Beware the risks of the data revolution

Until artificial intelligence suddenly emerged as a usable force, companies’ masses of data were seen as having fascinating potential but no real use in the business world.

Welcome to the new world of data based marketing which is set to become an important frontier of artificial intelligence.

And the battle for control of Origin Energy is emerging as a prime illustration of the transformation ahead.

In a few years corporate historians will look back at the independent report on the value of Origin Energy prepared by Grant Samuel in 2023 as one of the last documents prepared using the rules of an era rapidly fading into the archives.

The bidder, Brookfield, is a global leader not only in the global electrification revolution but in the use of data and artificial intelligence to transform businesses.

As our largest non-government source of equity, AustralianSuper finds itself in the middle of this transformation storm. As Australians we all have to hope that AustralianSuper resist the enormous pressures from both the quick-buck stock market traders and the mischievous villains who link the battle for Origin to the carbon debate.

Origin is one of a vast number of enterprises in Australia that have data about who buys their product. Given privacy and potential cyber attacks, using such data carries an element of danger that every enterprise will need to factor in to their strategies.

Until artificial intelligence suddenly emerged as a usable force, this data was seen as having fascinating potential but no real use in the current world.

Artificial intelligence at its core depends on data and is able to reach usable conclusions from data to transform enterprises.

And while the data can be used to open markets previously thought inaccessible, it can also transform professional operations.

For example, in the legal business some of the best lawyers are those that have a skill in being able to memorise legal facts and precedents.

Artificial intelligence can do part of that job and so while the old legal skill will still be important it is potentially replaceable.

In my own profession of journalism artificial intelligence when applied to behaviour of customers buried in databases will open a whole new era of commentary readership.

Commentaries like mine can be both enhanced by artificial intelligence and directed towards markets that currently don’t exist because they are buried in databases. But, as in the legal profession, how the facts are interpreted will be vital

The Grant Samuel independent report on the value of Origin shares was an excellent document of conventional valuation but it did not delve deep into either the database potential opportunities of Origin’s associated global company Octopus nor the opportunities that will be opened up to companies like Origin as the hidden marketing messages within its data are released by artificial intelligence.

Former Telstra chief Andy Penn. Picture: Gary Ramage

Outside the technology-driven boffin community, one of the first Australian businesspeople to grasp the business transformation potential of data was the former head of Telstra, Andy Penn.

He realised the telecommunications database of Telstra was a perfect springboard to take the company into the electrification revolution. Rather than buy an existing power retail database he prepared the telecommunications giant to enter the electricity marketing field itself.

He passed the responsibility for implementing that strategic decision to his successor Vicki Brady. She was about to press the ‘Go’ button when it was realised that power retailing was incredibly hazardous without a source of power generation, which was a whole new game.

Probably wisely, she pulled the plug on the Penn dream.

Around the same time Brookfield purchased a major customer data operation from US telco giant AT&T. Brookfield has learned from this exercise the opportunities and difficulties of using phone databases to develop new marketing opportunities.

I suspect Brookfield has found the power electricity databases will be more important because electricity is going to be the new petrol and knowing the way it is used by consumers will be the most powerful marketing information in the land.

Origin has arguably the best power database in Australia, which was not the subject of the detailed valuation conclusion in the Grant Samuel report.

On a global scale Origin has 20 per cent of Octopus which is at the cutting edge of electricity database management, but it is extending its systems into water and other areas of customer data.

It would appear that AustralianSuper has realised the hidden value of Origin and why Brookfield is so anxious to get it — even to the point of inviting the Australian institutional giant into the its Origin bidding tent.

In global terms AustralianSuper is a minnow and it must be very tempting to force Brookfield to pay a price for Origin which is above the current offer price.

Alternatively, it is invited to participate in the bid from Brookfield.

If Australian super joins Brookfield or simply stays with its significant minority position in Origin it commits itself to substantial investment in low carbon energy electricity production and a whole new world of marketing opportunities. But with that comes risk.