News & Views

December 2007 from PricewaterhouseCoopers – “Organizations operating in today’s world are facing some of the greatest people management challenges in the history of business: the talent crisis, an ageing workforce in the Western world, the rising demands for global worker mobility as well as the organizational and cultural issues emerging from the dramatic pace of change in the past ten years. But how will these changes impact businesses over the next decade, and what other social, economic, environmental and demographic factors will have an impact on the world of work?”

180 View (written by Lawrence Young) – As we usher in another new year, the eighth in this the third millennium AD, it’s only fitting that we look ahead at the year to come. But perhaps we should be looking much farther out in time when it comes to certain trends that will have far-reaching implications on our daily lives.

In this extremely illuminating 31 page report, international accounting firm PricewaterhouseCoopers reports on the results of a major research study that they conducted in July, 2007. Author Michael Rendell, PwC’s Partner and leader of Human Resource Services at PWC, says that the study was sparked by:
1. The rising profile of people issues on the business agenda
2. The talent crisis
3. An ageing workforce in the western world
4. The increase in global worker mobility
5. The organizational and cultural issues emerging from the dramatic pace of business change in the past decade.

Rendell and his team “wanted to explore how these issues might evolve and how organizations need to adapt to stay successful”. So they interviewed nearly 3000 ‘Millennials” – new graduates from the United States, China and the United Kingdom who represent a generation just joining the workforce – to understand their views and expectations on the future of work.
Based on the data they gathered, the researchers saw several strong themes emerging:
1. BUSINESS MODELS WILL CHANGE DRAMATICALLY-the pace of change in the next decade will be even greater than what we’ve seen up to now.
2. PEOPLE MANAGEMENT WILL PRESENT ONE OF THE GREATEST BUSINESS CHALLENGES-by 2020 the radical change in business models will result in companies facing issues such as the disappearance of the boundary between work and home life.
3. THE ROLE OF H.R. WILL UNDERGO FUNDAMENTAL CHANGE-perceived to be at a crossroads today, it is projected to follow one of three very different paths.

Amongst the things that caught our eye was the researchers’ vision that come 2020, three very different worlds of organizational structure and business models will likely co-exist.
While some of PwC’s findings confirm current views on the future of work, a number of themes are clearly emerging that defy conventional thinking. If you want a ‘heads-up’ and some very valuable insight into this critical area of your business going-forward, you must invest some time to read this eye-opening report.

January 2008 from CAmagazine and written by Michael Burns – If you read last month’s article (see “Top 10 software selection mistakes,” www.camagazine.com/softwareselection), you will know the software purchase process is riddled with pitfalls. But don’t expect implementation to be any easier. The article discussed the 10 top implementation slip ups you can make.

December 20, 2007 from ComputerWorld – “Robust software sales pushed Oracle Corp.’s second-quarter net income up 35% compared with the same period last year, to $1.3 billion (U.S.), or 25 cents per share, the company said Wednesday. Total revenue grew by 28% to $5.3 billion, Oracle said…

CEO Larry Ellison added that Oracle is finding new business by targeting vertical industries that may not be using packaged software like the kind Oracle sells. “Some of these verticals are almost green fields in terms of modern software,” he said. The company’s president, Charles Phillips, echoed Ellison. “We think we’re very early on in this strategy,” he said. “We’re still selling in the verticals who are building applications. We’re trying to convince them to buy packaged applications.”

180 View – Good move by Oracle in targeting the verticals. But how do you take an already complex software system, add more functionality and create something that will not be too onerous to implement? As well, verticals require more than just software; the implementation team also requires industry expertise.

January 1, 2008 from CFO Magazine – “Companies have spent substantial sums attempting to cope with the many burdens of Sarbanes-Oxley. Spending on Sarbox peaked in 2006, with publicly traded companies forking out about $2 billion on technology and consulting to help them assess internal controls and material weaknesses. With much of the Section 404 scut work now automated, customers want to leverage that initial investment and create a foundation for future compliance needs…

Vendors like BWise, Qumas, 80-20, OpenPages, and Paisley have created impressive GRC platforms — that is, portals where managers can access and monitor information about governance, risk, and compliance. The problem, say analysts, is that no software publisher covers all the GRC bases.”

