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Economics References Committee - 24/08/2015 - Australia's innovation system

BLOCH, Mr Kevin, Chief Technology Officer, Cisco Systems

PATTERSON, Mr Mark, Regional Manager Western Australia, Cisco Systems

Evidence from Mr Bloch was taken via teleconference—

Committee met at 09:17

CHAIR ( Senator Dastyari ): I declare open this hearing of the Senate Economics References Committee in its inquiry into Australia's innovation system. The Senate referred this inquiry to the committee on 18 March 2014 for report by the first sitting day of July 2015. On 19 August the Senate granted an extension to report by 25 November. The submission closing date was 31 July. The committee has received 181 submissions, which are available on the committee's website.

These are public proceedings of the committee, but the committee may determine or agree to have evidence heard in camera. I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as contempt. It is also contempt to give false or misleading evidence to a committee. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken and the committee will determine whether it will insist on an answer having regard to the ground which is claimed. If the committee determines to insist on an answer, the witness may request that the answer be given in camera. Such a request may also be made at any other time.

Finally, I take this opportunity to thank witnesses who have taken the time to appear before the committee today. I welcome Mr Bloch and Mr Patterson from Cisco's Internet of Everything Innovation Centre. Thank you so much for appearing before the committee today. There are a fair few questions we would like to ask you but before we get to that I wonder if you have any opening remarks or opening statement you would like to make.

Mr Bloch : Yes. First of all thank you for the opportunity to talk to this inquiry. This is the first time I have done something like this in my 35 years here. What I thought I would do is give you three points—a quick summary on me, Cisco and some thoughts and learnings. This is the advice I was given prior to coming to this inquiry. I thought the first two would give you some background as to why my thoughts and learnings may make sense for this inquiry.

First of all, about myself: I have a couple of degrees, one in engineering and one in computer science. I have worked for a telco, Telstra. I worked for a local R&D company, JNA Telecommunications, for 14 years. We developed technology in Australia, first for the local market—our primary customer was Telstra—and then we went into export. That company was then acquired by Lucent, and I was at Lucent for about 14 months. After that I joined Cisco, about 16 years ago. That is a brief background. In terms of this inquiry, I not only represent Cisco as chief technology officer but I am also very interested in this topic as an Australian engineer and over the years have thought long and hard about what Australia needs to do in terms of its innovation system.

The second is Cisco. For those who are not familiar with Cisco, we are a global company operating in about 120 countries. We spend about $5.6 billion per annum on our own R&D. We have acquired well over 180 companies. We have equity investments of about $2.8 billion in hundreds of companies around the world. So the company is very much an innovation technology company and still continues to do extremely well not only in Australia but globally. In Australia we turn over about $1.6 billion. We have about 1,500 staff, not all of whom operate for Australia and most of whom actually operate outside of Australia. They live in Australia but provide services for Asia and follow-the-sun-type activities.

The only other point I would make—which is, I think, one of the reasons I am here—is that, recently, in March, we announced that we were going to open the eighth global Cisco Internet of Everything Innovation Centre, in Australia. It is the eighth in the world. We made a $15 million commitment over five years to the centre here. We have centres already in places like London, Berlin, Tokyo et cetera. The first site for our innovation centre in Australia is in Perth, and its focus is on astronomy—because of our involvement in the Square Kilometre Array since 2007—and resources. We have declared to the market, and in particular to Cisco, that we in Australia want to focus in particular on resources and agriculture, because we believe it gives us differentiation amongst the other countries in Cisco in the world. The objective of the centre is, first of all, to grow the internet of everything market. Internet of everything is really about digital and digital transformation. In government it is referred to as the knowledge economy. We referred to it as IOE, internet of everything. Some people talk about the internet of things.

The second reason we are opening these centres to develop an ecosystem. Cisco recognises that, in terms of the internet of things, we do not do it all—we do not make jet engines; we do not make turbines; we do not make locomotives. So we obviously need to work with others. Thirdly, we need to foster innovation and we need to foster innovation in Australia. When we talk about agriculture, we are talking about fostering digital agriculture, where others in Australia can innovate within our centre to enable more productive agriculture—and mining and other things. The Perth centre was opened by the Western Australian Premier in July, and we are aiming to open the Sydney centre within the next six months. We believe the potential benefits to Australia of this innovation centre are more jobs, increased productivity, potential for export, growing skill sets and identifying what skill sets are required in the future. Also—and I should have pointed this out earlier—I have secured venture capital from Cisco in Australia, so we have a few million dollars secured to invest locally when the opportunity arises.

