How satellite data improves business decisions

Michelle Khoo:
But the best sensors today and the best cameras and imagery, you can get up to 30 centimetre resolution, which means you could potentially see this table from space. And that is going to really power a lot of new use cases and applications.

Elinor Kasapidis:
Welcome to the With Interest podcast. I'm Elinor Kasapidis, Chief of Policy Standards and External Affairs here at CPA Australia. Today we're talking about space, but not really about space rockets or astronauts. We're talking about decision making and how businesses are starting to use a new layer of data that just happens to come from space.

A new Deloitte report, The Space Edge, argues Southeast Asia could unlock around US $100 billion in economic value by 2030, not by launching rockets, but by using space enabled data to make better decisions on earth. This is a subtle but important shift from space as a sector to space as infrastructure.

Joining me today from our Singapore studio is Michelle Khoo, co-leader of Deloitte's Centre for the Edge in Southeast Asia. And she's going to explore with me what this actually means in practice and what leaders should do with it. Welcome, Michelle.

Michelle Khoo:
Thanks, Elinor. It's such a pleasure to be here.

Elinor Kasapidis:
So such an exciting topic because if we go back even a few years, most conversations about space were still framed around national capability, launch capacity, or the growth of a new industry. But what this report does, it flips that framing and suggests that the real value is not in upstream space itself, but downstream in how organisations use space enabled capabilities. So before we get into the details of the report, it's perhaps worth resetting the baseline of what we actually mean when we say the space economy. So I always think about rockets and government programmes and SpaceX, but what is the shift that you're trying to get leaders to understand and what is it about now?

Michelle Khoo:
I love that you're starting with this question because I think this is the mindset shift that we really need to achieve when we talk about the space economy and to really unlock all of its commercial potential. We are entering what we call the new space economy. Like you mentioned in the past, it's about governments sending up satellites for defence purposes, for research purposes.

But really what SpaceX has done with their reusable rockets is to bring down the launch costs of satellites to a tiny fraction of what it was before. And also with better satellite manufacturing technology, the size of the satellites have also come down. So in the past, your satellites are the size of a bus, but right now it's maybe the size of your laptop or a shoebox. And so the cost of sending a satellite up is much, much more affordable.

Now what that has created is the private sector becoming more involved in that sector. And you see a lot of private companies or even venture backed startups sending satellites and constellations into space. Now they wouldn't do that unless there was a revenue opportunity. And that revenue is going to come from increasing capabilities, like you mentioned, of using space data to improve operations and insight on earth.

And so that's really driving that new space economy. And like you said, it's moving downstream into looking at how we have all this data and sensors being collected around the earth and how can we use that to improve life on earth?

Elinor Kasapidis:
So that's a fantastic opening and to frame the question, so with the economics of it all, where's the value actually coming from? So $100 billion is quite significant. So is it translating into productivity gains? Is it about risk reduction or better capital allocation decisions? Because this report points to different parts of the value chain than what we might traditionally expect. So where does it come from in practice?

Michelle Khoo:
Yeah, I think it's all of what you have talked about. It's really about a different source of data to improve the decisions that we are making on earth. And that is really enabled by AI as well. With AI helping us to be able to improve our workflows, to be able to understand image and video content, that's actually going to help us understand and make use of satellite data much better.

And so where is that value coming from? In the $100 billion estimate that we had, a large part of course is agriculture. And so with better sensors, we are actually able to detect even the health of the crop. Are they lacking in water or fertilisers? And we are able to inform better decisions on what we need to do to increase crop yield. And that's being done across Thailand. Their space agency has been very, very proactive about enabling the agricultural sector to make use of satellite data.

So that's one example. Of course, linked to agriculture, which is enabling tracking of counting crops. So similarly, that has a huge impact on sustainability as well. Monitoring changes in tree cover, monitoring changes in land use and being able to better estimate carbon assets. So that is a huge value as well that satellite data brings. The second-largest sector that I think satellite data can benefit is in the mining and oil and gas industries.

And in that sector, satellite data, being able to use that to better understand weather patterns, to be able to better understand potential forecasts of floods or rain or dangerous conditions, that is actually going to help the sector become much safer. And in fact, Deloitte produced one solution in the oil and gas sector on detecting methane gas. And methane is actually a colourless gas. So you actually cannot spot it or identify it even after some time.

And when that methane builds up to dangerous levels that could be potentially dangerous, could lead to explosions and damage to property and lives. And so we were able to use satellite data from multiple consolations and bring that together to be able to create an early warning system. So that's an example of how satellite data can bring real value to operations and make it safer.

Elinor Kasapidis:
That's so cool. And of course we have many Australian listeners and mining and agriculture are key industries in Australia as well. And food security and worker safety of course are critical aspects of operations in those industries. And so when we think about better data, a lot of our members are accountants. They're sitting there looking at internally generated data or they're looking at the operational stuff.

So the test for leaders is really around understanding how this data can bring better decision making, better operational improvements, better yields. You've got the agriculture and the mining sector. From a policy perspective, that relationship between government, between corporations and things like food security, workers' safety, how does space-enabled data fit into that landscape?

