Tag Archives: Analytics

Philip Lowe: Opening remarks at the Melbourne Business Analytics Conference

Good morning and welcome to this year’s Business Analytics Conference.

I am very pleased to be able to join you, not least because of the theme of this year’s conference: Driving Recovery and Growth through Data Analytics. This theme brings together 2 issues that are very close to my heart – the recovery of the Australian economy from the pandemic and the critical role that investment in IT and data can play in sustaining that recovery. So I congratulate you on your choice of topic and I look forward to hearing your ideas.

The challenges facing us all are large. At the Reserve Bank, we are seeking to support the economic recovery and a stronger labour market that is consistent with achieving the inflation target. And most of you at this conference are seeking to find new ways of using data to help businesses and organisations innovate, compete and succeed.

These challenges are complementary. We will each be more successful if the other is successful. A stronger economy will provide businesses with the confidence and the resources to make the investments that are needed for our future. And conversely, our economy will be stronger because of your work, since the best decisions are those based on data, evidence and analysis. So our causes are linked.

I will come back to this idea, but first a few words about the economic recovery.

As a nation, we have responded very well to the pandemic. Australians have pulled together and been prepared to do what is necessary to contain the virus and support one another. Businesses have adapted quickly and innovated, with many making more progress on the digital front in a matter of months than they would have made in years. Governments also responded quickly and decisively, with extensive income support, increased spending on infrastructure and a large wage subsidy program. And monetary policy has also helped, reducing the cost of borrowing to historically low levels and supporting the supply of credit.

The result has been a quicker and stronger economic recovery than was expected. In the December quarter, GDP increased by 3.1 per cent and we are now within striking distance of the pre-pandemic level of GDP. The number of people in jobs has also almost returned to the level before the pandemic. Looking across the range of indicators, Australia is doing much better than most other advanced economies.

This, however, does not hide the fact that we still have a long way to go. The unemployment rate of 6.4 per cent is too high and the economy is operating well short of its capacity. Inflation and wages growth are also both lower than we would like. While we are expecting further progress to be made towards full employment and the inflation target, it is going to take some time before we reach our goals.

One piece of the recovery that is yet to click into gear is business investment. Understandably, last year many firms deferred their investment plans and sought to reduce risk on their balance sheets. Late in the year there was a welcome pick-up in investment in machinery and equipment, but there is still a long way to go to get back to the level of investment before the pandemic, which itself was low by historical standards. If we are to have a strong and durable recovery, it is important that the recovery in business investment continues and broadens.

Looking across the economy, there are investment needs and opportunities in many areas. The one I would like to focus on today is investment in IT, digitisation and data science. Investment in these areas is critical to lifting our nation’s productive capacity.

In many ways data is the new oil of the 21st century. Investing in data and our digital capability are critical to our future prosperity. These investments allow better decision making and a faster response to the changes in our economy and society. These investments are also crucial to organisations delivering the more personalised goods and services that many people are seeking.

There are opportunities for digital innovation in every sector of our economy. Almost every organisation needs a strong digital capability to perform well, to innovate and lift their productivity. Technology and data analysis also hold the keys to solving many of the great challenges of our times, including controlling the pandemic, dealing with climate change and responding to increasing cyber threats. This all means that the discussions you are having at this conference are really important.

If, as a nation, we are to capitalise on your work and the growing opportunities, we need to keep investing in the skills and knowledge of our people. This conference is a good example of this investment. Developing a strong digital workforce with skills in areas like predictive analytics, machine learning and artificial intelligence is just as important as investing in the hardware and software needed to support the digital economy. As part of our journey we also need to think about how our organisations function and make decisions, so that our people can work in more agile and flexible ways as they grapple with complex problems. It is by investing in both physical and human capital that we can boost our productivity, create employment and drive Australia’s future prosperity.

The importance of investing in the digital economy has been recognised by our governments. The Australian Government has a strong focus on this and is making additional investments in skills and training, streamlining regulatory processes and strengthening the nation’s cyber security. The consumer data right, to give consumers greater access to and control over their data, will also help. This access has started with open banking, which will make it easier for Australians to switch between financial institutions and access financial products that better suit their needs. In time, Australians will benefit from this being extended to other areas.

At the RBA, we are also investing significantly in digital infrastructure and data. The importance of this to us is reflected in the decision to make ‘harnessing the power of data’ one of our internal strategic focus areas for the next few years.

We view data as a strategic asset, and are investing in the processes, technology and people to enhance the value we get from data. We have established an enterprise data office with responsibility for data management, for ensuring that our staff have the right skills and that we are using leading data technologies and methods in our analysis. This includes the use of machine learning and ‘big data’.

We are seeing the benefits from this focus on data in our analysis of the economy and financial system. For example, the Bank’s staff use loan-level large datasets from securitisations to better understand developments in the market for housing loans and use detailed settlement data to measure bond market liquidity. They also use machine learning techniques to extract measures of sentiment from news articles as an economic indicator.[1] And during the pandemic, we have been able to access and analyse a broader range of data to obtain real-time readings of economic conditions in a way that wasn’t possible in the past.

