The beta blog

< The beta blog | Nov 25, 2014

Using Google Glass to fight crime

Wearable technology is set to impact industries of all kind and recent PwC research found that sales of wearable devices will hit 19 million by the end of this year. While it's still early days wearables will become part of the workplace much like the laptop, smartphone and tablet has over the years. 

Forward-thinking organisations of all kinds are embracing and experimenting with wearable technology in many ways. One of which is Dubai Police Force who have been testing Google's head-mounted wearable device, Glass, to help fight crime. We spoke with the CIO and director of smart services at Dubai Police, Colonel Khalid Nasser Alrazooqi on his experiences on using Glass and on wearable technology in general. 

PwC UK: Can you please explain your role in the Dubai Police Force and what it entails?

Khalid: I am a general director of the smart services at Dubai Police where we have 4 strategic goals: 

1.The prevention and reduction of crime rates

2.Detection of crimes and the arrest of criminals

3.Readiness to deal with crises and disasters effectively

4.To control the roads securely 

The General Department of Smart Services supports the above by providing all necessary means of technological infrastructure, systems, software and electronic services.

How did the idea of using Glass to fight crime come about?

Dubai Police has a long history of embracing advanced technologies and is the first, at Arab World level, to introduce "Electronic Services” and use GPS in police patrol. We have a dedicated team that studies and acquires the latest technology for test use and pilots case studies in our environment of which Google Glass is one of them.

What have been the results of using Glass so far?

Google Glass is still not officially available on the market as a production wearable device and thus it has its strengths and weakness. We have found in our testing that Glass communication with a server is impressive and it is very easy to capture an incident instantly and send it to the server for analysis. On the other hand, the battery life of Glass is weak and does not stand the Dubai heat very well.

The jury is still out as to whether Glass will gain mass market among consumers but we're increasingly seeing more valid uses for it in a commercial/government setting. What are your thoughts on this?

The City of Dubai has set a strategy to become the smartest city in the world and this strategy will reflect on all government entities to utilise the latest technology. However, it is very early to judge how well Glass will gain market share especially since it is yet to have an official consumer release and the device we have today is a developer version. In addition, we still haven’t seen its implication on laws and policy in the country.

What's your view on the wearable technology space in general? Room for growth or a passing fad? 

I think Smartphone devices have reached their max, this is the time and maybe the era of wearable technology.

Find Khalid on Twitter @KhalidAlrazooqi

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< The beta blog | Nov 11, 2014

Digital technologies are allowing insurers to take customer connection to a new level

In the mid-2000s price comparison websites changed the insurance market. They shifted power into the hands of the customer by providing the ability to access and compare information and research for free. But since then insurers have wrestled with the challenges faced by the digital age. Insurers have struggled to build customer loyalty in what is now a highly price conscious and high-switching UK market, and many have struggled to engage customers to meet their changing demands.

It is no longer acceptable to think of ‘an insurance customer’. Customers’ experiences are being transformed by online retailers, search engines, social networks and other industries. Because of these experiences, customers are justifiably demanding more from their insurers.

And insurers can no longer ignore these threats from other industries because these companies are now their competitors. Our data suggests there is a growing customer demand to buy from alternative providers. 18% of customers are prepared to buy an insurance product from an internet search provider, 15% would buy from an online retailer whilst 5% would buy from a social network.

The UK market is one of the most digitally mature in the world. 86% of customers conducted some kind of online research, while that converts to only 50% of insurance policies that are bought online. Insurers have a huge opportunity to bridge that gap. Customers not only want to buy online but also to interact with their policy online, when it is convenient for them. Customers don’t think in terms of ‘channels’ and instead think about their how best to achieve their goal. They want to communicate with their insurer by phone, email, online and on social networks and expect a service that meets their goals and achieves the outcomes they’re looking for as simply and easily as possible. Above all they want a service that is tailored to their needs.

Insurers need to break away from a one touch per year relationship, digital provides a way to connect with their customers in new ways, and use it to provide a highly personalised service. For years insurers have prioritised risk data, rating factors and product development over listening to their customers and providing the experience they demand.

The digital insurer of the future must look beyond seeing digital as an add-on, and instead see it as a key driver of change for their entire business. Insurers don’t need a digital strategy, they need a business strategy fit for the digital age. 

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< The beta blog | Nov 10, 2014

10 ways drones will impact society

Last week I wrote a blog on world in beta asking if society is ready for the oncoming use of commercial drones in numerous industries from retail to manufacturing. While still early days, the use of unmanned flying objects is set to change the world in which we live. Here we look at 10 ways drones will impact society. 

1.Drone Traffic Regulations –Gone are the days of being able to fly a drone at will, even now, you have to follow the law of the land. Moving forward authorities will be turning their attention to drones specifically and the space will become increasingly regulated.

