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How visionary CFOs approach tech investment

How visionary CFOs approach tech investment

Customer experience

Digital transformation is on the minds of CFOs, who expect to invest more in advanced analytics and artificial intelligence (AI) that can transform their businesses by improving customer experience.

That’s according to a recent Grant Thornton report, which shows that 69% of CFOs and senior finance executives plan to increase investment in technologies that quicken business change. CFOs themselves will need to have more technical skills, and they are divided in how to improve their overall workforce’s financial and technical expertise.

“It’s really a question of who’s more visionary as a CFO in moving forward with their products and services and reaching their customers,” said Srikant Sastry, Grant Thornton’s national managing principal for advisory services.

IMPROVEMENT TIED TO DIGITAL INITIATIVES

Companies that have figured out a way to reach customers more effectively through digital advances are reaping benefits. In one notable increase, Costco saw its second-quarter 2018 e-commerce sales grow about 29% year-over-year, to $1.5 billion, CFO Richard Galanti told analysts and reporters on a recent earnings call.

Additionally, firms that embraced digital transformation averaged a 55% increase in gross margins over a three-year period, according to a 2016 Harvard Business School study. Companies that were slow to adapt generated lower margin growth on average (37%) during the same period.

Meanwhile, International Data Corporation estimates that, by 2019, enterprises will spend $1.7 trillion on digital transformation — a 42% increase compared with 2017.

A year ago, Sastry said CFOs likened strategising on digital transformation to gazing into a crystal ball. Now, he says they are trying to gain a clearer picture of what is inside the sphere.

Accordingly, CFOs are not necessarily seeking digital transformation to improve efficiencies in their IT systems. The goals now are to enhance the customer experience, grow the business, and outperform the competition, according to the Grant Thornton report.

CHANGING THE VIEW OF ANALYTICS

CFOs have recognised that they were not thinking enough about analytics. Consequently, 24% of respondents said their finance team is currently adopting advanced analytics, another 24% will do likewise over the next year, and an additional 25% plan to adopt advanced analytics within two years. But CFOs will have to adapt, too.

CFOs have traditionally been focused on operational performance, cost reduction, and business management, but now they want to drive strategy and clear a path to digital transformation by leveraging information and technology, Sastry said.

“They have to make sure that they have the right skillset and innovation to leverage advanced analytics,” he said. “So the crystal ball is still there, but I think they’re trying to clarify the fog in the ball.”

Forty-one per cent of respondents do not believe they have good financial metrics that show the return on IT investments. And only 12% strongly agree that they possess an effective system to measure financial performance tied to newly implemented technology.

The report points out tension between companies’ current need to invest in maintenance and system updates and their desire to allocate funds to new automation technologies, such as AI. Investment in AI is projected to increase significantly: Beyond the 7% who say they have already adopted AI, an additional 47% expect to adopt it over the course of five years. A similar number of CFO respondents expect implementation of innovations such as distributed-ledger technology (also known as blockchain), machine learning, robotic-process automation, and optical-character recognition within five years.

“Ostensibly, AI will help improve quality, improve accuracy, and streamline the number of people required to perform tasks,” Sastry said. “It’ll change the face of business, including financial management.”

The top IT challenges in the survey are:

  • Systems complexity, including enterprise-wide systems integration;
  • Upkeep of legacy systems; and
  • IT talent.

Regarding the talent challenge, most executives — 52% — would prefer to retrain existing staff. Twenty per cent want to recruit new, technically skilled employees, and 17% aim to outsource tech hiring.

In addition to being aware of AI concepts, Sastry said, CFOs will need to know how AI systems work and how they can improve the business through a better customer experience.

“Those skillsets have, historically, resided in the technology space,” he said. “They’ve resided in the IT shop and the CIO [chief information officer] function. So CFOs need to really embrace the technology portions of their business, or the CIOs.”

Source : FM

4 ways innovative companies set themselves apart

4 ways innovative companies set themselves apart

Consider how you used to book a hotel room or flight 25 years ago, or how and where you watched a movie, or hailed a ride from the airport. Companies that have thrived as innovators have capitalised on digital advances more than their peers have, and as a result, they have built strong brands that customers keep coming back to.

“Customers have more information today than ever before,” said Bill Swedish, a consultant in the western US state of Washington. “They have speed of obtaining that information and, because of that, they have the power.

“There is a call for companies to innovate today because of the rapid changes that are happening with their customers and in their markets,” he said. “… The imperative here for the organisations is to get back ahead of their customers and to be proactive in terms of establishing products and services and ways to interact that will win the hearts and minds of customers.”

