By Julian Box, CEO at data optimization and data privacy specialist Calligo.
Any financial services business focused on growth will want to achieve the same thing; to expand and provide their product or service to an ever-larger client base. However, globalisation and technology have lowered the barriers to entry to such an extent that competition has never been fiercer.
To stay competitive, businesses must invest in digital innovation – digitising internal processes to help the business deliver faster and better services at lower costs. Taking accountancy firms as a prime example, this may mean putting cloud infrastructures in place to facilitate seamless remote working so advisors can be on client site, with no impact on their ability to access data or collaborate with colleagues.
There are two primary ways to invest in digital innovation. One option is to hire full-time IT professionals that can drive technological advancements from within; cloud engineers, developers and network administrators being just some examples.
However, hiring full-time employees for this process can be extremely costly and unfeasible for many businesses, particularly SMEs. As a company’s digital ambitions grow, the cost of hiring new specialists is simply too high.
The second option is to hire an IT Managed Services Provider (MSP). Outsourcing a company’s IT function is often the best way of accessing the necessary talent and skills that will ensure your business and data processes are optimized, without breaking the bank.
However, hiring an MSP – or indeed any outsourced service provider – is notoriously difficult. Many are only capable of tackling the basic maintenance issues. No matter how well these duties may be performed, there is a natural limit to the value this can offer.
The challenge is therefore to find an MSP that focuses both on routine maintenance and the strategy of long-term digital innovation. Here are three key considerations for any financial services business seeking a provider that will generate the most value from digital innovation.
- Ensure your MSP develops a bespoke strategy for your business
The first step to creating an IT strategy that is truly ‘strategic’ is ensuring that the MSP truly understands your business. If an outsourced IT provider does not align its approach with your individual goals, you risk a cookie-cutter contract that will never quite meet your needs. You may find that technology recommendations are not best suited to your ambitions, or may even hamper longer term goals. in the future. A more valuable managed IT services provider will take a business’ corporate strategy and accurately identify where and which technology can best help.
Taking an example from Calligo’s own experience, an accounting firm was looking to expand and introduce new services, many of which would require more time on clients’ sites. A typical MSP had simply recommended a cloud infrastructure that would make data available remotely and securely. On the face of it, an entirely logical solution. But because it was a generic solution, offered to all clients of the same size, it failed to consider the business’ own particular requirements.
We tailored the infrastructure offering to accommodate the new tools that the news services would require, and the industry-specific legislation that dictated how and where data could and could not held. If these nuances had been addressed only retrospectively, it would have cost the client far more to implement, and required them to have experienced problems with either their clients or their regulator before knowing they needed to make a change.
- Hire an MSP that understands and can improve the day-to-day performance of your business
Although a key quality in a strategic MSP is its ability to constantly innovate a client’s business through new technologies, it’s equally important that the team maintains your environment in a way that supports and improves your particular day-to-day activities.
How rigorous are the inspection routines? How automated are the patching processes? What benchmarks do they hold their support teams to? And how reliably will they solve your employees’ IT issues at the first time of asking?
In the finance and accounting industry, for example, it is quite common for businesses to have offices and clients across multiple time zones. It is therefore necessary that their MSP ensures continuous uptime and out of hours issue resolution.
But just as the strategy needs to be bespoke to your business, so does the support. Accountancy firms will experience predictable peaks of activity during the year, such as during tax seasons, when extended support hours can be critical, alongside preparations to ensure that the cloud infrastructure can handle the additional activity. A good MSP will be able to preempt and proactively accommodate these challenges and ensure that the service adapts with your working pattern.
- Choose an MSP that prioritises long-term growth
A good strategy in any field is to plan for the long-term. The same applies to IT and your choice of MSP. Many MSPs will recommend and successfully deploy new, sensible technologies into your business, yet undermine it all by not ensuring that the short-term actions also supported the long-term goals, and that the current innovation did not hinder any digital innovation or wider business activity in the future.
A classic example is where an MSP recommends new approaches without considering data privacy laws, and how they may change. Privacy regulations now impact every interaction with data, with some geographies and verticals particularly affected, but many more that are not yet affected but whose regulators and lawmakers are working on new requirements. These new laws could demand sweeping changes to a whole industry’s typical processes. And if they are not preempted, or if your IT advisors are not keeping themselves abreast of these possibilities before making recommendations, then you could be about to implement an unwise IT strategy that would be very expensive to reverse out of.
