Velvet-Belle Templeman
Welcome to Grant Thornton's Navigating the New Normal podcast series. My name is Velvet-Belle Templeman, and I'm here talking to Ian Renwood, Tech Advisory Partner at Grant Thornton. Ian specialises in emerging technologies and their application to transform traditional operating models. Today we're talking new technology and the way it disrupts industries and how COVID-19 has brought a digital transformation to many companies and industries sooner than expected. Thanks so much for joining us Ian.
Ian Renwood
Thank you. It's great to have the opportunity to talk to you.
Velvet-Belle Templeman
Now Ian, let's talk about the pace of technological change. It was pretty fast before COVID and it seems to have sped up even more in the last five or so months, is that correct?
Ian Renwood
That is correct. Yes, it has sped up quite a bit, but there's a big ‘but’ there. And then it's quite a large but. A lot of organisations, even those that thought they were quite technically advanced have actually had to put a lot of band aid measures in place to enable remote working and enable compliance to all the various shut downs/lock downs we've had over the last few months. What that means is they've introduced a whole bunch of risks and they've done a bunch of point solutions that might actually be working now, but are not necessarily sustainable in the long term. So a lot of those organisations whilst they're being quite proactive, or I should say reactive, and they have delivered an integrated remote workforce they’ve also set themselves up for some challenges down the future that they really need to get on top of.
Velvet-Belle Templeman
And obviously remote working has been a major driver, but it's not just about enabling your workforce, is it, it's also about understanding your customer?
Ian Renwood
Yes, that's correct. One of the big challenges of the remote working is we've taken away the most important interaction we have with many of our customers and even those organisations such as Amazon and others that have been very, very good at taking orders remotely, they've spent a lot of time and energy getting that sort of insight and analytics around customers in place. So they actually have a good understanding of how you or I consume things, how we want to be managed as customers. A lot of other organisations that are surviving now or are in survival mode going from bricks and mortar with a little bit of e-commerce to 100% e-commerce. They haven't had the same opportunity to do the analysis and understand how their customers want to be engaged and how they manage that relationship going forward. So there's some challenges there, but there's also quite a number of opportunities. So for those organisations that are moving into the online or e-commerce world, the first ones that will actually start to look at the insights that they can gather about their customers and manage them more effectively, are the ones that are really going to get the best leverage out of this new normal, if I can call it that, about how we're engaging and consuming products and services these days.
Velvet-Belle Templeman
And Ian, how much data do you think businesses are sitting on that they aren't using to their full advantage, and where is it?
Ian Renwood
Yeah, that's a great question. There's a lot of data and very difficult to estimate just how much data there is out there, but it depends upon the organisation. And, and even before you get into some of the more advanced things like IoT and devices and wearables that we have that’s capturing data about us, every organisation captures data to some degree and there's two kinds of data that we need to think about. A lot of organisations and people just think about data in the context of transactions, personal records, medical healthcare records, those sorts of things and that's the traditional structured data. But there's a whole raft of unstructured data that's out there about how that individual or how another company interacts with your organisation and how you can actually unlock that unstructured data alongside the structured data that's known is going to be one of the great opportunities that most companies face in the future
Velvet-Belle Templeman
Is that where businesses should pin their hopes on understanding their client's data better, or should they be investing in automation and new tech?
Ian Renwood
The answer is both of them really and I'll explain that. The automation and new technology is very important to enable the future interaction and service delivery to our customer base. However, you can only really do that if you understand how your data is being captured and managed right now. So if you're automating a process and you're unsure what data is being captured in that process or the veracity or accuracy of that data, it can make it very, very difficult and you can end up going down the path where you're automating inefficiencies. I would say that we should always be looking at, and we always tell our clients that they should be looking at ways to automate and the ways to leverage emerging technology. But if they don't have their underlying data sorted out properly, and by that, I mean, having the appropriate information architecture in place, how they manage that data, how they store it, how they interrogate it, how they actually know where it is then there's not a lot of value, in fact, there's a lot of wasted effort and energy in trying to look at new technologies, such as automation or anything else that's emerging at the moment.
Velvet-Belle Templeman
Ian, bigger picture now, at the big end of town, we've got businesses built purely on data, which is for the most part ungoverned and unregulated. And now we're experiencing a pushback around data privacy, consent and AI. What do you think will happen in this space in the next two to five years? And how might this influence how businesses use their data?