Companies that have excelled in that realm have embraced four specific types of digital-related innovation, according to the Boston Consulting Group (BCG), which compiles an annual list of the world’s most innovative companies. The four types of innovation that are a strong focus among leading organisations are:

  • Big data analytics.
  • Fast adoption of new technologies.
  • Mobile products and capabilities.
  • Digital design.

BCG singled out those areas because they were the four that had the greatest year-over-year change in expected impact to their industry in the next three to five years. Overall, new products and technology platforms, at 41% each in a survey BCG conducts for the report, are tied atop the list, but their perceived impact shrunk in the past year. In particular, big data analytics (39%) and fast adoption of new technologies (38%) have narrowed the gap of what’s important for companies.

More than half of respondents said that their companies use data analytics for a variety of purposes connected with innovation, BCG said. These include “identifying new areas for exploration, providing input for idea generation, revealing market trends, informing innovation investment decisions, and setting portfolio priorities,” the report said.

One company is still No. 1

Not surprisingly, Apple is atop the BCG list. The Silicon Valley company has been No. 1 all 12 times the list has been compiled. Google, for the tenth time in the past 11 BCG lists, is No. 2. Amazon, which ranked No. 20 on the list ten years ago, is up to No. 4, just behind Microsoft. The rest of the top ten, in order are Samsung, Tesla, Facebook, IBM, Uber, and Alibaba.

Apple’s most recent financial results demonstrate how the company is winning with digital products around the world. Apple CEO Tim Cook said the company’s number of active installed devices, including the new iPhone X, reached 1.3 billion in January, a 30% increase since 2016. For the quarter that ended 30 December 2017, Apple reported revenue of $88.3 billion, its all-time high. Apple said nearly two-thirds of that revenue came from outside the US.

On the BCG list, North America remains the most represented region, with 27 companies in the top 50. Europe is next with 16 companies on the list, up from ten companies in 2016. Europe’s improvement includes first-time appearances by German companies Adidas and SAP.

BCG bases its list on financial metrics, such as three-year total shareholder return and a survey of innovation executives.

Source:  

How to develop a global mindset

How to develop a global mindset

Today’s business world is a far cry from yesteryear. An increasing number of organizations operate worldwide, and they are more diverse internally. And that means professionals — including CPAs — must be adept at dealing not only with employees from various backgrounds, but with workers and clients in different countries as well.

But how do leaders ensure that they and their organizations are culturally savvy and prepared to deal with diversity? This was the subject of “Developing Your Global Mindset,” a one-hour talk given by Kim Drumgo, director of Diversity & Inclusion at the Association of International Certified Professional Accountants. Drumgo’s talk was the second in a series of CPA Diversity & Inclusion webcasts aired by the Association.

“In this digital age, geographical borders are no longer clearly defined, so having a global mindset while working globally has become critically important for the success of business leaders, especially in the accounting profession,” Drumgo said following her talk.

Drumgo defines “global mindset” as the “ability to adapt to a culture and influence individuals or groups whose ways of doing business are different than your own.” By having this mindset, by asking questions and engaging in dialogue with others, leaders can improve employee morale, generate greater insight into untapped markets, and gain more credibility with clients. Those who do not develop a global mindset could miss out on client and talent potential, she noted.

She outlined three work environments:

  • Multicultural environments contain several cultures or ethnic groups alongside one another, but who operate independently.
  • Cross-cultural environments include people from different cultures and some acknowledgement of the differences, though one culture remains dominant.
  • Intercultural environments are the “gold” standard for organizations to achieve, as they encompass a deep understanding and respect for different cultures and ideas.

Drumgo also described the “global mindset inventory,” a concept created by the Thunderbird School of Global Management at Arizona State University. Individuals with global intellectual capital or global business savvy have strong analytical and problem-solving skills and an ability to understand international business. Next is global psychological capital, which is an individual’s innate passion for diversity. Then, global social capital is described as a more enthusiastic and outgoing quest to “collaborate with people from different perspectives,” she noted. Those who possess each type of capital are often more effective leaders since they engage and learn across cultures. Psychological capital is the most difficult to grasp as you are “changing your thought process, breaking down biases, and beginning to challenge your old way of thinking,” Drumgo said.

Drumgo offered the following five tips for changing your global mindset:

Forget the golden rule and use the platinum rule. “Treat people the way they want to be treated. Find the positive in other approaches,” she said.

Don’t underestimate the challenge. Dealing with cultural and individual differences can be difficult, and you cannot assume that you know how to handle every situation that can arise. “Having many stamps in your passport doesn’t mean you have a global mindset,” Drumgo said. So don’t underestimate the challenge of leading and working with others across the globe.

Apply multiple strategies. “There isn’t one silver bullet as to how you can interact with everyone. There is not one proven strategy that will help you relate to your entire team better,” Drumgo said. “Applying multiple strategies is really important.”

