Category Archives: Economy

Now the Unions are Quashing Political Freedoms

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1984_apple1.jpgStanding as a list MP candidate for the ACT Party seems rather like an exercise in futility, but does anyone else find it hugely ironic that New Zealand’s most powerful union has reportedly suspended an employee for political activity?

OK, the gentleman in question may have been a bit naive in how he went about it. Records show that he did raise the possibility of his parliamentary candidacy with the union, but there seems to be some confusion over whether or not he had received their permission. But irrespective of this, since when can employers dictate what political beliefs their employees may hold? The union objected to the behaviour simply because it did not align with their own ideology. If the guy had been standing for the Labour Party or Greens, you can guarantee nobody in the union management would have been the least bit concerned.

I have a huge amount of respect for Andrew Little and what he has achieved with EPMU by dragging it out of the dark ages and making it relevant again. I went to school with him way back when. He’s a very smart guy, so I’m surprised he dropped the ball on this one by playing into the hands of his critics. Unions have an important role in civil society but it is not their role to restrict political freedoms.

Anyhoo…at least the EPMU story is a welcome diversion from the tedium surrounding the Winston show. The scary part about Slick Winnie is that his geriatric fanbase demographic grows bigger every year. Despite his many indiscretions, he is likely to remain a thorn in the side of future governments for some time yet. The guy gets way too much airtime and yet contributes very little of real value. Consequently, in this election year, the rabid media are neglecting to challenge politicians on the REAL issues such as crime, education, health and economic growth.

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Entrepreneurs Epilogue

ideegeo continues to make progress as we build developer capacity and deal with all the administrative issues that go with a brand new business. It’s my role to look after the admin stuff so that the developers can get on with what they are good at doing. At present we need to find a balance between consulting and product development, but we always expected this would be the case to begin with.

Consequently, we currently have some developer bandwidth available to help out with web-based enterprise application development and implementation. The skill set includes experience in Perl, PHP, Python and Ruby plus we are exploring Erlang which we think is the next big thing in web-based application development.

We specialise in transactional environments requiring high volume and low latency. Experience operating in MySQL and other commonly deployed databases is a given of course. Our lead tech guy has held CTO roles in large technology organisations offshore and already has an impressive CV of New Zealand projects under his belt, including trouble-shooting legacy software.

If we can help out on a project, drop me a message: paul (at] ideegeo {dot] com

Do World Cities Have an Entrepreneurial Advantage?

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According to media reports, a recent study by the Global Entrepreneurship Monitor (GEM) names Auckland as the OECD’s most entrepreneurial city. With all due respect, I beg to differ.

I could not find any recent reports by GEM specifically identifying Auckland as the most entrepreneurial OECD city, however I did locate a July 2008 paper exploring the hypothesis, proposed by the work of Prof. Richard Florida and others, that “world cities” attract creative people and enterprises and are hence more entrepreneurial.  Whilst I respect the idea that “creative class” and creative cities engender more entrepreneurial dynamism, I’m concerned by one or two shortcomings in the GEM methodology that seem to cloud some of the conclusions in the recent paper.

Firstly the GEM research questions subjects about their perceptions of entrepreneurial behaviours and opportunities and gives these values overly significant weighting, as opposed to assessing and reporting on actual levels of entrepreneurial activity. Furthermore it is assumed that regions with large numbers of aspirant or early stage entrepreneurs equates to economic success, when this is not neccessarily the case. An area with established and profitable businesses may be more economically successful than a region with many start-ups. The study is also a wee bit vague on defining exactly what a “world city” is. Finally, the research excludes a number of cities where high value technology entrepreneurship thrives such as Wellington, Adelaide, San Francisco and Taipei, for example.

Notwithstanding these shortcomings, it is a shame that the GEM research has not received funding in New Zealand over the last three years. The data is useful as a benchmarking tool and the methodology should be made more widely available so that excluded cities could make their own comparisons. It is unfortunate that no New Zealand data is available beyond 2005, hence we cannot be sure of what the current position might be. What we do know however, looking at the data up until 2005, is that when we include non-OECD cities, Auckland ranks similarly to Santiago, Buenos Aires and Bangkok in terms of “early stage entrepreneurial activity”.  Is that really the company we want to keep? In other words, high levels of entrepreneurial activity do not neccessarily equate to high economic returns. But there’s worse news.