Ian Renwood
That's a good question, and there's a lot to that. So yeah, organisations are facing those challenges. I would say that there are a number of issues that need to be addressed. One is there’s a generational issue, certain emerging generation of consumers, don’t at all feel perturbed about having their data shared and through transactions such as TikTok and other social media platforms, they sort of opt into it automatically and don't seem to mind. You've got more established consumers, such as you and I and others who have a little bit more concern or awareness about how their data is being leveraged and utilised. Whilst we used to go back to the old days where you can literally, I could go to an organisation and buy sheets of information and databases where I could probably target you. I probably know your home phone number, your income range, all that sort of thing, your age and be able to target you by phone calls or direct mail. In the new world, and it's been coming this way for some time, but it's only going to accelerate. The use of that information is now sacrosanct. So you need to be able to leverage the data that your organisation captures about individuals to target those consumers or potential consumers in a way that doesn't threaten them. Doesn't make them feel like they're being, I guess, sold to aggressively, but it shows a degree of insights into the way they conduct their lives, the way they consume, so that they can build a trusted client relationship with it.
Velvet-Belle Templeman
So there's a school of thought for certain industries like fashion or books that there are no new ideas, just new ways of exploring old ones. In terms of tech, is it a matter of making what we have smarter or are there new innovations on the horizon that we haven't thought of yet?
Ian Renwood
So there's two answers to that. The first answer is that yes, there is a degree of, and most people are familiar with Moore's Law in terms of storage, and you can only increase your compute power or your storage capacity to a certain extent. And we've been the beneficiaries of that for the last decade or so. But there are some emerging technologies that are coming out, such as quantum computing, and that's going to completely change the way we operate or function as organisations, because it's going to break a particular barrier on the compute capacity, compute capability that an average organisation will be able to marshal. We really don't quite know yet just how vast that particular impact will be going forward.
The second point to your question is there is a degree, there is an element of doing things more efficiently and more effectively, but we shouldn't also dismiss that there is a great deal of opportunity to innovate using existing and not even having to worry about the future technology. So the current COVID-19 circumstances has given us opportunities to test the market and organisations are now looking at how technology can change the way they engage.
Velvet-Belle Templeman
Ian, a hard question for you. If you look at the sectors most impacted by COVID, the arts, travel and tourism, hospitality, could they use technology to reinvent themselves? And what might that look like?
Ian Renwood
Yes, they could. And there's been some good examples of that just recently. So in my own personal circumstances, I've recently done a tour of the Amalfi Coast in 4K video GoPro, which was quite interesting. And although that may not replace the opportunity to go there and visit it, there's nothing like experiencing that yourself, sitting in the coffee shop. It certainly has opened my mind to wanting to go there. So it's one way that sort of travel organisation has used to whet the appetite for potential consumers down the track. Also the Canberra Zoo, which has some amazing interactive experiences where you can literally sleep next to the tiger enclosure and things like that. They've done a similar element of engagement with their customers. Not the same as actually being there, but again, it helps, you know, a consumer put that as a priority on their bucket list for something to do, when there's more freedom of movement in the coming months.
The other opportunity that I've seen recently is the way that some, you know, pop stars, rock stars and performers have engaged in their market and kept them, I guess, current and kept them excited about their arts. So two examples there, I recently attended a virtual Kate Ceberano concert, which was a great idea. It's not something that would have happened three, four months ago, but it was a great opportunity to engage with her fan base and it's something that I think you will see more and more going forward. The other opportunity that I've experienced is the Royal Ballet have also run some similar sessions out of Covent Garden. Now you might only be able to get there once every few years, if you're an overseas resident who has a passion for ballet or their opera, but by doing those kinds of engagements, it means that it whets your appetite and you may just want to go there more frequently.
So there are ways that these performers in the arts and travelling industries are using technology. It's not replacing the end user experience that we've become accustomed to, but it certainly keeps you involved, engaged and it makes sure that your passion for that doesn't slip down your priority list. So when we are able to move more freely, you're more likely to want to go out and embrace that in real life, again.
Velvet-Belle Templeman
There are limitations to tech though. I think I was reading that all online streaming providers are growing. People are noticing not as much new content because it can't be created, but instead of getting rid of Netflix, they're getting more apps.
Ian Renwood
Yeah, that's correct. So there are a number of apps that are rolling out. Disney is a good example, and there are other parallel apps because of the way the digital rights are managed for a number of those studios, for movies and television productions and even music catalogues, it means that they're held by a number of different licensees. So previously you might've had one or two go to market, such, such as Netflix, which you mentioned, but there are a number of other people are saying in this current climate why don’t we capture the digital rights we've got and rollout our own solutions, our own app. So you've got a number of people that six months ago may have only had Netflix. They've now got Disney, they’ve now got Stan, they’ve now got Amazon. They’ve got whole raft of those online media providers and I think most people are happy to have a portfolio of those, because as you say, you can then pick and choose and you can broaden your access to things that you enjoy.