Be sensitive to differences in language. Communicating isn’t always easy for those who use English as a second language. Be empathetic, kindhearted, and understanding.

Be patient and ask for feedback. “You can’t flip a switch and know how to interact with everyone around the globe,” Drumgo said. “You can’t be everything to everyone all of the time,” she said. “But be the best you can to somebody when it’s time.” Then, she added, you will make a huge difference in developing your global mindset.

Workplace Health and Safety a Vital Component of Mature Risk Management

Businesses of all types are being transformed by technology, and so are the many kinds of workplaces that support their operations. Changing business strategies and increased productivity lead to rapid changes in process, which often means that executives lack a full understanding of the impact on the health and safety of employees and third parties. Workplace health and safety risks are among the most critical to address, as they can result directly in loss of life and limb—not to mention chronic injury and illness, work stoppage, lawsuits, and damage to brand reputation.

Traditionally, workplace health and safety matters have been addressed by dedicated safety teams working apart from the business, and risk management teams relying on spreadsheets, checklists, and incident reports as tools of the trade. As the number and interdependence of risk factors increases, this is no longer a sustainable approach—the cost of managing each regulation, requirement, change, or incident out of siloed programs will continue to rise, while effectiveness erodes.

The growing influence of international standards for risk management (e.g., ISO 31000, ISO 9001 and ISO 45001), and emphasis on integrated risk management as a key factor in cultivating business resiliency have created prime opportunities for workplace safety professionals to raise awareness of their role in risk management and of the impacts of accidents. With the right processes and technology, safety professionals can help protect their organizations from a range of negative outcomes from employee absences to insurance premium increases to fines and lawsuits.

With this in mind, health and safety leaders, C-level executives, and boards should be incorporating workforce well-being into strategic planning, corporate responsibility programs, and risk maturity initiatives across the enterprise. Governance, risk management, and compliance (GRC) efforts are not abstract—they are interrelated, and each function can be made stronger when addressed holistically. Carrying out integrated GRC initiatives (including health and safety programs) involves orchestrating and centralizing numerous interdependent policies, processes, and reports.

Integrated risk management should raise continuous, data-driven improvement of health and safety measures to the same level as other operational risk measures (e.g., cyber security, outsourcing, fraud prevention). Supporting these efforts with a systematic and streamlined process and toolset for documentation, tracking, training, reporting, and analysis is fundamental to incorporating them throughout the enterprise.

Integrated risk management processes help organizations foster accountability and collaboration, form a clear and complete picture of risk, cover compliance obligations more efficiently, reduce safety and health incidents, and improve incident response. The longer problems remain unaddressed, the greater the liability and risk exposure. Ineffective responses to workplace health and safety issues can lead to repeat accidents, illnesses, absences, loss of productivity, higher fines, higher insurance premiums and increased scrutiny from regulators and business partners. The GRC processes that need to be optimized include: performing risk analysis and business impact analysis; maintaining and reviewing process and safety documentation; investigating and reporting on accidents, injuries, illnesses and near misses; analyzing injuries and issues by site to pinpoint and measure risk; automating generation of incident forms for outside agencies (e.g., OSHA and HSE); executing job hazard analyses; managing site inspections and remediation actions; and ensuring employees are aware of safety processes.

There are few excuses for the blind spots that lead to major workplace health and safety issues. If we integrate policies and controls with processes and systems across the enterprise, we can gather and analyze metrics on just about every aspect of operations, as well as incorporating employee input and best practice guidelines. GRC technology solutions that include a health and safety component can help automate and bring a new level of intelligence to the associated risk analysis.

Enterprise-wide data integration enables predictive analytics capabilities, making it possible to identify health and safety issues and communicate them to executive decision-makers before they turn into incidents and losses for the company. Data captured during risk or safety assessments, and investigations into near misses and incidents generates insights to be incorporated into safety protocols and job training. The same types of analyses can be applied to vendor and supply chain management to improve health and safety outcomes throughout the value chain.

Data-driven safety programs should also include mechanisms for gathering input and feedback from the workforce. Whistleblower capabilities, responsive communications, and reliable procedures for following up after an incident or near-miss cultivate a safety-first environment. The ability to reassure workers that their wellbeing is a management priority positively impacts everything from recruitment and retention to incident rates, productivity, and corporate reputation.

Organizations cannot reach a mature, effective level of risk management without incorporating health and safety into their operational risk programs. An informed and comprehensive view of risk leaves enterprises better prepared for planned growth as well as unexpected opportunities and challenges. To strengthen business resiliency and sustain competitive advantage, executives must prioritize the continuous monitoring of health and safety risk and compliance across all business units, partners, and vendors. Mature risk management not only saves lives, but also lowers insurance costs, increases productivity and protects the sizable investments companies make in acquiring, training, and retaining their workforce.

