Equip: Issue 7Emerging Technology 2017

Image Source: Case

Are you ready for change?Equip: Issue 7

Ready or not, here IoT comes…new technologies are poised to transform the way we purchase, use and manage assets, with the potential for unprecedented improvements in productivity and cost-effectiveness. So what should you be doing now to take advantage of them?Welcome to the new-look Equip, designed to bring you exclusive insights into the trends shaping the equipment and financing markets. Each edition will address a different theme, with a focus on four key industry sectors: agriculture, construction, healthcare and transport.

In this edition, we consider the implications of a new generation of emerging technologies — from artificial intelligence (AI), to electric vehicles, and the connecting of assets known as the Internet of Things (IoT).

Our research suggests that, while their longer-term impact is likely to be profound, only a minority of Australian organisations have moved to embrace them, at least so far. Over half of the businesses we surveyed said they were unprepared for the impacts of emerging technology, while one in four said they were “completely unprepared”. That confirms findings from other recent research, such as the RMIT survey which found that while 73% of businesses recognise they are operating in a disruptive environment, one-third of those are choosing to ignore the trend, and only 30% are just starting to explore options of how to adapt.1

Nonetheless, a significant number have already begun their innovation journey. 65% of businesses plan to invest in at least one emerging technology over the next 12 months, with IoT (37%) and energy-efficient hybrid or battery technologies (24%) proving most popular.

As the take up of these and other technologies accelerates, they are set to transform the way Australian organisations purchase, use and manage essential assets. For example, digitally enabled vehicles and equipment are likely to have replacement cycles more closely resembling computers than their purely mechanical, pre–IoT versions. That suggests organisations will need to become more nimble if they wish to avoid holding a portfolio of rapidly depreciating or obsolescent assets. It also has important implications for the way businesses finance and hold new assets, increasing the attractiveness of flexibility. And it raises the possibility that assets could become self-funding, at least to some extent, in a shared or “uberised” business economy. Eventually the day may come when autonomous assets become independent economic actors, hiring themselves out to business clients and using the proceeds to pay for their own maintenance.

While that prospect is still well in the future, there is no doubt that today’s connected devices already give businesses the ability to achieve significant gains in asset utilisation and cost-effectiveness. We hope this edition of Equip inspires you to begin exploring the potential benefits for your business, and we look forward to the opportunity to work with you to realise them. Are you ready for change?

Sylvia Terry Managing Director, Asset Finance Commonwealth Bank

 

1 RMIT, Disruption — Ignore or Embrace, 2017.

“ Eventually the day may come when autonomous assets become independent economic actors, hiring themselves out to business clients and using the proceeds to pay for their own maintenance.”

Sylvia Terry, Managing Director, Asset Finance, Commonwealth Bank

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Fast facts

Businesses investing in emerging technologies

A significant proportion of businesses have already begun their innovation journey.

• Top 5 investment areas over the next 12 months:

Internet of Things

WIFI connected equipment

Hybrid/battery

Sensor/telematics technology

Drones

Average proportion of revenue being invested:

5.2%

6.9%

7.8%

12.8%

23.9%

36.6%

Change on the horizon

Already here On the horizon

Agri

• Survey drones

• Controlled traffic

• NDVI imaging

• Self-driving tractors

• Autonomous agbots

Transport

• Robotic Warehouses

• Augmented reality

• Big data analytics from telematics

• Autonomous and platooned trucks

• Uberised delivery

• Hydrogen-battery vehicles

Construction and

infrastructure

• Pre-fabricated buildings

• Survey drones

• Embedded sensors

• Smart infrastructure

• 3D printed buildings

• Construction robots

Health

• National Digital Health Strategy

• Wearables

• Robot-assisted surgery

• Integrated digital health care models

• AI assisted treatment

• Remote care

Area/Percentage of businesses investing

Prepared Unprepared Unsure

41.6% 5.9%52.5%

Less than half say they are prepared for the impacts of emerging technology:The impact of change

Australian businesses know new technologies are transforming their market — but many aren’t yet ready to embrace change.

of businesses recognise they are operating in a disruptive environment

are not exploring opportunities to participate

73%33%

Source: RMIT, Disruption – Ignore or Embrace, 2017.

