Category Archives: Information Technology

CSIRO – what price #innovation?

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Last week Startup Victoria invited scientists and researchers from CSIRO to come and talk about some of the projects they are currently working on. Around 400 people turned up to listen to fascinating presentations on flexible solar panels, 3-D titanium printing, flexible OLED lighting, robotics, wearable kinetic dynamos powering textile-based battery storage systems, high-speed instrumentation using FPGA, and micro-manufacturing processes.

logoFrom the outset, the emphasis of each presentation was on the practical application of these inventions. The goal of the evening was to encourage entrepreneurs and founders from the startup community to connect and engage with CSIRO’s project teams. There was an open invitation to co-operate with CSIRO, via R&D, prototyping, IP licensing and commercialisation initiatives.

The evening was generously sponsored by Cogent, PwC, Elance-oDesk and BlueChilli, hosted by inspire9, and ably compered by Leni Mayo; and in place of the usual Startup Alley was a team of experts offering free advice to startups, organised by Two Square Pegs.

As well as showcasing its latest developments in nano-technology, materials, fabrication, energy generation and workplace automation, CSIRO wanted to remind the audience that they have development and test facilities, which are available for commercial use at very economic rates to the right sort of project. It’s all part of a broader charm offensive, in part designed to raise awareness of the great innovation that has come out of CSIRO (e.g., WiFi…), in part to counter the challenges of reduced government funding ($111m in cuts over 4 years).

To me, CSIRO would appear to be pretty good value for money based on the $700m+ government contribution (which probably accounts for about 70% of current budget). CSIRO generates income from industry for research and other services, and earns royalties from patents and other IP it licenses. But its challenge is to demonstrate its true economic value, either as a contribution to GDP, or as a return on investment to the government (and to the wider community).

On the one hand, CSIRO is not an investment vehicle – yet on one level it operates as an early-stage VC fund, identifying which projects to “invest” in, and securing commercial returns via patents and other licensing streams. Nor is CSIRO a listed company, but without the benefit of its research and inventions, many companies traded on the ASX might not be as financially successful.

Ironically, CSIRO has been involved in research on the future of Australia’s $1.4tn superannuation assets – part of the effort to work out how to put these assets to better use, both to generate more sustainable income for Australian retirees, and to ensure the nation is investing in the right sort of infrastructure, innovation and international growth opportunities.

Traditionally, superannuation funds and other institutional investors have shied away from early-stage projects, especially home-grown startups, either because they are deemed too risky, or because the technology is not well understood. Yet some investors are willing to allocate part of their funds to Silicon Valley VC’s, only to see some of that money flow back into innovative Australian startups (a phenomenon I have previously described as an “expensive boomerang”.)

I’m no economist, but if there was some analysis done on the value of the “CSIRO Dividend”, it would both be able to secure current government funding, and attract long-term funding via the Future Fund or similar investment vehicle.

Post Script: Soon after this post was published, the Federal Government announced its Industry Innovation and Competitiveness Agenda, which among other things is seeking to generate a better return on investment on for innovation.

Next week: The Three Pillars Driving the Online Economy

 

Defining RoDA: Return on #Digital Assets

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How do we measure the Return on Investment for digital assets? It’s a question that is starting to challenge digital marketers and IT managers alike, but there don’t appear to be too many guidelines. Whether your social media campaign is being expensed as direct marketing costs, or your hardware upgrade is being capitalised, how do you work out the #RoDA?

In most businesses, measuring the expected RoI of plant or equipment is usually quite easy: it’s normally a financial calculation that takes the initial acquisition price, amortized over the useful life of the asset, and then forecasts the “yield” in definable terms such as manufacturing output or capacity utilisation.

However, when we look at digital assets, many of those traditional calculations won’t apply, either because the usage value is harder to define, or the benchmarks have not been established. Also, while hardware costs may be easy to capture, how are digital assets such as websites, social media accounts, software (proprietary and 3rd party) and domain names being reported in the P&L, cash-flow analysis and balance sheet?