At the RBA, we also see the power of new technologies and data in our central banking operations. The RBA has played a significant role in building the New Payments Platform (NPP), a critical piece of national infrastructure, which enables us all to make fast payments on a 24/7 basis. As a provider of banking services to the Australian Government, the RBA has been working with its government banking clients as they modernise their payment systems using the NPP. As an example, Services Australia now routinely uses the NPP to make emergency welfare and disaster relief payments in real time to Australians in need. Payment messages through the NPP can also carry richer data, opening up opportunities for more efficient business processes and new digital services in the future. As an example of this, NPP will be able to support the adoption of e-invoicing, which will lower the cost of doing business.

Another example where technology and data are opening up new possibilities is in the area of digital currencies. The RBA is conducting research on the technologies and policy implications of a potential wholesale central bank digital currency. This could use distributed ledger technology to support the settlement of transactions in the interbank payment system. Some of this work is taking place in the RBA’s in-house Innovation Lab, where we are collaborating with external parties on a proof-of-concept. We look forward to sharing more details in due course.

The Bank and the Payments System Board are also strongly supportive of forms of digital identity that can be used in both the public and private sector. An effective system of digital identity is important in promoting competition, security and innovation in the digital economy. The Australian Government is also supporting digital identity services for conveniently and securely accessing government services online.

I would like to conclude by returning to the idea that the challenges facing the RBA and those of you attending this conference are complementary.

The RBA is doing what it can to support the recovery from the pandemic and will maintain that support until we have achieved our goals for full employment and inflation. A strong economy will make for a more conducive environment for investments in data and technology. Similarly, your investments in data, technology and human capital will help make the economy stronger and more dynamic. We need these investments to develop the industries of the future and to equip Australians with the skills needed for that future. Australia needs your ideas, your ingenuity and your energy so that organisations across our country can seize the opportunities that will help deliver our future prosperity.

I wish you the best for the conference and look forward to your insights on how we can best drive the recovery and growth through investment in data analytics.

Thank you.

Digital Transformation – Digital Leadership

Digital Transformation – Digital Leadershipby Casper Tribler

 

Casper Tribler – Experienced Telecom Prof.

Our ability to digitally transform companies, governments, healthcare, education, legal systems, law enforcement, communication, finance etc. are pushing forward new digital strategies and increased focus on digital leadership. Such leadership is required across all levels of the horizontal and vertical organizational grid, and across all age groups. The current workforce wants to work for businesses that are digital ambitious, and being a digital risk taker is becoming a necessity for employees to stay attractive as well as organizations to stay competitive within their core activity.

To stay competitive as an employee and an organization Digital Transformation has to be an integrated part of who we are and what we do.

A study presented by Deloitte explains that employees want to work for digital leaders, and across the age groups from 22 to 60 the vast majority of respondents want to work for digitally enabled organizations. 4 Leaders need to bear this in mind in order to attract and retain the best talent needed to transform their digital strategy into digital reality. Many leaders tend to believe that Digital Transformation is driven by technology, but it could not be further from the truth; as Cap Gemini explains it:

Digital transformation is first and foremost a business transformation. People, not technology, are the most important piece in the Digital Transformation puzzle. 1

What is Digital Transformation?

For some Digital Transformation is just another term that is used with increased frequency these days together with other trendy terms such as Disruptive Innovation, Internet of Things, Data Lakes, Machine Learning, SMAC, Code Halos etc.

I have heard the term Digital Transformation described in a rich variety of ways by my industry colleagues within IT and Telecom, and it is evident that Digital Transformation means different things to different people. Some describe Digital Transformation as creating a digital culture centered around a strong brand idea, or that it is about getting a company to be more digital native, acquire new skills and capabilities to be data driven and ultimately more customer centric, and some refer to the concept of ‘going paperless’, or that Digital Transformation changes companies so they can take advantage of new opportunities and face the challenges from the technical world. My response to these definitions are that Digital Transformation is all that and much more. However, this leaves us with a rather illusive concept and it would be quite helpful if we had a more defined understanding of Digital Transformation.

From studying various publications, I managed to put together below definition that I would like to share with you:

Digital Transformation
(definition)

Strategically embrace new digital innovations enhancing the customer experience

 

  • Strategic: Ever evolving strategic exercise promoted by the relevant leadership, which are then required to be translated into clearly defined tactical and operational goals ensuring long-term commitment and ongoing momentum.
  • New digital innovations: Move the organization forward compared to its current digital capabilities enabling new types of innovation and creativity in a particular domain, rather than simply enhance, support and rely on existing technologies. The transformation is focused on digital initiatives and integrations within the organization, such as for example Internet of Things, or social, mobile, analytics and cloud (SMAC) and other underlying IT architectures such as big data, Data Lakes etc.
  • Customer experience: Ensure that the overall goal from the Digital Transformation is to deliver an enhanced customer experience having a positive impact on the organization’s performance for example on its revenue, profit, share price etc.

What drives digital leadership?