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Construction• Infrastructure investment is set to double

between 2013 and 2030.2

• Winsun builds houses with a 3D printer in under 24 hours.3

• Balfour Beatty saved over 450,000 person-hours building the Queen Elizabeth Hospital in Birmingham (UK) using pre-fabrication.4

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2 The construction productivity imperative.3 Winsun website (www.yhbm.com/index.php?m=content&c=index&a=lists&catid=67).4 Balfour Beatty website (https://www.balfourbeatty.com/expertise/specialist-services/mechanical-and-electrical-modules/).

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New tech set to revolutionise construction and simplify maintenance.

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As construction and infrastructure firms emerge from the shadow of the resources investment slowdown, the time could be ripe to invest in productivity-enhancing technologies.The outlook for construction and operations and maintenance (O&M) companies is improving, as infrastructure investment picks up and recovering commodity prices see activity revive in the resources sector. In the Australian market, anecdotal evidence suggests many construction companies have cycled through marginal projects on their books and have strengthened their balanced sheets. Globally, research by McKinsey&Company suggests that infrastructure investment is on track to double between 2013 and 2030.5

Overall construction companies are now in a good position to invest in the emerging technologies set to transform the sector in the years ahead. Yet while our research suggests some companies have already begun their innovation journey, with 43% either fully or partially prepared for the impacts of emerging technology, many are still to come fully to terms with the implications of technological change.

Underpinning the case for investment is the need to boost productivity across the sector, which has lagged leaders like manufacturing, according to McKinsey. Between 1994 and 2012, productivity growth in manufacturing has outpaced construction by an astonishing 1.7 times.5 That suggests a significant untapped opportunity for construction companies to gain a competitive edge by embracing change.

While other industries have increased output per worker, productivity in construction has remained flat.

5 McKinsey&Company, The construction productivity imperative, 2015.

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Many of the gains are likely to be in the maintenance phase, with embedded sensors, networked devices and predictive maintenance models potentially leading to significant cost savings. Given the long lifecycles of building and infrastructure assets, a saving in maintenance costs of even a few per cent a year in maintenance costs could significantly outweigh the potential for savings during construction.

Yet emerging technologies also offer the potential for significantly enhanced productivity during construction. To take just one example, Balfour Beatty’s construction of the Queen Elizabeth Hospital in Birmingham (UK) saved over 450,000 person-hours by using pre-fabrication and modularisation, while delivering significant health and safety benefits to the project.4 Also in the UK, Laing O’Rourke has combined Building Information Modelling with RFID technology and ‘virtual construction’, to fabricate the Leadenhall building offsite then assemble it in the heart of London.6

Design and planning optimisation is also a focus for innovation, with drones equipped with laser and radar technology rapidly improving surveying productivity, by reducing the need for time and labour-intensive manual surveys.

That said, safety remains paramount. In such a labour-intensive industry, innovation and experimentation with artificial intelligence, driverless vehicles and other automation needs to be contemplated cautiously. Human oversight, at least for now, remains a crucial consideration.

Six trends to watch.1. Enhanced Building Information Modelling (BIM). While BIM is now established practice, networked and augmented reality

devices could help it reach its full productivity-enhancing potential.7

2. Pre-fabrication and modularisation.

3. Increasing use of robotics for repetitive tasks like block laying.

4. The expanding utilisation of 3D printing or ‘additive manufacturing’, extending from design modelling through to industrial applications. One group, MX3D, even aspires to print a steel bridge.8

5. Drones for surveying and maintenance tasks.

6. Embedded sensors and ‘Internet of Things’ devices for maintenance, and predictive modelling to extend asset lifecycles.

4 Balfour Beatty website (www.balfourbeatty.com/expertise/specialist-services/mechanical-and-electrical-modules/).6 Laing O’Rourke website (www.laingorourke.com/our-projects/all-projects/the-leadenhall-building.aspx).7 Augment website (www.augment.com/blog/enhancing-bim-with-augmented-reality/).8 MX3D website (www.mx3d.com/projects/bridge).

By designing a building to participate in a connected world, you can potentially lock in benefits far outweighing your initial investment and avoid expensive retrofitting in the future.

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Case Study: Smart drains and roads that listen for accidents.

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Downer Group (ASX: DOW) is one of Australia’s leading engineering and infrastructure services firms. It’s also a leader in innovation, actively experimenting with emerging technologies across hundreds of different projects in collaboration with both customers and tech giants like Microsoft and Cisco.