For example, the implementation of GDPR in 2018 meant that clients now had the right to make a data subject access request, or DSAR. Accountants suddenly had a new duty to be able to find and deliver requested data from within their systems, process it and relay it back to the data subject ‘without undue delay’. Any accountancy firms whose MSPs had failed to take this data management need into account risked not having the proper technology or processes in place to adhere with these new requests, and therefore had to expensively retrofit them to avoid having to process requests manually, laboriously and potentially incompletely.
Ensuring that an IT Managed Services plan is strategic rather than reactive is crucial for digital innovation, and ultimately for the business to meets its ambitions. Furthermore, standard IT services, such as support desks and network monitoring, should be delivered in the context of the industry you operate, and your operational needs, not just a generic “best practice”.
Finding and choosing a reliable and value-adding service provider to outsource to is one of the hardest undertakings for a business, especially those looking to grow quickly. Ultimately, it comes down to whether they can align to and support your strategy. If so, the result will be an immediate and continued acceleration. If not, it could mean irretrievable lost opportunity.
Foxconn chairman says expects “limited impact” from chip shortage on clients
TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients will face only “limited impact” from a chip shortage that has rattled the global automotive and semiconductor industries.
“Since most of the customers we serve are large customers, they all have proper precautionary planning,” said Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd
“Therefore, the impact on these large customers is there, but limited,” he told reporters.
Liu said he expected the company to do well in the first half of 2021, “especially as the pandemic is easing and demand is still being sustained.”
The global spread of COVID-19 has increased demand for laptops, gaming consoles, and other electronics. This caused chip manufacturers to reallocate capacity away from the automotive sector, which was expecting a steep downturn.
Now, car manufacturers such as Volkswagen AG, General Motors Co and Ford Motor Co have cut output as chip capacity has shrunk.
Counterpoint Research says the shortage has extended to the smartphone sector, with application processors, display driver chips, and power management chips all facing a crunch.
However, the research firm predicts Apple will face a minimal impact, due to its large size and its suppliers’ tendency to prioritise it. Apple is Foxconn’s largest customer.
Foxconn is looking at other areas for growth, including in electric vehicles (EVs), and Liu said their EV development platform MIH now had 736 partner companies participating.
He expected it would have two or three models to show by the fourth quarter, though did not expect EVs to make an obvious contribution to company earnings until 2023.
Liu also said the company was still looking for semiconductor fab purchase opportunities in Southeast Asia after not winning a bid to take over a stake in Malaysia-based 8-inch foundry house Silterra.
(Reporting by Ben Blanchard and Jeanny Kao; Writing by Josh Horwitz; Editing by William Mallard and Ana Nicolaci da Costa)
EU seeks alliance with U.S. on climate change, tech rules
By Sabine Siebold and Kate Abnett
BERLIN (Reuters) – Europe and the United States should join forces in the fight against climate change and agree on a new framework for the digital market, limiting the power of big tech companies, European Union chief executive Ursula von der Leyen said.
“I am sure: A shared transatlantic commitment to a net-zero emissions pathway by 2050 would make climate neutrality a new global benchmark,” the president of the European Commission said in a speech at the virtual Munich Security Conference on Friday.
“Together, we could create a digital economy rulebook that is valid worldwide: a set of rules based on our values, human rights and pluralism, inclusion and the protection of privacy.”
The EU has pledged to cut its net greenhouse gas emissions to zero by 2050, while President Joe Biden has committed the United States to become a “net zero economy” by 2050.
Scientists say the world must reach net zero emissions by 2050 to limit global temperature increases to 1.5 degrees above pre-industrial times and avert the most catastrophic impacts of climate change.
The hope is that a transatlantic alliance could help persuade large emitters who have yet to commit to this timeline – including China, which is aiming for carbon neutrality by 2060, and India.
“The United States is our natural partner for global leadership on climate change,” von der Leyen said.
She called the Jan. 6 storming of the U.S. Capitol a turning point for the discussion on the impact social media has on democracies.
“Of course, imposing democratic limits on the uncontrolled power of big tech companies alone will not stop political violence,” von der Leyen said. “But it is an important step.”
She was referring to a draft set of rules unveiled in December which aims to rein in tech companies that control troves of data and online platforms relied on by thousands of companies and millions of Europeans for work and social interactions.
They show the European Commission’s frustration with its antitrust cases against the tech giants, notably Alphabet Inc’s Google, which critics say have not addressed the problem.
But they also risk inflaming tensions with Washington, already irked by Brussels’ attempts to tax U.S. tech firms more.