Keys to Embracing Disruptive Technology

Keys to Embracing Disruptive Technology

In taking stock of potentially disruptive technologies, CEOs should be ready—really ready. Reinhard Fischer, chief of strategy for Audi of America, urges CEOs to “stop denying reality, which is what taxi operators did with Uber. Now Uber has taken about one-third of the taxi traffic in big cities.” Disruption is happening faster than ever. “Before when you talked about technologies coming, you’d name one or two,” says EY global chief innovation officer Jeff Wong. “Now there are 10, and they’re all relevant and important. That’s what’s really changing for the CEO.”

Here are some key pointers for CEOs looking to embrace disruptive tech solutions:
Don’t panic. The world is rife with examples of businesses where technological revolution fell short of its warnings. Early participants in e-learning, for example, still haven’t made money, says Julian Birkinshaw, a professor at London Business School. “Sometimes we forget about industries that haven’t been turned completely, immediately upside down. You have to make an ultimate commitment to new technology, but it’s not like you necessarily have to do that immediately.”

 

1. Take a long and broad view. Wall Street may demand rapid returns but woe be unto the CEO who concedes wholesale. “You’ve got to try to optimize for 10 years from now, not even just one to two years ahead,” warns Guo Xiao, CEO of the consulting firm ThoughtWorks. CEOs must also broaden their transformation push to encompass relationships with suppliers, customers and other external constituencies. “The greatest success comes through building an ecosystem of alliances and not thinking that the impact of technology is all within the four walls of your company,” says Nichole Jordan, national managing partner of markets, clients and industry for Grant Thornton.

2. Disrupt yourself. Critically evaluate your existing business model much as a hacker would try to take down a cybersecurity network. “Find out what the weak points are that you don’t see so that a disruptor can’t take advantage of them—and so you can disrupt yourself,” says Fischer.

“YOU’VE GOT TO TRY TO OPTIMIZE FOR 10 YEARS FROM NOW, NOT EVEN JUST ONE TO TWO YEARS AHEAD.”

3. Seed early successes. Enable a “culture of testing and learning new technologies, not necessarily passing and failing them,” advises Roger Park of EY. Former Humana innovation chief Paul Kusserow, now CEO of Amedisys, recommends testing technologies with “people in the company who have a very specific problem that a technology could solve—more acute than anywhere else in the company—or who believe that a process needs to be changed and this could help it. Then you need to make sure these people get not only the benefit of the innovation but credit for taking the risk.”

4. Create emerging-tech scrums. EY’s Jeff Wong suggests charging a team with “actually getting dirty with tech and playing with it, trying to address and answer problems.” Audi of America created a “digital team where we pull all the bright young minds that are working on digital topics and merge them with people who do strategy for the long term,” Fischer says. “It’s a little lab where we play around with all kinds of ideas and ask ‘what if?’ questions.”

5. Expect resistance. “There are incredible forces working against innovation” in any organization, Kusserow says. “Technology has to be so good that someone has to be willing to take the risk of restructuring or disassembling an existing process to which their success or maybe their careers may be tied.”

6. Don’t get hung up on a specific technology. Resist the urge to make a big bet on the latest buzzword technology, says John Mullen of CapGemini. “Don’t prepare yourself to chase certain technologies, but [rather] to get better decision making in your organization, because the technologies that pass through your ecosystem are going to be different tomorrow than today.”

7. Focus on building capabilities. CEOs need to see their roles as “building an organizational culture that can rapidly figure out which technologies are advancing, what the paybacks are and what the future leverages of those technologies are in order to determine whether they’re part of the business strategy going forward,” Mullen says. Consider putting tech people on the board and add the CIO to the company’s core management team. “You need to infuse specific technology skill sets in management—people who understand digital as well as your industry,” says Jeanne Beliveau-Dunn, VP and general manager of Cisco Systems. “They need to be embedded in each business unit.”

8. Reckon with legacy IT. A company’s IT base typically must provide the computing horsepower and platforms for embracing machine learning and other data-intensive disruptors. Many CEOs get excited about a shiny new app, “but they shouldn’t lose sight of the fact that existing IT can be an enabler or an inhibitor of new digital services,” advises Paul Appleby, EVP of transformation for BMC Software. “They have to work on how to turn their existing infrastructure into a competitive differentiator. It may not be the exciting piece, but it’s what will allow you to be agile and scale and do so in a trusted environment.”