When we consider the data on prevalence rates of entrepreneurial activity by city versus national figures, Auckland actually demonstrates levels less than that of New Zealand as a whole -at least according to the research.

Why ICT Underpins Innovation

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GITRA recent global report on information technology places New Zealand about the middle of the pack in terms of “network readiness”. But the index only accounts for part of the story about why the country is struggling to remain competitive through innovation.

The information technology report from INSEAD university and the World Economic Forum offers some very clear indications around what New Zealand has to achieve in order to boost innovation and raise competitiveness. The annual report ranks all countries in terms of ICT readiness by assessing a basket of factors that influence business, government and individuals. Quality of phone, broadband and server infrastructure, regulatory environment, quality of science education, R&D spend by firms and availability of venture capital are amongst the variables assessed to establish a “network readiness index” (NRI).

High network readiness alone does not guarantee success however. In fact highly competitive nations such as Finland, Israel and Taiwan rank slightly below New Zealand on the network readiness index. But if we consider a bunch of other factors that allude to innovative capacity, it paints a much different picture. Innovation factors (IF) include quality of scientific institutions, extent of university-industry collaboration, availability of scientists and engineers, number of patents issued per capita. These factors tell us whether or not a nation has the capacity to innovate through novel research, which is a far stronger value proposition than simple imitation. The fact that New Zealand ranks about the same as Zimbabwe is probably reason for some concern.

What we do know is that countries which rank highly on both counts, tend to be innovation powerhouses with rapidly improving GDP per capita. By this we mean nations such as Denmark, South Korea, India, Singapore and Malaysia. Unsurprisingly, all of these countries embarked some time ago on aggressive improvements to their ICT infrastructure. So exactly why does ICT appear to underpin innovation?

There are at least five good reasons why a sound ICT environment supports innovation processes:

  • Knowledge identification eg. market research, locating human resources, accessing science research, knowledge sharing platforms.
  • Developing creative capacity eg. computer aided design and 3D graphics.
  • Enhancing exploration eg. simulation and prototyping.
  • Shortening the design-test cycle eg. making failure inexpensive.
  • Improving capacity for commercialisation management eg. knowledge management, Web 2.0 e-marketing, virtual collaboration.
  • Empowering customer feedback into the design process.

The human genome project is a good example of a piece of innovation work that, a decade ago, could not have even been imagined anywhere in the world. Could such a project be done in New Zealand today? Although we now have a high speed research network and at least one homegrown firm offering suitable enabling software technology, it hasn’t happened because we are still struggling with a number of the innovation factors mentioned above. R&D spend is low, collaboration seems problematic rather the accepted norm and the education system is failing to inspire a new generation of scientists and engineers.

This shows that, as an enabler of innovation, we cannot consider ICT in isolation. There has been much debate over the need to rollout better broadband across New Zealand. But the economic case for substantial publicly funded investment in the project has yet to be properly made. Most people grasp that more and better ICT would be a good thing, but few are clear on exactly why. We need to benchmark ourselves more fully in order to better articulate the need.

New ICT Body Kicks Off

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phoenix We seem to be awash in a sea of forums, networks, industry bodies and think tanks these days, all of whom have opinions on broadband and the state of the ICT industry. Will we ever get a consensus?

After a lengthy debacle, in which ICT industry players failed embarrassingly to score any goals, the government has stepped in with a solution that bundles the picked over carcass of ICT-NZ with that of the decapitated body of the Digital Strategy. Hopefully increased gate takings in the form of new digital sector funding and some firm direction from the game’s governing body can breath life into Digital Development New Zealand (DDNZ).