Jeff Sharp is Downer’s Group Manager for Technology and Innovation. He says many of the Group’s innovations involve capturing rich streams of data to manage and protect large networks of assets, alleviating chokepoints and preventing potential breakdowns with targeted maintenance.

“Rather than finding a cheaper way to dig a hole, we’re now looking for ways not to dig a hole.”

Sharp says drones have proved valuable for collecting data safely and cost-effectively. “We’re working with partners developing drones to replace people for dangerous surveys of assets such as bridges and telecommunication towers,” Sharp says. “We’re also working on trials utilising drones with thermal imaging cameras to detect water under roads, so we can see issues before they cause problems.”

Built-in, connected sensors have also delivered significant benefits in projects like the Smart Drain initiative, a partnership between Downer, Fujitsu and EYEfi, piloting sonar sensors across a city council’s stormwater network and replacing annual manual inspections with hourly, automated checks. Downer has also been experimenting with embedded fibre cables in roads that act like a linear microphone, allowing engineers to monitor traffic, detect accidents and identify changes to the road surface that indicate maintenance is required.

Sharp says that while technologies like these may increase construction costs upfront, they generate substantial savings downstream: “If you knock 2% off the cost of maintaining an asset and multiply that out over 30 years, it dwarfs the technology costs during construction.”

Combining big data with artificial intelligenceAccording to Sharp, the real value of big data comes when it is combined with predictive analytics, often powered by artificially intelligent (AI) systems.

He gives the example of Otraco, a Downer business that uses an AI system to monitor and maintain the enormous tyres used on modern mining equipment, some of which cost $100,000 each.

“By using data from the tyres, such as temperature and pressure, combined with other data sources, such as the batch of tyres, the load the tyres are carrying and the road they drive, we can forecast a tyre failure within a two-week window,” he says.

One of Otraco’s key findings: tyres last 20%–30% longer when mounted on autonomous, self-driving vehicles, compared to vehicles with human drivers.

From service provider to trusted adviserBy drawing on this rich data stream, Downer not only helps to reduce costs today, it also generates insights that can be used to plan and manage assets more effectively in the future. Sharp says that has allowed them to build deeper customer relationships, repositioning the company from a maintenance service provider to a trusted partner.

He says customers particularly value the broad perspective Downer can offer, spanning multiple industries. “We can provide a lot of valuable advice and learnings across sectors, and even take learnings from one sector and apply it into another sector,” he says.

Downer is also partnering with tech companies like Microsoft and Cisco to find ways to apply those insights in real world solutions.

“Together, we’re creating better operational technology,” says Sharp. “For instance, we’re developing augmented reality solutions, which overlay information on top of real surroundings and can be used for training purposes.”

Meanwhile, Downer continues to pilot innovative solutions across its project portfolio.

“There’s no set rule for innovation,” Sharp says. “It’s really got to be organic.”

“ Rather than finding a cheaper way to dig a hole, we’re now looking for ways not to dig a hole.”

Jeff Sharp, Group Manager for Technology and Innovation, Downer Group

Transport• 92.8% of transport businesses plan

to invest in emerging hybrid or battery technology in the next 12 months.

• Transport business plan to invest an average 7.2% of revenues in emerging technologies — the most of any sector.

• Nikola’s hydrogen–battery rigs promise to deliver a semi-trailer at a lease cost similar to the current cost of diesel alone.

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Gearing up for change.

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From driverless vehicles to automated ports, the transport and logistics sector is set to undergo enormous change over the next decade. Here are some key trends to watch and steps you can take to future-proof your business.The transport sector is no stranger to emerging technologies. From telematics to automated warehouses, transport and logistics operators have been enthusiastic users of new ideas. And most businesses in the sector know further change is coming. The challenge is to get ready without overstretching limited budgets.

For a number of years, operators were focused on taking costs out of the business to protect and improve margins. While we remain in a cost-conscious environment, with most of the “easy gains” having been achieved, firms may need to begin investing again if they are to drive productivity further. And our research suggests that many firms are ready to do just that. Throughout 2016 and into 2017, most of transport and storage businesses have consistently reported that their asset finance needs are expanding — and our latest survey also shows that firms are planning to invest an average of 7.2% of revenues in emerging technologies over the next 12 months.

The potential benefits are significant. New technologies have the potential to drive down fuel costs, lower emissions, improve productivity through better asset utilisation and more efficient labour use, and even help companies create stronger customer relationships as trusted advisers, not simply service providers.

