Innovation policy should promote technology use, not just creation

As the federal election looms, Australia’s major political parties have both jumped firmly aboard the innovation bandwagon with a raft of programs either underway or promised.

Yet relatively few of these directly impact the efforts we, as an enterprise technology provider to Australian businesses, see being made to innovate in industries like mining, refining, chemicals, discrete manufacturing, food and beverage, and pharmaceuticals.

I’m not saying that a National Broadband Network isn’t important. Of course we need reliable and high-speed communications to support innovation. But that was an issue for previous elections. What is being talked about in the current election amount to relatively minor differences in how we get there and how much it’s going to cost.

But if you look at new policy measures like better access to funding for start-up companies, collaboration via innovation hubs, better STEM (science, technology, engineering and mathematics) education or improved access to government procurement contracts, few have much immediate impact on the sort of innovation we are seeing today. Which makes me wonder if the innovation the major parties appear to be focused on is based more on what we have seen in the past, rather than the sort of business disruption we are seeing at present.

Disruptive technologies like the Industrial Internet of Things (IIoT) are driving massive industry changes — such as focusing on product capabilities and moving towards a more service-oriented approach. Smart manufacturing techniques, or Industry 4.0, are increasing efficiency with greater digital interconnectedness between supply and production chains, incorporating the latest advances in sensors, robotics, big data, controllers and machine learning.

Don’t get me wrong — I am a massive supporter of efforts to kick-start new innovation-based industries, support growth in start-ups and invest in STEM education. The new innovative businesses and technically skilled individuals this will create can work with existing technology firms like IFS and our enterprise customers.

But the companies disrupting Australian businesses right now are no longer technology start-ups. They are well capitalised multinationals with deep pockets, and Australian firms are under tremendous pressure to innovate and compete against them.

The innovation that IFS sees right now is focused on capturing and making sense of information in real time, and using it to drive better business decisions and more efficient processes. We are working with our customers to implement enterprise software solutions that leverage new and disruptive technologies like mobility, big data, IIoT and Enterprise Operational Intelligence. The focus is not only on meeting today’s business challenges but on innovating to compete in the future.

This sort of innovation plays to Australia’s strength as one of the world’s most advanced users of technology, even though the record of our tech industry is patchy. To quote technology public policy commentator InnovationAus.com, “The local market has a well-earned reputation for producing sophisticated users of technology, but has had only mixed success of developing and commercialising products for the world market.”

I am a firm believer that we should have a strong technology industry. It would be good for the country and it would be good for existing technology providers like IFS and our customers. I look forward to having a bigger pool of highly qualified technical people to hire from. Australia may also become a more attractive place for us to do R&D. We may even be able to acquire promising local start-ups to fast-track innovation in our core enterprise software products.

But right now, these measures do not have an immediate impact in helping existing Australian enterprises to innovate. I suspect that if you asked them, they’d say they’d like to have more money to invest in technology, or at least the ability to more quickly write off technology investments, so they can ramp up their investments in innovative solutions like Industry 4.0.

These measures would be more in line with the sort of R&D investment incentives that we have seen in the past but which have been wound back by successive governments because of their cost and fears that programs were being rorted and used as tax minimisation schemes. I’m not saying these dangers don’t exist, but I am worried that the national innovation debate is overly fixated on creating new innovation-based industries and a more vibrant start-up culture rather than the potential for innovation within existing enterprises. This should be a more important focus of both major political parties, and I would welcome some innovation from them in coming up with new policy measures to support it.

Rob Stummer is the Managing Director, Australia and New Zealand for global enterprise applications company IFS. He has held this position for the past eight years, and holds several degrees, including a Masters degree from Melbourne University.