Let me just pause there. I do have some thoughts and learning from all of that, but maybe you have got some questions before I get into some of the learnings and some ideas I have.

CHAIR: We might do that, and some of that might come out in the questions we ask. You might have an opportunity to touch on those then.

Senator KIM CARR: Could I start by asking you if you could give us an assessment, your opinion. Business expenditure on R&D in this country is about $18 billion a year. It may be a little bit more now, but the figures we had for our interim report went to that number. So it has been rising quite substantially year on year. However, despite the increase, the amount of money spent on ICT has declined, and I draw your attention to the interim report we have produced and the business expenditure on R&D by socioeconomic objective tables. For instance, for information technology in 2007-09 it was 12 per cent. In 2011-12, which was the latest set of figures we had, it was down to 10 per cent. Can either of you tell us why you think that is? Why is business spending less money on ICT at a time when people like you are telling us it is an all-encompassing discipline?

Mr Bloch : One of the things that not just Cisco has identified but Gartner and other industry analysts have also identified is that the way ICT has been measured in the past may change, and this has come about through what is called the Internet of Things. For example, take a utility. In the past when Cisco sold to a utility it was typically to the IT department, and that is where IT got measured. But in the last five to 10 years, if you take a look at the second part of a utility, which is the actual delivery of electricity—the network itself: the distribution network et cetera—we have been selling quite a lot of products outside of IT. We call it operational technology, OT, and it may be that some of the numbers may be hidden in operational technology. For example, let's take energy distribution again and the substation technology, where we have put intelligence into those substations. Or let's take the example of Rio, where they have put intelligence into the autonomous trucks. Has Rio accounted for the intelligence in the truck as ICT or is that part of their vehicles and their operations technology? That is one idea I have. I am not sure exactly what the answer is. But our view is that the growth in the market for ICT has absolutely expanded and will continue to expand, in particular as IT moves into OT, into operations technology.

Senator KIM CARR: You say it is a measurement issue.

Mr Bloch : That is correct.

Senator KIM CARR: Is there any evidence to contradict the tables that we have that indicate business R&D on ICT is actually going up? What evidence can we point to?

Mr Bloch : I think there are analyst numbers, and I could refer to Gartner and IDC. Gartner in fact made a prediction that by 2020 90 per cent of IT will be purchased outside of IT. In other words, it will be in OT. The question then is: is it being measured as IT in OT? That is the point I am trying to make.

Senator KIM CARR: Given the amount of money that governments invest in scientific research and innovation, do you think that there should be a more specific allocation made for ICT?

Mr Bloch : Absolutely. There is plenty of evidence now to suggest that the world is going digital. I can submit a paper from Cisco. It was done in conjunction with a university in Switzerland. It is called Digital vortex, and that paper, plus others by McKinsey and others, has referred to how the world is going digital and is digitising basically everything and anything. That is governments, and all sectors have not been left untouched. We believe that this is going to accelerate. We have seen governments in other parts of the world invest very heavily in what is called the Internet of Things. In particular I referred to the Chinese government, and there are other governments investing in the Internet of Things. That is a very important reflection on where things are heading. I think that the Australian government would be very well advised to place the investments in innovation not just in IOT but in ICT in general, and if we could be more focused that would be even better.

I would like to reflect on even what Cisco has done in terms of focusing on our core strengths as a country—in particular, resources and agriculture. I believe there are tremendous opportunities for Australia not just to mine and farm more but to do it intelligently. I am talking about using digital technology to enhance how we mine and how we farm and, hopefully, to eventually export that technology. Certainly, an objective of the Cisco IoE Innovation Centre is to foster innovation in others within Australia—not just Cisco—to develop these smart applications so that we can export some of them and build on our strengths in agriculture and resources. That is a long answer, but I genuinely believe that the world is going digital, and if Australia does not focus on this and invest we are going to be left behind.

Senator KIM CARR: It may well be that there other explanations rather than it just being a management issue. You have invested quite heavily in the new centre of excellence here. Wasn't that initially driven by the SKA?