180 View – The article predicts that “GRC will be as common a business term as ERP”. We think that ERP will be extended to include GRC just as ERP has been extended to include CRM, BI and CPM.

December 21, 2007 from internetnews.com – “Yes it’s that time of year folks, as news announcements wind down and reporters try to stay busy and show they know what they are talking about. It’s time for year-end lists. For my part, I’m doing a Top Ten ‘Best of the Year’ list as relates to my wide swath of product coverage, including a few items from the lighter side of things.
1: Most Overrated Technology – Quad-core for the desktop.
2: Most Annoying Security Trend – Six degrees of too much security.
3: Best use of Adobe’s Flash – Desktop Tower Defense.
4: Biggest Shift In Online Sales: From eBay to Craigslist.
5: Best Spillover Trend From Gaming – The Guitar Hero effect
6: “Doh!” Moment Of The Year – Virtualization starts to slow server sales.
7: Most Shameful Moment For Tech – Electronic voting.
8: Biggest Waste Of Money – Incessant virus conferences.
9: Most Mixed Message – Power use at home vs. the datacenter.
10: Best Argument Against DRM: Pandora/last.fm.

180 View – We thought this was the #1 best ‘Best of the Year’ lists.

December 31, 2007 from CIO Update “What we’re interested in is not what might happen in 2008, but what is already starting to happen. The following trends are here.

1. Data leaks and IP Theft – Even as viruses grow more dangerous and zombie botnets flood us with spam, security experts are turning inward. The real threat is from within…

2. Virtualization – Until recently, virtualization has been focused on data-center optimization. With virtualized servers, hardware utilization goes up and flexibility increases. At the same time, costs associated with hardware and ongoing maintenance drop…

3. Software as a Service – SaaS has slowly been expanding beyond the mid-market, and since it dovetails well with other trends like virtualization and utility computing, 2008 could be a breakout year…

4. The Mobile Workforce – If your concerns about mobility are still centered on rogue access points and weak wireless encryption, you’re not keeping up…

5. Windows Vista – The question here is what should you do about Vista…

180 View – We would add web based applications to the list. We see a steady move away from Fat Windows client/server user interface (FUI) to a thin web-based user interface (TUI). Just as DOS applications that did not convert to Windows did not survive, the same will hold true for FUI applications that don’t convert to TUI. We made up the FUI and TUI acronyms and apologize to those of you fed up with 3 letter acronyms.

January 3, 2008 from CIO Insight – “As much as e-mail, instant messages, blogs and their brethren technologies have helped knowledge workers better collaborate, interruptions and duplications derived from these forms of digital communication and content are overwhelming workers to the point of distraction.

The result is an egregious lack of productivity that may cost the U.S. economy $588 billion a year, according to a report by Basex, which has tabbed information overload as the “Problem of the Year” for 2008.

“Information Overload: We Have Met the Enemy and He is Us,” authored by Basex analysts Jonathan B. Spira and David M. Goldes and released Dec. 19, claims that interruptions from phone calls, e-mails and instant messages eat up 28 percent of a knowledge worker’s work day, resulting in 28 billion hours of lost productivity a year. The $588 billion figure assumes a salary of $21 per hour for knowledge workers.

180 View – We are also guilty and too frequently check email and interrupt what we are doing. But we don’t agree with the findings. Most people don’t have the attention span to stay focused on the same thing for hours at a time. They need a break and lots of them. So if we are going to take a break, why not do it in a productive way by collaborating with colleagues, customers, suppliers and referral sources? And even if the email or instant message is with a friend, it’s faster than having a chat on the telephone.

January 2008 from Popular Mechanics “The recent boom in video monitoring—by both the state and businesses—means we’re all being watched. It’s like something out of George Orwell’s 1984. Except that, unlike Orwell’s protagonist Winston Smith, we can watch back—and plenty of people are doing just that. Which makes a difference.

The widespread installation of recording devices is not all bad: ATM cameras helped prove that Duke students accused of rape couldn’t have committed the crime. And we all sympathize with the goals of preventing terrorism and crime, though it is not proven that security cameras accomplish this.