2.Drone Hijacking – With Amazon and Dominoes looking at using Drones in their SCM cycle, it is feasible that soon there will be large amounts of goods being moved by drone. It’s only a matter of time before someone tries to hijack your drone for a free pizza or a free Ipad.

3.Employment – Drones have the potential to supersede large amounts of courier roles, and there is the possibility that there will be many redundancies. Conversely there will be a need for more technically skilled people to manage and maintain an efficient drone delivery network. Whether the UK has the labour pool for this type of work is up for debate.

4. The end of the “We have something for you” card –With a drone’s ability to deliver day or night, at a time of your convenience, gone are the days of having to re-arrange a courier or visit your local Royal Mail depot with a “we have something for you” card.

5.Last mile disruption: Last mile courier companies, who deliver from final transport hub to final destination, will be massively affected by drones, with short deliveries now made even easier by drones.

6.No more clear skies – Our skies are no longer going to be empty wide spaces of blue or grey (in the case of London), they are going to be a chockablock ‘droneways’.

7.Make room for drone stations – With the widespread use of drones, we should expect the introduction of drone docking station in our cities and towns. These are places to for drones to refuel/recharge, as well as pick up and drop off goods.

8.Drone terrorism – Cyber terrorism and crime is on the rise, and with more and more drones in the air, there is potential for these to be hijacked for terrorist use. The payload doesn’t even need to be explosive, fast and heavy flying objects can do enough damage by themselves. 

9.Drone economics – The economics of drones is going to govern and affect a lot of decisions in the retail market. This will in turn have an impact on the price of commodities.

10.Drone throne – A more light hearted possibility is the idea of drone wars and drone gaming, pitting drones against each other as a sport.

The applications and possibilities engendered by drones are endless, and merely limited by our own imagination. How do you think drones will impact society? 

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< The beta blog | Nov 5, 2014

We don’t need new digital taxes, we need an international tax system fit for the Digital Age

The ways in which global businesses are taxed has been on the front pages more in the last couple of years than during the whole of the rest of my career combined. There’s a perception that international businesses, particularly those of a more virtual nature, are paying less tax than they ought to. International tax is pretty complicated stuff and so, if they are paying less, this isn’t down to lack of effort on the part of taxing authorities: it’s just that the rules, when properly applied, can give results that many think look odd.

We’re now half way through a project being run by the OECD called BEPS (Base Erosion and Profit Shifting)which has recently issued seven interim reports, with the final eight reports due out in about a year’s time. The first BEPS report was on the Digital Economy and considered whether we need new taxes to deal with the digital businesses which have been getting themselves on the front pages.

So what has this to do with the OECD? Beginning in the 1920s, the nations of the world have established tax treaty networks to eliminate the unfairness of the double taxation that arose on cross-border trade. As the international tax system has become more established, the inequity of double taxation has been reduced, however, the BEPS concern is that the pendulum has started to swing more towards the apparent inequity of non-taxation.

Although the premise of the Digital Economy working party was that there are “Digital Economy businesses” (the ones on the front pages) which need new tax rules, pretty quickly they concluded that Digital just means “using modern communications technology” and, surprise, surprise, all businesses are at it – some just do it better than others. In tax terms, this gets you to the conclusion that an international tax system designed in the 1920’s for the international communications of that time (trains, boats and telegraph) does not cope well with the modern world: hence the title of this blog.

Whilst it will be a year or so before we know where these changes will take us, the Digital Economy report does give a vision as to what the future may look like. It does this by setting out what aspects of the tax rules need to change. At a very high level, the changes would make it easier for a company based in one territory and selling into a second to become liable to taxes in that second territory. There is, of course, a lot a technical detail behind this broad statement.

One of these details is the way in which the Permanent Establishment rules operate (i.e. what threshold of activity needs to be crossed before a company selling from country A to customers in country B has to declare taxable profits in country B).

The draft report of the Permanent Establishment working party has just come out for comment and this gives us a first clue as to whether or not the Digital Economy report contains the blueprint for the future of the international tax system. The number of references to the Digital Economy report (and its recommendations) in the Permanent Establishment draft paper suggest that, yes, the recommendations made by the Digital action group are being taken seriously by the other working parties.

I’m not suggesting that anyone should change their business model and tax arrangements based on as yet unwritten rules (although I would give the matter serious thought if you’re making changes for other reasons), but I do think it’s worth keeping a weather eye out for these changes and doing some simple scenario planning based on the more likely outcomes.

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< The beta blog | Nov 4, 2014

Four ways big data is transforming the finance industry

If you are a finance professional, should you care about ‘big data’ and will it have any impact on how you do your job?

