Category Archives: Predictive Analytics

How Are Drones Influencing The Business World?

drone How Are Drones Influencing The Business World?

Achieving quantum leaps through disruption and using data in new contexts, in ways designed for more than just Generation Y — indeed, the digital transformation affects us all. It’s time for a detailed look at its key aspects.

Data finding its way into new settings

Archiving all of a company’s internal information until the end of time is generally a good idea, as it gives the boss the security that nothing will be lost. Meanwhile, enabling him or her to create bar graphs and pie charts based on sales trends – preferably in real time, of course – is even better.

But the best scenario of all is when the boss can incorporate data from external sources. All of a sudden, information on factors as seemingly mundane as the weather start helping to improve interpretations of fluctuations in sales and to make precise modifications to the company’s offerings. When the gusts of autumn begin to blow, for example, energy providers scale back solar production and crank up their windmills. Here, external data provides a foundation for processes and decisions that were previously unattainable.

Quantum leaps possible through disruption

While these advancements involve changes in existing workflows, there are also much more radical approaches that eschew conventional structures entirely.

“The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management,” states Professor Walter Brenner of the University of St. Gallen in Switzerland, regarding the effects of digitalization.

Harnessing these benefits requires the application of innovative information and communication technology, especially the kind termed “disruptive.” A complete departure from existing structures may not necessarily be the actual goal, but it can occur as a consequence of this process.

Having had to contend with “only” one new technology at a time in the past, be it PCs, SAP software, SQL databases, or the Internet itself, companies are now facing an array of concurrent topics, such as the Internet of Things, social media, third-generation e-business, and tablets and smartphones. Professor Brenner thus believes that every good — and perhaps disruptive — idea can result in a “quantum leap in terms of data.”

Products and services shaped by customers

It has already been nearly seven years since the release of an app that enables customers to order and pay for taxis. Initially introduced in Berlin, Germany, mytaxi makes it possible to avoid waiting on hold for the next phone representative and pay by credit card while giving drivers greater independence from taxi dispatch centers. In addition, analyses of user data can lead to the creation of new services, such as for people who consistently order taxis at around the same time of day.

“Successful models focus on providing utility to the customer,” Professor Brenner explains. “In the beginning, at least, everything else is secondary.”

In this regard, the private taxi agency Uber is a fair bit more radical. It bypasses the entire taxi industry and hires private individuals interested in making themselves and their vehicles available for rides on the Uber platform. Similarly, Airbnb runs a platform travelers can use to book private accommodations instead of hotel rooms.

Long-established companies are also undergoing profound changes. The German publishing house Axel Springer SE, for instance, has acquired a number of startups, launched an online dating platform, and released an app with which users can collect points at retail. Chairman and CEO Matthias Döpfner also has an interest in getting the company’s newspapers and other periodicals back into the black based on payment models, of course, but these endeavors are somewhat at odds with the traditional notion of publishing houses being involved solely in publishing.

The impact of digitalization transcends Generation Y

Digitalization is effecting changes in nearly every industry. Retailers will likely have no choice but to integrate their sales channels into an omnichannel approach. Seeking to make their data services as attractive as possible, BMW, Mercedes, and Audi have joined forces to purchase the digital map service HERE. Mechanical engineering companies are outfitting their equipment with sensors to reduce downtime and achieve further product improvements.

“The specific potential and risks at hand determine how and by what means each individual company approaches the subject of digitalization,” Professor Brenner reveals. The resulting services will ultimately benefit every customer – not just those belonging to Generation Y, who present a certain basic affinity for digital methods.

“Think of cars that notify the service center when their brakes or drive belts need to be replaced, offer parking assistance, or even handle parking for you,” Brenner offers. “This can be a big help to elderly people in particular.”

Chief digital officers: team members, not miracle workers

Making the transition to the digital future is something that involves not only a CEO or a head of marketing or IT, but the entire company. Though these individuals do play an important role as proponents of digital models, it also takes more than just a chief digital officer alone.

For Professor Brenner, appointing a single person to the board of a DAX company to oversee digitalization is basically absurd. “Unless you’re talking about Da Vinci or Leibnitz born again, nobody could handle such a task,” he states.

In Brenner’s view, this is a topic for each and every department, and responsibilities should be assigned much like on a soccer field: “You’ve got a coach and the players – and the fans, as well, who are more or less what it’s all about.”

Here, the CIO neither competes with the CDO nor assumes an elevated position in the process of digital transformation. Implementing new databases like SAP HANA or Hadoop, leveraging sensor data in both technical and commercially viable ways, these are the tasks CIOs will face going forward.

“There are some fantastic jobs out there,” Brenner affirms.

Want more insight on managing digital transformation? See Three Keys To Winning In A World Of Disruption.

Image via Shutterstock

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Why FICO Was Named a Leader in Predictive Analytics

Great news, FICO was named as a leader in the March 2017 report, The Forrester Wave™: Predictive Analytics and Machine Learning Solutions, Q1 2017. This is an honor, and it underscores for us the value and positive business impact our analytic solutions continue to deliver.

Forrester Graphic Predictive Analytics Machine Learning Wave 300x240 Why FICO Was Named a Leader in Predictive Analytics

These types of technology evaluations are really useful for organizations needing guidance as they enter into new strategic ventures. With plenty of attention on the promise of advanced analytics and machine learning, this report from Forrester is very timely. The report highlights:

  • The Predictive Analytics and Machine Learning (PAML) Solutions market is “hot,” with Forrester forecasting “a 15% compound annual growth rate (CAGR) for the PAML market through 2021.”
  • The true essence and core value of predictive analytics, stating “enterprises that can make probabilistic predictions about customers, business processes, and operations will have an edge over enterprises that can’t.”
  • Machine learning is fundamental to artificial intelligence.

