Australian businesses need to understand their tech supply chains

Simon Bush

There has been a sudden and transformational shift in the digitisation of Australian businesses, large and small over the past two years.

This shift was not driven by board mandates or CEOs wanting to future proof their businesses and remain globally competitive, rather COVID was the externality that forced Australian businesses – and governments – to act and invest.

Businesses were overnight forced to respond to the myriad of challenges they faced including sudden office shutdowns and working from home, supply chain exposures, talent shortages, their customers moving online and cyber threats increasing.

Sadly, it has taken a global disruption to shake many Australian companies (and governments) from their slumber and realise that we are being left behind globally in our investments in digital capability.

AIIA head of policy and advocacy Simon Bush

The former managing director of Accenture in Australia Tara Brady made an astute observation when considering differences between UK and Australian companies, suggesting that Australian companies lacked urgency to digitise their operations due to lack of competition.

If our economy is to grow and prosper our companies need to invest in the latest transformative technologies such as AI, data and analytics platforms and emerging quantum technologies. By not doing so we will fall further behind international competitiveness benchmarks.

The other change taking place is that boards of our major companies are realising that they need to have directors that are tech literate which includes cyber awareness.

Indeed, the government’s recently updated cyber security strategy is moving to ensure that directors have basic cyber security understanding and legislation passed in December 2021 will require companies operating in one of 11 government nominated critical industries will be required to report cyber incidents to the government. Currently many of our board directors come from the same mould, with a director’s club mentality persisting. We need younger more tech literate directors.

It is in the context of these regulatory changes and the parallel challenges of disrupted global supply chains in technology and people, that I believe the boards of Australian listed companies require a detailed understanding of their digital supply chains and have a view on where this capability is acquired and delivered.

Gartner estimates that tech spending in Australia will grow 6.3 per cent in 2022 to reach $111 billion and our domestic tech industry has moved from sixth to third largest industry in the Australian economy.

From a detailed understanding of where and how this $111 billion is being delivered and supported, better business decisions will be made that weigh up factors such as costs, business continuity, risk and benefits of sourcing from onshore assured and trusted capabilities.

Further, transparency of tech investments will also show directors and shareholders where investments are not being made, an example being AI commercialisation, where we have a two-year window to invest and grow our Australian capability.

That is why the AIIA wrote to the chief executive of the ASX and to the Treasurer in September last year recommending that ASX 200 companies – to ensure a better understanding their digital supply chains and interdependencies – report on their tech supply chain sourcing in annual reports as a pragmatic first step giving much needed transparency.

This reporting is in line with the ASX’s commitment to corporate social responsibility amongst its listed entities, including encouraging innovation which is to the benefit of all Australians as well as moves to educate directors on cyber security and resilience.

Australian business leaders need to ensure that they have sustainable businesses in the wake of another significant externality and investing in onshore delivered technology capability and delivery – as well as in new and emerging technology – will be critical to that. Disruption creates opportunities and exposes weaknesses.

To truly benefit from disruption, organisations need to lead not follow when it comes to the adoption of technology.

Simon Bush is head of policy and advocacy for the Australian Information Industry Association (AIIA).

Do you know more? Contact James Riley via Email.

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