Digital pressure to fall on government: Deloitte

The impact of technology has hit the IT and media sectors hard recently, but it's government-owned industries that will be up next, according to a new Deloitte report.
Written by Aimee Chanthadavong, Contributor on

A new report by Deloitte has singled out six industries — mainly of which contain government-owned corporations — that it believes will be subject to the next wave of "digital disruption".

Representing one third of the AU$1.4 trillion Australian economy, the government services, education, agriculture, health, transport and post, and utilities sectors are next in line to be impacted by technology, the Harnessing the bang: Stories from the digital frontline report has forecasted.

These sectors fall under the 'Long fuse, big bang' category where the impact will be significant, but is expected to happen over a longer period of time.

Deloitte Access Economics director John O'Mahony said it will put greater pressure on the government to work out their technology strategy.

"The question for government [is] ... here are your institutions, your universities, your hospitals, your post, and are you keeping your businesses up to date with the latest digital technologies so they can deliver the best outcome for consumers," he said.

"There is a clear message for government that digital disruption has now come to the non-market sector of the economy."

Deloitte Digital lead partner Frank Farrall points out while government has been feeling the pressure for a while, it's not until now have they felt the need to do something about it.

"Those customers that have driven the competition on short fuse, big bang are the same citizens that go and take part in government services," he said.

"They like to be able to interact through their smartphones, they like to be able to interact at a time and place of their choosing, so if you talk to senior government leaders they feel the pressure, they just don't have the bottom line impact that is driving them to respond like the commercial businesses did."

The prediction comes based on results from Deloitte's last report, Digital disruption — Short fuse, big bang, released two years ago. It forecasted sectors that fell within the 'short fuse, big bang' category, which included ICT and media, retail, finance, business and professional services, arts and recreation, and real estate were going to be the first to experience the digital impact.

Telstra was one company that fell into the 'short fuse, big bang' category and felt the initial impact of the digital disruption when the uptake of mobile devices gained momentum. As a result, it saw its fixed-voice revenue drop from AU$5.37 billion to AU$4.358 billion from 2011 to 2013.

Telstra digital executive director Gerd Schenkel said Telstra has for the last three years undertaken a digital transformation program referred to as Telstra Digital to bring "digital activities to be part of core business operations". This saw the establishment of Telstra 24x7 smartphone and tablet apps, and its CrowdSupport community.

The Telstra 24x7 apps, which enables customers a "new level of control" of their account by allowing them to track their usage and pay bills, saw downloads reach 2.5 million in 2013 with 1.5 million regular users.

"Thanks to the app and its benefits to our customers, we now have a direct channel to easily enable customer to take up data packs and add-ons tailore to our customers needs, so it's now a revenue source," Schenkel said.

Farrall said the main take away from Telstra for other businesses is they need to put customers first to cope with the digital impact. "To get this right and respond well to digital disruption, you have to be obsessed with your customer."

Earlier this week, both the NSW and South Australian government released their budget for 2014-15, each indicating a sizeable amount will be dedicated to IT projects. 

For NSW, the main winners are the Departments of Health, Education, Police and Justice. The Health department picked up AU$83 million for e-Health and IT programs, and AU$42 million over four years will be allocated to "replace or remediate" the IT infrastructure throughout the Department of Police and Justice. 

The Office of the Chief Information Officer for South Australia identified cloud computing will be the focus for the next fiscal year where over AU$5.8 million will be allocated for the next twelve months to "complete the StateNet Core Network and consolidation of the Central Data Network and supporting facilities". The estimated total cost is expected be AU$17.6 million. 

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