When you talk to data scientists and business leaders and hear their real-world stories, one begins to comprehend the possibilities that come with advanced analytics or data science. So, to compliment this Forrester Wave report, I thought I would share a few FICO case studies that demonstrate the value and competitive advantage predictive analytics can provide.

Airline Predicts and Solves Problems Before Crews Are Grounded and Customers Are Unhappy

Managing an airline that serves 100 million customers annually – with more than 3,900 daily departures during peak travel season to more than 100 destinations globally – is no small undertaking. And when regular operations become irregular, the task of keeping customers happy, flights on time and crews supported is daunting.

This is why airlines, like Southwest, have extensive contingency plans for irregular operations. Southwest has The Baker, a recovery optimization engine that turned the best practices of its irregular operations (IROPS) team into complex algorithms that solve potential challenges like maintenance problems or volatile weather, while minimizing the impact to passengers and crews.

Southwest can not only react to problems within minutes, but it can also get ahead of potential disruptions hours in advance and evaluate multiple scenarios. The Baker has helped Southwest improve on-time performance and customer satisfaction, while lowering flight diversions, tarmac delays and crew changes.

This is predictive analytics in action, and it has made a significant impact at Southwest, helping the airline gain advantage in a highly aggressive and competitive market.

Meaningful, Personalized Connections with Customers at the Grocery Store

Virtually any customer engagement can be improved with the power to predict. In the case of a major grocery retailer FICO works with, using analytics to deeply understand customers helped the retailer provide a highly personalized experience that encouraged loyalty and increased profitability.

The grocery retailer wanted to predict the propensity of a customer to purchase particular products and then prescribe the best offer. This required a multidimensional understanding of each of its 9 million loyalty program members, as well as taking into consideration business objectives and constraints.

With FICO’s advanced predictive analytics, the grocer was able to take its 380 billion possible offer combinations and deliver 20 tailored, relevant offers to each member every week.

Predictive Analytics Revolutionize the Energy Industry

Another great FICO customer example is SolarCity, a leading solar energy provider working to create an ideal way to store solar energy and then use it when demand is high. Electric demand can vary widely, based on things like changes in the weather, inconsistent supply or seasonal consumer patterns. With advanced predictive analytics, SolarCity is able to track and forecast complex scenarios for selling aggregated energy.

It’s fascinating that the same technology that is helping Southwest minimize flight delays and a grocery retailer deliver highly personalized offers to customers is also helping optimize a solar energy grid. Hopefully these real-world examples add a little perspective as you read the March 2017 Forrester Wave™ for Predictive Analytics and Machine Learning Solutions.

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3 Ways To Disrupt Your Own Business (And How To Spot The Opportunities It Presents)

As 2015 winds down, it’s time to look forward to 2016 and explore the social media and content marketing trends that will impact marketing strategies over the next 15 months or so.

Some of the upcoming trends simply indicate an intensification of current trends, however others indicate that there are new things that will have a big impact in 2016.

Take a look at a few trends that should definitely factor in your planning for 2016.

1. SEO will focus more on social media platforms and less on search engines

Clearly Google is going nowhere. In fact, in 2016 Google’s word will still essentially be law when it comes to search engine optimization.

However, in 2016 there will be some changes in SEO. Many of these changes will be due to the fact that users are increasingly searching for products and services directly from websites such as Facebook, Pinterest, and YouTube.

There are two reasons for this shift in customer habits:

  • Customers are relying more and more on customer comments, feedback, and reviews before making purchasing decisions. This means that they are most likely to search directly on platforms where they can find that information.
  • Customers who are seeking information about products and services feel that video- and image-based content is more trustworthy.

2. The need to optimize for mobile and touchscreens will intensify

Consumers are using their mobile devices and tablets for the following tasks at a sharply increasing rate:

  • Sending and receiving emails and messages
  • Making purchases
  • Researching products and services
  • Watching videos
  • Reading or writing reviews and comments
  • Obtaining driving directions and using navigation apps
  • Visiting news and entertainment websites
  • Using social media

Most marketers would be hard-pressed to look at this list and see any case for continuing to avoid mobile and touchscreen optimization. Yet, for some reason many companies still see mobile optimization as something that is nice to do, but not urgent.

This lack of a sense of urgency seemingly ignores the fact that more than 80% of the highest growing group of consumers indicate that it is highly important that retailers provide mobile apps that work well. According to the same study, nearly 90% of Millennials believe that there are a large number of websites that have not done a very good job of optimizing for mobile.

3. Content marketing will move to edgier social media platforms

Platforms such as Instagram and Snapchat weren’t considered to be valid targets for mainstream content marketing efforts until now.

This is because they were considered to be too unproven and too “on the fringe” to warrant the time and marketing budget investments, when platforms such as Facebook and YouTube were so popular and had proven track records when it came to content marketing opportunity and success.

However, now that Instagram is enjoying such tremendous growth, and is opening up advertising opportunities to businesses beyond its brand partners, it (along with other platforms) will be seen as more and more viable in 2016.

4. Facebook will remain a strong player, but the demographic of the average user will age

In 2016, Facebook will likely remain the flagship social media website when it comes to sharing and promoting content, engaging with customers, and increasing Internet recognition.

