digital innovation

Businesses in every sector of the economy compressed several years’ worth of digital transformation into months as they scrambled to find a new way of working and keep staff and customers safe from coronavirus.

That accelerated pace must be maintained as organisations prepare for a post-pandemic world, according to McKinsey & Co in its report Digital strategy in a time of crisis, released in late April.

The report argues that, “businesses that once mapped digital strategy in one- to three-year phases must now scale their initiatives in a matter of days or weeks.”

Because if they don’t, then their rivals will.

The New South Wales government competes for financial and human capital and investment with other jurisdictions. If it’s found wanting in terms of efficiency and effectiveness, then it too can be ousted come election day.

To boost efficiency, streamline operations and deliver fresh services to residents and businesses, the state government is undertaking significant digital transformation. That primed it to pivot to digital delivery during the pandemic, when 2200 public schools and 400,000 public servants operated remotely. It serves as an exemplar for private enterprise looking to digitally transform and innovate. These are the four key steps taken.

Four steps to success

  1. Break open the silos
  2. Jon Whittle, who leads CSIRO’s data and digital specialist division Data61, has pointed out that technology will be key to Australia’s economic revival post COVID-19. “History shows economic recessions are a driver for innovation in the tech sector,’’ he says.

    Data is the key to unlocking gnarly problems across government and business, says Dr Ian Oppermann, the NSW chief data scientist and industry professor at the University of Technology Sydney. The NSW Data Analytics Centre is the repository for the state’s data collections and analytics skills. NSW Minister for Customer Service Victor Dominello calls it the “claybreaker” that forces agencies to open and share their silos of data and insight.

    Oppermann says private enterprise also needs to break open departmental silos and access external sources of trusted data in order to prosper and grow. He stresses boards need to appreciate the value of data and analytics, starting by identifying a “substantial business, emotional or political problem” and then iterating a solution using multiple data sources. Oppermann validated this approach with a system developed for NSW Fire and Rescue, which uses an array of data such as time of day, weather, location, even pollen count to predict which of the 48,000 automatic fire alarm callouts are likely to be genuine rather than people burning toast — the case in 97 per cent of callouts. That insight ensures attending crews are prepared for what they are likely to face, thereby enhancing their safety.

    “People think that data analytics is magic or nonsense,” says Oppermann. He advises board directors and senior executives that being able to demonstrate a concrete outcome dispels both notions and allows boards to set proper expectations about future data analytics projects. “Think about data sets and invest a small amount in a concept. You may need to change business processes, invest in change management and uplift capability around data analytics platforms or systems.”

    Oppermann recommends directors build their own data governance and literacy capabilities. “Someone else will get an advantage from data analytics if you don’t use them.”

  3. Data design for impact
  4. While the NSW Digital Restart Fund has reduced the time taken to secure funding, governance surrounding each project has been amped up. Digital projects need approval from the NSW expenditure review committee (ERC) and the delivery and performance committee (DaPCo), co-chaired by Dominello and Premier Gladys Berejiklian. This demands a customer lens on each funding application.

    “In many ways, DaPCo is modeled on a classic business structure in the sense that cabinet is run by the CEO, then expenditure review by the CFO, then DaPCo run by the COO — which is me,” says Dominello.

    “I have three main criteria. I want to see the data architecture, I want to know about the digital design, and how I get the success metrics. What does success look like and how you are going to measure it? And what is the customer lens? Ultimately, we are here to serve the people.”

    More than 130 applications have been made to the DaPCo and, at time of writing, 34 have been successful and able to draw down funds to get started. The NSW Government has had to break open department silos, establish new bodies, upskill its people and even change legislation to enshrine the new funding model. The takeaway is: if government can innovate, anybody can.

  5. Small bites, faster funding
  6. NSW launched its Beyond Digital strategy in late 2019, blueprinting the way it would fund digital work. Until then, digital projects relied on conventional infrastructure-type funding with a 12–18 month cadence. The Digital Restart Fund (DRF) — expanded from an initial $100m to $1.6b in June — delivers seed funding for projects in four to six weeks, with a focus on customer outcomes and providing more services online and delivered via Services NSW. Exhaustive business case development and juggernaut IT developments don’t meet the needs of modern government or business. The focus instead needs to be on bite-sized investment in experiment-sized projects that can be expanded if successful, and rapidly adjusted to account for fluctuating market conditions.

    It’s an approach delivering new products and services in NSW — such as the digital driver’s licence, a fuel price-comparison website, a state property planning portal and a Park’n’Pay app.

    A typical digital project lasts 20 weeks from go to whoa. So far, seven paper-based processes have been completely digitised and new services are being developed.

    Recognising cybersecurity must be to the forefront of any sustainable digital transformation initiative, NSW has also earmarked $240m of the $1.6b over four years for cybersecurity.

    The government is opening a specialised cybersecurity centre in Bathurst, has put 900 employees through cybersecurity training, and mandated all digital projects adhere to the “essential eight” security recommendations from the Australian Signals Directorate.

  7. Demand feedback
  8. Ask Dominello how many digital drivers licences have been issued and he reaches for his phone. It’s currently 1,628,289, he says, knowing that number will be refreshed every 15 minutes. He is a big fan of up-to-date feedback.

    “I love the agency, but if they’ve got info, they can share it with me in real time,” says Dominello. “Fast feedback de-risks problems you might not pick up for months. And that’s equally applicable to the private sector”.

    This is borne out by the McKinsey & Co data. “In situations of extreme uncertainty, leadership teams need to learn quickly what is and is not working and why,” the report says. “This requires identifying and learning about unknown elements as quickly as they appear.”

    Dominello says that’s critical for the private sector. “Businesses are there to service customers. If the customers are happy, they get money and if they manage it well, they make a profit. If they don’t know what their customers are thinking in terms of product delivery in real time, then they’re not in the game.”

The need for constant cyber vigilance

In early September, the NSW government released the results of its investigation into a significant cyber attack. By targeting the email accounts of 47 people employed by Service NSW, attackers were able to steal 738 GB of data, 3.8 million documents, and trigger a data breach affecting 186,000 people. Four months after the event, following a lengthy forensic investigation, those people were alerted by the government — in letters sent through registered post — that warned about the risk of identity theft.

Around the same time, a security consultant discovered images of 54,000 NSW drivers’ licences accessible over the internet on a then unsecured (since secured) segment of a public cloud. While the records weren’t created or stored by the government, the privacy of NSW citizens’ data was again breached.

“Security is a major issue for all governments in the 21st century,” says NSW Minister for Customer Service Victor Dominello. “Cyber attacks have increased rapidly, particularly during the COVID-19 period, with more people and services accelerating to digital. It means our awareness and responses have to improve to match increased criminal activity.”

Instead of slowing down and taking stock however, Dominello advocates even faster and complete digitisation. “Criminals and specific state actors will become more sophisticated and devious in their attacks,” he says. “Most of the information that was hacked and obtained was paper information stored in a digital format as an attachment to an email. When you have end-to-end digital like you do with the digital driver’s licence, there is no paper, there is nothing to attach. It is all digitised... and far easier to secure.”

However, Dominello does acknowledge that there will be more cyber attacks. “It’s naïve for any government to think this will be the last of the attacks — the attacks are just going to be constant.”