Gig platforms have also been praised for their ability to help businesses improve their operations. For example, by using a gig platform, businesses can more easily scale their workforce up or down to meet changing demands. And because businesses can access a global pool of workers on these platforms, they can tap into new talent pools and get work done faster. So how exactly do gig platforms improve business operations?
Human resource is one of the most important—and expensive—aspects of running a business. Staffing agencies can cost businesses thousands of dollars, and finding and hiring workers can be time-consuming.
Gig platforms have made finding and hiring workers for short-term projects easier and more affordable. With a few clicks, businesses can post their project on a gig platform and receive applications from a global pool of freelancers and other independent contractors.
Gig platforms have also been praised for creating more jobs for underemployed workers. For example, a recent study found that 36% of US workers are part of the gig economy through primary or secondary jobs. And of those workers, 53% said they joined the gig economy because it was the only work available to them; many of them did this work through the ten most popular gig platforms shown in this image via Compare the Market business insurance. This is good news for businesses, too. By tapping into the gig economy, businesses can find high-quality workers who may have otherwise been unemployed.
So not only do gig platforms provide a convenient way for businesses to find and hire workers, but they also create more jobs for underemployed workers.
Not only do businesses save money on staffing costs with gig platforms, but they can also offer their workers better salaries and working conditions.
One study found that the median hourly rate for workers on gig platforms is $31, compared to $15 for traditional employees. And because workers can choose when and where they work, they have more control over their schedules and can often find gigs that fit better with their lifestyle.
This can lead to improved worker satisfaction and wellbeing, which can, in turn, improve productivity and results for businesses.
Flexibility is another key benefit of using gig platforms. Because businesses can hire workers for short-term projects, they can more easily scale their workforce up or down to meet changing demands.
This can be helpful during busy times, such as the holiday season, when businesses need more workers to handle increased customer volume. And it can also help businesses save money during slower periods when they can reduce their workforce and avoid paying unnecessary wages.
Gig platforms have improved business operations in several ways. They've made finding and hiring workers easier, improved the wellbeing and salaries of employees, increased flexibility, and created more jobs for underemployed workers. Gig platforms are worth considering if you're looking for a way to improve your business operations.
Here Ian Smith, GM and Finance Director at Invu puts to rest five of the most common myths about this business critical function.
Reality – While it is understandable that most businesses will prioritise investment in front office functions, funding back office operations should not be ignored. Business requires accounts payable to deliver customer satisfaction. Failure to invest can result in the function being off the pace and unable to support the business.
Reality – Funding your business by delaying payments to suppliers can damage your brand and normally ends with a fall. We’ve seen this multiple times in the past year, where the only cash generation was from delayed payments to suppliers who eventually could not take anymore. The late payment of suppliers by large companies has been subject to regulatory overview with the introduction of Reporting on Payment Practices and Performance.
Initial reporting figures show that on average 31% of invoices are not being paid on time.
Reality – The consequences of keeping the accounts payable department in the dark, by failing to provide the information required to resolve issues, can be harmful both to supplier relationships and management accounts due to delayed processing of transactions. Accounts payable and those responsible for the approval of invoices require transactional visibility and an audit trail to ensure effective processing.
Reality – The perception of accounts payable as a department staffed by variations of the Little Britain character Carol Beer – “computer says no” – mis-states the role, which is to support budget holders in the delivery of outcomes and maintain a positive relationship with suppliers.
Reality – There’s an expectation that accounts payable will be seen and not heard, be error free, and always on time. When this is not the case there is often an assignment of blame rather than an appreciation that this is an exception to the normal success rate.
The brave new world of accounts payable requires systems that automate data entry, provide approval workflows and requires skilled staff who can deal with exceptions, helping provide efficiency, visibility, and control over the payables process.
Yet according to PwC, this form of fraud is the second-most commonly reported economic crime in the world, ranking above bribery, corruption and even cybercrime. The question is – who should lead counter-fraud efforts? This week Finance Monthly hears from Laurent Colombant, Continuous Controls and Fraud Manager at SAS, to explore the ins and outs of procurement fraud.
Worryingly, businesses seem unclear on the answer. Our latest research report, Unmasking the Enemy Within, found there was no clear leader or common approach to procurement fraud prevention across businesses. Indeed, almost a quarter (23%) of business leaders have no clear owner assigned to the task or can’t say who is responsible.