However, it will become less and less possible to ignore the fact that younger consumers are moving away from the platform as their primary source of online social interaction and content consumption. Some companies may be able to maintain status quo for 2016 without feeling any negative impacts.

However, others may need to rethink their content marketing strategies for 2016 to take these shifts into account. Depending on their branding and the products or services that they offer, some companies may be able to profit from these changes by customizing the content that they promote on Facebook for an older demographic.

5. Content production must reflect quality and variety

  • Both B2B and B2C buyers value video based content over text based content.
  • While some curated content is a good thing, consumers believe that custom content is an indication that a company wishes to create a relationship with them.
  • The great majority of these same consumers report that customized content is useful for them.
  • B2B customers prefer learning about products and services through content as opposed to paid advertising.
  • Consumers believe that videos are more trustworthy forms of content than text.

Here is a great infographic depicting the importance of video in content marketing efforts:
small business video infographic 3 Ways To Disrupt Your Own Business (And How To Spot The Opportunities It Presents)

A final, very important thing to note when considering content trends for 2016 is the decreasing value of the keyword as a way of optimizing content. In fact, in an effort to crack down on keyword stuffing, Google’s optimization rules have been updated to to kick offending sites out of prime SERP positions.

6. Oculus Rift will create significant changes in customer engagement

Oculus Rift is not likely to offer much to marketers in 2016. After all, it isn’t expected to ship to consumers until the first quarter. However, what Oculus Rift will do is influence the decisions that marketers make when it comes to creating customer interaction.

For example, companies that have not yet embraced storytelling may want to make 2016 the year that they do just that, because later in 2016 Oculus Rift may be the platform that their competitors will be using to tell stories while giving consumers a 360-degree vantage point.

For a deeper dive on engaging with customers through storytelling, see Brand Storytelling: Where Humanity Takes Center Stage.

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Do ‘Digital-Only Banks’ Have a Future in Asia?

digitalonly banking Do ‘Digital Only Banks’ Have a Future in Asia?

Imagine a scenario where banks offer their services digitally; not as an ad hoc feature but as a fully integrated mobile experience. A digital-only bank that allows customers to do everything on their smartphones, from opening a new account to making payments, settling credit card bills to resolving disputes, all without having to go to a physical branch.

If this vision sounds premature, then perhaps it’s time to update your view of what’s happening worldwide. This was the bold proposition offered by McKinsey & Company’s Sonia Barquin who presented at FICO’s Asia Pacific Chief Risk Officer Forum held this week in Thailand.

Banks worldwide are fighting back against fintech start-ups looking to cut their lunch with low-cost banking offerings. Barquin pointed out that some global banks are developing digital-only offshoots while others are bringing the philosophy and business model to their main bank offering.

Sonia encouraged the participants to be imaginative –and why not? Especially when she says her research shows that more than 80 percent of banking customers in Asia’s developed markets are willing to move part of their holdings to banks with a solid digital-only banking proposition?

While the financial benefits of the model for banks are obvious, the big question is, how do banks approach this massive undertaking? And especially the more traditional banks who have only just started to integrate many aspects of digital into their operations and offerings?

FICO’s decisioning technologies are clearly an advantage for banks considering an all-digital play. FICO has experience helping banks to quickly build digital offering which transform their business. Our experts at the CRO forum openly shared some great insights on how advanced technology can be leveraged in multiple areas of digital banking:

  • Instant credit decisions: Consumers expect an ‘instant’ experience on their mobile phones. FICO has been pioneering credit scoring for more than 60 years and now has the technology to assess the vast majority of consumers with some basic credit information. This empowers banks to issue credit cards, personal loans and other credit in the mobile channel with confidence. FICO is also working on solutions for those outside the traditional banking system, who may have a smartphone. As part of its financial inclusion efforts it is employing a range of partnerships and technologies to grant credit based on alternative data.
  • Pricing and loan optimization: FICO has been perfecting analytics that enabled banks to identify that sweet spot or optimal pricing for deposits, mortgages, car loans and other products. Finding the right balance between customer satisfaction and profitability needs to happen quickly when applications are happening online. FICO’s optimization algorithms and knowhow allow banks to make a variety of offers based on the customer’s risk profile, long-term value, loan term preferences and more.
  • Detecting fraud in real-time: Less exposure to fraud and financial crime when you are identifying customers online and not in person is critical. FICO’s real-time predictive analytics has been used for more than 20 years to help catch credit card fraud. This same technology is now being incorporated into FICO’s cybersecurity and financial crime solutions, so banks can spot out-of-pattern and suspicious behavior.

Ultimately, the digital-only banking model will not only require a behavioral shift among Asian consumers, but the opportunity for banks will require the deep integration of data and analytics into banking operations. The key to eliminating risk in the business model is to enable banks to make consistent, data-backed, and analytically powered decisions, and ultimately make the smartest choices. Once that happens, the digital-only proposition for banks could be a real game-changer in Asia.

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When It Comes To Rewarding Employees, Is Cash Really King?

The September issue of the Harvard Business Review features a cover story on design thinking’s coming of age. We have been applying design thinking within SAP for the past 10 years, and I’ve witnessed the growth of this human-centered approach to innovation first hand.

Design thinking is, as the HBR piece points out, “the best tool we have for … developing a responsive, flexible organizational culture.”

This means businesses are doing more to learn about their customers by interacting directly with them. We’re seeing this change in our work on d.forum — a community of design thinking champions and “disruptors” from across industries.