Mr Bloch : No. We got involved in the SKA in 2007. I was responsible for some of these initiatives. When we saw what was going on with the Internet of Everything around the world, we felt that we had better move on. So we decided to put forward some ideas around this innovation centre. And it made sense to bring in the work that we had already done in the SKA. The reason the SKA is kind of interesting—and a lot of people looked at me sideways as if to say, 'Why are you looking at astronomy for the Internet Of Everything?'—is very simple: the Square Kilometre Array itself is a big sensor; in fact, it is one of the biggest sensors on earth. That sensor is generating a lot of data that is going down to the Pawsey centre 700 kilometres away in Perth. The data is being processed in that supercomputer and, in real time, impacting and adjusting those antennas. That is exactly what we mean by 'the Internet of Everything'. It is a great example; it is one of the world's leading examples of IoE, and we have got it right here in Australia. Cisco has been involved in that since 2007. It made a lot of sense in that it was such a good example of IoE to bring into our centre here in Australia.

Senator KIM CARR: It has been put to me that, in a very short period of time, within months, the amount of data collected would be equivalent to every word spoken throughout the history of humanity. Is that the sort of number you would expect?

Mr Bloch : I will go one better. Professor Steven Tingay, who heads up that operation, says that within the first five minutes of turning on the SKA it will generate more data than the internet ever.

Senator KIM CARR: What do you say about what has happened at NICTA?

Mr Bloch : I think it makes a lot of sense. I have got a lot of comments about research, so maybe I should take a step back before I answer your question about NICTA. The first point I would make is that whenever I am dealing with research in this country—I am talking about higher education—they always talk about research. By the way, government does this as well. Government and research tend to talk about research and industry. And yet industry does not quite see it like that—because industry is made up of supply and demand. So I actually think there is a triangle. You have got industry, you have got research and subject start-ups, and you have also got the market. Companies like Cisco do not see industry as one; we are a supplier and demand is the market customers. That is a very important point, especially when I am dealing with universities. Dealing with Cisco is very different from dealing with, for example Woodside, which is a customer of ours. We as a company are very customer centric, but research is not. I am not saying they are not, but I do not think they clearly delineate between the supply and demand side. It is really important. If research wants to get involved with industry a la Cisco, they need to understand that what we are really after is customers and markets. That is my first point.

Going back to CSIRO and NICTA, a lot of progress has been made and it is heading in the right direction. But my key point here is that we need to be more commercial in Australia with our investments in innovation. My rule of thumb—having spent 14 years in R&D, mainly 'D', in Australia and another 16 years at Cisco, where we are not only doing a lot of innovation but also selling a lot around the world—is that it takes about $1 to do the research for a product, $10 to build the product and $100 to get that product to market. The problem I have seen in Australia is that government and higher ed tend to focus on the $1. I think there is not a great appreciation of the cost of commercialisation to get a product to market. Countries like America and Israel absolutely get the $100 and they assist in the commercialisation aspect.

Going back to CSIRO and NICTA, there is a sort of a merging of CSIRO and NICTA now and there is a new management regime stepping in. CSIRO has signed up as a partner in our innovation centre, so we are very optimistic. There is literally a treasure trove of innovation within CSIRO but it is locked up. I do not believe that we as a country have really explored the opportunities of all of that innovation. And one of the interests that Cisco has is to partner with CSIRO. Obviously CSIRO is a massive organisation but in terms of the IoT in particular we think they have got tremendous technology and tremendous people—I am talking about PhDs, real experts. The world is just praying for this type of capability. That is one of the reasons we are getting together with them—to see how we can unlock some of the potential and commercialise it. That is a long answer, but I think what I am saying is that CSIRO and NICTA are moving in the right direction and we are very optimistic.

Senator KIM CARR: Why was it necessary to do the amalgamation? Wasn't it to do with government withdrawing support for NICTA?

Mr Bloch : Maybe. I do not know the machinations of government. From an industry point of view, dealing with a CSIRO which includes NICTA makes it a lot simpler for us.

Senator KIM CARR: There are 300 graduates. It is the largest source of ICT PhDs in the country. Who is going to look after them?

Mr Bloch : When you say 'graduates' do you mean—

Senator KIM CARR: The largest source of ICT PhDs is through NICTA. How can we be certain that they will be able to continue? Secondly, why aren't we able to get more support from industry in the training of PhD candidates?

Mr Bloch : I cannot answer the first question; it is a short-term issue and I have not been involved in all the political machinations, so I can only give you the big picture. We think there is tremendous opportunity in the people and the intellectual property that NICTA and CSIRO combined offer. We are optimistic that, with the new management, they will become more commercially aware and willing to work with companies like Cisco.

