifting or increasing productivity, that acceleration of performance, as opposed to doing more of the same.

Glen Paul: And how much dependency will be placed on the National Broadband Network for all this to work?

Dr Oppermann: We’ve assumed that there is ever increasing broadband communications in Australia, so the fundamental aspects about this Flagship is that it really is about the digital economy, and that’s the generation, transmission, and consumption of services, or frontier services. And if you have a continent or a country where everyone is connected, everyone has high enough speed communication, if there’s a high degree of symmetry, and if it’s affordable, so cost itself doesn’t become a major barrier to the use of the services, then we can focus really on what to do with it.

So we assume the infrastructure exists, we assume it gets rolled out, and we’ll build or design frontier services on top of that. So the more broadband that gets rolled out, the more applicable this is to Australia, but of course the working assumption is that if broadband, we can do all of these different sorts of things, and certainly what we do for the benefit of Australia as part of the Flagship, we could also look to export out of Australia.

Glen Paul: OK. So we’re all connected, what do people need to do then if they want to make use of this Flagship?

Dr Oppermann: Well where it touches people’s lives is where we start to actually develop pilots, and we’ve got a number of activities ongoing at the moment. We’re doing a hot start with this Flagship, so we’re taking our existing health services work, our existing Government and services, our commercial services, and our broadband smart secure infrastructure, and we have a number of tools which are already deployed into the system, so in Queensland for example our patient admission prediction tool is exactly one of those sorts of tools I was describing earlier, in that it aggregates information and helps emergency departments predict their use of critical resources more effectively. So it reduces the uncertainty, and makes the use of emergency beds much more effective.

So in that case it costs half a million dollars to buy a bed for an emergency department, it costs about a million dollars a year to run it, so being able to utilise those resources more efficiently means that patients get to go into the hospital and use the resource more often, so bed blockage rate reduces, and it also means that that resource can be managed more effectively in individual hospital, but potentially between hospitals. And with an understanding of who’s using the emergency department beds, you can then get a State-wide view of what’s actually happening from a, for example, disease outbreak perspective. So the point is we’re already using these tools in places like Queensland.

When we look across to other examples, the Hunter Valley Coal Authority actually utilises part of our end-to-end optimisation, so we’ve looked at a very big system where coal is dug up, put on trucks, trucks take it to trains, trains take it to Ports, Ports load it onto ships, and in the harbour the ships need to wait for the tide to then go out, and that whole process is a very, very complicated system, or system of systems, and the interface between those different stages in that long complex process means that we need to know who’s responsible at each point, so if everything happens well, that’s great, if something goes wrong we need to know who’s responsible. So we talk about service level agreements between these different stages.

What we’ve been able to do in that case is look at that end-to-end process, help to optimise that process with as light touch as possible, while still maintaining that responsibility gateway between each stage, and helped in that case to boost productivity or efficiency, or throughput in this case, by about 8% per annum, so 8% more gets through the system. And now if that particular authority wants to push up their total throughput, we can go and revisit the whole system and then project forward and say, “In the future you would need to increase capacity at this point, and this point, and this point, in order to drive your productivity.”

So my point really is that people are already being touched by the work that’s being done in what was the previous stage, the Proto Flagship, now what we’re looking to do is scale up some of those activities, and when we work with our partners, the Department of Human Services, New South Wales Fire Brigade, when we work with the Department of Broadband, when we work with Queensland Health, people will certainly be touched by the technology which is being developed. But we’ve also been piloting – in Armidale we have a pilot with an aged care facility, where we’re looking to help people stay in their homes longer as they age, so they can stay there safely, rather than being moved into a managed care facility.

And whilst these pilots are relatively small, they show the way for what’s possible, and show the way for a new way of people ageing healthily, and ageing in a way which actually improves their quality of lives. So in those sorts of scenarios we demonstrate what’s possible, we’ll work with commercial partners, work with Government partners, to then expand those sorts of activities over time, so people will be more directly touched by those sorts of pilot activities.

Glen Paul: So looking into the future then, how confident are you that the new flagship will prove effective in addressing Australia’s digital economy concerns?

Dr Oppermann: The Digital Productivity and Services Flagship is really focussed on frontier service creation in the digital economy. Frontier service creation really means looking at issues of effectiveness and efficiency, doing old things in new ways and doing new things in ways never thought of before, and our focus really is in four strategic areas and that’s government services, commercial services, smart secure infrastructure and health services, and in each one of these cases where really talking about improving the efficiency and effectiveness of the process, making services better targeted to individuals, to people, the circumstances of people helping people make better more informed decisions and really changing the value of the experience people get of the services, and we’re building on quite a strong track record, we’ve been working in these spaces for quite some time now and we’ve got some good runs on the board and now we’re looking to really focus the effort and take it to the next level, take it up to a flagship level.

Glen Paul: OK, an exciting new era for CSIRO with the Digital Productivity and Services Flagship.  Thank you very much for discussing it with me today, Ian.

Dr Oppermann: It’s been my pleasure. Thanks very much.

Glen Paul: Doctor Ian Oppermann. And to find out more about the research being undertaken at CSIRO, and to follow us on other social media, go to www.csiro.au.