Meanwhile, technology is making it possible to know exponentially more about a customer. Businesses can now make increasingly accurate predictions about customers’ needs well into the future. The businesses best able to access and pull insights from this growing volume of data will win. That requires a fundamental change for our own industry; it necessitates a digital transformation.

So, how do we design this digital transformation?

It starts with the customer and an application of design thinking throughout an organization – blending business, technology and human values to generate innovation. Business is already incorporating design thinking, as the HBR cover story shows. We in technology need to do the same.

SCN+SY When It Comes To Rewarding Employees, Is Cash Really King?

Design thinking plays an important role because it helps articulate what the end customer’s experience is going to be like. It helps focus all aspects of the business on understanding and articulating that future experience.

Once an organization is able to do that, the insights from that consumer experience need to be drawn down into the business, with the central question becoming: What does this future customer experience mean for us as an organization? What barriers do we need to remove? Do we need to organize ourselves differently? Does our process need to change – if it does, how? What kind of new technology do we need?

Then an organization must look carefully at roles within itself. What does this knowledge of the end customer’s future experience mean for an individual in human resources, for example, or finance? Those roles can then be viewed as end experiences unto themselves, with organizations applying design thinking to learn about the needs inherent to those roles. They can then change roles to better meet the end customer’s future needs. This end customer-centered approach is what drives change.

This also means design thinking is more important than ever for IT organizations.

We, in the IT industry, have been charged with being responsive to business, using technology to solve the problems business presents. Unfortunately, business sometimes views IT as the organization keeping the lights on. If we make the analogy of a store: business is responsible for the front office, focused on growing the business where consumers directly interact with products and marketing; while the perception is that IT focuses on the back office, keeping servers running and the distribution system humming. The key is to have business and IT align to meet the needs of the front office together.

Remember what I said about the growing availability of consumer data? The business best able to access and learn from that data will win. Those of us in IT organizations have the technology to make that win possible, but the way we are seen and our very nature needs to change if we want to remain relevant to business and participate in crafting the winning strategy.

We need to become more front office and less back office, proving to business that we are innovation partners in technology.

This means, in order to communicate with businesses today, we need to take a design thinking approach. We in IT need to show we have an understanding of the end consumer’s needs and experience, and we must align that knowledge and understanding with technological solutions. When this works — when the front office and back office come together in this way — it can lead to solutions that a company could otherwise never have realized.

There’s different qualities, of course, between front office and back office requirements. The back office is the foundation of a company and requires robustness, stability, and reliability. The front office, on the other hand, moves much more quickly. It is always changing with new product offerings and marketing campaigns. Technology must also show agility, flexibility, and speed. The business needs both functions to survive. This is a challenge for IT organizations, but it is not an impossible shift for us to make.

Here’s the breakdown of our challenge.

1. We need to better understand the real needs of the business.

This means learning more about the experience and needs of the end customer and then translating that information into technological solutions.

2. We need to be involved in more of the strategic discussions of the business.

Use the regular invitations to meetings with business as an opportunity to surface the deeper learning about the end consumer and the technology solutions that business may otherwise not know to ask for or how to implement.

The IT industry overall may not have a track record of operating in this way, but if we are not involved in the strategic direction of companies and shedding light on the future path, we risk not being considered innovation partners for the business.

We must collaborate with business, understand the strategic direction and highlight the technical challenges and opportunities. When we do, IT will become a hybrid organization – able to maintain the back office while capitalizing on the front office’s growing technical needs. We will highlight solutions that business could otherwise have missed, ushering in a digital transformation.

Digital transformation goes beyond just technology; it requires a mindset. See What It Really Means To Be A Digital Organization.

This story originally appeared on SAP Business Trends.

Top image via Shutterstock

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Lots Of Talk Ahead To Develop International Standards For Financial And Fintech

Geneva fountain 313 Lots Of Talk Ahead To Develop International Standards For Financial And Fintech

The regulatory environment is a rapidly shifting landscape for CFOs. The pressure to meet changing compliance requirements can frustrate even the most level-headed executives. I can’t tell you how often I’ve heard CFOs complain that compliance is a financial and resource drain on the business. And I understand their viewpoint.

But here’s a surprising truth: A comprehensive compliance and risk framework can actually create strategic advantage. With proper planning and precise execution, a well-designed compliance initiative can become a competitive secret weapon.

Changing your perception of compliance might require a mental shift. Right now, compliance may seem like a necessary evil – a chore with punishments for tardiness or deviation. If that’s your thinking, I urge you to view compliance as a lever, one that will help you operate your business better by providing visibility into operations and enterprise risk, while reducing waste. It can also help you take advantage of new market opportunities, especially when competing against other companies that haven’t made compliance a priority.

Going beyond perfunctory compliance practices

In the heavily regulated pharmaceuticals industry, for example, GlaxoSmithKline (GSK) Vaccines found that simply complying with global industry, financial, and data protection mandates was not enough.

“Preventing compliance issues entails the use of a proper internal control system that guarantees our significant risks are effectively mitigated,” explains Christophe Louis, IT project manager for GSK Vaccines. “Our vision was to implement an integrated framework empowering users to identify, assess, and treat risks, but also to ensure the effectiveness of controls and, when appropriate, automate their monitoring.”

By instituting a strong internal control framework, the company ensures compliance with regulations and also mitigates significant risks – protecting patient safety, employees, the environment, shareholder investment, and company assets and reputation. With control monitors and an audit framework to guarantee product quality, the framework also makes it easier for GSK Vaccines to prove compliance to regulators.