Your second question is a really important one. Cisco has four innovation centres—in San Jose, Beijing, Mumbai and Israel. It is extremely difficult for us to get R&D done in Australia. That is mainly because of distance and because of a lack of personal relationships with people in Cisco. My experience is that, where we have made investments here with research, it has been based on personal relationships. It is extremely difficult. I will give you an example. We have recently won an ARC grant with the University of New South Wales. That grant—which, by the way, I think is extremely valuable and attractive for a company like Cisco—was written and conceived two years ago. Now that we have got the grant, we have taken a look at the submission and it is already out of date. In other words, Cisco has turned around and said, 'Actually, the market has moved; we do not need that anymore.' So it is very difficult to have these long-term things—

Senator KIM CARR: Did you send the money back?

Mr Bloch : No, we have not got any money yet and we are deliberating on what to do now. There are still some basic concepts in there that we can modify and make more relevant, but this is important because it is providing a reality check. Had we not done this, the university would have gone off and done the research and it would have been a total waste of time. We are saying: 'No, don't do that. We don't care about the grant. We don't want to waste time.' We are actually providing a reality check. And this is one of the big deals about operating as a—when you have global—

Senator KIM CARR: What about the support measures that are available? You mentioned there is money through the linkage program—I presume that is what you are doing with the university—and there is the R&D tax credit system. Can you give us a view as to how effective those are in terms of your company's operation?

Mr Bloch : We have not used it very much. Obviously, now that we are investing more in the innovation centres and we are doing more R&D, we will probably be taking advantage more often of the tax concessions. The ARC grants, as I said, are really difficult for us because of distance and because of timing. The other thing I would say is that, going back to my first point, a lot of the funding from government is focused on the $1 ARC; it does not help with the commercialisation.

Senator KIM CARR: There is an article in The Australian today, on page 3, that says:

… two-thirds of Australian students are being trained for jobs that will vanish or look completely different in the future …

It is talking about the whole education system: schools, vocational education and university. I wonder if you have had a look at the article?

Mr Bloch : Yes, I have; I read that with interest and I thought about it for today. I think that is fundamental. Obviously sometimes people overhype it, but where there is smoke there is fire; there is a lot of truth in this. We are seeing a massive shift because of digitisation.

Let me take a step back; I want to explain a couple of things. Why are the internet of things and the internet of everything so important? They are so important because we are moving from what we call human scale, where everything was done in our brains, to machine scale. By 2020 we believe there are going to be 50 billion things, and most of them are going to be controlled by machines. We are moving from what we call an open loop, where humans are involved, to a closed loop, where no humans are involved: things are automated, and only on the exception is a human involved. When you look at IoT and IoE and the data it has produced, what are people really after and what is industry really after? They are really after two outcomes: (1) they want to make faster, smarter decisions—we call that human augmentation; and (2) they are after automation. In other words, you fully automate a process.

The reason I am telling you this is a lot of people, when they look at big data and analytics and IoT, are very focused on the first, which is really important—how do we make smarter decisions about running a business, about running government, about traffic, about mining et cetera—and there is a lot of investment going on there now. The second one is even bigger. This is where we fully automate systems: where we have pit to port with Rio with no people involved at all. This is a major issue for governments because what that means is a lot of the manual work, such as people driving those trucks, will no longer be required in the future; therefore, we need to think very carefully and very quickly about reskilling the labour force. We believe there is a huge opportunity for Australia to develop our skills into these higher value jobs around data, around analytics and around data science, and we have seen this in Perth in Western Australia with Curtin University opening up a school of computational science. What we have also found is that those skill sets are transportable horizontals as well. That article in the paper is a very good warning bell because there is no question that the types of skills that we see in the future are definitely going to change. They are going to be far more around digital and ICT and data and analysis, and a lot of the manual tasks are going to be automated. This is just in inexorable; it is just going to happen.

Senator KIM CARR: To what extent should our science and innovation policy focus be on those enabling technologies like nano, semiconductors, advanced materials, photonics, artificial intelligence and biotech? To what extent should we concentrate on those, given that you say there is this inevitable march? To what extent should they benefit all industries generally, rather than specific industries?

Mr Bloch : Are you asking whether you need to be more specific or selective?

Senator KIM CARR: I want to know to what extent we need to concentrate on the enabling technologies and to what extent we need to be industry specific.

Mr Bloch : I think you should definitely be concentrating on enabling technologies like the ones that you mentioned, but I would also play to our strengths. I think Australia has tremendous strengths, as I said before, in resources and in agriculture. I think we have tremendous opportunities in finance and in transport. I have seen reports from government that highlight some of the more successful sectors within Australia, and we need to combine them. I think picking a few winners is not a bad thing; I have seen other countries do that and do that very well. How you do that is the question, I acknowledge, but 'play to your strengths' is what I have always believed.

