Monday, June 30, 2014

Welcome to 'The DigEcon Gazette'

When you use the term "Digital Economy" in a modern policy setting you usually get one of two responses. The first says that we've already arrived; that the economy is digital. The second is those that say this is all just hype that has been around for twenty years.

They are both right, in a way, because we are still in the middle of a process.

The global economy has been in a continuous process of change since humans first progressed from living as bands to the formation of tribes.

There have, however, been periods where the nature of the change has proceeded in leaps. Earlier leaps included the process of planned agriculture, the use of animals for transport and work, and the formation of the state as part of political organisation.

We are more familiar with the industrial revolution brought about by the use of engines, be they steam engines or internal combustion engines or the electric motor. These developments followed the transportation revolution of ocean crossing sailing, and led to further innovations in trains, cars, trucks and planes.

From the middle of the 19th century there has been a long process of changes from information and communications technology, including the telegraph and the telephone. The next wave began with the development of "automatic data processing" or ADP as much early mainframe computing was known. 

But the really big wave started with the advent of the networked computer, especially as the terminal in the form of the PC became pervasive. This was the era in the mid-1980s when the management literature also took note. At the end of this post is a short list of articles from the Harvard Business Review  in the mid 1980s.

This was the start of the era of talking about the information economy, including in Australia.

Our own telecommunications deregulation agenda was framed from the mid-1980s on by a group of Corporations all of whom had an interest in the development of telecommunications services for data. Telecom Australia had been slow to develop products and was very restrictive in its permitted attachment nd interconnection rules. (See Reinecke and Shultz The Phone Book for a good discussion of the consortium (Business Telecom Services).

This led eventually to the three step de-regulation in 1988, 91 and 97. In 1994 the Australian Government report Networking Australia's Future  provided the vision of an expert group established to investigate the development and use of broadband technology across all spheres of domestic and economic life. (see also Paul Keating's statement at the launch)

In 1997 the Howard Government's industry policy statement Investing For Growth committed the federal government to, among other things, delivering all appropriate services electronically on the Internet by 2001, and establishing a government information center as a main point of access to information about government services; and, in consultation with the states, developing a "single window access" to government information and services in Australia.

Also in 1997, the National Office of the Information Economy (NOIE) was established as a separate government agency to implement and coordinate the federal government's online and Internet policies and to develop strategies for reducing the "digital divide." NOIE's first task was to develop the government's overall ICT policy, A Strategic Framework for the Information Economy: Identifying Priorities for Action, which was subsequently released in December 1998. (Last three paras based on E-government in Australia Sue Burgess and Jan Houghton).

An update was released in 2004 under the title Australia's Strategic Framework for the Information Economy 2004–2006: ‘Opportunities and Challenges for the Information Age’. That outlined the strategies also outlined at the end of this post. They are eerily familiar.

That in some ways the policy questions are unchanged is unsurprising, but a bit like the old joke about the economics exam, the answers are changing. The phase of the mid-1980s was built around the change from stand alone computers to networks. The phase today is built on the move to web connected computers, where communications bandwidth, and even storage and processing limitations, are no longer impediments.

The change we have seen thus far is the experience of the steam engine; the change that is in front of us is the change of the internal combustion engine and the electric motor.

The policy issues of the Digital Economy is what DigEcon Research tries to address. Over the last six years the term Digital Economy has gained greater global currency. The Gazette is a short form way of just bringing some of the issues to the fore.

I will, hopefully, be migrating the gazette to a sub-domain of My intention is that the Gazette will replace the ICT related posts from Anything Goes. My goal is to write something here at least once a week.

David Havyatt
Executive Director
DigEcon Research

HBR Articles from the 1980s

Information Technology Changes the Way You Compete (McFarlan May 1984)
As it moves from a strictly supporting role in the back office, computer-based technology offers new competitive opportunities. A company can use this technology, for example, to build a barrier to entry, to build in switching costs, and even, sometimes, to completely change the basis of competition.