Chinese airlines poised for windfall as in-flight broadband fosters sky-high e-commerce

Chinese airlines poised for windfall as in-flight broadband fosters sky-high e-commerce

 Carriers are expected to gain a significant share of the estimated US$130 billion global in-flight broadband ancillary revenue by 2035

 

The mainland, which has the world’s largest smartphone and online retail markets, is predicted to corner a considerable share of the estimated US$130 billion of global in-flight broadband-enabled ancillary revenue forecast for airlines by 2035.

“Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content and e-commerce packages”

“We can expect to see significant growth in China because passengers prefer to bring their personal electronic devices on board to access their choice of content and services, as they would enjoy on the ground,” Otto Gergye, the vice-president for Asia-Pacific at British satellite telecommunications company Inmarsat, told the South China Morning Post on Thursday.

“In-flight broadband is able to bring about tremendous customer service and revenue possibilities for airlines, brands and internet companies.”

His comments followed the release on Wednesday of a research study on the emerging in-flight market segment, Sky High Economics, by the London School of Economics and Political Science in association with Inmarsat.

Airlines in Asia-Pacific can expect to see the greatest opportunity from in-flight broadband-enabled ancillary services, with total revenue projected to reach US$10.3 billion on the back of passenger growth and wide availability of such services, according to the study.

Revenue would come from broadband access fees, advertising, so-called premium content and e-commerce sales  arrangements with companies such as JD.com and Alibaba Group Holding. New York-listed Alibaba owns the Post.

The study estimated airlines around the world currently receive, on average, an additional US$17 per passenger from traditional ancillary services, such as duty free buys and in-flight retail, food and drink sales. In-flight broadband-enabled ancillary revenues would add an extra US$4 by 2035, it said.

“Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content and e-commerce packages,” said Alexander Grous, the author of the study.

A recent global survey of 9,000 airline passengers from 18 countries conducted by market research firm GfK and Inmarsat found 68 per cent of passengers in China ranked in-flight connectivity as more important than in-flight entertainment.

The survey also found the mainland airline likely to lead in providing in-flight Wi-fi services is Beijing-based national flag-carrier Air China, according to 46 per cent of respondents. It was followed by China Eastern Airlines, headquartered in Shanghai, and Guangzhou-based China Southern Airlines.

“The major airlines in China have already struck strategic partnerships with the country’s largest online retailers, such as JD.com and Alibaba Group, to serve their passengers,” Gergye said.

“These include making online flagship stores available across various flight routes and providing online payment support, such as through Alipay.”

Such demand is fuelled by how mainland consumers are more accustomed to using the internet than anywhere in the world, with 731 million users at the end of December last year, according to the China internet Network Information Centre. Of that number, 695 million people access the internet on their smartphones.

Online shopping has also remained buoyant on the mainland, despite a slowdown in the domestic economy. The country’s online retail market is predicted to grow to US$1.7 trillion by 2020, compared with US$750 billion last year, according to a report from Goldman Sachs.

“There’s no doubt that in-flight broadband will revolutionise the way we work, play and consume content whilst in the air,” said Paul Haswell, a partner at international law firm Pinsent Masons.

“There is potential for airlines to generate additional revenue, but these carriers should not just treat in-flight broadband as an extension of an in-flight shopping magazine. Instead, they should look at innovative ways to entice passengers to spend.”

At present, only 53 out of an estimated 5,000 airlines worldwide offer in-flight broadband connectivity, the study said.

China is forecast to record a total of 1.3 billion passengers flying to, from and within the country by 2035, according to a forecast made last year by trade group the International Air Transport Association.

How to stay ahead of the IoT curve

How to stay ahead of the IoT curve

How to stay ahead of the IoT curve

Business leaders need to keep the big picture in mind when thinking about the internet of things.

Seemingly overnight, the internet of things (IoT) has become a technology buzzword, challenging businesses to embrace a technology in its infancy before they can firmly grasp the pitfalls and opportunities involved.

While business leaders are optimistic about the doors that IoT – the sum of smart devices that can measure and communicate data, and the technology and analysis to make the data useful – can open for cost reduction and new revenue streams, many find it difficult to get a foothold and develop a strategy. Research from Bain & Company found that only about 10% of companies have made it to extensive implementation and 20% of companies expect to do the same by 2020.

Executives in Europe are more ambitious and optimistic about their plans to deploy and integrate IoT solutions than their American peers, Bain found, particularly in industrial and commercial applications. Bain suggested this may be because European firms have clearer expectations about how IoT will change the way systems and businesses operate, and because Europeans and Americans appear to want different things out of IoT. American executives are more focused on cost reduction, Bain found, while European executives are enthusiastic about the potential to improve quality. According to Bain’s study, 27% of European executives said they are implementing or have already implemented IoT and analytics use cases, compared with 18% of US executives.