The persistent evolution of technology is a source of constant inspiration to redefine the way we exist (co-exist) as a species. Digital Transformation has become the ultimate challenge in change management because it impacts not only organizational structures and strategic positioning, but all levels of society (every task, activity, process).

Leaders must constantly challenge their organizations to ensure that this technology-enabled change can unlock productivity gains and competitive advantages, and understand where and how the fundamentals of their current operations could be unsettled by agile new entrants or new business models.

Today’s leaders need insights to validate strategic and tactical decisions quickly, which requires access to large volumes of data, from an increasing number of different information channels and preferably real-time. As a consequence, leaders are becoming more personally involved in generating their own tailor-made insights rather than simply reading a pre-canned report or analysis. And if you are an ambitious leader that likes to be in control of your own destiny, what better way to reach such enlightenment than spearheading the Digital Transformation of your organization?

What is digital leadership?

This may come as a surprise to some people; Digital Transformation does not demand mastery of the technologies. Instead, it requires commercial leadership to articulate the value of digital technologies as a critical part of the organization’s future. 4

The success of Digital Transformation is greatly dependent on the organization’s ability to commercialize its digital strategy.

Digital leaders are more likely to have a data-driven mentality when it comes to decision making rather than taking what is presented at face value; these digital leaders has a need to verify their commercial decisions through analyses: 5

 

 

 

 

Further to the argument that the core success driver to Digital Transformation is not technology nor technological mastery, is supported by Aberdeen Group’s study from October 2015 stating that digital leaders are:

  • 73% more likely to have strong analytical knowledge within non-technical roles.
  • 65% more likely to have processes in place for defining and communicating business needs for analytics.
  • 38% more likely to have policies and/or tools in place for governing end-user access to data.

Successful digital leaders also understand that to get maximum ROI out of investing into Digital Transformation they have to push their organizations to accelerate the flow of information between departments, and make that information available more quickly and more broadly across the organization. In more concrete terms this means creating an environment that nurtures data-driven insight thinking, implementing clear user needs and strong policies for data governance, support more efficient decision-making processes delivering relevant capabilities to the right job roles at the right time. These are all characteristics that digital leaders foster within their organization ultimately building the foundation for lower risk, increased profitability and faster management decisions.




Why should leaders take digital seriously?

Today’s most critical decisions not only rest on the business feel and gut instinct of our leaders, but to a greater extend requires convincing insights. The involvement of data may once have been purely supporting or affirming in nature, but now plays a more central role. Even shareholders are depending more heavily on a data-driven mindsets to drive their investments forward and Digital Transformation has the tools they need to achieve their vision.

If leaders wish to stay relevant in the future adopting digital risk-taking and formulating digital strategies – if not already – will become the norm. So if leaders are not motivated by the incredible opportunities Digital Transformation in itself offers, then keeping once own job might just do the trick. Digital Transformation is here to stay and the sooner leaders get to terms with this fact the better as they will be able to take advantage from enhanced knowledge sharing, improved process efficiency, revenue growth and increased profit as findings show from Aberdeen Group study in October 2015:

 

 

Digital Transformation is here to stay

Digital Transformation is a never ending endeavor and in these disruptive times we live in the frequency of formulating new digital strategies and adopting new technologies is only expected to increase. Our future leaders must embrace Digital Transformation as their mission, and define and deliver winning digital strategies.

 

 

As many leaders have already started their organization’s digital exploration, those who has yet to begin need to take this development seriously. The sooner they transform themselves into digital leaders and start their own Digital Transformation journey, the less catching up they have to do and the more relevant they will become to their shareholders, management and employees going forward.

 

 

More information, questions or comments

 

 

 

Thank you for reading this article “Digital Transformation – Digital Leadership”. Please visit me on LinkedIn to find my previous articles covering Big Data (RoI and Big Data), Data Lakes (Introduction | How does it work? | Risk Management – Part 1 | Risk Management – Part 2), Predictive Analytics, Internet of Things, Customer Insight Analytics (Part 1: Introduction | Part 2: Solutions | Part 3:  Implementation | Part 4: Conclusion), and more: LINK

Please connect to me on LinkedIn (LINK) and Twitter at @CasperTribler.

For more information on this topic please contact me on:

  • Email: casper.tribler@gmail.com
  • Skype ID: caspertribler

 

 Special thanks

Special thanks to below sources of inspiration and references:

  1. https://www.capgemini-consulting.com/digital-transformation
  2. https://econsultancy.com/training/digital-transformation/
  3. https://youtu.be/2q_lWLm5qtg
  4. “Strategy, not Technology, Drives Digital Transformation”. MIT Sloan Management Review. Retrieved 2016-01-18. Deloitte University Press
  5. THE ANALYTICAL EXECUTIVE: GETTING THEIR HANDS DIRTY WITH DATA, October, 2015 by Michael Lock from Aberdeen Group
  6. IBM Podcast. How to build a highly collaborative and data-driven organization. https://itunes.apple.com/us/podcast/ibm-analytics-insights-podcasts/id605818735?mt=2&i=366448947

 

This material may be protected by copyright.