Minister Cunliffe announced that the new team will comprise a partnership between industry, community and voluntary groups and will focus on issues of national importance. In the meantime another more commercially oriented organisation has reportedly sprung Phoenix-like out of ITANZ. This group will also have representation at the table of the digital sector body as will TUANZ, NZCS, INZ, LGNZ and WIT – to mention but a few of the team members. A group of prominent business people and heavyweight telco players has also established the independent Broadband Industry Forum to channel ideas on scoring better broadband for New Zealand.

DDNZ is tasked with “providing policy advice and delivering on strategic goals”, although the groundsman has not yet set up the goalposts. I must admit that I’m also left back wondering how well DDNZ can actually function as a team, given the wide spectrum of views represented on its founding board and the lack of industry alignment in the past. Perhaps that’s why Fran Wilde has controversially been engaged to referee the council.  Wilde is a consumate political animal with a history of driving difficult projects forward. It may not matter that there is no consensus.

Notably absent from the DDNZ council are representatives of the academic community. Given the nature of comments on innovation by sports columnist Stuart Corson in a recent Unlimited article, I trust that these new bodies will move quickly to establish links into academia. Considering the absence of academics on New Zealand tech company boards, the shortage of technology graduates and the general paucity of informed debate on the broadband issue, it behoves the industry to finally substitute some representation from the university community onto the playing field. In my experience, contemplative intellectual types are generally the last people chosen to join sports teams. In this case it may prove to be a mistake.

Thank-You So Much for Waiting

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Why does it take a major telecommunications provider eight days to rectify a simple fault on a phone line in New Zealand? No. it’s not a bad joke, it really happened to me last week.

A couple of weeks ago I noticed there was a lot of background noise on my phone line. About the same time, my home office ADSL broadband began to get mighty slow. Eventually I lost all access to the Internet, although my phone remained working, but with even more noise. So I set about eliminating all the possible causes of the fault including swapping the router/modem, replacing the cabling and testing wall socket filters. No joy, so now it’s time to call the helpdesk.

Now when you call the helpdesk you first have to navigate the voice activated interface which (if it works) places you in a queue to speak to a real person. That’s fine, they play some cool Kiwi music that I like whilst I wait (Liam Finn, Anika Moa etc). Any moment I will get to speak to a technician who can resolve my fault – wrong. After a few minutes a lovely Filipina lady called Maria answers and we go through all the standard questions like, “have you turned your modem on and off?” She’s very polite, so I play along. When this fails to solve the problem she decides to put me on hold in order to speak to her supervisor. More music. After ten minutes in the holding pattern I realise she has lost the call.

Second attempt to call helpdesk, virtual receptionist then more music. Then I get a charming fellow from Manila called Arvin. He’s a bit more technically savvy and we talk about testing and swapping filters on all the wall jacks (I bought new filters and a very long cable in anticipation of this conversation). Still no luck. But Arvin agrees there is a line issue and kindly books me a service call with “Advanced Broadband” the division who actually fix the phone lines back in New Zealand. Next day I wait at home for the scheduled call. Nobody calls.

Then I have some meetings and don’t get to follow up. I use CafeNet in the city to check my email and do a bit of business online. Couple of days later I try again. Another call patched through to Manila and the same music whilst I hold. Another lovely lady re-books my technician call, “thank-you so much for waiting”, she chimes. But the technician again fails to call the following evening. Why is this is taking so long? I head off to bed tired and annoyed. The next day, an early helpdesk call, more holding music and then a very sleepy sounding night shift worker in the Manila call centre. We both manage to remain polite. He books me another service call. This time the technician calls as per the agreed schedule. The technician agrees there is a line fault (told you so) and promises to contact me when he is at the local exchange. He makes good on his promise and cheerily calls back to report that a small wire-end was loose at the exchange. Back in business.

So I guess my first question is: why does it take eight days, five phone calls and two hours of my valuable time to resolve a simple fault? Now to be clear, I received very polite and helpful service at all times from the call centre workers and the technician. The problem is the system and how it is managed. Outsourcing call centre work is a great way to lower costs, especially so given that recruiting locally is also getting harder. But if the helpdesk staff do not have authority to make any decisions it reduces their role to that of triage and placating the customer. Furthermore, when they do take action, better make damn sure that request is followed up locally or risk alienating the customer.