How does a business comprehend such a fast-evolving landscape? Here are some factors for CFOs to consider as they approach the IoT space.

Think up, down, and all around

Ann Bosche, partner at Bain and one of the authors of the study, said that IoT – which can come in visible forms such as wearable fitness trackers or behind-the-scenes technology such as a network of sensors tracking and communicating an array of performance indicators – presents a blind spot to most companies, whether they’re providing it or using it.

While businesses are excited about one-dimensional IoT opportunities, such as connecting hardware to the internet, Bosche found that they are struggling with the larger picture. “The misconception for CFOs of those businesses delivering IoT solutions is that they can just go forward with the traditional horizontal model, implementing IoT across business units, when actually they’ll have to provide more integrated end-to-end solutions with vendors, customers, and partners.” Smart meters, for example, have a much wider implication than optimising energy costs at home; they also provide data that can benefit energy and tech suppliers.

Open the door to ideas

In trying to understand return on investment for IoT, finance professionals are looking to vendors to help, but vendors are making their own mistakes, Bosche said. “Vendors are spreading their investment too thin,” she said, explaining that many try to serve too many industries at once. “There’s a lot of focus on consumer devices and solutions, but our view is that most of the profits in the long term will accrue to vendors that are providing solutions to enterprises and industrial clients, in segments such as software, infrastructure, or analytics.”

Following the news and IoT influencers on social media is a good first step to stay current. Bertrand Lavayssière, managing partner of global financial consultancy zeb, said many effective executives also participate in hackathons, sprint-like events where programmers and other IT specialists collaborate on concepts or projects, which provide startups with a forum and allow companies to gather intelligence on ideas in development. Businesses also can designate a “research brain” that keeps a finger on the pulse of the latest IoT advancements, Lavayssière added, and can invite innovators over, or visit them on-site, and have an informal chat, presenting the challenges the business faces and finding out what the new technology can do to address them. In the banking industry, for instance, some firms hold “IoT speed-dating” sessions, where they present a particular challenge and give invited innovators three minutes each to present their solutions.

Make IoT part of overall data strategy

Bernard Marr, author of Data Strategy: How to Profit From a World of Big Data, Analytics and the Internet of Things, said there is no such thing as a specific strategy for IoT. Instead, Marr identified four distinct areas in which data can drive business performance:

  • Improve decision-making. More devices can collect more data to inform decisions.
  • Better understand customers. Automobile manufacturers, for example, are getting huge insight from connected devices as to how customers are using their vehicles.
  • Improve operations. Instead of a blanket rule that a machine has to be maintained every six months, it can get maintenance only when it really needs it.
  • Identify new revenue streams and income opportunities. Look not only at increasing the value of your business, but also at how you might partner with others to sell the data. For example, Google didn’t buy Nest just because it produces thermostats, but also because it can sell to utility companies the insight Nest collects on how people use energy.

You should make sure you’re considering IoT from the perspective of your customers, as well. Sam Ganga, a partner at KPMG specialising in digital, mobile, and IoT, sees a great deal of IoT initiatives driven by internal signals – typically, engineers or IT staff pushing an initiative. He encouraged CFOs to make sure that the voice of the customer is folded into the strategy. If IoT is purely a data monetisation play, Ganga warned, it may be a long play. Just because a business added a great innovative feature, he said, doesn’t mean that the customer is going to pay for it.

“Four years ago,” Ganga said, “a midsized manufacturer used IoT for a significant product improvement but was caught off-guard when the customer, although happy to use it, was not prepared to pay more. Two years later, they rethought the approach and offered a premium data service that would help predict machine maintenance at a higher price, and the investment ultimately paid off. Today IoT is moving so fast businesses can no longer afford to invest first and then hope to back into a value proposition.”

Take the lead

For James Pews, vice president of finance for professional networking platform Webtalk, IoT is an opportunity for financial managers to wear a leadership hat.

“We have to make a concentrated effort to stay up to speed with the evolving technology, not just at work, but also on the personal front, keeping our own ‘technology house’ in order.” The principles that apply to investment in smart home tech, using connected devices and data to make personal life more cost-effective, more sustainable, and more productive, involve decisions that can be scaled up to larger investments for a business.

Source : GCMA

Single Touch Payroll Program Lead at Australian Taxation Office

Single Touch Payroll Program Lead at Australian Taxation Office

Single Touch Payroll is a game changer for tax and super reporting and the broader economy. It is an exciting digital initiative as it ultimately unlocks real time salary and wage information for all employees in Australia.

For now, it means employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO directly from their payroll solution at the same time they pay their employees.

