What does sovereign capability really mean?
Once upon a time, not so long ago, those who talked of Australian sovereign capability, especially in the technology sector, were generally considered an amusing group of eccentrics. After all technology ecosystems are global, big multinationals led development of cutting edge capabilities, and Australia could just sit back be a “taker” of technology. However, the last few years have jolted us out of that comfortable view. First, Covid-19 taught us that global supply chains are fragile and not everything in technology is purely virtual – for example, supply and logistics issues with the supply of integrated circuits caused shortages in the availability of new cars[1] that are only just starting to be resolved. We have also become very aware of the impacts of geostrategic tension and competition. Concerns around potential influence on and compromise of supply chains by foreign governments was the driver for Australia’s pioneering decision to prohibit high-risk vendors from participating in 5G network infrastructure rollouts[2]. This led to follow-on discussions about alternative options for mobile technology, including how to ensure supply-chain diversity, how to work with trusted partner nations and the role of sovereign capability.[3] More recently we have seen that the level of trust, even in long-established partners, can change very rapidly.
However, it’s not necessarily necessary or desirable for Australia to become completely self-reliant. Such an approach would be extremely costly and inefficient, and in many areas hold us back from having access to the latest technology. A risk managed approach is required to ensure that ‘sovereignty’ doesn’t become a byword for protectionism and end up increasing costs and limiting supply if this brings no net benefit to Australia. Therefore, the discussion needs to move on from ‘We need sovereign capability’ to ‘What sovereign capability do we need?’ This means understanding what needs to be sovereign, and why.
To start with the first question of what needs to be Australian, we can consider:
- Physical location. The capability and the personnel delivering related services must be somewhere: even virtual assets such as software and data have a physical location on hardware somewhere in the world. Where is that, and also where are the supplier personnel who have ongoing access to it?
- Ongoing access. Are spare parts, support and/or maintenance services available in Australia? How will the needs of Australian customers be balanced against those of other global customers, especially in a crisis?
- Control of capability. Who owns the intellectual property and underlying technology? Who decides how it will be developed and where it will be sold and supported? Could the owner effectively make the capability unavailable to the buyer in the future, even after it has been purchased and installed?
Moving on to the reasons why sovereignty might be important, it is normally for one or more of the following reasons:
- Localisation of offering. The products and services may need to appropriately designed and tailored for the local environment.
- Security of supply / resilience. It may be important to have confidence that the product or service will be available when it’s needed. This includes ongoing support, and assurance over who may have the ability to disable or restrict ongoing usage in the future.
- Economic benefit. This could be through means such as employing people in Australia, creating Australian-owned intellectual property or paying Australian taxes.
- Assurance of quality. This could be to address concerns such as poor quality control within the supplying organisation, malicious insiders who compromise the product, or influence by the country of origin on quality (either overtly or covertly).
- Trustworthiness. Similar to the above, but as well as ensuring the product meets its intended purpose, there may be concerns it could create an impact or vulnerability elsewhere.
It is important to realise we can’t just blithely ask for “all of the above”, (except in a small number of cases where it is strictly necessary). In order to avoid unnecessary cost and to ensure we reap the benefits of global advances in technology, decisions will need to be made about which of these reasons are actually important. Understanding this will allow appropriate decisions to be made about what needs to be sovereign. For example, criteria 1 and 3 require the physical location of the capability in Australia, while criterion 2 requires ongoing access to Australian supply.
To summarise, sovereign capability is a commonly used term, but can mean many different things. There are different aspects of sovereignty, and organisations need to understand what is important to them, and why, in order to make appropriate procurement decisions. In my role as a member of the CAN.B Group Advisory Board, I am excited to see that the organisation has built a portfolio of sovereign offerings including consulting, design, development and infrastructure hosting, as well as partnerships with key industry players. This means that CAN.B Group is able to provide a tailored combination of sovereign capability and global capabilities to meet the individual needs of each customer.
[1] https://www.jpmorgan.com/insights/global-research/supply-chain/chip-shortage
[2] Robert Clark, ‘How Australia came to ban Huawei’, LightReading, 21 May 2021, online
[3] Rajiv Shah, Ensuring a trusted 5G ecosystem of vendors and technology, ASPI, Canberra, 17 September 2020, online