Improving enterprise performance and transparency

Most organizations begin their compliance efforts by simply trying to “check the boxes.” Programs are designed to meet the statutory requirements or keep executives out of jail, and little more.

As companies gain expertise, however, they often expand their compliance programs to focus on avoiding minor or even critical enterprise risk. By using tools and processes to automate compliance efforts, these programs can increase efficiency, reduce related expenses, and accelerate cost savings, especially for internal and external audits. That’s great for the bottom line.

But even more important is the impact of these more mature compliance initiatives on the business. Automation can help improve overall performance, reduce cycle times, and increase enterprise visibility. A holistic view of the business also allows executives to make decisions that limit the likelihood of enterprise risk, including fraud.

Preventing fraud

Think about how many companies struggle with false, inflated, or duplicate invoices for goods and services. Many incidents are discovered after the fact or never at all.

Even when fraudulently dispersed monies are identified, they are not always recouped from the bank. In fact, the Association of Certified Fraud Examiners estimates that the average company loses 5% of its annual revenue through fraud. A comprehensive compliance program that includes real-time monitoring of fraud and fraud prevention can add both top-and bottom-line benefit.

Mitigating catastrophic risk

The most advanced level of compliance focuses on avoiding catastrophic risk. CFOs who recognize the very real dangers of these threats pose are often the first to take responsibility for enhanced compliance. They must then develop a holistic strategy that not only identifies risk early but addresses how the company will handle any problems that are discovered.

This advanced level typically includes an enterprise-wide framework for compliance, with the associated people, processes, and technology needed to support the program. Are there costs involved? Of course. But companies that embrace this approach can significantly improve their ability to detect and prevent catastrophic losses, such as the hacking of financial information, breaches of finance systems, or violations of anti-corruption mandates.

Real-world examples of measurable benefits

Leading CFOs tell me that these projects typically pay for themselves while helping increase controls, reduce waste, and improve operations. In Africa, for example, Exxaro Resources Limited mines for coal, chemicals, ferrous metals, and energy resources. One major operational risk is the availability of water, which is needed for coal cutting, dust suppression, and pipeline transportation. To build a risk threshold around water intensity and manage its conservation, Exxaro restructured its processes to achieve best-in-class governance, risk, and compliance (GRC). Using SAP technology, the company created a standardized process to ensure that GRC activities are carried out in all business units and are integrated into the company’s sustainability framework.

I’m impressed with the resulting business benefits. The company realized a 90% improvement in risk visibility, a 20% savings in costs through effective risk management and better resource allocation, and a 10% reduction in auditing costs. Exarro also anticipates saving US$ 800,000 in the first year after deploying the new solution.

This example proves that compliance is definitely more than a check-the-box exercise. When executed as well as these companies have, your compliance initiative can add real value to your business. Is it time for you to take compliance to the next level?

Learn more

A great resource for CFOs is available now at the SAP finance content hub, specifically on the topic of Enterprise Risk and Compliance Management.

To learn more about how finance executives can take a more strategic approach to governance, risk, and compliance (GRC), read the Forrester report: Adopt Three Lines of Defense Technology To Manage Governance, Risk and Compliance. Also, check out the GRC Value Calculator.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube

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Why the Panama Papers Leak Was Good for KYC

Panama Papers Why the Panama Papers Leak Was Good for KYC

For many banks, KYC — Know Your Customer — means asking them how they intend to use a product, where the funds are coming from for their new account, etc. At the same time, the bank will check the customer against sanction lists, PEP (politically exposed persons) lists, and so forth.

It’s not enough.

Some hard evidence that it’s not enough came in 2016, when the so-called Panama Papers leak revealed that thousands of people worldwide owned a shell company in one of the countries covered. This was, needless to say, not something those individuals had disclosed to their banks.

Should banks care? Absolutely. Under the KYC requirements that are part of current regulations, such as the 4th EU Money Laundering Directive and the fifth pillar of the BSA, the bank needs to know the business of their customers. If a customer owns an offshore company, it’s quite possibly so that they can avoid taxes — or, even worse, so they can hide the flow of money, potentially illegal money.

While there are some legitimate reasons for offshore companies, an offshore company by its very nature poses a risk that needs to be investigated. But you can’t investigate something you don’t know about.

Banks that don’t know about their customers’ offshore companies face not only non-compliance, but reputational risk. No one wants to read that their bank is supporting tax avoidance or money laundering by the use of a shell company in an offshore.

How do you check?

Immediately after the leak went public, banks began a hectic operation to find and fix. I know banks that hired teams of expensive external consultants to manually check if any of millions of customers owned a company in Panama.

A manual check has multiple disadvantages:

  • It’s costly and slow.
  • It might not stand up to an audit — who can reproduce what has been checked?
  • Worst of all, it’s a one-time approach. It will need to be repeated regularly, and intensively whenever further leaks are published.

We have a better way. We built an interface between the FICO® TONBELLER® Siron®KYC solution and the ICIJ Offshore Leaks Database. Not only is this database constantly updated, it’s exhaustive:

  • The data covers nearly 40 years.
  • It links to people and companies in more than 200 countries and territories.
  • It reveals more than 370,000 names of people and companies behind secret offshore structures.