Not surprisingly the short answer is ‘yes’. The advent of big data – an umbrella term which includes new sources of detailed data on all aspects of enterprise activity – is already transforming the role of the finance function and how it goes about supporting the business.

Why? Because big data allows finance teams to build a much more holistic view of how the business is performing, and provide more complete, better insights to support strategic decision making.

Here are four examples:

1. Evaluating performance and return on investment: In a big data world, an evaluation of a new product launch includes not only the sales numbers and development costs, but which customers purchased the new product, the knock-on impact on other products, what consumers and the market thought about the product via social media, what operational issues affected the launch, even whether external factors such as the weather impacted on sales. The net result: finance can provide insight into why the product launch performed as it did, not just what happened. And this could have a huge impact on whether the launch was seen as a success (or failure).

2. More proactive risk management: big data can transform finance’s understanding of risks. For example, through collating a wide range of external data sources (media reports, sanctions lists, company reports, social media feeds etc) some Finance teams have started to continuously monitoring supplier and counter parties, enabling them to react much faster to emerging issues. Internal audits are becoming more effective through joining up data to understand the whole context behind a series of transactions and building a better picture of compliance risks in real time, utilising detailed transaction data, internal documents and communications history, external market data and so on. Hence finance teams are becoming proactive risk managers, staying ahead of risks instead of reacting to them.

3. Safeguarding data asset values: Businesses are increasingly recognising that their data is a strategic asset and has value. finance is well placed to become the overall custodian of the organisation's data asset, both to evaluate its monetary value, and to ensure data across whole organisation meets quality standards to support this valuation. This latter role will become increasingly important in the big data world, particularly as the provenance and reliability of data coming from a much wider range of sources will need to be rigorously tested and assured.

4. Better models: One side effect of the explosion in data has been the proliferation of tools that are able to cope with analysing such volumes. It is now possible for finance teams to run much more extensive and granular modelling scenarios across their data, to improve the quality of decision making. We are seeing finance functions moving away from a traditional approach to testing worst, expected and best case scenarios and instead, running simulations across all possible scenarios to get a much more accurate view on the spread of risk, enabling a more informed debate about where the business should be investing its money.

So big data is driving change in the world of finance. Underpinning this change in approach is a change in skill sets and capabilities. Are we near the point where data science skills could become as important to a finance professional as financial qualifications?

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< The beta blog | Nov 3, 2014

Drones are coming but are we ready?

In recent years and months there has been a lot of hype around drones and their possible application. Numerous companies, from Amazon to Disney, have filed patents and are conducting research, with a view to commercialising this technology. Drones are no longer confined to the military, and the question now is when, rather than if, they will become widespread in the consumer market.

Moore’s law dictates:

“Over the history of computing hardware, the number of transistors in a dense integrated circuit doubles approximately every two years”

This exponential prediction of technological advancement is particularly apparent when we look at drones, and the leaps that have been made in recent years. Paired with the millennial generation’s seemingly exponential ability to accommodate and adapt themselves to the ever changing and evolving nature of devices, especially around computing, form factor and applicability, we can see an interesting dynamic forming.

Given the above, it’s only natural that we would expect this tech hungry, e-savvy generation to adapt to this new entity which is going to be introduced into their day-to-day lives. Amazon seems to have taken the lead by releasing their testing plans to deliver packages, and have even gone as far to say, regulation dependent, they are ready to deliver packages with drones. Introduction of a disruptive technology, in this case commercial use of drones, creates a ripple effect of sorts. With Amazon leading the way, and others forced to follow or fall, we can expect to see a complete upheaval of the logistics and SCM industry.

Standing in the way of widespread use of drones, is firstly the cultural status quo and its attitude to the use of drones, and secondly stringent Air traffic regulations. The public are no strangers to the concept of automated flight, with numerous works of fiction in the media portraying such a reality, and they are now more than ever open to new technology. In regards to regulation that stifles technological innovation, we need only look to the music industry to see that burying your head in the sand is the road to ruin. The scene is set for a massive cultural and technological shock, and the norm could soon be that every individual will have personal control of their own drone.

In enabling this change, lies a multitude of challenges. NASA has started to tackle the problem of drone traffic, and is developing a DTC (Drone Traffic Controller). This though, is probably one of the easier problems to tackle. Other more poignant challenges that will require some thought are around the issues of privacy, safety and terrorism. Increasingly sophisticated cyber-crime, and the implications of this for drones, is also cause for concern.

In conclusion, the immense amount of value that drones could potentially add, to industries from agriculture to retail, as well as to consumers, mean that any challenges or potential pitfalls are surely worth overcoming. The technology is here, however, the key challenge is going to be shifting our current perception around drones, and accepting them as a part of our day to day lives. If we are indeed ready for drones, then the sky is the limit to where this can take us. 