What’s not in question, however, is who’s held responsible for the damages that fraud inflicts. While CFOs might not be involved in day-to-day anti-fraud operations, they are frequently first in the firing line when procurement fraud is uncovered. In 2014, for example, Sino-Forest Corp CFO David Horsley was fined C$700,000 by regulators for failing to prevent fraud under his watch. Furthermore, he was permanently banned from being a public company officer or corporate director, and was ordered to pay $5.6 million to the company’s investors following a class action settlement.
While they are unlikely to coordinate fraud efforts single-handedly, 31% of companies place ultimate responsibility for fraud in the CFO’s hands - more than any other role. That’s hardly surprising, given that fraud has a direct impact on the bottom line, with over half of businesses (55%) reporting losses of up to €400,000 per year.
While we are not arguing that the finance department should be the command and control centre for anti-fraud efforts, it’s clear that the CFO has a crucial role to play in tackling procurement fraud. They are the ones who guide purchase decisions, who oversee risk management or audits and, ultimately, have the final say in what anti-fraud capabilities a company is equipped with.
Even so, it’s unfair to expect the finance department to shoulder the entire burden themselves. Just as IT security in the organisation is everyone’s responsibility, so too must accountability and responsibility for fraud be embedded throughout the workplace.
Yet there is much that the finance department can do to help uncover incidents of fraud – not least conducting regular audits. Around half businesses (46%) claim to hold regular internal audits, but many of these exclude procurement fraud from their remit. More worrying still, more than one in 10 (11%) organisations admit to either doing nothing to audit for procurement fraud or are unable to say what they do. A further fifth (22%) fail to audit for procurement fraud at all.
That one in three companies aren’t actively searching for procurement fraud, or don’t know what processes cover it, suggests a blind spot that potential fraudsters could easily exploit.
Finance needs to look at areas where existing auditing process are letting them down. When we look at how organisations deal with procurement fraud, 29% validate procurement applications manually while a further 30% rely on staff to inform them of any wrongdoing. Both carry a high risk of human error, potentially minimising or masking the true scale of the problem.
Ultimately, the buck stops with the CFO, which is why they should consider a new approach to auditing based on continuous and automated detection. This is only possible with a strong foundation of advanced analytics that assists investigators in pinpointing the needles in the haystack. A company’s ability to identify and prevent fraud rests, to a very great extent, on the good judgment of the CFO in selecting the right systems to prevent fraud from happening in the first place and deterring anyone with ill intentions.
Continuous, data-driven detection represents the best way to fight procurement fraud and identify errors, enabling companies to pre-empt signs of fraudulent activity rather than discover it after it’s taken place. This limits costs, saves time as well as reputation and prevents losses.
Yet only a small minority of organisations are using advanced analytics (14%) and AI (nine%) technologies in their anti-fraud efforts. The most common obstacle to adoption is the perceived cost of the technologies, but this could well be short-term thinking on the part of the CFO. While there is an upfront cost implicit in any implementation, an effective fraud detection tool will quickly make its money back in the losses it prevents and the monies it helps recoup.
The finance department should not be afraid to make the case for investment in the latest advanced analytics and AI solutions. Procurement fraud is too serious and too costly to make short-term capex savings in favour of the long-term ROI offered by analytics-enabled security. After all, the buck stops with them.
The European funds industry still has major concerns over Brexit and the fear and uncertainty that comes with it, according to new research with European fund managers.
More than half of respondents (55%) say that Brexit continues to be one of the biggest issues facing the funds industry in 2018. However, the study, conducted by online board portal provider eShare with delegates at the recent FundForum International event in Berlin, also revealed the funds industry was generally optimistic about prospects for the industry in 2018 and beyond - 82% believe that the funds market is generally buoyant despite political and economic affairs.
“The fund management industry has faced much pressure over the past few years, with new regulation intended to improve transparency adding many layers of complexity to governance and compliance programs,” said Camilla Braithwaite, Head of Communications, eShare. “But confidence amongst European fund managers remains high despite this, with Brexit the only main concern for many. However, with the major decisions over Brexit and its impact on financial services still to be made, fund managers are proceeding as normal until they know more and the industry is thriving because of it.”
The new regulations, such as GDPR and MiFID II, have undoubtedly affected the industry though, with fund managers increasingly aware of the risks that come with non-compliance. 84% of those surveyed felt that their organisation could improve the operations surrounding risk management and decision-making.
With fund managers facing tough decisions about compliance, investments and many other factors, the ability to be transparent about such matters was one of the most important things identified by survey respondents. 97% said that demonstrating transparency into decision-making is increasingly important for the industry.