Innovations like Nikola’s hydrogen–battery rigs promise to deliver a semi-trailer at a lease cost similar to the current cost of diesel alone.

Image Source: Nikola.

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Seven trends to watch.1. Networked vehicles that automate data capture and communication, generating enormous volumes of data that

can be used to improve maintenance, efficiency and asset utilisation.

2. Better data analytics, enabling businesses to become expert advisers to their customers on fleet optimisation and supply chain management, rather than simple service providers.

3. The ‘uberisation’ of trucking, especially for SMEs, as technology enables customers to share fleets or access unused capacity. Apps and services like Transfix, DashHaul, Cargomatic and uShip are already helping transport users to post jobs and book trucks directly online, instead of through an aggregator.

4. Early adoption of driverless or platooned transport in geographically contained applications such as ports, warehouse complexes and mines.

5. Automated and roboticised ports and warehouses, eliminating human stock pickers in many e-commerce logistic applications.

6. Augmented reality and wearables to streamline warehouse operations and improve efficiency. Systems are already available from Knapp, SAP and Ubimax which include a smart-glasses display, a camera, a wearable PC and a battery pack to support faster stock picking. There is also ‘vision picking’ software which offers real-time object recognition, bar code reading, and data integration with the warehouse management system. As long ago as 2015, a pilot project by DHL found that smart glasses and augmented reality systems can lead to a 25% efficiency increase during the picking process, with further increases expected in the near future.9

7. Further cost savings from fuel efficient and alternative fuel vehicles, with more than 90% of transport businesses expecting to invest in emerging hybrid or battery technology in the next 12 months.10 Innovations like Nikola’s hydrogen–battery rigs promise to deliver a semi-trailer at a lease cost similar to the current cost of diesel alone.

How to get ready for change.Are you ready to gear up? Here are five ideas to get you started:

1. Consider appointing a Chief Innovation Officer to drive change and create a culture of innovation from the top.

2. Start small then scale up, trialling multiple ideas before investing in the most successful.

3. If you haven’t already, consider using fleet management to start generating a data stream, or begin analysing data you already collect to see how you can make better use of it, both within your own business and on behalf of your customers.

4. Look for opportunities to automate activities.

5. Involve your customers in your innovation journey.

9 DHL, “DHL successfully tests Augmented Reality application in warehouse”, 26 January 2015.10 Nikola (nikolamotor.com/one). Available in the US. Based on an average distance of 8,000 miles per month solo or 16,000 miles

per month as a team, including Nikola’s free hydrogen offer for the first 1 million miles.

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Case Study: Using social robots to enhance the customer experience.

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Air New Zealand is one of the world’s leading passenger and cargo airlines, operating a global network carrying more than 15 million people a year. In 2017, the company partnered with the social robotics team at CommBank’s Sydney Innovation Lab to investigate the potential for robots to improve customer service and enhance the in-airport experience.

A collaboration between CommBank, the University of Technology Sydney and the Australian Technology Network of Universities, the social robotics team was created to explore opportunities for harnessing robots in customer-facing situations.

Tiziano Bianco, the bank’s General Manager of Global Innovation Labs, says social robots have the potential to create a richer and more fulfilling experience by replacing static screens with an interactive technology that evokes a very human response.

“They can bring to life information that is not particularly engaging when delivered by a screen,” she says. “People interact with them in a very social and sometimes emotional way, which means they can enhance experiences in ways that other technologies are unable to.”

The experimentFor this experiment, the team used CommBank’s Chip CANdroid, a humanoid robot capable of providing information, answering questions, and even telling jokes.

The team configured Chip CANdroid to assist airline passengers at check-in counters and selected passenger gates over a period of five days. The aim was to discover whether social robots can bring to life useful information in a more engaging way than traditional screens and announcements, cutting through the audio and visual noise in busy environments such as airports.

The resultThe team found that customers connected with Chip CANdroid quickly and naturally. After a short time, customers and staff were high-fiving, hugging, waving — and in some cases even kissing Chip CANdroid goodbye.

At check-in, customers appeared happy to physically approach Chip CANdroid. Families in particular enjoyed Chip CANdroid’s presence, finding it entertaining and de-stressing, and engaging with Chip CANdroid socially.

At the gate, customers showed much less anxiety about their flights when Chip CANdroid was present. Along with providing useful information, Chip CANdroid alleviated boredom by taking selfies, telling jokes, and generally providing a level of social engagement and entertainment.