I have long maintained that broadband speed is not the issue in New Zealand. I can run my consulting business from home on 500kbs or 100Mbs line speed or anything in between. There are other more pressing problems like international connectivity. And as long as we have a monopolistic situation we risk the continued imposition of high prices and poor service levels for broadband. Bring on the competition.

My second question then is this: if it takes eight days to reconnect a loose wire, how long do you reckon it will take to build and support a nationwide fibre network?

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Epilogue of Enragement

gunmen

I don’t normally speak out on such issues, but I am growing tired of political correctness and can hold my tongue no longer. A father of three young children has died as a result of another armed robbery by three bandits in South Auckland. [Subsequent to first posting this article, an 80 year old Asian woman has been beaten to death in the same area and another Asian businesswoman intentionally run over and killed in a carpark.]

I hope Tapu Misa, who attempted to rubbish a recent controversial research paper by Greg Clydesdale on Polynesian social , educational and economic underperformance, will visit the family of the shot man and apologise for the way both Maori and Polynesians continue to be overrepresented in the violent crime, child abuse statistics and in the prison population. I hope she will explain the reasons why the adoption (by some) of L.A. style gangster culture has led to an increase in drug taking, teen promiscuity and gun ownership. 

I hope she will also write another editorial detailing why some members of her community feel they are somehow exempt from aspiring to contribute economically apart from in the colourful street markets of Otara or mopping toilet floors at nearby Auckland airport.

Clydesdale’s research was not anti-migrant and neither is my argument. The victim in this attack was a migrant, a family man who came to New Zealand and was prepared to work hard for a better life. His attackers were young Polynesian or Maori males probably born and raised locally. The issue here is that we are growing a brown underclass and nobody seems to want to talk about it nor acknowledge the likely downstream consequences for our society. If embarrassed government agencies try to shut down this discussion, how can we possibly find a solution?

Forget broadband or taxation. This is the real election issue debate we should be having because it impacts on our collective economic futures and our prospects for ongoing social cohesion – irrespective of our skin colour.

ICT Investment for Health

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It’s no coincidence that David Cunliffe was allocated both the role of ICT Minister and that of Health; he’s both comfortable with technology and adept at relationship building. But in his speech to a recent health leadership forum, he made only passing reference to the role of ICT in the health sector.

Given that New Zealand companies have developed and exported some of the smartest health sector business applications around, it seems curious that we still have not yet invested in an integrated health I.T. infrastructure of our own. Apart from the obvious cost saving benefit, there is the alluring prospect of showcasing our homegrown technology to the world. Most importantly, such a system might save lives and alleviate suffering. Furthermore, the health sector has long been touted as a beneficiary of better broadband, yet we don’t seem to have made the connection yet.

The recent case of a patient whose lung cancer remained undetected is surely a prime example of a medical misadventure that might have been avoided through the use of technology. The gentleman concerned presented with a bowel problem. He then received an x-ray which incidentally alerted the attending physician to the presence of a suspicious mass in the patient’s lung. However no follow-up was done after the man returned home and four years later the tumour is now inoperable. With a high speed nationally integrated system, the query by the house surgeon would have been flagged on a universal patient file and the digital x-ray image could have been accessed by a specialist and the patient’s GP at any time. Why haven’t we implemented such a service yet?

The most obvious reason involves having the political will to allocate funding when there are competing needs within the health sector. The other reason is that it would be a lot easier to do if all health providers were linked by a proper broadband network. In fact if there ever was a compelling case for extending the reach of high speed networks then this it. There is one other hurdle. District Health Boards make independent funding decisions. Getting unanimity across the country on any such project would be almost impossible. But if anyone can help form a consensus in the health community, it is Minister Cunliffe. The only question then is whether or not he will get the opportunity to do so after the election result.