Here’s how this works in the KYC process. During onboarding we automatically check if the potential client owns a company in an offshore country. If yes, we would raise a red flag and allow the financial institution to decide if they want to accept the customer. If accepted, the customer would be put in the high-risk segment, with enhanced due diligence. The customer would be monitored against very strict scenarios and thresholds.

If a customer doesn’t own an offshore company when they are onboarded but opens one later, our solution’s continuous customer screening against the ICIJ Offshore Leaks Database will automatically detect it and handle the case, following the risk appetite of the financial institution.

People are sneaky — sometimes a customer will open an offshore company and spell their name slightly differently to avoid the high-risk classification. We have an algorithm to catch that.

The Panama Papers and Bahamas Leaks are only the first step. Regulators will be demanding increased transparency into each customer’s business soon. That’s why we set up a future-proof integration — so that our clients can protect their reputations with an audit-secure, low-friction, scalable process.

The Panama Papers leak has strengthened KYC. We made finding out easy.

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Top Ten Digitalist Magazine Posts Of The Week [March 13, 2017]

the future of supplier collaboration 9 things cpos want managers to know now blog 300x200 Top Ten Digitalist Magazine Posts Of The Week [March 13, 2017]As a sourcing or procurement manager, you may think there’s nothing new about supplier collaboration. Your chief procurement officer (CPO) most likely disagrees.
Forward-thinking CPOs acknowledge the benefit of supplier partnerships. They not only value collaboration, but require a revolution in how their buying organization conducts its business and operations. “Procurement must start looking to suppliers for inspiration and new capability, stop prescribing specifications and start tapping into the expertise of suppliers,” writes David Rae in Procurement Leaders. The CEO expects it of your CPO, and your CPO expects it of you. For sourcing managers, this can be a lot of pressure.

Here are nine things your CPO wants you to know about how supplier collaboration is changing – and why it matters to your company’s future and your own future.

1. The need for supplier collaboration in procurement is greater than ever

Over half (65%) of procurement practitioners say procurement at their company is becoming more collaborative with suppliers, according to The Future of Procurement, Making Collaboration Pay Off, by Oxford Economics. Why? Because the pace of business has increased exponentially, and businesses must be able to respond to new market demands with agility and innovation. In this climate, buyers are relying on suppliers more than ever before. And buyers aren’t collaborating with suppliers merely as providers of materials and goods, but as strategic partners that can help create products that are competitive differentiators.

Supplier collaboration itself isn’t new. What’s new is that it’s taken on a much greater urgency and importance.

2. You’re probably not realizing the full collective power of your supplier relationships

Supplier collaboration has always been a function of maintaining a delicate balance between demand and supply. For the most part, the primary focus of the supplier relationship is ensuring the right materials are available at the right time and location. However, sourcing managers with a narrow focus on delivery are missing out on one of the greatest advantages of forging collaborative supplier partnerships: an opportunity to drive synergies that are otherwise perceived as impossible within the confines of the business. The game-changer is when you drive those synergies with thousands, not hundreds of suppliers. Look at the Apple Store as a prime example of collaboration en masse. Without the apps, the iPhone is just another ordinary phone!

3. Collaboration comes in more than one flavor

Suppliers don’t just collaborate with you to provide a critical component or service. They also work with your engineers to help ensure costs are optimized from the buyer’s perspective as well as the supplier’s side. They may even take over the provisioning of an entire end-to-end solution. Or co-design with your R&D team through joint research and development. These forms of collaboration aren’t new, but they are becoming more common and more critical. And they are becoming more impactful, because once you start extending any of these collaboration models to more and more suppliers, your capabilities as a business increase by orders of magnitude. If one good supplier can enable your company to build its brand, expand its reach, and establish its position as a market leader – imagine what’s possible when you work collaboratively with hundreds or thousands of suppliers.

4. Keeping product sustainability top of mind pays off

Facing increasing demand for sustainable products and production, companies are relying on suppliers to answer this new market requirement.

As a sourcing manager, you may need to go outside your comfort zone to think about new, innovative ways to collaborate for achieving sustainability. Recently, I heard from an acquaintance who is a CPO of a leading services company. His organization is currently collaborating with one of the largest suppliers in the world to adhere to regulatory mandates and consumer demand for “lean and green” lightbulbs. Although this approach was interesting to me, what really struck me was his observation on how this co-innovation with the supplier is spawning cost and resource optimization and the delivery of competitive products. As reported by Andrew Winston in The Harvard Business Review, Target and Walmart partnered to launch the Personal Care Sustainability Summit last year. So even competitors are collaborating with each other and with their suppliers in the name of sustainability.

5. Co-marketing is a win-win

Look at your list of suppliers. Does anyone have a brand that is bigger than your company’s? Believe it or not, almost all of us do. So why not seize the opportunity to raise your and your supplier’s brand profile in the marketplace?

Take Intel, for example. The laptop you’re working on right now may very well have an “Intel inside” sticker on it. That’s co-marketing at work. Consistently ranked as one of the world’s top 100 most valuable brands by Millward Brown Optimor, this largest supplier of microprocessors is world-renowned for its technology and innovation. For many companies that buy supplies from Intel, the decision to co-market is a strategic approach to convey that the product is reliable and provides real value for their computing needs.

6. Suppliers get to choose their customers, too

Increased competition for high-performing suppliers is changing the way procurement operates, say 58% of procurement executives in the Oxford Economics study. Buyers have a responsibility to the supplier – and to their CEO – to be a customer of choice. When the economy is going well, you might be able to dictate the supplier’s goods and services – and sometimes even the service delivery model. When times get tough (and they can very quickly), suppliers will typically reevaluate your organization’s needs to see whether they can continue service in a fiscally responsible manner. To secure suppliers’ attention in favorable and challenging economic conditions, your organization should establish collaborative and mutually productive partnerships with them.