As the pressure grows on fund managers to be compliant and well-governed, so the need for transparency increases too. 84% of respondents said that technology is the future for improving governance standards within the funds industry.
“Transparency is essential in modern fund management and demonstrating this is right at the top of the agenda for most fund managers, keen to reassure clients and regulators alike,” continued Camilla Braithwaite. “Technology can play a significant role in this, showing how decisions were reached and supporting governance and compliance requirements. The industry has woken up to the potential of technology to help in this way, and the research would suggest that the mood within fund management is positive.”
Creating a balanced and even workflow will optimise productivity for robots – in the same way as it will for human workers.
Surely robots don’t get tired, can work 24/7, are fully skilled at what they are programmed to do, and don’t have any pesky motivational issues – so their productivity must always be consistently high? Absolutely not. This is according to Neil Bentley, Non-Executive Director & Co-Founder of ActiveOps, a leading provider of digital operations management solutions.
To believe this would be to forget everything we have learned about Lean Workflow and the way production systems work. For a processor (robot or human) productivity is best measured as a ratio of output:input. How much work did we get out for the amount of time we put in? For this to make sense we generally convert time into “capacity to do work” based on some idea of how much work could be done in a given time.
So, if Person A completes 75 tasks in a day and they had capacity to complete 100 then their productivity was 75%. Similarly, if Robot B completes 500 tasks in a day and had capacity to do 1,000 then their productivity would be 50%.
As we begin to increase our investment in Robotic Process Automation (RPA) and AI: the productivity of this (potentially) cheaper processing resource will matter – if not so much now then certainly when everyone is employing RPA to do similar tasks within the same services.”
But why would Robot B only do 500 tasks? They wouldn’t dawdle because they didn’t like their boss. They wouldn’t spend hours on social media, and they would surely only be allocated tasks that they were 100% capable of processing.
Maybe Robot B could only process 500 tasks because there were only 500 available to be done. Maybe the core system was running incredibly slowly that day, or there was so much network traffic that latency was affecting cycle times. Maybe someone changed a port on a firewall and the robot needed to be reset. Or there were hundreds of exceptions and the robot had to try them multiple times before rejecting them.
It is strange (isn’t it?) that if a person’s productivity is 50% we assume idleness, a propensity to waste time on social media, or a lack of skill but if it is a robot we quickly understand that it is the workflow that is the problem,” he continued.
Data-focused technologies such as Process Forensics and some digital operations management technologies or WFO technologies that seek to improve performance by URL logging or other screen monitoring techniques are totally missing the point: people’s productivity is far more influenced by the flow of work through the system than it is by their willingness to work or their skill level.
Workforce monitoring technologies seek to intimidate people into working harder, but you can’t intimidate people into having more work available to do. Equally, fluctuating demand, bottlenecks in the workflow, variations in work complexity will all drive variations in productivity – as with people, so it is with robots,” he added.
The answer is to introduce digital operations management solutions in the back office that will be the result of a blended human/RPA strategy made up of:
The plain fact of the matter is that with humans and robotics increasingly working alongside one another in service operations a blended and balanced approach needs to be taken on the issue of productivity.
Worldwide spending on blockchain is set to top $2 billion in 2018, according to the International Data Corporation.
Stacey Soohoo, research manager, customer insights and analysis at IDC, said: “The year 2018 will be a crucial stage for enterprises as they make a huge leap from proof-of-concept projects to full blockchain deployments.”
There is, clearly, a lot of time, money and effort being spent in tapping into the potential of this technology. But, how can we expect to see the benefit of all of this? How far will blockchain go in terms of changing the way we do business?
Having originally been met with some scepticism in the banking sector – probably due to its disruptive nature and the presence of scams targeted at early adopters – blockchain is increasingly being harnessed by financial institutions to change the way they do business.
Perhaps most obviously, this can help to add speed and security to the process of transferring money, something that everyone from a holiday-bound consumer to a novice investor dabbling with a forex demo account through to a FTSE100 CEO can appreciate.
Yet, as the FT notes, the process of clearing and settlement, the verification of a customer’s identity and the raising of syndicated loans can all be made more efficient with blockchain.
Yet, to focus solely on banking and payments would be to ignore the broader scope of the benefits of blockchain.
In industries where ‘traceability’ is crucial, this provides a clear, immutable record of a financial transaction. Examples of where this is necessary include the charity sector – where organisations need to prove that donations ended up at the intended target and, perhaps most pertinently in a business context, for diamonds.