Senator KIM CARR: Are you familiar with the Digital Transformation Office?

Mr Bloch : Yes.

Senator KIM CARR: To what extent do you think the Digital Transformation Office should focus on Australian government departments and agencies, and to what extent should it be encouraged to take a broader approach towards industry?

Mr Bloch : That is a really good question. The way I look at it is: phase 1 was the NBN, phase 2 is the DTO and phase 3 is to digitise the whole of Australia. I really believe that the more the government—any government—focuses on NBN, the more we are looking in the wrong place. That is just moving atoms around faster. It is what you do with it that is going to change the country. The first thing is that the DTO is a good move because it is saying, 'How do we digitise government?' Great. We need to bring that on and make that happen. I think we have now got all the other private sectors that we need to help along the path. I genuinely think that a lot of those sectors do not fully understand either how competitive they will be if they embrace this or how uncompetitive they will be if they do not. I think the government has got a role to play in really helping them, just like the DTO office has done in terms of setting an example for government within government. I think government can also help accelerate the adoption and digitisation of other sectors as a phase 3, if I could put it that way.

Senator EDWARDS: I am interested in your comments to Senator Carr, but I want to take you to a different space which I have started to do a little bit of work on or just had a look at recently—that is, quantum computing. It would seem to me that that is an opportunity for the first mover anywhere around the world, and it seems that Australia may have an opportunity to be at the front of that. Can I have your general comments, given your incredible background in this space, on quantum computing and where you see it in this country?

Mr Bloch : That is a great point. First of all, let me just say that I am not an expert in quantum. I know that the university that I attended, the University of New South Wales, has done a lot of good work there. In fact, I am due to visit their centre in a couple of weeks, so I wish this had happened afterwards, but here is what I think. I think that is a great example. We are going to need more computers—there is no question. I have got two answers: No. 1, I think it is an absolutely great example of where the puck is heading and where we could go, but the danger is if we try to do this in Australia by ourselves. So my first suggestion would be: do not try and do this quantum computing just at the university in Sydney. We need to start building some bridges with some globals. I have always said, from when I was doing R&D, that the problem with Australian engineers—and they are damn good; on a world scale they are some of the best—and the problem that we have in this country is that we tend to focus down. We are looking down at our feet and we are not seeing how the world, every day, is moving a couple of degrees to the left, to the left. So what we have got to do with something like quantum computing is obviously to invest, but we have got to keep our eyes open to what is going on in North America, in Asia and in Europe and make sure that whatever we are doing here is still ahead of the game.

Senator EDWARDS: Are you familiar with the work of Professor Michelle Simmons at the University of New South Wales?

Mr Bloch : No, I am not.

Senator EDWARDS: She is somebody who has certainly captured my attention with regard to this area and quantum computing and things like that. I might send you that link, when I find your contact details, and I would be interested in your comments with regard to where our investment should be in relation to this and how we could better fund these types of things to try and stay ahead of the game.

Mr Bloch : I am more than happy to comment. Again, as I said, I have not been into it in any depth. I think it is an area for the future, but we have got to be careful in just trying to lock it in in Australia; we have got to build global links. The kind of people I am talking about are the people who make silicon, who make this sort of stuff, and who are also threatened by this sort of stuff. It is no good saying, 'We will continue to do the research until we are ahead of the game,' because the world would have moved by then anyway. We have got to do this as a global thing, whether it is building a relationship with a Cisco, an Intel, or an AMD—that type of business is what I am suggesting.

Senator EDWARDS: As a government—and that is what Senator Carr's interest is, as he is the shadow minister for industry and science, and we all preside over that in the parliament—where do you think the failures are in addressing perhaps the entrepreneurial side of what we need to be addressing? And where do you think our strengths are right now?

Mr Bloch : Our strengths in—

Senator EDWARDS: In innovation, with regard to the areas specifically which you have a knowledge of.

Mr Bloch : I think the strength is the fact that I am even talking to you. It is clearly a topic and it is really important right now. Innovation is absolutely so important around the world. The fact that I am presenting to you is a big tick. Innovation is, obviously, a very tough thing and it requires a whole ecosystem—venture capital people, universities et cetera—so we have got to continue this. I take the example of what Israel has done in terms of being right out there, looking three to five years ahead and placing some bets and—

Senator EDWARDS: In fact, I have recently returned from Israel and they openly celebrate failures of people in this area—

Mr Bloch : Correct.