Sure, most hardware (servers, PCs and physical networks) can be treated as capex (e.g., if the purchase price is more than $1,000 and the useful life is 2-5 years). But how do you make sure you are getting value for money – is it based on some sort of productivity analysis, or is it simply treated as fixed overhead – regardless of your turnover or operating costs?

As we move to cloud hosting and #BYOD, many of these assets utilised in the course of doing business won’t actually appear on the company balance sheet. Yet they will have some sort of impact on the operating costs. Most software is sold under a licensing model, where the customer does not actually own the asset. (But, if the international accounting standards change the treatment of operating leases longer than 12 months, that 2-year cloud hosting fee might just became a balance sheet item.)

I was once involved in the acquisition of a publishing business that was converting legacy print products to digital content. Not only did they capitalise (and amortize) the servers and the conversion software, they also capitalised the data entry costs (using freelance editors) to avoid the expense hitting the P&L. Nowadays, that’s a bit like putting the HTML coding team on the balance sheet and not the payroll…

In some cases, the costs associated with maintaining an e-commerce website or registering a URL, will remain as overhead or operating expenses. But over time, businesses will want to have a better understanding of their RoI for different online sales and digital marketing channels, especially if they have been investing considerably in their design, build and maintenance. Measuring online visitor data, customer conversion rates and average yield per sale, etc. are becoming established metrics for many B2C sites. Having a good grasp of your #RoDA may just give you a competitive edge, or at least provide a benchmark on effective marketing costs.

 

Digital transactions hold the key for Australia Post

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Last week’s news that Australia Post is shedding jobs made unwelcome reading for the 900 unfortunate employees who are affected, and the recent proposal to restructure (combined with the implicit risk to rural postal services) has generated some highly charged media commentary and prompted very passionate customer responses.

My personal view is that Australia Post will have to maintain a commitment to letter delivery as part of its protected monopoly obligations. But a “user pays” model that results in higher charges for a “premium” postal service may fail to offset losses from standard snail mail – because businesses will make greater use of existing document exchange and courier services, and retail customers will prefer to receive their utility bills and bank statements by e-mail or other digital solutions such as mobile apps.

Australia Post faces a dual challenge, quite apart from the decline in its letter business (which is rightly seen as a community service, albeit one that should be able to at least cover its costs). First, although it has diversified with a range of products and services, there is very little cohesion across its individual lines of business, and nearly all of them face strong competition, and/or rely on external service providers. Also, according to one software developer I spoke to several months ago, the sheer number of available services meant that some customer service staff did not have sufficient product knowledge and needed an in-house app to train them on how to up- and cross-sell these products.

Second, although it is trying to get into digital solutions, it seems late to the party (e.g., the MyPost Digital Mailbox, which has taken about 12 months from initial announcement to market launch). A few years ago, when I was working on a standard business identifier solution for the financial services industry, Australia Post was well placed to leverage its in-house knowledge of business customers (location, size, industry, spending patterns, logistics, etc.) and combine it with a unique entity ID to enhance and upgrade its business CRM database. However, it was unable to incorporate third-party data sources that would have resulted in even greater analytics on business customer behaviour, because the legacy data systems were unable to cooperate (and the teams that ran them unwilling to collaborate…).

Australia Post’s anticipated expansion into financial services hasn’t materialised (the current CEO is a former banker). If Australia Post became an Authorised Depository Institute, it could offer on-line banking services in its own right, giving it an alternative funding source (in addition to, or instead of, issuing corporate bonds that are implicitly guaranteed by the government). Or, in conjunction with relevant partners Australia Post could expand its Load&Go pre-paid VISA card to become a universal stored value card (such as Hong Kong’s Octopus system).

Instead, Australia Post is relying on the current boom in online shopping to drive revenue growth from its parcels and logistics operations. To me, this is a short-sighted strategy.