Nonetheless, the trend toward constant surveillance is troubling. And even if the public became concerned enough to pass laws limiting the practice, it’s not clear how well those laws would work. Government officials and private companies too often ignore privacy laws…

The widespread availability of digital cameras and video-capable cellphones means that ubiquitous surveillance on the part of the little guys is moving, if anything, even faster than ubiquitous surveillance on the part of the big boys. And distribution tools like YouTube make it easier to get the footage to a large audience.”

180 View – 9/11 changed everything. It seems that most people are ok with less privacy in favour of more security. Technology is also changing everything when it comes to privacy vs security. Some claim that satellites in space can already read a license plate. London’s so-called Ring of Steel, is an extensive web of cameras and roadblocks designed to detect, track and deter terrorists. New York is in the process of doing something similar. According an article entitled “Surveillance: A New Look at Big Brother” published by CIO Today on December 26, 2007, “There are about 30 million surveillance cameras in the U.S. — inside ATM machines, at traffic lights, in department store dressing rooms.” How long will it be when the cameras can find someone based on a retina scan?

January 2008 and written by Al Title of Horwath Orenstein – “Hope is not a method. Without a risk management program that identifies, reports and mitigates principal business risks using a systematic and disciplined approach, your organization will be spending most of its time with crisis management instead of being focused on achieving its business objectives.

Recently Al Title, a partner in Horwath Orenstein’s Risk Management Group, led a discussion on Business Process Outsourcing (BPO) and its underlying risks at York University’s Schulich School of Business Masters Program for Operational Risk Management.

The highlights of the discussion were the following:

1. Good business theory suggests that most activities that are not part of an organization’s core competency should be outsourced.
2. Presently, there is a tidal wave of outsourcing activity worldwide resulting from a lack of resources, a global economy and the need to remain competitive by focusing on core competencies.
3. The key to successful BPO is ensuring that there is a clear understanding by your organization and the service provider as to where they fit into the value chain of interdependencies and alignment with your business objectives
4. Once you understand your principal business risks, you realize they are the same or similar whether they are outsourced or internal. The difference is that you have to manage these risks with a different style and process while operating in an outsource environment.
5. The benefits of BPO include a) Drives an organization towards achieving its objectives; b)Improves ability to enter new markets; c) Improves resiliency; d) Improves the ability to adapt and innovate; e) Improves the ability to expand production and market share
6. A risk matrix framework is recommended to identify all the risks. The matrix should include the following components based upon people, process, systems and external factors: a) Strategic; b) Selection; c) Implementation d) On- going management; e) Contingency planning

If you would like to discuss any of these highlights, other risk management issues or obtain a copy of the presentation please contact Al Title at 416-260-3513 or email atitle@hto.com.

January 2008 and written by Gordon Hertzman – We now live in a world with more data than ever before, and where the power to “crunch the numbers” growing exponentially. So, does more data at the click of a mouse make us any smarter? According to Ian Ayres, a Yale “econometrician” and author of the bestselling Super Crunchers, the ability to mine large datasets is the new source of competitive advantage in business. It is foundation of Google’s success, and Wal-mart won’t make a move without it. It has also made for smarter public policy and for thousands of lives saved in hospitals.

In case you were wondering, Super Crunchers has nothing to do with a cereal, but refers to the statistical analysis of large datasets or data mining for better decision making. In Super Crunchers, its Man vs. Machine. As our world becomes more complex, we just can’t see that forest for the trees the way those supercomputers can.

For those of you who have read Freakonomics, you will see this book as derivative. For those of you have not, read it first. In Freakonomics, Steven Levitt “explores the hidden side of everything”. He applies statistical on a wide range of familiar issues from parenting to the how much we cheat. In Super Crunchers, Ayres also takes us “behind the curtain”, this time to large, familiar organizations who are crunching numbers to get new insights into how to do things better.

So how does a book about data mining make the Wall Street Journal bestseller list? It’s an easy read with a minimum of jargon, with a strong focus on anecdotes we can all relate to. The book starts with the story of Orley Ashenfelter, a Princeton Economist who claimed that he could mathematically predict how good a wine vintage would be; no “swishing or spitting” required. Needless to say he was ridiculed by the wine establishment until he predicted that in 1989 (and again in 1990) that we would have the wine harvest “of the century” Today there is a lot more respect for the his notion that average temperature and rainfall is correlated to the quality of a wine harvest.