Looking to the futureOverall, this experiment showed that social robots like Chip CANdroid can engage people with information or instructions in a more meaningful way than a sign, screen or announcement. However, it also showed that while customers listened to Chip CANdroid and found it helpful, they still tended to consume information passively rather than proactively interacting with the robot. Whether that is simply because robots like Chip CANdroid are still a novel and unexpected technology remains to be seen.

The Air New Zealand experiment also demonstrated the value of inter-disciplinary collaborations across commercial and research organisations, including the role that innovation specialists like CommBank’s social robotics team can play. To find out more about the CommBank Innovation Lab and how it could help your business, visit commbank.com.au/innovationlab or talk to your CommBank Relationship Manager.

“ This experiment is a great example of why we invested in social robotics; working collaboratively with an innovative client like Air New Zealand, while also engaging some of the brilliant minds from the UTS Centre for Artificial Intelligence.”

Tiziana Bianco, General Manager of Global Innovation Labs, CommBank

“ Going through this process collaboratively has been incredibly useful in helping us understand how an innovative organisation such as CommBank implements and utilises the principles of design thinking, experimentation and agile development.”

Avi Golan, Chief Digital Officer, Air New Zealand

Agriculture• 1 in 2 regional businesses are actively

pursuing innovation initiatives.11

• Regional innovation generates $19bn in extra earnings a year.11

• 38% of agribusinesses plan to invest in the Internet of Things in the next 12 months.11

• Autonomous tractors are on their way, with Case IH demonstrating driverless concept vehicle at AgQuip in 2017.

• The global market for agricultural robots (agbots):12

• 2016: US$1.7 bn

• 2023: US$27.1 bn

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11 CommBank Regional Business Insights Report, National Report FY17.12 Wintergreen Research, Agricultural Robots: Market Shares, Strategies, and Forecasts, 2017 to 2023, 2017.

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The innovations set to change the way you farm.

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CommBank research shows regional businesses are star innovators, applying their creativity to generate billions of dollars in production every year. Now emerging technologies are set to liberate producers from repetitive manual tasks and give them the insights they need to farm smarter, faster and more cost-effectively.Australia’s agribusinesses are capital intensive operations exposed to a hugely competitive international market, so it’s no surprise that they are constantly looking for new and better ways to do things. This research shows that regional businesses are above-average innovators, with around one in two actively pursuing innovation initiatives (compared to just 43% of metro businesses), generating an estimated $19bn in extra earnings every year.11

For agricultural producers, those innovations increasingly mean taking advantage of emerging technologies that are gradually revolutionising almost every aspect of farming. Low carbon emission and fuel-efficient technologies are a key focus, with the latest generation of tractors and harvesters offering potential fuel savings of 25% or more compared to older machinery – a considerable saving when a large machine can use 100 litres of fuel an hour.

And farmers are becoming more connected than ever, using a range of apps to assist with farm management, productivity, and weather analysis. Yet our research suggests that the largest area of investment over the next 12 months is set to be in the networked devices known as the Internet of Things (IoT), nominated by 38% of agribusinesses.

Sensors, drones and paddock-mapping technologies are already helping producers boost productivity and cut costs by concentrating water, nutrients and weed control where they’re needed most. And the next generation of automated tractors, sprayers and headers is set to liberate farmers so they can focus on farm management and business development, rather than repetitive manual tasks. In the longer term, GPS-driven autonomous ‘agbots’ could even operate continuously to take care of weed management, planting, crop health, livestock control and feral animal management.

The opportunities are enormous, but there’s plenty of work to be done to realise their potential. Our research shows only 38% of agribusinesses feel prepared to embrace emerging tech in the near term, while around one in four have adopted a ‘wait and see’ attitude.

11 CommBank Regional Business Insights Report, National Report FY17, p. 5.

With so many emerging technologies at the farmgate, what will agriculture look like beyond 2020?

In the connected age, valued generational knowledge and experience could quickly be replaced by networked knowledge that can be transmitted globally and applied in seconds.

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That’s consistent with the long asset replacement cycles common in cost-conscious agribusinesses, but it also underlines the need for many producers to start researching now so they can make informed choices when it’s time to upgrade.