If digital is the key to future growth (especially for a data-rich business that operates in logistics, communications and payment transaction services), Australia Post should be looking to  provide and expand business and consumer solutions in the following areas:

  • Digital document verification, validation and transmission (to help offset the decline in snail mail)
  • Location-based payment solutions (to leverage its geographic and transactional knowledge of business customers, especially retailers)
  • Update the current post code system to provide more granular customer data to businesses and to streamline delivery and location services (e.g., like the UK’s system of house number and postcode – imagine how that would make life easier for taxi drivers!)
  • Develop off-the-shelf productivity tools for SMEs – such as on-line data forms, CRM, CMS, e-commerce (become the IKEA of small business data apps – rather like flat-pack, self-assembly furniture, many businesses might welcome such a service)

Finally, if Australia Post thinks that parcel services will carry them through, consider this: each time I want to send a parcel overseas, the counter staff have to undertake the following steps:

  • weigh the item
  • calculate the postage (using a cumbersome sequence of drop down menus on their terminal screen)
  • capture some ID information (such as my driver’s license)
  • attach the customs declaration form (which I have manually completed) to the parcel
  • print the postage label and attach it to the parcel
  • attach an “ID sighted” label to the parcel
  • attach an “Air Mail” sticker to the parcel

More steps are involved if I want use any sort of tracking, insurance or express delivery service. What if I could complete an address and customs form label, and print it before I leave home (or at a terminal at the post office)? And what if this label had scannable items, such as the destination address, for easier processing at the counter?

 

 

 

Smart Designs: 5 Trends for Digital Products

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There are 5 key themes emerging in new digital products* that are grounded in the analogue world. It seems designers and developers are having to find ways to embrace analogue once more, and integrate it into digital solutions. While not everything old is new again, there are some distinct echoes of the past in many of these new developments.

Eno Hyde - Someday World

#1. Revivalism

Sony is reviving magnetic tape as a data storage medium – prompting some pundits to suggest that cassettes might be making a comeback. (Not if the participants in this video have their way…..) Interesting to note that tape storage is far more energy-efficient than traditional hard drive storage. And last week, Telstra announced the development of a major public Wi-Fi network which sounds like the stuff of the future, but looks back more than 25 years, with the launch of Telepoint services.

#2. Hybridisation

The combination of analogue and digital technologies** is not new (remember the Advanced Photo System and the Digital Compact Cassette from the 1990s?). But modern polymath Brian Eno and his latest musical collaborator Karl Hyde have just put out an iOS app that is designed to interact with the vinyl edition of their new album, “Someday World”. It’s not quite augmented reality, but the app uses that concept to project animated graphics to accompany the music when the user points the iPhone’s camera at the record label.*** This could just be the first example of making the vinyl record a digital artefact!

#3. Simulation

As someone who dabbles in iOS music apps (as well as beta-testing a few in my spare time), I have become used to replicating the analogue experience of old-school analogue synthesizers and drum machines on my iPhone and iPad. This has now been taken a step further with the launch of the iVCS3, an iPad version of one of the first portable analogue synthesizers from the late 1960s (an instrument made famous by The Who and Brian Eno, among others). A notoriously difficult piece of hardware to operate, it is almost the antithesis of digital predictability, yet makes perfect sense in the digital context when simulated via the touch screen interface of the iPad.

#4. Sensorial

Despite some concerns about smart phone biometric security tools, the use of biometrics in banking is a near certainty. Sensory-based smart phone applications and add-on devices in the areas of health (diagnostics), the environment (air quality monitoring) and even cooking (taste tests) will soon be commonplace.

#5. Interconnectivity

The Internet of Things is starting to get interesting (beyond the fridge that can do your grocery shopping), especially when combined with robotics (although this April fool spoof from Sphero was probably a bit too real for comfort….). A couple of physical devices that could find extended use when hooked up to an internet connection are the Auug (featured in the new Apple ads) and the SwatchMate Cube (a winner in the 2013 Melbourne Design Awards). For example, the Auug could be used in remote control or simulation applications, while SwatchMate could be modified to analyse surface materials beyond their colour properties.

NOTES

* I’ve been re-reading “Grounded Innovation: Strategies for Creating Digital Products” by Lars Erik Holmquist which has helped shaped some of my thinking on this topic.

** I thought I may have invented a new word as a possible title for this blog – Digilogue – until I came across this book. (But I took heart from the fact that the author, futurist Anders Sorman-Nilsson, like me also holds an LL.B.)

*** If you install the app and point your iPhone camera at the picture below, it should also have the same result as scanning the record label itself:

WARPLP249-Label