Von der Leyen said Facebook’s decision on a news blackout on Thursday in response to a forthcoming Australian law requiring it and Google to share revenue from news underscored the importance of a global approach to dealing with tech giants.
(Additional reporting by Foo Yun Chee; editing by Robin Emmott and Nick Macfie; editing by Jonathan Oatis)
Packaged food giants push direct online sales to gauge consumer tastes
By Siddharth Cavale and Nivedita Balu
(Reuters) – Packaged food giants including Kraft Heinz, General Mills and Kellogg are pushing sales of their products to consumers directly via their own online channels, in a quest to gather more data about shoppers’ purchasing habits.
Velveeta-cheese maker Kraft Heinz saw its e-commerce sales double in 2020, now representing more than 5% of its global sales, Chief Executive Miguel Patricio said at the virtual Consumer Analyst Group of New York (CAGNY) conference this week.
The company sells Heinz baked beans and tomato soup by subscription or in bundles directly to consumers on a “Heinz To Home” website in the United Kingdom, Australia and Europe.
Sales on the site are “giving us valuable insights into consumer behavior, enabling us to quickly test and learn from innovations,” Kraft’s head of international business, Rafael de Oliveira, said at the conference.
Kraft would continue to use the site as a channel to generate strong sales in developed markets, he said.
The company also counts sales of its products through marketplaces such as on Amazon.com and Walmart.com as part of its e-commerce sales.
U.S. shoppers spent on average $1,271 buying groceries online last year, 45% more than they did in 2019 as the pandemic spurred shopping online, according to market research firm Earnest Research. In contrast, the average dollars spent in stores rose only about 7% to $3,849.
PepsiCo sells products including Doritos, Quaker oats and Gatorade directly to consumers through two websites, pantryshop.com and snacks.com, both launched in 2020.
Chief Financial Officer Hugh Johnston said that more than 45% of the company’s capital investments over the next few years would be dedicated toward manufacturing capacity, automation, and a “ramping up of investments in our e-commerce channel.”
As major online retailers including Amazon.com and Walmart.com continue to gather valuable data on shoppers, many packaged food manufacturers are keen to gather their own data on shoppers, too.
“COVID (has) simply accelerated our digital growth and has provided us with yet another source of data and insight,” Monica McGurk, chief growth officer at breakfast cereal maker Kellogg Co., told the conference.
Kellogg, producer of Corn Flakes as well as Pringles chips, said on Wednesday it had launched a direct-to-consumer website focused on digestive wellness. The group plans to sell its new Mwell Microbiome Powder for gut health via the site to gather data on customer interest before it launches the product more widely.
E-commerce sales have doubled in the past year and now represent about 8.5% of the group’s $13.77 billion in annual sales, Kellogg said.
Pillsbury dough-maker General Mills also sees the benefits of tracking consumer habits more closely.
“We’re aggressively investing in data and analytics. We are gathering unparalleled insights from the first-party data we collect through our brand websites,” General Mills’ Chief Executive Jeffrey Harmening said at the conference.
On its Bettycrocker.com website, General Mills provides hundreds of recipes using Betty Crocker cake mixes and frosting. The site leads people to the closest store or an online retailer where they can purchase the products, thereby generating data for General Mills on what a particular customer from a certain zip code is buying. The company does not sell the food products directly on its website.
Consumers, however, may have to shell out more if they shop directly from brand websites.
Prices on the two PepsiCo sites, for example, were generally higher than those on Walmart.com or Amazon.com, Reuters checks show. On Walmart.com, for example, a 10 oz pack of Doritos Nacho Cheese was on sale for $2.50 compared to $4.29 on Pepsico’s website.
Kraft Heinz offers tins of soup, beans, pasta and baby food bundled into packs ranging from six to 25 items and costing between 10 and 20 pounds ($14.01-$28.03) on its UK website. It told Reuters the relatively higher prices of items and bundling of packs than on some other online marketplaces was to be able to eke out a margin after including delivery costs.
“Longer term, we see real value in this channel to be an insight and data channel for us,” Jean-Philippe Nier, head of e-commerce for Kraft Heinz’s business in the UK and Ireland, told Reuters. People are more prepared to order directly from manufacturers than they were before. The time is now.”
Graphic: Direct online sales to cross $20 billion in 2021 – https://graphics.reuters.com/PACKAGEDFOODS-ECOMMERCE/rlgpdexngvo/chart.png
($1 = 0.7137 pounds)
(Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru; Editing by Vanessa O’Connell and Susan Fenton)
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