According to Grant Cairns, CommBank Executive General Manager for Regional and Agribusiness Banking, “Mastering innovation means making creativity and experimentation an essential part of your business’ DNA, rather than a one-off process improvement.” For agribusinesses seeking to make the most of emerging technologies, that is likely to mean a whole-of-farm solution, with interconnected devices constantly generating management data you can use to reduce costs and lift productivity.

A good starting point is to have a conversation with your CommBank Asset Finance Specialist. As part of a team working with hundreds of similar businesses across the country, they can offer you a unique perspective on the latest technologies and the initiatives other agricultural businesses are pursuing. Once you’ve identified the technologies you want to invest in, they can also help you find the cost-effective finance or leasing option, so you can take advantage of everything these ground-breaking new technologies have to offer.

Tips for adapting new technologies.1. Educate yourself

Start researching now and continuing investing time regularly so you can make better informed decisions when you’re ready to invest.

2. Don’t be afraid to create your own solution You know your property best, so you’re the person best qualified to choose the right technological components and put them together in a way that fits your needs.

3. Connect to the global network Agribusinesses are learning in real time globally. Keep an eye on what is happening overseas as part of your ongoing research, so you can stay on top of new developments.

4. Partner with an expert A CommBank Asset Finance Specialist can help with ideas about investing now and being ready to invest in the future when you’re ready. Flexibility and the ability to change your business tools will be crucial for riding the wave of next generation technology, so it’s important to avoid locking yourself in to technology that will rapidly become obsolete, and to think about the new developments on the horizon.

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Case Study: Boosting productivity with controlled traffic.

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Jochim (“Josh”) Jager is a grain cropper on a large family property in Western New South Wales, and an enthusiastic adopter of new farming technologies. He’s seen firsthand how precision agriculture machinery can boost productivity and deliver significant time and cost savings.

Over the past seven years, Jager and his family have been updating their machinery to implement controlled traffic farming – separating the crop zone and traffic lanes for more efficient sowing, spraying and harvesting. With their farm spread over a 100 kilometre radius, being able to move quickly between paddocks and farms is critical.

“We’re trying to create economy of scale, lowering labour and other costs as much as we can for each hectare,” says Jager.

Doing more with lessNewer, more efficient farming equipment means they can do more with less. For example, their new sprayer has a reach of 48 metres, instead of the old 36 metres, allowing them to spray an extra 30 hectares an hour – or up to 300 hectares extra on a good day.

“We can now crop about 10,000 hectares with the harvesters and just one seeder, one sprayer and one spreader,” he says. “We also save time by putting nitrogen fertiliser down with the seed.”

Because Josh and his team can work faster, they’re better able to respond to changing weather conditions. With less time in the cabin, he also has more time to focus on farm management, while requiring fewer contractors to get the job done.

And that isn’t the only cost saving. Jager has bought two new headers which can harvest 30% per hour more than the older model, creating significant fuel savings. The new headers are also more reliable, with far fewer breakdowns, resulting in cheaper maintenance costs – and fewer headaches in the field.

“We’re trying to make our business more diverse by growing health crops like lentils, which are profitable but can be challenging to harvest,” Jager explained. “These headers have flex header fronts, so they’ll make harvesting far easier.”

Looking ahead Jager has big plans for his family’s farm. Because of the increased efficiencies that the latest equipment provides, they’re looking to expand crops from 10,000 hectares to at least 15,000. He is keenly watching new developments in autonomous tractors, drones and NDVI imaging.

“The technology isn’t quite there yet for the scale of our farm – but it will be, and soon autonomous tractors will be in production,” Jager says. “Over the next 10 years, technology is going to revolutionise our industry.”

“ Over the next 10 years, technology is going to revolutionise our industry.”

Jochim Jager

Health• 48.8% of healthcare organisations

are prepared for the impact of emerging technology — more than any other sector.

• 41.5% plan to invest in the Internet of Things over the next 12 months.

• 24.4% would like to see greater government incentives for investment.

• The global medical robots market:13

• 2016: US$4.9 bn

• 2021: US$12.8 bn

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13 Markets and Markets, Medical Robots Market by Product – Global Forecasts to 2021, 2017.

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Preparing for the data tsunami: five technology trends set to transform healthcare.

