Can Australia’s private and public sectors rise to the global digital transformation challenge?

With various crises looming, Australia’s luck may be running out.

In contrast to current superpowers such as the US, China and India, as well as ambitious middle powers such as Singapore and Israel, Australia has taken a more relaxed approach to digital transformation. Unlike New Zealand, Australia isn’t a member of Digital Nations – the international forum of leading digital governments. Being a digital transformation laggard doesn’t appear to have had many serious consequences yet. But the complacency of both its public and private sector leaders will hamper Australia’s ability to overcome looming demographic, environmental and geopolitical crises. Especially in a pandemic era, when many other nations have been jolted into doing everything possible to accelerate their digital transformation journey.

How does Australia’s digital readiness stack up?

While many developed and even developing nations are racing at full speed into the digital future, Australia has been content to amble along. A ‘Digital Readiness’ report found that while Australia was performing reasonably well, it was slipping in the rankings and “exists within a competitive global environment, and can expect pressure from more nations joining [the top-ranked ‘digital readiness’] group in years to come.”

Likewise, the federal government’s recently released Digital Economy Strategy 2030 notes, “How well our businesses, governments and workforce keep pace with changes in technology and the digital frontier will define Australia’s future prosperity… with other countries investing heavily in their digital futures, our actions over the next 10 years will determine whether we lead or fall behind our global competitors.”

Australia’s CEOs and Department Secretaries have to worry about more than just a decline in Australia’s living standards. If they fail to ensure their organisations remain somewhere near the technological cutting edge, those organisations could become much easier targets for cybercriminals and malicious state actors. Or grind to halt if their premises are impacted by extreme floods or fires.

There’s also the issue of Australia’s ageing population. There are increasing numbers of retired citizens needing government services and declining numbers of working-age citizens available to provide and pay for those services. If technology isn’t aggressively leveraged to drive efficiencies, Australians can look forward to a future of higher taxes and significantly lower level of government services.

Fortunately, it’s not all doom and gloom. Simon Williams, Chief Technology Officer, Federal Government at Kyndryl, says that Australians can take advantage of the “post-pandemic inflection point” to rapidly make up lost ground.

Could the cloud be a magic bullet?

The reason for his optimism is the amount of low-hanging cloud fruit Australian organisations can pick. Australian public and private organisations are typically digitally mature. However, when it comes to the logical next step in their digital transformation journeys – embracing the cloud – they are lagging behind their counterparts in nations such as the US, UK, Netherlands and Canada, and even the likes of Poland and Brazil.

“Moving to the cloud – that is, taking advantage of public clouds provided by the likes of Microsoft, Amazon, Google, IBM and Oracle – has huge upsides,” says Williams. “If most of an organisation’s workloads are on a public cloud with the resiliency and availability that can afford, rather than stored in an on-premises data centre, that makes it much easier for the organisation to get back online after experiencing a cyberattack or natural disaster.”

“Most government departments and many private businesses have lots of data about their clients, or the citizens they serve, but aren’t currently effectively wringing actionable insights from that data. By taking advantage of the cost-effective computer processing available in public clouds, they can use advanced analytics and machine learning to make savings, improve customer satisfaction and gain a competitive advantage,” he says. On top of all that, Williams notes, a growing proportion of the Australian population are digital natives. They expect to be able to renew their licence, put in Medicare claims and even vote online.

Williams argues, unlike the transformation driven by Service NSW, some of Australia’s public servants have, especially in recent years, been tempted to go for easy wins rather than undertake more substantive change programs. “You can slap a new user interface on an application and call it digital transformation, which it is, but it’s not going to provide the same return on investment as, for instance, embracing the public cloud,” he says.

Williams believes moving to a hybrid cloud model – a scenario where data stored on on-premises private clouds has the right permissions and paths to be sent, where appropriate, to off-premises public clouds – should be public sector decision makers’ top digital-transformation priority.

“If both the public and private sectors of a nation don’t keep their foot on the digital transformation accelerator, that nation will start going backwards,” he says. “Those leaders who keep kicking the can down the road by continuing to rely on legacy systems are storing up trouble for themselves – or their successor – and will continue to accumulate technical debt that they will find increasingly difficult to resolve.”

Smoothing the migration journey

Jim Freeman, who is Kyndryl’s Chief Technology Officer for Australia and New Zealand, is similarly upbeat. Freeman believes that by 2025 most organisations will have 95%-100% of their digital workloads on public clouds. He argues that any organisation that wants to be competitive and cyber-resilient should now have around 30% of its mission-critical workloads in public clouds. He points out that Australian organisations typically have less than 25% of their workloads, and often less than 5% of their mission-critical workloads, in the cloud.

By 2025 most businesses will have at least 95% of their digital workloads on public clouds.

Williams says cybersecurity concerns and legacy workload issues are the two main reasons Australia’s public sector organisations have moved slowly with the logical next phase of their digital transformation journeys.

“Any change to an organisation’s technological infrastructure involves risks and that’s certainly true with cloud modernisation,” says Williams. “Legacy systems are the beating heart of most government departments. These systems typically comprise millions of lines of code that have accreted over decades. So, it’s almost always complicated and risky to move those systems to the cloud. However, it’s ultimately much riskier to endlessly defer cloud modernisation and keep falling further behind in a competitive world.”

Freeman, who mainly works with private sector organisations, says that cybersecurity and legacy systems are the two big stumbling blocks for businesses, too. But he insists senior decision makers usually underestimate how difficult their organisation’s cloud migration journey will be.

“The big public cloud providers, the hyperscalers to use the jargon, want organisations to accelerate their cloud migration journeys, so they try to be as accommodating as possible,” he says. “Also, organisations can outsource most of the risk by relying on a Managed Service Provider.”

In 2015, Freeman was part of a joint client and IBM team that moved an enormous amount of sensitive financial data from a large Australian financial firm’s on-premises legacy system to a public cloud. “Granted, it involved a lot of late nights for the joint client and IBM team, but the client had confidence, patience and unwavering support to realise the outcome; client support is one of the best predictors of successful outcome,” he says.

“If an organisation partners with a competent Managed Service Provider (MSP), they can reap the benefits of access to the latest technology while dramatically reducing the risk of modernising legacy systems and constructing solid cyber defences to outside experts.”

Discover how Kyndryl can help modernise your mission-critical systems.

The reason for his optimism is the amount of low-hanging cloud fruit Australian organisations can pick. Australian public and private organisations are typically digitally mature. However, when it comes to the logical next step in their digital transformation journeys – embracing the cloud – they are lagging behind their counterparts in nations such as the US, UK, Netherlands and Canada, and even the likes of Poland and Brazil.

Australia’s CEOs and Department Secretaries have to worry about more than just a decline in Australia’s living standards. If they fail to ensure their organisations remain somewhere near the technological cutting edge, those organisations could become much easier targets for cybercriminals and malicious state actors. Or grind to halt if their premises are impacted by extreme floods or fires.