For diamond companies, being able to create and manage a record for customers and clients will enable them to be clear that their product in genuine and sourced responsibly – two things that will help reputable firms to stand out from companies engaged in practices that have threatened to tarnish the sector.
While speed, security and a transparency are clearly important, so too is privacy, especially in sectors such as healthcare where it’s vital to protect patients’ data and, typically, there are issues with out of date security software and records systems.
While the US’ private healthcare system has already embraced blockchain, the NHS could benefit too. As Tech UK notes, tracking medical test results in real time, sharing data between medical teams in different locations for research purposes, speeding up compliance paperwork processes and handling documentation for short-term staff could all be done quickly and – crucially – with the required level of privacy. This doesn’t just benefit the NHS but also a number of science and healthcare companies that rely on the NHS for work as third parties.
In some respects, blockchain’s real power is not necessarily that it changes what can be done as a business. Rather, it enhances the way in which companies operate in the digital age, allowing to carry out the processes and practices that they have developed in recent years and allows them to be done quicker, safer and cheaper.
In good times and bad, M&A remains one of the best ways to get ahead of the competition and increase opportunities – and returns – for businesses. It also represents an immense commercial activity that drives significant macroeconomic value across the globe. But why are still so bad at it? Below Finance Monthly hears from Carlos Keener, Founding Partner at BTD Consulting, on M&A tactics and the value in improving on our own.
Even during the ‘Great Recession’ of the last decade, the worst since the 1930s, the poorest year for M&A saw over 35,000 global deals representing $2.25tn – equivalent to more than 3% of global GDP. M&A impacts national economies, individual businesses, and everyone involved.
Yet far too many deals still fail to achieve their objectives. By most measures, long-term M&A success rates remain very low compared to other growth or investment activities. Underneath many celebrated cases of outright merger collapse lies a general prevalence of underperformance, one that has remained unchanged in over 30 years. An Accenture report, Who says M&A doesn’t create value, published in 2012, actually celebrated the view that as many as 58% of all acquisitions added shareholder value 24 months post-close. Problem solved? We think not.
We do not believe such figures deserve the complacent optimism they receive. If you ‘play the M&A odds’ and do no better than your peers, your business is likely to be walking away from approximately half of a percent of its enterprise value with every single deal. That could easily add up to millions if not tens of millions of pounds.
Even so, this is about more than just the numbers. Underperforming acquisitions damage shareholders, careers, brands, communities and opportunities for companies and people alike. Executive survival in serial acquirers is notoriously short: according to one study, disciplinary replacement of CEOs is 77% higher than in non-acquisitive companies.
This endemic level of failure rarely prompts serious remedial action or increased rigour the next time there’s an M&A opportunity. The reason stems from the unique ‘gain today, pain tomorrow’ nature of deal-doing which can be typified by a few characteristics such as:
Studies of M&A and integration best practice are widespread and largely focus on tangible, concrete ways to improve individual steps along the process. They might advocate more due diligence, earlier integration planning, increased focus on culture or better communications. These can certainly help individual cases, and yet overall levels of M&A success remain largely unchanged. Best practice is available, understood, widely applied, and yet it is clearly insufficient.
Our own experience and research suggests that success rates are stuck because in most cases both organisations and the external groups that support them fail to understand and grapple with the leadership behaviours that really underpin M&A performance. These behaviours embody the culture, mindset, motivations and actions necessary for sustained success. Our detailed research report Inconvenient Truths identifies 10 critical leadership behaviours both pre- and post-close that impact M&A performance. Here are three of the ten to consider before embarking on your next deal:
All of this might seem obvious. But these points are rarely tackled head-on, and in part that’s because they can by difficult to address. A strong, robust M&A process can help encourage these ‘good behaviours’, or at the very least highlight when they’re not being followed. Those who think this might not be worth the pain and effort might want to know that according to our study, leaders who successfully follow our 10 ‘good habits’ consistently see M&A deliver long-term benefit 72% of the time. That is more than four times more than those who don’t follow the habits. They also saw an increase in share price of 46% over the three years of our study, which is more than twice that of their ‘badly-behaving’ peers.
Complexity often means risk, mess and can easily spell disaster. The fund sector for example, is one that requires constant thinking, innovating and success management; and it’s not always so easy, especially with a myriad of tasks and operations to see to internally. Below Lauri Paal, who used to work with Skype, Microsoft, and is now the Chief Product Officer at KNEIP, discusses with Finance Monthly some things the funds industry could learn from the telecommunications industry, from consumer behaviour to outsourcing and standardization.