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From government-mandated data sharing, to wearable devices and artificial intelligence (AI) assisted diagnostics, the future of healthcare is all about data. The challenge is to use it effectively.Australia’s healthcare system is under pressure. By the end of the century, one in four Australians are projected to be aged 65 and over, up from just 14% in 2012,14 with an increasing number living with multiple chronic conditions.15 Meanwhile, healthcare costs continue to rise, at the same time as governments are seeking to rein in spending and household budgets are tight.

But it isn’t all bad news. Emerging technologies promise to help the healthcare system meet the challenge by underpinning new, integrated care models focused on outcomes, not services. By capturing and sharing information across the healthcare system — including data from smartphone apps, biosensors and implantable devices — these innovations promise to deliver improved outcomes at a reduced cost. But there is much to be done before that promise becomes a reality.

Healthcare providers have always been quick to assess and adopt new ideas that directly improve patient care. Yet our research suggests they have been more cautious about embracing emerging technologies, with many waiting to understand the full impact of impending regulatory change before they invest. So, while 22% of the healthcare organisations in our survey said they were fully prepared for emerging technologies, another 29% said they were “completely unprepared”, with another 19% only partially ready.1

Now, however, new technologies are likely to take centre stage, following the approval of the Federal Government’s National Digital Health Strategy by COAG on 4 August 2017. The strategy sets an ambitious roadmap for the future of digital healthcare in Australia over the next five years, designed to enhance models of care, change prescription processes and improve interoperability across the system. As new initiatives supporting the strategy are launched, organisations are likely to accelerate the adoption of new technologies, either by choice or necessity, with benefits for governments, healthcare businesses and patients alike.

Healthcare is heavily dependent on high-tech devices, many of which could become obsolescent as emerging technologies proliferate. So it’s important to think about the right way to acquire now, while allowing scope to update in future.

14 Australian Bureau of Statistics, Population Projections, Release 3222.0, 2013.15 AIHW, Australia’s Health 2016.

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Five trends to watch.1. Ubiquitous, secure data-exchange

Mandated by the Federal Government’s National Digital Health Strategy and underpinned by the rollout of My Health Records for all Australians by the end of 2018, the collection and exchange of high quality data is set to become a familiar part of every healthcare practice.

2. Digitally enabled care models Through a collaboration between consumers, governments, researchers, providers and industry, the National Digital Health Strategy envisages a new generation of evidence-based, digitally enabled care models with the potential to radically transform the way healthcare is organised and delivered. These integrated care models will be designed to deliver value-based healthcare payments, moving away from a fee-for-service model to outcomes-based funding.

3. Wearables and connected devices The proliferation of wearables and connected devices through the Internet of Things (IoT) will generate a tsunami of data that can be used to monitor and predict health outcomes. Globally, the wearable medical device market has been valued at over $13.2 billion in 2016.16 Our research indicates that over 40% of healthcare organisations plan to invest in IoT within the next 12 months — and as the range of devices and potential applications proliferate, that figure is likely to grow.

4. Machine learning and artificial intelligence IBM Watson Health and other artificial intelligence (AI) applications have already demonstrated the potential of AI to support diagnostics and healthcare provision. But their true power will come from their ability to analyse the enormous new datasets generated by connected devices, deriving unexpected insights and predictive models for improved prevention and treatment.

5. Remote and robotic care Devices like the Da Vinci surgical robot are already being successfully used to improve on human capabilities, with surgeons operating entirely through the machine interface. As these technologies improve, practitioners will be increasingly liberated from the need to be in the same location as a patient, while patients will be able to consult the experts of their choice from around the world.

16 Kalorama Information, The Market for Wearable Devices, 2016.

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Case Study: Taking Australian healthcare innovation to the world.

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One Australian healthcare company successfully embracing new technology and taking its innovations to the rest of the world is Genea and its technology offshoot, Genea Biomedx. Formerly Sydney IVF, the fertility pioneer brings together clinical insight, research and technology to find game-changing solutions to the difficult issues fertility clinics face.

Steven McArthur is the Scientific Director of Genea. He says the company has always invested heavily in research and development to maximise the potential of successful IVF pregnancies. One of the ways they’re doing this is with technologies that reduce manual intervention in the IVF process.

Technology that mimics nature“To check eggs, sperm or embryos, scientists have traditionally needed to remove them from the incubators, check them under a microscope and then put them back,” explains McArthur. “That’s a very big intervention compared to the natural process, where an embryo will travel for about five days down the fallopian tube before being implanted in the wall of the uterus.”