Michelle Khoo:
So one way that we've seen governments around the world use satellite data is really to understand the changes that are happening in the urban landscape and also to monitor population changes. So you could use nighttime lights or you could use earth observation imagery to see perhaps where new houses or new apartments are being built and be able to then estimate how or plan, how you can provide infrastructure to those areas.

So we've seen it being used in telecommunications where you can use this kind of imagery to plan, okay, where should I make sure I have better coverage? And another thing that satellites are helping to unlock is, for example, SpaceX with their Starlink satellites, that's bringing better connectivity to remote areas. And that is then enabling better amenities to be brought to these populations.

Elinor Kasapidis:
So it lifts the quality of living and access to data and information. And I think the urban planning, sometimes I go onto Google Maps and I look at the cities. And in Australia, of course, we have a lot of natural disasters. So flood resilience, understanding the topography. So governments have got a real benefit if they access this data when they're thinking about their planning decisions.

Michelle Khoo:
Yeah, that's right.

Elinor Kasapidis:
Is there also in terms of critical responses, I'm just thinking of a situation where you might have flooding or unexpected rainfall or even changes over time as a result of climate impacts. Is that an avenue for space data to really be useful for policy designers?

Michelle Khoo:
Yes. And actually we think of space as something very new. Maybe for most people it was only brought to attention because of the SpaceX IPO that just happened and suddenly we realise what an economy that is. But actually we have had satellites since 50 years ago that are taking images of the Earth. What we have now over the past five years is more satellites rotating so you get a better refresh of data and also better sensors. And what that means is that you have this very rich archival data set of changes that have happened over a particular region over time.

And that is helping us be able to better understand impact of natural disasters. For example, flooding, you could use that to look at how floods have impacted specifically certain areas. So one example I've come across is that traditionally a government may look at reports of flooding in a certain area, but then it's not precise enough to be able to see actually which specific areas the flood affects.

And so there was this example where a bank decided not to provide housing loans to a whole area because of the flood risk, because it was bordering around two rivers. But actually when you do the deeper flood analysis, you realise actually a lot of these housings are on higher ground. So they actually would not be impacted by that flooding as much. And so with better understanding of the topography or the impact of floods on a particular area, you actually can make smarter, better decisions.

Elinor Kasapidis:
So that refined data can touch lending decisions, presumably insurance decisions as well. And then you can model the probabilities of impact a lot better. So the more accurate the data, the richer the data, the better the decision making.

Michelle Khoo:
In fact, I have one example here, which is in our Space Edge report. So the Space Edge was released in May, just very recently. And what we wanted to do was bring real examples to show how that $100 billion was actually being realised. And since you mentioned lending, one of the examples was this financial services. And using Earth Observation data, you're able to analyse the roofs of residential and commercial buildings and be able to estimate their feasibility for solar panel insulation. And with this technology, a bank was able to analyse 15,000 green loans in a matter of a week. So that is really driving, I think, sustainability, but also commercial value to the bank.

Elinor Kasapidis:
Yeah. And because sustainability and renewables, we need to increase the production, but to be able to do it in an efficient way and make those capital allocation decisions, that's a fantastic example. And so in Southeast Asia, so we're here in Singapore, I just came from a few days in KL. Those opportunities seem even more real. So how do you think... And there's some urgency around it as well. So there's opportunities, but also urgency. So what are the strongest use cases for Southeast Asia in particular?

Michelle Khoo:
Yeah. So Southeast Asia, I think we have seen the huge potential value that it can bring to Southeast Asia, particularly because Southeast Asia, I mean, of course we have big agriculture and oil and gas industries, but also it is an area that's very prone to natural disasters. And it's also an area where the urban landscape is changing very, very quickly. And I think one more point is the rich biodiversity and forest cover that we have in Southeast Asia that should be preserved. Now all of these use cases I think can greatly benefit from the increased use of satellite data to make decisions to drive activity and also to preserve the valuable things that we need to preserve like sustainability, like biodiversity.

Elinor Kasapidis:
And when I think physically being in space, it's like you zoom out, you get that macroeconomic view about how all of these different activities are coming together and what's changing and how to really influence the outcomes. And I think just globally, but particularly like you say in Southeast Asia, there's tension-

Michelle Khoo:
Yeah.

Elinor Kasapidis:
... too, isn't there? So the more accurate we can be, the more precise we can be about how to allocate the different decisions that we need to make. It's a critical piece of infrastructure.

Michelle Khoo:
Yeah. And I think it's an interesting point you made about zooming out. So absolutely. It gives you a very higher than birds-eye view of what's happening on Earth, but also our ability to zoom in with images today. Now traditionally an open-source data, you can get five metre resolution, which actually you can see quite a bit with five metre resolution. But the best sensors today and the best cameras and imagery, you can get up to 30 centimetre resolution, which means you could potentially see this table from space. And that is going to really power a lot of new use cases and applications. It's almost like having a CCTV up there in space. Yeah.