Entrepreneur’s Epilogue

It has been a busy week, with many hours logged slaving over a hot laptop. One of the first tasks was to set up our office server with a suite of nifty collaborative tools – essential because some of the team are offshore based. We also checked in with our very helpful accountant friends at Openside CA, we plugged away at the business plan, protected our trademark and completed the incorporation process. By the way, my co-founders assure me that despite the slightly clunky interface, the Companies Office website is light years ahead of anything in Europe where bits of paper and numerous trips to several different offices are required. They should know what they are talking about because they write application interface logic in their sleep. But more about that later…

The Great Wall

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It’s hard to separate last week’s contrasting media images of scuffles by pro-Tibet protesters from those of a proud NZ government delegation kowtowing to the beaming Chinese trade mandarins. So does anyone really believe that the freshly inked free trade agreement (FTA) will bring a flood of economic opportunities to the doorstep of the average New Zealander? China’s determination to protect the image of the Olympic flame at the cost of other nations’ sovereignty is instructive. They built the Great Wall for a reason didn’t they?

I’m not surprised that details of the agreement were kept under wraps until the day of the signing ceremony, some of the concessions made are real shockers. For starters the dairy products component is phased in over 10 years and China even then has an ejection seat clause should they decide that their own dairy industry is threatened. Estimates of the dollar value benefit for New Zealand vary, but appear to be in the vicinity of $200 million per annum, which frankly seems like peanuts in the face of a massive $3.7 billion trade deficit.

Secondly, since when did an FTA ever proscribe rules on migrant labour? “Working holiday” and general category visas for sought after trades are to be broadened immediately for Chinese entering NZ, but there is no reciprocity. Not that I would want to live and work in the most polluted nation on Earth, but tell me how this is fair. However, I look forward to reports of a flood of highly experienced plumbers, hotel chefs and software developers gushing forth from China eager to plug critical gaps in our labour force. The Qualifications Authority will have a field day navigating the rules on equivalency. Given the number of migrant doctors, lawyers and university professors already prowling Queen Street in taxis, one has to wonder where this new influx will actually end up.

So at first glance the FTA looks a bit like it was cobbled together rather more with a sense of urgency than any overriding economic logic. But wait there’s more! It turns out that, having already signed the agreement, our parliamentarians now finally get the chance to discuss it in Select Committee and debate it in The House. What happens if the bill doesn’ t pass? What if the weight of public submissions is against the Bill? Talk about potential for losing face.

The FTA is certainly a historic document and I agree that it will open other doors in the future and (probably) bring a net gain in export trade value to New Zealand, as advertised. As well, a ratchet clause levels the playing field if any other nation negotiates a better deal, therefore going first is not neccessarily a disadvantage. And if the WTO round falls flat, it is highly likely that APEC will set about developing a regional FTA that will now have to favourably include New Zealand. So perhaps I’m being a little unfair. The FTA seems very much like a strategic neccessity. But in our haste to supplicate Beijing could we have possibly overlooked too much detail?

On the technology front, the Prime Minister has curiously fingered software exports to China as a growth opportunity for New Zealand under the FTA. But industry leaders have indicated that the ICT sector is not thinking that way at all. Unless the FTA somehow enshrines and guarantees the protection of intellectual property, China is about the last place I’d be wanting to export software to right now. So if our much hyped knowledge based goods and services are out of the equation, that just leaves us with flogging dairy commodities to China’s burgeoning middle classes. Great stuff, but how can I personally share in that opportunity? Oh right – Fonterra still hasn’t gotten around to listing – bugger!

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New Zealand Trade and Enterprise has an informational website and seminar events planned on the topic of trade opportunities with China. Key outcomes of the FTA can be found here.

Fast Forward Fry-Up

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The government’s announcement of a $700 million “Fast Forward” fund for the food and pastoral industries is a long awaited boost to the research sector, but does it signal a strategic withdrawal from other technological arenas?

Crown Research Institutes (CRIs) are naturally ecstatic at news of the investment because it provides much greater certainty for their businesses going forward. The CRIs have been struggling with recruitment, retention and planning issues in the face of historically low levels of investment in a demoralised agricultural research sector.

