Leading chief executives see lots of disruption in the next decade and say the best response is increased investment in data analytics, cloud computing and AI.
Dec 12, 2019
AFR
When Microsoft chief executive Satya Nadella was in Sydney last month he spent considerable time talking about technology with Woolworths chief executive Brad Banducci.
So it was no surprise that Banducci’s responses to the Chanticleer CEO survey were informed by his close relationship with the company supplying Woolies with a range of services including cloud computing, data analytics and data encryption.
When asked about the most disruptive forces of the past decade, Banducci said it was the ever rising customer expectations around convenience and the ability of digital and data to assist in meeting this need.
Brad Banducci is one of many leading CEOs utilising cloud computing services to ingest and analyse mountains of data. David Rowe
Nadella told him during their meeting: “What is convenience today is friction tomorrow.”
“This captures it perfectly,” Banducci says.
“We have had an online delivery business setup for next day delivery for many years and it continues to grow in double digits. It meets the needs of the customer who likes to carefully plan out the weekly shop, but it doesn’t work for everyone.
“We’re seeing much faster growth – albeit it off a lower base – in our same day services such as Same Day Pick Up or Same Day Delivery. Our fastest growing platform right now is Delivery Now, which offers grocery delivery to the door in under two hours.
“We’ve rolled it out to select parts of Sydney, Melbourne, Brisbane and the Gold Coast and it is currently accessible for 4.5 million Australians. Every time we add same day capacity in our network, customers respond incredibly quickly. We need to keep pace with the soaring demand while also upholding the quality of the customer experience.”
Banducci says the future of retail is “a strong core of physical stores overlaid with an even bigger digital presence and a range of convenience driven services supported by strong range curation”.
Also, Woolies is coming under pressure to rapidly change its range of products to ensure they are perceived to be “better for me or better for the planet”.
“The conscious consumer is increasingly going mainstream,” he says.
The power of data
Banducci’s tech strategy is delivering higher returns to shareholders. Woolies shares have had a total shareholder return over the past year of 41 per cent, according to Bloomberg. The S&P ASX200 is up 28 per cent over the same period.
The dominant theme running through the CEO answers to the question of what will be the most disruptive change over the next decade was data collection and analysis.
In Woolies case it is analysis of data using artificial intelligence and machine learning to make better decisions about product movements across the supply chain.
How to find the hidden truths in your business data
“We need to optimise on a daily basis the flow of 25,000 plus products from more than 3,500 suppliers to 1,000 plus supermarkets across the full breadth of Australia,” Banducci says.
“While we are getting better at this optimisation, we are just scratching the surface given rapid improvements in access to real time data.”
NIB chief executive Mark Fitzgibbon says he wants to use “the power of data science to move our business value proposition to predicting and mitigating disease risk rather than just treating it”.
Fitzgibbon has been at the forefront of the health insurance industry’s move to shift highly sensitive data to efficient cloud-based systems.
In October, NIB migrated the system of record for its corporate health insurance business, GU Health, to the Amazon Web Services cloud. This was done after consultation with the Australian Prudential Regulation Authority.
APRA defines a system of record as a system which maintains information essential for an institution to determine its obligations to its customers and counter parties.
Business must change for the AI era
LNG producer Woodside is another big user of cloud services offered by AWS. Woodside chief executive Peter Coleman says cloud computing delivered a breakthrough for the company this year.
“We used high-powered cloud computing and traditional seismic data to reassess the recoverable gas in the Scarborough reservoir, revealing a 52 per cent increase in the estimated resource volume.
“That’s huge. It’s known as full waveform inversion (FWI) seismic data reprocessing and allows us to harness a full data set that was previously way too big to process. This gives us a much clearer imaging of the reservoir than we have ever had in the past.”
Hyper-personalised open banking
Woodside is also using AWS for its Pluto LNG facility. It is equipped with 200,000 sensors that monitor operations 24 hours a day. Data from the sensors are pumped into 10,000 algorithms which are used to optimise production and anticipate maintenance requirements.
Data analysis is the key disruptive force across a range of industries, according to the Chanticleer CEO survey.
Andrew Bassat, CEO of SEEK says: “We have great data and insights on how labour markets are evolving and want to use technology and AI as the enablers for SEEK to offer many more employment and education solutions.”
Bendigo and Adelaide Bank CEO Marnie Baker says the data made available to Australians through open banking legislation will create opportunities to offer a better customer experience.
“Open banking will be another way that financial services companies can hyper-personalise compelling offerings for their customers,” she says.
“It’s the next major transformation of Australia’s financial sector but, the many faces of trust will be critical to successful consumer uptake. Consumers won’t engage with it, if they don’t understand it and if they don’t trust it or the organisation that offers it.”
Richard White, the CEO and founder of WiseTech Global says machine learning, natural language processing, automation and big data will be used by his company to lift productivity and better serve customers.
“These tools are enablers to rapidly create more valuable content, verify massive and often inconsistent data sets that combine from many sources and then to make that data available to our customers and their customers,” he says.
“It is also allowing us to target low-value “robotic like” human activities and turn these activities into high-value knowledge, worker-driven processes and thus improve the productivity, accuracy and reliability of logistics tasks that, to date, have been fragile and fragmented.
“The move to migrate these into a set of “straight-through digital processes” will be a profound change – the fusion of human intelligence, machine learning, big data and automation.”
Trying to pick the future
Telstra chief executive Andy Penn says the level of disruption will grow because of “a tidal wave of technology innovation coming over the horizon”.
“No single technology is driving this – it is the convergence of a number of breakthrough technologies including cloud, AI, edge compute, and 5G.”
He says the full range of opportunities from Telstra having a 5G enabled network “will evolve with the market, with innovators and entrepreneurs and, most of all, with customer needs and preferences”.
Amid all the optimism about data analytics and AI there were some cautious CEO comments.
ANZ Banking Group CEO, Shayne Elliott, says he does not know what the next big disruptive force will be.
“People and organisations that listen and are agile and fast enough to adapt will be the ones that win,” he says. “Trying to pick the future isn’t a good strategy.”
Francesco De Ferrari, CEO of AMP says a market downturn is likely to be the biggest disruptor to the wealth management industry.
“At the moment, the discussion in wealth management is focused on achieving absolute returns but risk is the critical factor that is largely being ignored in individual portfolios,” he says.
“We’re explaining to our clients, and to other stakeholders, that it is not absolute performance but risk-adjusted performance that should be the focus. I’m sure we’ll all hear a lot more about this in the year ahead.”
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