Elinor Kasapidis:
That's amazing because I was just thinking of the days when the Google cars used to go up and down the streets to get street view and we were all like, "What's happening?" So now it's from space going down to 30 centimetres. The Great Wall of China being visible from space. Now we can see tables and cups and chairs. So that's quite an incredible rapid progression.

And so when you can get that level of clarity, lots of ideas come to mind, but how does a business leader or a finance team who's helping the organisation make decisions, how do they figure out where it might fit in their organisation? So where's the relevance? I mean, we've touched on a whole bunch of industries where this could be very useful. So from a leadership and business decision making mindset, how do they even begin to conceive how this data could be useful to them?

Michelle Khoo:
I think it really starts with an understanding of what's available. And I don't want to oversell satellite technology as being relevant for everyone. I think it's a little bit different from AI in that AI is changing a lot of our workflows. I would think of satellite technology as a different source of data that we can leverage. And so it's more relevant for activities where you require monitoring over large areas and that's where you get a lot of ROI. And so it's also understanding what kind of imagery is available. So often we always think of optical imagery, right?

Using our phone and taking a picture, that kind of imagery. But there are also interesting sensors that are available that can look across beyond the visual spectrum like infrared and that allows you to look at different things. So for example, agriculture or the health of trees and forests, you would typically use infrared technology to be able to determine the health of a planet.

There's also what we call radar images or SAR, synthetic aperture radar, which allows us to see through clouds, which is very, very important, especially in Southeast Asia where we have a lot of cloud cover. And so optical imagery, half the time you can’t actually get a good image of the Earth. So complementing these different technologies together. And of course there's also the mobile aspect to it.

So location positioning data, that's another source of data where it can help you track your cars or people movements. And that actually drove the last, I would say, decade of unicorns that we've seen in this region with e-commerce, your Ubers. Those were all enabled by positioning technology. So I think just having an understanding of all of this and seeing where it could apply to your business. So maybe I'll take my own organisation as an example, Deloitte.

And so of course we have a big audit business. And so we've also used earth observation imagery in our audits. So for more remote assets like mining sites or offshore platforms, even in Southeast Asia, we've started to use earth observation imagery. And that's helped us have a different source of data to validate our ground visits. Because for some of these sites, it can take you six hours or you have to take a small plane to get to the site to do your checks and due diligence. But you can have another source of data, an image taken from space and you can even task it to say over a certain period, I would like to take images of this area. And that's another sort of cameraman, I think, helping you monitor a particular area.

Elinor Kasapidis:
I love the lateral thinking because even though we're CPA Australia, we think about audit all the time. And if you're a business with remote assets, for example, you can actually monitor how they're going and any perhaps damages if you can zoom in. So if you have a vast asset portfolio, it's a different way of monitoring, like you say, just like sensors everywhere. So that's really, really cool.

So if you look ahead, let's say five years because things are changing so quickly, how do you think the successful organisations that are able to use this data effectively, what will separate them and what will benefit them from those that are a little bit slower on the uptake or who are not aware of these opportunities?

Michelle Khoo:
Those companies and industries where satellite data is relevant, I think satellite data can really help you create a safer, more productive and more inclusive operations and more inclusive world. There's also still that inspiration of what space represents to people and it can be a real driver of innovation and breakthrough. Now of course we see SpaceX using that very, very effectively.

And actually their space business is only a small proportion of their revenues, but what they have used space as that north star, that aim, that Mars ambition, the Mars shot or moon shot to be able to motivate engineering excellence. And that's really where the company's value is on engineering excellence. And I was very amazed to find that actually in Asia Pacific as well, there are many companies that are using space as an inspiration.

And I was very surprised to find that many Japanese companies, the largest conglomerates all have a space division. And so traditionally non-space companies are also setting up space divisions and Japanese investors love whenever a Japanese company announces a space project. And they're really seeing that as that innovation edge, that inspiration to drive transformation and new technologies.

Even in China, I also learned that Chinese insurer Ping An also has their own satellite constellation. And again, I think it's that same motivation of giving their engineers a very complex problem to work on and also being able to bring together a multidisciplinary team and inspire them with a very big goal of how to move forward and how to have breakthroughs. So I would say maybe the biggest takeaway for your audience maybe is to think about how can you leverage space to develop your next edge in the next frontier of your growth?

Elinor Kasapidis:
That's been such a fantastic conversation and so inspirational. And the idea at the centre of the report, The Space Edge, is simple; so space is no longer something that's happening far away, it's becoming part of our operating system. And particularly in regions like Southeast Asia as well as Australia where better data directly improves decisions, resilience, and growth. The implication for leaders is not that they need a space strategy, but rather that they need to recognise where this new layer of data can materially change how their orgnanisations operate. Thank you so much Michelle for taking the time to talk us through this all.

Michelle Khoo:
Thank you, Elinor. This was so fun.

Elinor Kasapidis:
For our listeners eager to learn more, we’ve got a link to the Deloitte report in our show notes so have a read and be inspired. Don't forget to subscribe to With Interest and share this episode with your colleges and friends across the business community. Until next time, thank you for listening.