But the Prime Minister Helen Clark, speaking on National Radio, emphasised that without recharging the investment in food and pastoral research, New Zealand was at great risk of falling ever further behind on the global stage. With agriculture still comprising almost half our national export income, it was imperative to invest in areas where we had a sustainable competitive advantage.

Clark then poured cold water on Opposition Leader John Key’s comments that the Fast Forward Fund was a grandiose overstatement of the government’s committment. Industry heavy hitters like Fonterra have reportedly already signed up to contribute matching funding and the plan is to draw down on both the interest and capital over a 10 to 15 year period. This would release up to $30 million in the first year, eventually climbing to over $100 million, said agriculture minister Jim Anderton.

Perhaps the only real downside from the deal is that it confirms a mood swing away from stimulating other technology sectors. Prof. Jeff Tallon, who only last week headed up a group of concerned scientists that wrote to the government pleading for more research funding, said that even after this investment, New Zealand still only has about half the RS&T spend of its high tech competitors. Tallon says that although food and pastoral research is important, we need to continue to diversify away from our heavy reliance on agriculture.

I have to admit, Fast Forward does seem more like “Back to the Future” to a time before the government was championing ICT, biotechnology and creative sector as the three planks for high tech based economic growth. However, on the up side it does show that government is listening; and by using a public-private partnership model it also focuses industry to engage fully in the project. One hopes that this will not be the only research funding announcement come Budget time.

Confusion Over IP Guidelines

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The recently released policy on the treatment of intellectual property rights within government ICT contracts may open up downstream opportunities for New Zealand companies who provide software and services to public sector agencies. But industry commentators cannot seem to agree on whether or not it is a good thing.

A few years back a lobby group called ICTX pressed government to change the rules around onselling of intellectual property arising from publicly funded I.T. projects. ICTX cited replication of effort and confusion over copyright as barriers to further commercialisation of such technology. But now that the rules have been clarified, former ICTX members still appear disgruntled.

Others view the new guidelines as an opportunity because it opens the door to vendors retaining ownership of the technology. Under this scenario the developer effectively gets their R&D funded by a government contract, licences out the application and then has the option of pursuing further commercialisation where a wider market exists. That seems like a win-win situation.

But the State Services Commission (SSC) makes it clear that the guidelines are just that. Government agencies still get the final say on what goes into the contract. That’s fair enough, especially in the case where the technology relates to a sensitive area such as Defence, Customs or Police for example.

It is unsurprising that a diversity of views exist on this topic. The ICT sector has still not managed to solve the representation problem, with a myriad of bodies still claiming to speak on its behalf. Now that the SSC has finally responded to industry feedback it seems a little unreasonable to criticise.

Perhaps the best way to resolve the debate is to test the guidelines. Are there any technology applications currently in the pipeline that can be taken down a commercialisation pathway? Having a successful reference site already operating within a government agency is a great selling point after all.

About Face on Brokering FDI

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Economic development Minister Trevor Mallard last year announced an about face in how Investment New Zealand will operate in the future. Investment NZ is a government agency currently involved in attracting foreign direct investment (FDI) capital into the country. But a recent review of the organisation showed that it spent $60 million over four years to attract a net additional investment of only $155 million.

It is not clear from the review whether this result speaks more about the lack of “greenfields” opportunities than it does about any shortcomings in competency. However, it has been decided to refocus instead on encouraging New Zealand firms to grow through investing offshore. The theoretical net result should be more dividends returning home, exposure to new markets and networks, greater access to capital and acquisition of new technology. In principle it sounds like a great road map for adapting to a globalised world – create a few more Fonterras.

But shouldn’t we also still be facilitating new inwards investment – especially in the tech sector? Just because Investment NZ underperformed doesn’t mean we should stop engaging with offshore investors. It just means we need to find a better way to do it. And just because we are currently at about the OECD average for FDI doesn’t mean we can be complacent. Now you see what I mean when I discuss lack of economic leadership and the price of political expediency when it comes to government funded initiatives. It also underlines my point about the inappropriateness of having risk averse government agencies involved in facilitating business. Investment NZ needs to be tweaked for sure, but it doesn’t need to be completely nobbled.