A faster future: NBN opportunities and challenges for the Chief Risk Officer

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“Now is the time to shift the discussion to the business applications and innovations that are going to transform many sectors of the Australian economy”

Siobhan McKenna,
Chairman, NBN Co

The National Broadband Network (NBN) is currently being built to bring high speed broadband within reach of all Australians over the next decade. By utilizing fibre, fixed wireless and satellite technologies, the ambition is to make Australia one of the world’s leading digital economies by 2020.

However, as the largest change in the communications landscape rolls out, there will be a broad range of opportunities and challenges facing Australian businesses.

Faster connectivity could give rise to improved productivity, greater access to new markets, segments and customers and a reduction in communication costs across the board.

Conversely, the possible disruption in transitioning services and customers to new technologies, the uncertainty around political changes and the complex nature of the roll out over an extended period of time, are all issues that could have detrimental impacts.

In addressing NBN implications, it is imperative that Chief Risk Officers are aware of the multitude of risks associated with the roll out (strategic, operational and customer focused), and are fully prepared for a faster future.

Getting connected

By 2020, Australia’s goal is to rank in the top five Organisation for Economic Co-operation and Development (OECD) countries in relation to the percentage of businesses using online opportunities to drive productivity improvements, expand their customer base and enable jobs growth.

To help achieve this goal, the Australian Government has allocated up to $37.4 billion over the next eight years towards construction of a national broadband network, providing the infrastructure for affordable, high-speed internet and phone access for all Australians, regardless of where they reside or work.

This is the single largest investment by any Australian government and while the task at hand is no small feat, deployment continues to gain momentum with 207,500 premises now passed with optical fibre that will support this faster, higher speed broadband – and the take up has been promising.

Over 44% of businesses and households who have signed up to the NBN so far have opted for the company’s fastest 100Mbps speed tier. Even allowing for the heavier usage of early adopters, the take up of the fastest speed is higher than expected. Given the prediction was for the majority (52%) to opt for the entry level 12Mbps speed tier, and only 8% to select the highest 100Mbps speed tier, the result indicates there has been a gap in the market for some time and businesses and households alike are really looking to embrace the benefits that come from a faster network.

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Are we ready?

These early signs suggest that there is potential for a significant transformation in the way we work, live and connect – however there is still a lot to be done and it’s not just by NBN Co in its remaining eight years of this decade-long build.

Amid all the debate, politics and layers to the NBN rollout, many businesses have been preoccupied with the hype and frenzy associated with the launch of a high profile government initiative. As a result the focus has been unduly deflected away from the enormous task businesses have in front of them in terms of preparing for this significant change – and the consequences could be detrimental.

Who is not up to speed?

NBN Co Chairman Siobhan McKenna recently attended the EY Director Briefing Series Roundtable in Sydney, hosting influential Non-Executive Directors from ASX 100 companies.

The robust and interactive discussion at the session and our recent poll of 20 Non-Executive Directors illustrates that many Australian boards are simply not ready for a faster future.

Only 10% of directors who participated in the poll said they were aware of the state of their organisational readiness, with another 45% saying they only partially understand the possible impact to operations.

The lack of consideration given to the likely change in customer behaviour is also of some concern. Although a difficult and complex task to grasp, only 50% of directors say that their board understands the possible implications to a degree, and 50% confess that they do not know how the NBN roll out will impact their supply chain.

In addressing the NBN implications, it will be critical for the CRO to educate their board to clearly articulate their organisational readiness plan, outlining what needs to be done prior to the migration and specifying objectives, benefits, strategies and timings. For those who are yet to do so, it will be important to assign accountability, recourses and identify implications for operations.

CROs should now be identifying how all relationships throughout the supply chain will change, from understanding how the buyer experience end-to-end could be enhanced, how to extend geographic or market segment reach and how to streamline and enhance business processes with suppliers.

Adding to the case that more needs to be done to prepare for the largest change in the communications landscape in Australia, it was found that only 10% of directors acknowledged their board had an understanding of the business opportunities that could be realised, with a staggering 50% facing up to the fact that they were unaware of the apparent risks.

If they haven’t already done so, Australian businesses should not only be identifying ways in which the NBN can improve and enhance business – but look to understand the risk and possible threats that will arise – such as minimising migration disruption and delivering benefits faster than competitors and managing operational complexity.

The NBN roll out is taking place across the country, and the pace of the roll out is accelerating. It is timely for CROs to understand how this faster future will impact their businesses, and put adequate measures in place to mitigate the various associated risks, whilst also managing profitability throughout the transition.

It will be crucial to ensure that organisational readiness is made a priority now as the NBN build accelerates. The possible disruption in integration of systems, transitioning services and customers to new technologies, and the complex nature of the roll out over an extended period of time are all issues that could have detrimental impacts.

Factors such as adequate communication with customers throughout the transition and optimising initiatives to protect the organisation’s reputation and brand, should also be high on the radar of the CRO. Furthermore, it is important to keep the board informed of the long term strategy and vision for the organisation. Given the far reaching implications associated with the NBN, it is vital that the board is able to articulate the strategy and be aware of future plans.

There is no doubt that as the NBN is rolled out, businesses can expect to better understand the ways in which they might benefit. However it will be the early adopters that are acting now to change their business models, to realise cost savings, increase access to new markets, increase potential workforce, and improve customer experience that will be able to create a competitive advantage.

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