Telecommunications has changed significantly in the last ten years. The regulation, technology and approach have all been reviewed and the industry has seen obvious moves. For example, voice to data as well as communications switching to apps. Moving into financial services, I have witnessed complex regulation and, like in the telecommunications sector, this is constantly changing and creating new challenges. However, our approach and business practices have not changed.
From the outside it is easy to think that the reason the telecommunications industry changed is because of the rise of 3G and eventually 4G technology. But the truth is that change is driven by consumer behaviour and I like to believe Skype played a part in how people consume technology today. Skype’s approach to voice services radically changed the market as we focused on lower cost and high quality international calls. To guarantee this standard, in traditional telecoms networks, operators needs to connect to hundreds of networks globally. Quantitative measures are used to monitor performance. At Skype we defined quality of service as a core value. We created a live feedback feature which is used after every call and we built an algorithm which allowed business allocation based on customer feedback. We drove this innovation.
Non-core activities were outsourced to specialist organisations. We did not build local infrastructure as many telecommunications agencies have in the past, we outsourced to partner management operations, including pricing and invoice management. The results were positive for everyone with each industries’ players focusing on their specialist industry, ultimately providing the customer with a better experience.
Now, in the financial services industry, I think there are a number of lessons that we can take from the disruptive approach in telecommunications and change the way our sector operates. Too much of our industry is still reliant on manual operations and systems are not streamlined to free up professionals to work on their area of specialism rather than on back office functions. Just as voice has become a secondary asset to data in telecommunications, so to traditional investment - especially assets under active management - is facing an optimisation drive. We need to find solutions that automate compliance processes, giving better focus to core activities.
I think the industry needs to push for standardised back office functions and compliance process. We have spent months preparing for PRIIPS and MIFID II but this needs to pay off for the end user. These complex regulations have focused on transparency but that is only beneficial if it uncovers inefficient historical processes, and force companies to adapt and innovate, ultimately becoming more effective. The industry, jointly with the regulators, should focus on understanding and enabling technology trends. Markets tend to be self-regulating, driven by customer demand. Perhaps keeping the end customer (or investor) in the centre of the process and making sure initial objectives were met post implementation will ensure processes are improved.
Asset managers currently tend to build a lot of solutions internally. The industry should rather take a step back to determine which tasks are core, such as product manufacture and investment management, and which tasks can be considered as non-core. Doing so could lead to greater business efficiencies and could, given time, lead to a more standardized industry, as we all witnessed in the communications industry.
However, I think the biggest lesson we can learn from the communications industry is the need to put customers in control. We are seeing trends towards younger investors demanding more knowledge of and access to their investment choices. We need to look at systems that allow the end user to understand and put them in control, whether they are an asset manager or an individual. If we can simplify processes, then their needs will define the future of the industry. Customers will decide and putting them in control needs to be our mission regardless of the industry.
A new study of the 50 largest banking groups in the UK and Europe calls for disruptive management strategies to reverse lacklustre profitability across the industry, warning that Return on Equity (RoE) and Common Equity Tier 1 (CET1) ratios are in danger of falling below the average market and regulatory minimum over the next five years.
The European Banking Study (EBS), recently launched by zeb, shows that European banks are lagging behind their international counterparts in profitability and operational efficiency. It goes on to predict four major trends that will dominate the European banking scene from now until 2021 in response to the current unhealthy state of the industry.
“Profitability has become the critical concern for the European banking industry,” said Bertrand Lavayssière, Managing Director UK, zeb. “Actual organic profitability of Europe’s top 50 banks has declined significantly since 2012, and their average RoE has fallen to a level that is about half of what shareholders should expect based on a standard cost of equity calculation.
“And with Brexit looming ever-closer, it’s set to be an even bumpier road ahead. Although the top 50 European banks have strengthened their capital positions with a CET1 ratio of 13.5% in 2016, upcoming regulation and a continuation of the relatively low yield environment will increase the burden on these banks. If banks do not employ disruptive strategies to reverse their own fortunes, they risk becoming targets for acquisition. Without taking decisive action quickly, banks’ profitability and financial strength could deteriorate further by the end of the decade - we could see, in a baseline scenario, RoE fall to 1.5% and CET1 ratios below the average market and regulatory minimum.”
The zeb European Banking Study includes:
You can find a copy of the report here.