7. Suppliers can help simplify operations

Cost optimization will always be one of your performance metrics; however, that is only one small part of the entire puzzle. What will help your organization get noticed is leveraging the supplier relationship to innovate new and better ways of managing the product line and operating the business while balancing risk and cost optimization. Ask yourself: Which functions are no longer needed? Can they be outsourced to a supplier that can perform them better? What can be automated?

8. Suppliers have a better grasp of your sourcing categories than you do

Understand your category like never before so that your organization can realize the full potential of its supplier investments while delivering products that are consistent and of high quality. How? By leveraging the wisdom of your suppliers. To be blunt: they know more than you do. Tap into that knowledge to gain a solid understanding of the product, market category, suppliers’ capabilities, and shifting dynamics in the industry, If a buyer does not understand these areas deeply, no amount of collaboration will empower a supplier to help your company innovate as well as optimize costs and resources.

9. Remember that there’s something in it for you as well

All of us want to do strategic, impactful work. Sourcing managers with aspirations of becoming CPOs should move beyond writing contracts and pushing PO requests by building strategic procurement skill sets. For example, a working knowledge in analytics allows you to choose suppliers that can shape the market and help a product succeed – and can catch the eye of the senior leadership team.

Sundar Kamak is global vice president of solutions marketing at Ariba, an SAP company.

For more on supplier collaboration, read Making Collaboration Pay Off, part of a series on the Future of Procurement, by Oxford Economics.

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The Infographic That Will Revolutionize Your Approach To Content Creation

Here’s an important question: When you come up with your content marketing strategy, do you consider the psychological impact of what content you choose? Taken even further, to what extent does psychology influence how you craft that content?

You probably took a course on consumer behavior in college but in practice, marketers tend to neglect the inner workings of the brain, paying more attention to the outer workings of society. SEO matters much more than the verbatim effect, for example – or does it?

We pore over our prized metrics and create elegant analytic reports to give us insight into the impact we are having on the mind of the consumer. This is a way of looking at what we have done in hindsight, and then using this hindsight to refine our tactics.

What’s missing is foresight. How much do we consider the undercurrents of our collective mental processes when developing our content marketing? How much could this psychological foresight enhance our strategy?

The team at Main Path Marketing have created a riveting infographic on how the brain processes different kinds of content. And you will notice, this information is presented as a piece of visual content. Well played, Main Path! Visuals are known to make it easier to understand complex content quickly.

The infographic every marketer should hang on their wall

The infographic takes a look at each type of content and then explains when it is best used and why.

Written content

written%20content The Infographic That Will Revolutionize Your Approach To Content Creation

So all those blog posts and whitepapers you have been working on – what impact are they having on your readers? They aren’t just sharing info and persuading consumers to jump down the sales funnel. Written content is all about making a valuable connection.

Reading lets us step into the shoes of the author or protagonist. It helps us to relate. Your written content is building the emotional bridge between your leads and your brand.

This is why the concept of storytelling is so crucial in effective content marketing. If you are not telling the story of your brand with every piece of written content, then your leads won’t make that crucial empathetic connection. They won’t walk across the bridge and relate to your brand on an emotional level – which is one of your primary marketing goals.

Understanding this, ask yourself: Is the style and content of your written content in line with your brand’s story?

A great example of perfectly placed written content is the marketing of New Covent Garden Soup Co., founded by John Stapleton in 1989. The story behind this soup company is inspired by a personal story of Stapleton’s co-founder, Andrew Palmer. On return from a sailing trip, Palmer asked his mom to make him something warm to eat. She pulled together some veggies and whipped up a warm homemade soup. This inspired the idea for their fresh soup, sold in cartons to create a homier, more nourishing feel to their product.

To promote their brand, the company posted family soup recipes provided by staff. The posted recipes attracted a lot of positive attention by consumers and were a huge part of helping the brand become so successful (it was sold to Hain Celestial Group in 2011 for $ 230 million). They also perfectly exemplified the foundational story of the company and the product.

Stapleton says, “A strong story based in reality will bring your message and values to life in a way the consumer can believe in.”

Understand that empathy is triggered when someone reads your content. Choose written content when you are trying to make this connection. In crafting your words, make sure those feelings are linked to your brand’s story, and your website content, whitepapers, blog posts, and other written content will have a tremendous impact on readers.

Graphic content

visual The Infographic That Will Revolutionize Your Approach To Content Creation

It is well documented that our brains can more easily digest and remember visuals. This makes visual content extremely powerful in marketing, a field in which persuasion and impression are everything!

Consider that:

  • The use of infographics tends to increase traffic by as much as 12%
  • 46.1% of visitors to a website claim that design matters more than anything else for determining if a company is credible.
  • 90% of what is transmitted to the brain is visual

So when you want to persuade, make a lasting impression, or help your audience digest complex ideas, make your content visually appealing. The more you want to go in this direction with a piece of content, the more you want to opt for slideshows, infographics, and photos. This is also where eBooks with plenty of images, graphs, and other forms of visual data can be particularly effective when you are trying to make a persuasive argument.