In the examples that follow we learn how companies we know as consumers have tailored their service offerings based on data mining. Under the hood, Google relies on massively large datasets for their search engine. Harrah’s Casino’s (big success story) track their customers at every touch point and swipe of their loyalty cards. They even calculate your “pain point” (how much money you are comfortable losing) and will usher you to the buffet if you get too close to it. “Happy Customers” gamble 24% more, and this adds up to millions for them. If your last flight was late Continental Airlines may buy you a drink on the next one. We all know about how Amazon recommends books. Netflix recommends other movies you would like, getting customers “off” the new releases. Blockbuster knows the probability that you will return a movie late. UPS can predict when you are about to switch to one of their competitors and will dispatch a salesperson accordingly. Monster.com refined their website using randomized testing. Best Buy and other retailers can predict how long you will work for them based on your job application. Ayres even talks about a credit card company that can calculate your probability of divorce based on a change in your spending habits. Better pay those “No Tell Motel” bills in cash…

It becomes clear that “super crunching” has paid off for many Fortune 1000 companies. This trend may in part explain the recent takeovers of the leading data miners. IBM just picked up Cognos for $5 billion and Oracle purchased Hyperion for $3.3 billion.

The world’s largest data warehouse (over 150 terabytes) is at Teradata, who is referred to in this book the way the Beatles would be in a history of rock and roll. Teradata does the “super crunching” for Wal-mart, AT&T, Best Buy, EBay, FedEx, Harrah’s, Verizon, PayPal and T-Mobile.

So who do you listen to, your “domain experts” or the analyst at Teradata? The books gives us many examples where the “truth” was only discovered on number crunching. “The numbers don’t lie”. “Google and scores of other businesses thrive in large part because they are masters of the algorithmic mindset”. This evangelistic tone the pervades the book; no balanced view here.

And what about the “dark side of data”?. Where is the mention that Harrah’s was at one time criticized for targeted marketing campaigns to compulsive gamblers, even those “on the wagon”. How about this privacy issues, or the increased intrusion of marketing efforts by companies who now know that much more about you. To his credit Ayers suggested that information should be shared so that all can benefit. Imagine getting a phone call from the IRS or Revenue Canada and hearing that if you reduce your inventory by 13%, your risk of bankruptcy will drop by 8%.

So, who wins in the end, Man or Machine? Even the BI experts will tell you it still requires human judgment to make sense of things, and there is a limit to “how much future the past can predict.” I prefer a more balanced view, and also remember that Mark Twain, quoting Disraeli, said “There are three types of lies – lies, damn lies, and statistics.” And also that Gregory F. Treverton in his book Reshaping National Intelligence for an Age of Information, tells us that there is so much data out there that we can practically make a case for anything.

November 2007 Article from CMA Management Magazine – “Canada has one of the world’s most generous tax-based incentive programs for encouraging research and development — the Scientific Research and Experimental Development (SR&ED) program. It was established in 1985 and is administered by Canada Customs and Revenue Agency (CCRA). Currently, over 11,000 companies file for SR&ED claims, which generate approximately $1.5 billion in tax credits annually.

The SR&ED allows qualifed Canadian-controlled private corporations a cash refund of up to 35% on their taxes, and public companies are entitled to a 20% non-refundable tax credit. Once you’ve applied for the program, it’s impossible not to see the benefits it brings to an organization. Companies that apply for both federal and provincial programs can recover as much as 50% of their SR&ED expenditures (Alberta and PEI are the only provinces that don’t currently offer an R&D tax credit).”

180 View (written by Esther Friedberg Karp) – It has been estimated that only 30% of eligible companies pursue the SR&ED credits. This program is often overlooked as a source of cash flow by companies and many accountants.

The CRA is not only offering money; it’s offering us help in applying for it. In addition to the assistance programs offered directly by the CRA, major accounting firms have set up their own SR&ED departments. Also, type “SR&ED” in any search engine and you’ll find many consulting firms who will take up your cause for a piece of the action.

The first step should be: get the free scoop from the CRA by signing up for a public information seminar. Use whatever resources they offer you, and then decide if your company has a shot at the money. You can decide whether you will go it alone (with CRA resources) or if you want to offload the work to a consultant for a piece of the action.