For employers with 20 or more employees, Single Touch Payroll reporting starts from 1 July 2018. The first year will be a transition, we are keen to help people make this change and accept that there needs to be a bedding in period while everyone gets used to this new process.

The Australian Government has also announced it intends to expand Single Touch Payroll to include smaller employers with 19 or less employees from 1 July 2019, subject to legislation being passed in parliament.

What will I need to do differently under STP?

Single Touch Payroll is a new way of reporting payroll information to the ATO. As you pay your employees through your own payroll process, you will be sending us their tax and super information at the same time.

This will align your reporting obligations to your usual pay cycle. In other words, you’ll be interacting with the ATO at the point where you pay your employees. This will typically be through your accounting or payroll software and the majority of software developers are already building updates into their payroll products to deliver Single Touch Payroll reporting.

When the ATO receives the payroll information, they’ll match that to your records, as well as your employees’ records. You won’t need to provide your employees with a payment summary if you have reported their information through Single Touch Payroll. The ATO will provide that to your employees through myGov or through their pre-filled income tax returns.

What’s next?

We’re working closely with our industry partners – including software providers and tax practitioners – to make sure the move to Single Touch Payroll reporting is a smooth one for everyone.

In the next month we’re also writing to employers with 20 or more employees to let them know about their reporting obligations from 1 July 2018 so they can start planning for Single Touch Payroll.

If you’d like more information you can visit www.ato.gov.au/singletouchpayroll.

Source: John Shepherd via LinkedIn:

Personal Liability for Unpaid GST raised with introduction of Director Identification Number

As part of the reforms, the Government is consulting on widening the scope of directors personal liability to include GST liabilities as part of the Director Penalty provisions.

It is likely that personal liability for unpaid GST will operate in a similar way to current Director Penalty Notices that currently affect only unpaid PAYG and Superannuation. That is;

  • If a Director does not report by lodging a BAS return within 3 months of the due date for lodgement, there will be an automatic personal liability for a Company’s unpaid GST debt as well as its unpaid PAYG and Super debts.
  • Where a Director does report within the 3 month window, they will be able to avoid personal liability for the various company tax debts provided the Company is placed into liquidation within 21 days of the date on the Director Penalty Notice.

The Government’s consulting on Personal liability for directors with unreported and unpaid Company GST debts is a significant development that all directors must be made aware of.

As we discover more, we will keep you informed.


Media release from The Hon Kelly O’Dwyer MP

(Go here to view complete, unedited release)

A comprehensive package of reforms to address illegal phoenixing

The Turnbull Government is taking action to crack down on illegal phoenixing activity that costs the economy up to $3.2 billion per year to ensure those involved face tougher penalties, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, announced today.

Phoenixing – the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities – has been a problem for successive governments over many decades. It hurts all Australians, including employees, creditors, competing businesses and taxpayers.

The Government’s comprehensive package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.

The DIN will identify directors with a unique number but will also interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.

In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers. These include:

  • Specific phoenixing offences to better enable regulators to take decisive action against those who engage in this illegal activity;
  • The establishment of a dedicated phoenix hotline to provide the public with a single point of contact for reporting illegal phoenix activity;
  • The extension of the penalties that apply to those who promote tax avoidance schemes to capture advisers who assist phoenix operators;
  • Stronger powers for the ATO to recover a security deposit from suspected phoenix operators, which can be used to cover outstanding tax liabilities, should they arise;
  • Making directors personally liable for GST liabilities as part of extended director penalty provisions;
  • Preventing directors from backdating their resignations to avoid personal liability or from resigning and leaving a company with no directors; and
  • Prohibiting related entities to the phoenix operator from appointing a liquidator.

The Government will also consult on how best to identify high risk individuals who will be subject to new preventative and early intervention tools, including:

  • a next-cab-off-the-rank system for appointing liquidators;
  • allowing the ATO to retain tax refunds; and
  • allowing the ATO to commence immediate recovery action following the issuance of a Director Penalty Notice.

Consultation on the non-DIN measures will commence in the coming weeks.

These reforms complement and build on other Government action to combat crime and fraud in the economy, including:

  • instituting the Phoenix, Black Economy and Serious Financial Crime Taskforces;
  • strengthening disciplinary rules for insolvency practitioners;
  • legislating to improve information sharing between key regulatory agencies;
  • reviewing and enhancing ASIC’s powers and enforcement tools;
  • consulting on law reform initiatives to curb the excessive drain on the taxpayer funded Fair Entitlement Guarantee scheme, which covers employees’ entitlements left outstanding as a result of failed business enterprises;
  • improving the collection of GST on property transactions from 1 July 2018; and
  • consulting on a register of beneficial ownership of companies to be made available to key regulators for enforcement purposes.