IS Redraws Competitive Boundaries (Cash and Kosynski March 1985)
In a 1966 HBR article, Felix Kaufman implored general managers to think beyond their own organizational boundaries to the possibilities of extra-corporate systems. His was a visionary argument about newly introduced computer time-sharing and networking capabilities. In the nearly 20 years since that article was written, developments in information systems technology (IS) have made feasible many new applications of strategic importance.
Today the most dramatic and potentially powerful uses of information systems technology involve networks that transcend company boundaries. Some of these interorganizational systems (referred to hereafter as IOSs) also have important social and public policy implications. These systems, defined as automated information systems shared by two or more companies, will significantly contribute to enhanced productivity, flexibility, and competitiveness of many companies. However, current examples illustrate that some IOSs will radically change the balance of power in buyer-supplier relationships, provide entry and exit barriers in industry segments, and in most instances, shift the competitive position of intraindustry competitors. 

How Information Gives You Competitive Advantage (Porter and Millar July 1985) 
The information revolution is sweeping through our economy. No company can escape its effects. Dramatic reductions in the cost of obtaining, processing, and transmitting information are changing the way we do business. 

Telecom: Hook Up or Lose Out (Clemons and McFarlan July 1986)
The new technologies of communications have the power to change the competitive game for almost all companies of all sizes. Many companies already use telecommunications to gain a competitive edge, yet many others fail to see how they might use these new possibilities in their strategic planning. 

Beyond Chief Information Officer to Network Manager (Donovan September 1988)
Decentralized computing is sweeping business like a wave rolling onto a beach. Its advance is unstoppable—and for some powerful reasons. Economics is one important factor. On a mainframe computer, the average cost per mip (millions of instructions per second), a benchmark of hardware performance, approaches $200,000. On a personal computer the cost is only about $4,000. A similar cost comparison applies to software. Individuals and small groups can develop computer applications faster and less expensively than large teams can. To avoid diseconomies of scale in programming, companies disperse the software development process.
Strategic and organizational factors are also driving the decentralization of computing power. By definition, information systems that link companies with distant customers or suppliers—the much-heralded use of information technology as a competitive weapon—cannot be restricted to a headquarters computer facility under tight central control. Within companies, the emergence of confident and capable computer users creates a powerful constituency favoring decentralization. Employees want to operate their own systems, in their own way, and when it’s most convenient for them. 

Strategies from Australia's Strategic Framework for the Information Economy 2004–2006: ‘Opportunities and Challenges for the Information Age’. 

1. Ensure that all Australians have the capabilities, networks and tools to participate in the benefits of the  information economy.
Strategy 1.1 Develop the networks and capabilities needed by people living in regional communities,
Indigenous Australians, older Australians, people with disabilities and others facing economic or social  barriers to participation in the information economy.
Strategy 1.2 Strengthen collaboration and capabilities in SMEs, not-for-profit organisations and key industry  sectors to facilitate their participation in the information economy.
Strategy 1.3 Promote investment in broadband infrastructure, content, capabilities and networks in regional  areas and in key industry sectors.

2. Ensure the security and interoperability of Australia’s information infrastructure and support confidence  in digital services.
Strategy 2.1 Protect Australia’s critical infrastructures through effective partnership between public and  private sectors.
Strategy 2.2 Improve the culture of security in both public and private organisations.
Strategy 2.3 Promote security research and development and improve capabilities for analysis of security threats and vulnerabilities.
Strategy 2.4 Develop and implement a national electronic authentication framework covering both private and public sectors.
Strategy 2.5 Protect personal privacy and consumer interests in the information economy.
Strategy 2.6 Ensure the interoperability of Australia’s information infrastructure through effective partnership between public and private sectors.

3. Develop Australia’s innovation system as a platform for productivity growth and industry transformation.
Strategy 3.1 Build an innovation culture through improved access to education and skills development.
Strategy 3.2 Maintain a globally competitive business environment for innovation.
Strategy 3.3 Achieve global scale and critical mass in priority research areas.
Strategy 3.4 Develop ICT research networks as a platform for enhanced national and global research collaboration.

4. Raise Australian public sector productivity, collaboration and accessibility through the effective use of information, knowledge and ICT.
Strategy 4.1 Develop governance and business arrangements that ensure accountability, efficiency,
transparency and integration.
Strategy 4.2 Develop an Australian Government ICT investment and interoperability framework to support integrated services.
Strategy 4.3 Develop collaborative approaches across government that promote the creation, sharing, protection and accessibility of information and knowledge.

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