Senator EDWARDS: and then encourage them to go around the second and third time.

Mr Bloch : Israel is a slightly different country. They have an existential threat facing them and they do not have any natural resources. Fortunately, in Australia it is the opposite, and that, in my view, has made us somewhat complacent. And now is the time, in particular when commodities are down. We are seeing this, by the way. From a commercial point of view, we are seeing the big mining companies now really embracing technology, and they are doing it because, as the global market has dropped, they are investing in reducing their costs, and how they are doing this is by leveraging technology. The environment is right now and it is great that the government is doing this.

There is an enormous amount that we still can be doing to encourage, and I will give an example. You brought up quantum computing, but I remember importing products from Canada—listen to this—where they did the R&D in Canada, and they paid for my company in Australia to visit Canada. They paid full trips for our engineers to go there to learn more about the technology. You would say, 'Why the hell did they do that?' It was because, by having us trained in Canada, we came back to Australia and we were far better disposed to sell their technology here. Our government can probably think of the same sort of thing where we are now thinking about not just how we invest in research but how we commercialise and how we help others in the world commercialise the technology that we built in Australia.

Senator EDWARDS: So how important is it for our intellectual community to be included in or to be elected as members of, say, the likes of the American Academy of Arts and Sciences, where traditionally this innovation is recognised, and, obviously, with that, funding flows?

Mr Bloch : I would just like to distinguish between two things—and I have had many discussions with universities on this. I really think that, at any university, and in any innovation process, we need to cordon off research—that is, pure research, which is looking three, five or 10 years ahead—from commercial development and innovation. And what I am seeing is: the world seems to be far more focused today on bringing that forward. I think it is dangerous as a country to lump it all into one. My point is: a company like Cisco is less concerned about that longer term research over three, five or 10 years than we are about: 'How do we innovate in the next three years?' because things are going to live or die in the next three years, from our point of view, and you have got to move quickly.

I think maybe that is a message for this committee: understand the difference between 'R' and 'D'. Companies like Cisco are really interested in the 'D'. We are interested in the next three years. We want to really help companies in Australia innovate and to take them to the rest of the world in the next three years. We cannot wait and look beyond that; it is too high-risk; things are changing too quickly.

That being said, it is absolutely critical that we also do the 'R'. But that is something that Cisco would be less involved with in Australia than in the US, which is obviously the home of Cisco.

Senator EDWARDS: Mr Bloch, I might just go to your colleague, who has been nodding in furious agreement with you, I must say, at various times through your evidence. Mr Patterson, in wrapping up, are there some areas that you would like to summarise?

Mr Patterson : I was more here to play a backup role—

Senator EDWARDS: You have done that very well.

Mr Patterson : In summarising, we played a role with Kevin in opening the Innovation Centre here in Perth. The objective of our offices here in Perth has very much been engagement with some of the customers that Kevin outlined—the Rios and BHPs and Woodsides. I will go to Kevin's point on the distinction between what is happening, from a university's perspective, in research, as opposed to what is important to the development side. Woodside, Rio and BHP are customers we engage with, and, in these tough times right now, they are moving more towards technology to try and automate. So, even though they may be reducing jobs, they are hiring people. One of the examples that Kevin put out was of the SKA, where people from cross disciplines—for example, astronomers—were finding jobs as digital scientists within companies like Woodside, Rio and BHP. They are hiring those kinds of people to augment how they make decisions and how they reduce their costs. So that is a really interesting paradigm. In the past, when organisations like Cisco engaged with IT, we were having to work within cross disciplines to look at how technology was playing a role outside of the IT department—how technology was playing a role within their lines of business. That is a very interesting change for organisations like Cisco: we are having to skill our people up and go back into these organisations to engage with them. So it is a really interesting trend.

As to the questions that Senator Carr asked, as to ICT going down, that is a massive point because, if you look at the Western Australian office of Cisco, 60 to 70 per cent of i-engagements now are changing and shifting from ICT to line of business conversations. So that is a case in point: how is it being measured and what type of technology is being used?

In summarising, that is one of the reasons why a year and a half ago we looked at the innovation centre and we looked at that in trying to find out how we can demonstrate how technology is playing a role for customers, as opposed to them looking at purchasing bits and bytes. It is about showing them real life examples of how technology can augment them.

Senator EDWARDS: That has been very informative. Thank you.

CHAIR: Thank you, Mr Bloch and Mr Patterson, for your presentation today.

Mr Bloch : Thank you, and thanks for the opportunity.