Interactive content

interactive content e1489017417540 The Infographic That Will Revolutionize Your Approach To Content Creation

Want to boost your social shares and fire up some buzz about your brand? Interactive is the way to go. It is engaging. It offers a more personalized experience that is particularly well-suited to millennials – the ones who will be tweeting and pinning your content in the first place. It forces your leads to participate, activating multiple regions of the brain and increasing retention.

A survey by the Content Marketing Institute found that the most effective forms of interactive content that marketers are using for early state awareness are:

  • Contests
  • Games
  • Interactive infographics
  • Quizzes
  • Assessments

The use of interactive content by marketers has been on the rise. From 2015 to 2016 alone, 75% of marketers expected to publish more interactive content. Agencies are finding that it isn’t just an effective way to increase engagement. It also helps to inform consumers in a way that helps them remember the information better than other forms of content.

Video content

video The Infographic That Will Revolutionize Your Approach To Content Creation

Video has undergone somewhat of an explosion in recent years as studies have shown that it has a powerful effect on consumers, increasing brand awareness, likability, and interest.

So, how are these promo videos, webinars, and vlogs affecting the brain when they are viewed?

The basic benefit of video content is that it is processed so much faster than text. Think of your videos as a way of pouring content into the brains of the consumer – sort of like what happens when we watch our favorite show on Netflix. The mind is a passive receptor. Not a lot of energy is required on the part of the viewer to process the info.

Videos are also great for creating an emotional bond and telling the story of your brand. This is because things like body language, pitch, and other subtle cues are picked up in videos, which can’t be found in other forms of content. Keep this in mind when using video – every small intonation, the background music, even the colors used for props or clothing will send subtle messages to your viewers.

Content marketing is an ever-evolving art form. As we learn more about consumer response through the data that we analyze and through experience, we will continue to enhance our strategies. But the psychological basis of why each form of content has an impact is never going to change. The way the human brain is wired is probably going to remain the same for the next millennia, so use this to your advantage. Keep the inner workings of the human brain in mind when you develop your next content marketing strategy.

For more insight on content marketing, see 5 Content Marketing Trends To Watch In 2017.

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Hackers vs. Dracula: Biometrics Are No Silver Bullet

Dracula Hackers vs. Dracula: Biometrics Are No Silver Bullet

I’m not a big fan of vampire movies—I’d pick Blackhat over Abraham Lincoln: Vampire Hunter any night of the week—but there are a lot of similarities between hackers and vampires.

  • First, they’re afraid of the light. What hacker wants his true identity to be revealed?
  • Second, they suck the blood out of their victims. Whether stealing data or demanding payment for ransomware, “bloodsucking” is one of the kinder adjectives used to describe cyber criminals.

However, even though vampires are theoretically immortal, vanquishing them is pretty straightforward; any True Blood fan can tell you that a wooden dagger or silver bullet will do the trick. It’s not quite so easy to stop hackers in their tracks.

 Encryption can be effective …

 … but it’s not a stake through the heart of hacking.

Data encryption is a highly effective defense against hackers, particularly in achieving HIPAA compliance to protect Protected Health Information (PHI). By using sophisticated techniques such as (encryption) key rotation and key lifecycle management, hackers that manage to break in and get their hands on data can’t do too much with it because the data will be encrypted.

That’s true, but there’s one problem. Data needs to be decrypted to be used, and that means it’s easy for employee negligence to open the door to hackers. Unencrypted data is replicated across systems, stored in PDFs, saved on laptops and carried around on thumb drives. In searching for weaknesses in healthcare organizations’ storage of PHI, hackers first look for data that’s not encrypted, stealing it unnoticed in a crime of opportunity. Downstream, PHI fuels financial fraud by allowing cyber thieves to create false identities.

In 2015, the year in which an astounding 112 million patient records were stolen, employee negligence was the number-one security issue.

Biometrics are trending …

 … but they aren’t the silver bullet. (I realize some purists say silver bullets kill werewolves, not vampires, but stick with me anyway.)

To protect against consumer financial fraud, there’s a lot of buzz now about using biometric information — fingerprints, iris and facial recognition, and other unique physical characteristics — to authenticate payment card transactions. Here’s a typical cheer:

“Retail leaders should implement biometric authentication as an alternative to the EMV and other bankcards. Identity should be tied to a person — not a card. This is especially true in today’s omnichannel world where an EMV chip won’t protect fraud that occurs outside of a brick-and-mortar establishment.”

Like encryption, however, biometrics are not a silver bullet to stop hackers. As a defense mechanism, biometric authentication is actually worse because it can create a false sense of security. But once that information is corrupted or stolen by hackers, how do you prove who you really are? This excellent article in Scientific American captures the high-level privacy and cybersecurity implications that should be central to any discussion of biometrics:

“… [O]nce your face, iris or DNA profile becomes a digital file, that file will be difficult to protect. As the recent NSA revelations have made clear, the boundary between commercial and government data is porous at best. Biometric identifiers could also be stolen. It’s easy to replace a swiped credit card, but good luck changing the patterns on your iris.”

The best defense is vigilance

When it comes to ever-more resourceful and clever hackers, there is no single technology that can stop these criminals in their tracks. The best defense is constant vigilance.

All defenses can be compromised, and when that happens, you need to know it – and quickly. FICO® Cybersecurity Solutions deliver exactly that, allowing enterprises to identify emerging cyber threats and fight cyber crime in real-time. In doing so, FICO solutions help to reduce the dwell time of cyber threats, to dramatically narrow the window for potential damage.

To keep up with my latest musings on everything from vampires to hackers, follow me on Twitter @dougoclare.

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