“The Government is committed to ensuring individuals who engage in illegal phoenixing activity are held to account and that the regulators are equipped to take stronger action to both deter and penalise phoenixing activity for the benefit of all Australians,” Minister O’Dwyer said.

Source  : insolvencyexperts.com.au

Want to Improve Your Sales Forecast? Check Your Company’s Facebook Feed.

You’re scrolling through Facebook and see a post from your favorite clothing store showcasing a great pair of jeans. You “like” it, perhaps even leave a comment that you are eager to buy a pair, and then scroll on.

How is that store putting your likes and comments to use? It’s probably using them to shape its social media marketing strategy. But it is much less likely that the retailer is using that data to make operations decisions, such as how many pairs of those jeans to manufacture or whether to mark down prices.

That could change. In a recent study, Antonio Moreno, an associate professor of operations at Kellogg, found that social media data can improve sales forecasts. When researchers incorporated information about a clothing company’s Facebook interactions into prediction models, they could more accurately estimate purchases the following week.

Using advanced algorithms was key to the improvements, meaning simply collecting social media data is not enough: companies should also upgrade their forecasting techniques.

“It’s important to get new data but also use more sophisticated prediction methodology,” Moreno says.

The study did not reveal why the Facebook information improves forecasts. Moreno speculates that the data might reflect how much attention customers are paying to the brand, as well as good or bad word of mouth.

“By introducing social media data, we can do better.”

But companies may care more about the technique’s effectiveness than the mechanism behind it.

“If something works,” he says, “sometimes they might be able to live without knowing why it works.”

Using Social Media Data

The idea of mining social media data to guide operations is in its infancy.

For instance, companies might show a forthcoming shirt in two colors and see which one generates more clicks. The company could then use that information to decide which color to produce. “But it’s still not mainstream,” Moreno says.

And while academic studies have explored whether social media posts boost sales, little research has been done on using the data for internal operations decisions.

Moreno decided to investigate that idea with Ruomeng Cui, at Emory University, and Dennis Zhang, at Washington University, both of whom are former Kellogg doctoral students, along with Santiago Gallino at Dartmouth College.

The team worked with an online clothing company. Most of the firm’s social media–driven traffic came from its Facebook page, which had more than 300,000 followers at the time of the study. But to forecast sales, the company was largely relying on basic information such as its overall sales growth and weekly or seasonal patterns—such as the tendency to sell more on weekends.

Moreno’s team wrote software to extract information about the company’s Facebook posts from January to July 2013. The final data set included more than 171,000 users, 1,900 company posts, about 25,000 comments, and a quarter-million likes.

Next the researchers used language-processing software to categorize each comment as positive, negative, or neutral. In addition, the team obtained internal data on the company’s sales and advertising campaigns during that time.

Training the Forecasting Models

Using what they gathered, the researchers produced two sets of sales-forecasting models: the baseline forecast, which included only internal company information, and a second forecast that combined internal and social media data.

For both the baseline and social media forecasts, the team experimented with a variety of prediction methods. Most of the models relied on machine learning, in which the model trains itself to identify which factors are most important.

To assess accuracy, the researchers used a measure called mean absolute percentage error (MAPE), which captures how much the estimate deviates from actual sales. For instance, a MAPE of 10% would mean that, on average, the model’s estimates were 10% off.

The company’s existing sales forecasts for the next week had a MAPE of 12%. The researchers’ best-performing baseline model—the one without the social media data—brought the error down to about 7–9%.

Adding social media data lowered it even further to 5–7%. Yet, the social media data alone was not enough. When the team plugged social media information into a poorly performing model, the accuracy could be even worse than the baseline model without the social media information.

The results suggest that both the data and methods are important. “By introducing social media data, we can do better,” Moreno says. “But it looks like the first step should be having better methods.”

“They can actually use this social media to learn and make better decisions.”

Fine-Grained Forecasts

Future research could explore in more detail why social media improves sales forecasts. Researchers could also perform similar studies to predict sales for individual products, rather than just total sales. And if data could be broken down by geographic area, the information could help companies decide how much of a particular product to carry in, say, Texas versus Idaho.

Moreno notes that the study’s results may not apply to all industries. Social media data is more likely to be relevant to products with highly uncertain sales or industries heavily influenced by trends, such as fashion and entertainment. But for consumer goods like breakfast cereal, sales are already fairly predictable, so adding Facebook data may not improve forecasts much.

Companies could also become more strategic about their social media posts, in order to specifically elicit information that will help guide their operations. For instance, more firms might adopt the practice of displaying potential products and deciding what to manufacture based on customers’ reactions.

“They can actually use this social media to learn and make better decisions,” Moreno says.

Source  : Kellogg