To avoid this manual intervention, Genea created a technology called Geri (Genea Embryo Review Incubator). Geri allows scientists to check embryo development throughout those critical first six days without removing them from the incubator. By better replicating their natural environment Genea aims to maximise the potential of a pregnancy. And through automation, highly trained expert staff can be moved from manual tasks and onto greater value-adding work.

Genea has also taken this technology a step further with the creation of an app that allows embryologists to check embryo development remotely. This means they can work across cities, resulting in significant productivity gains.

Saving critical seconds The company has also harnessed the benefits of automation in another key piece of hardware. Known as Gavi (Genea Automated Vitrification Instrument), this technology automates and standardises key parts of the process of freezing embryos.

“Freezing an embryo is a highly manual process that requires extremely high attention to detail,” says McArthur. “It takes around 14 minutes to complete – and every second counts.”

Like other leaders in healthcare innovation, Genea are also leveraging the power of apps and smartphones to collect and share information. Their system, known as Gidget, uses re-engineered iPads and specifically designed apps that track the movement of eggs, sperm and embryos within the laboratory.

“Gidget creates auditable sample handling data, ensuring the security and the traceability of all of the reproductive samples in Genea laboratories,” says McArthur.

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Going global McArthur says Genea has further innovations in the pipeline, focused on further automating and standardising activities during fertility process and reducing manual intervention. A major part of their current research efforts centre on finding new ways to better understand the genetics of an embryo, without having to remove cells.

Genea is also taking its ground-breaking technology to the world. In 2015, the company signed an exclusive global distribution and sales agreement with German pharmaceutical giant Merck. As a result, Merck now has exclusive rights to sell the technology and associated consumables, under licence to Genea.

According to McArthur, the newly developed technology side of the business has the potential to dwarf its traditional, clinical operations. “According to the most recent published data, there were between 35 to 40 thousand egg collections in Australia – compared to more than one million egg collections globally,” he says. “The commercial potential for Genea Biomedx across the globe is huge.”

Harnessing new technologyCameron Ziebell, National Head of Healthcare, Commonwealth Bank, says Genea epitomises the accelerating pace of technological change across healthcare.

“Medical equipment is now in a similar place to computers 10 years ago,” he says. “With innovators like Genea constantly redefining best practice, the challenge for healthcare businesses is to find a way to access the latest technology, without being locked in to equipment that will rapidly become obsolescent.”

Ziebell says it’s important for healthcare businesses to rethink their asset finance strategies so they can avoid sinking precious business capital into rapidly depreciating items.

“You need to have flexibility in your financing, potentially using a structure like an operating lease to manage and access the equipment over its effective life, rather than owning it outright.”

“ The commercial potential for Genea across the globe is huge.”

Steven McArthur, Scientific Director of Genea

To find out more about CommBank’s Asset Finance solutions, visit commbank.com.au/assetfinanceCall 1800 Assets to access Australian based Asset Finance Specialists.

About Equip and the Asset Financing Australia Index ReportThe Commonwealth Bank has commissioned East & Partners to conduct research and provide insights for this edition of Equip through the Asset Financing Australia Index Report. All references to our research across this report relate to the research conducted by East & Partners commissioned by CommBank in May 2017 unless otherwise specified. East & Partners’ established research methodology has resulted in findings which are statistically robust and reflective of actual market experiences. Data is based on direct interviews conducted in May 2017 with a structured national sample of 894 businesses with annual turnover in excess of A$25 million. The sample has been structured to directly mirror natural distribution of these businesses by turnover segment, geography and industry. In building the sample frame, the relevant enterprise population demographic distributions reported by the Australian Bureau of Statistics are used, with actual interviewee targets being randomly selected. The sole selection criteria used in addition to this natural framing was that the target business had to be actively engaging in asset or equipment financing. About East & PartnersEast & Partners Pty Ltd, a leading specialist market research firm in the business, corporate and investment banking markets of Asia Pacific, work across 11 countries in the region delivering both multi-client and proprietary market analysis services to financial services providers. More InformationThis report is published solely for information purposes. As this report has been prepared without considering your objectives, financial situation or needs, you should before acting on the information in this report, consider its appropriateness to your circumstances and if necessary seek the appropriate professional advice. The information in this report and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication. No guarantee is provided as to the accuracy, reliability or completeness of any statement made in this report. Commonwealth Bank of Australia ABN 48 123 123 124. AFSL and Australian credit license 234945.

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