I mean, if you've got an instance of one organisation that controls the distribution rights, if you like, of Seinfeld, you can only watch so many episodes of Seinfeld, even though I’m a great fan of it myself. So if you need to sign up with, other media platforms to access other episodes of other series and movies and that then people are doing that significantly. I know anecdotally that's actually happening and I'm keeping an eye out to see some data about how many platforms per user, if I can put it that way, people are signing up for. But it's certainly growing. I know anecdotally, most people in my family and friends have now got two or three media platforms and I'd be interested to see how being adopted on a global basis.
Velvet-Belle Templeman
Ian, you sit on boards and act as a mentor for tech start-ups, how are they responding?
Ian Renwood
Actually, it's technology start-ups that have been quite resilient. The reason for that is most of them in fact, have been very much used to the remote working concept because they're quite agile, small staff often working in a rented-out space in some incubator hub or accelerator, they don't often always have their full staff there full time. And that sector have also been extremely good at engaging people who are returning to their career, maybe having raised a family or halfway through that, on a flexible basis. So most of those organisations being technology enabled or born in the cloud, as we like to say, are not having as many challenges as some of the traditional businesses in terms of engaging their workforce and making sure that they're delivering the sort of content that they want. More broadly, there have been some pivots and it's interesting, I was reading on the weekend, the Financial Times, has just released all the recent quarter announcements on some of the venture capital funding for the start-up community.
And there's been a big pivot towards those start-ups that are providing customer engagement. So to go back to the question you asked earlier, people are looking at the more and more innovative ways that they can be engaged by an organisation. So you've got a technology that helps a dress shop or a menswear outfitter, be able to engage their customer base in a more attractive, insightful way. Then that's an area that's been quite well-funded at the moment. The other area, which is interesting is the Insure Techs market. So there's a lot of insurance technology type companies that are coming up with interesting solutions and they've also received significant growth in their funding over the last quarter. Just one impact and how that flows to the rest of discretionary investments in that sector over the next few years will be interesting to see.
The other interesting thing is, has been a significant drop off on the funding that has been provided to alternate lenders. Now, I find that interesting because there's a lot of anecdotal evidence that people are using those payday lenders and other lenders and sources of alternate finance to help find them through the current cashflow situation. But it seems to be that they might be leading the market, but the investment from the venture capital space is being redirected elsewhere. So how that actually impacts that market over the next couple of years will also be something that'd be worth keeping a close eye on.
Velvet-Belle Templeman
Ian, years ago there were articles saying that all Australian cars will be driverless by 2030. That's in a decade, based on what we're living through now, what else can we look forward to?
Ian Renwood
That's an interesting observation. I've always been a great advocate for adopting new technology and we always thought Tesla was interesting and a very curious investment. I for one have been a bit sceptical. I like the technology, as a technologist, I think it's fantastic what they've achieved, but at the price point and the consumer that they were targeting, it was never going to make mainstream penetration, certainly not in the foreseeable future. But what's been interesting is some of the larger automotive organisations, such as Honda had come out and said that by 2022, all their cars, will be at a minimum, will be hybrid with a strong preference to move towards electric. So that will have a huge impact on the adoption of that technology in the broader marketplace. So I think the 2030 objective for most of the cars on the road being either alternate energy sources but potentially driverless, I think is certainly achievable.
In terms of other technologies and I mentioned a little while ago, quantum computing is one to really keep an eye on because it will massively enhance the compute power that not just large organisations have access to, but consumers as well. And we really don't know yet just how much of an impact that will have on the likes of medical research, research into things like cancer, dementia, and other challenges that we face on a day to day basis. So the quantum computing is something over the next decade that will probably have as bigger impact on mankind as the transistor had 45, 50 years ago. The other challenge of course, off that is because of the massively increased compute power. It also raises significant concerns around the security. So most of the transactions that we're now pretty comfortable to do on a day to day basis via our mobile devices or via our desktop are conducted over public key infrastructure.
The issue with quantum computing is it means that people with more nefarious motivations will have access to a lot more powerful computing, to create havoc with our payments platforms and other forms of cyber security. So there's a trade-off here that has to be watched very closely. But I would say there's a lot of excitement in there about some of this new technology around quantum, but there's also some major caveats and question marks we need to keep a close eye on.
Velvet-Belle Templeman
Ian, thank you for your time.
Ian Renwood
Thank you. It's been a pleasure.
Velvet-Belle Templeman