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< The beta blog | Oct 28, 2014

The Internet of Things means business

The Internet of Things refers to the internet-enabled network of physical objects that can connect and interact with one another. Sensors, networks, objects, and even humans can produce data that is picked up by connected devices and converted into one or more of a diverse range of actions and impulses.

They can close the gap between digital and physical, making the world ‘smart’ and lives simpler than before by automating decision-making and removing unnecessary human action. Devices can be coordinated and optimised in real-time, and the possibilities for usage are endless. Industry predictions on the total number of connected devices by 2020 range between 20 and 40 billion, and Cisco have valued the potential economic benefit of the IoT at $19 trillion over the coming decade alone. 

The Internet of Things can and will have an enormous impact on businesses – from how they interact and understand their customers through to how they gather, capture, and manage their data effectively. Sensors and analytics can help businesses better know their customers and themselves, and differentiate themselves and their business model. Yet, as with many consequences of the digital age, success is reliant on data and its associated infrastructure: potential issues include data ownership, security, ethics, and standardisation of technology. The Internet of Things presents both a great challenge and an incredible opportunity for businesses to seize upon.

What does it mean for businesses?

As with the most well-known examples so far, the Internet of Things has huge potential for revolutionising how businesses interact with their customers – digitally and otherwise. By giving devices the ability to interact and make decisions depending on data received, the Internet of Things can join up previously unconnected processes and create a connected, seamless customer experience. Gathering data directly from customer action using sensors rather than slower and less reliable manual measurement ensures far higher data integrity, and can allow businesses to create an integrated business model that focusses on creating the best possible individual customer experience, as well as the ability to constantly re-evaluate and change near-instantly. 

Customers can be individually measured, quantified, and catered for in a tailored manner and in return will invest their trust capital in brands that provide a relevant, differentiated service. Integration opportunities with other businesses can be identified and realised – and much more.

However, the Internet of Things is by no means a solely consumer-focussed phenomenon. Connected devices can be used to improve business process, with internal gathering of information from devices and people giving a richer degree of management information than ever before. Industrial products and processes can be harvested for data that can drive innovation, improvement, and quality assurance – an example being the use of sensors to monitor effectiveness and efficiency of water usage in agriculture. 

Device and people issues can be identified, mitigated and resolved earlier than before, and process can be improved rapidly. A great example of the full-scale effect of this measurement is the use of sensors on players at various US Major League Soccer teams during training is used to build a physical profile of players, assess individual workload and performance, and provide early identification of injury risk – the data gathered influences strategy, people management, and performance quality.

Yet with all these impressive opportunities there are a number of key pressures for businesses to address. Despite the obvious wealth of “big data” that can be gathered internally and from customers, it is vital to focus on what you are gathering, and why you are gathering it. Just because data is available does not mean it is useful – data collection must be constrained to the necessary, and should be fully aligned with strategic priorities and relevant connected devices to deliver the most value. Businesses will need to align their business strategy with their IT infrastructure to identify and gather the right data, and ask the right questions of it if they are to achieve the best results.

Security concerns are also a key issue to address. Consumers are more sensitive than ever about data loss, particularly in light of recent public breaches of privacy. In giving up data to businesses, consumers invest a very fragile trust, which can be quickly and near-irreparably shattered. This threat is magnified when considering an enormous interconnected network – it is truly imperative that this is handled with the most care possible. With individual data already sufficiently possessed that Europol has predicted the first murder via IoT before 2015, it is crucial to prioritise robust cyber security and data governance.

As can be seen, the Internet of Things, and its associated connected devices, is wide-ranging beyond belief, and as a result has been seen as a somewhat nebulous buzz-word – a long-identified trend that never truly arrives. But this is not the case. With Google’s $3.2bn acquisition of home automation company Nest fresh in mind, and with technology and telecoms giants currently battling to establish a dominant standard to operate through, it is clear that the IoT’s dots are really starting to join up. There can be no doubt that the Internet of Things means business.

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< The beta blog | Oct 22, 2014

Big Data: Big Danger?

On Sunday 19 October I took part in the Institute of Ideas' annual Battle of Ideas at the Barbican which aims to encourage free-thinking and open-ended public discussion on a range of topical subjects. PwC is a proud sponsor of this yearly event.

The other panellists for the ‘Big Data: Big Danger?’ session were Sheila Bird from the Cambridge Institute of Public Health, Marion Oswald from the University of Winchester, and Sandy Starr from the Progress Educational Trust. The session was chaired by Timandra Harkness.

The session looked at the danger and opportunities of Big Data. I focused on 4 topics: Definitions; Decisions; Next step; A new Data Deal.

Definitions

Let’s start by the definition of Big Data, which is assumed often to be understood, but seems to mean different things to different people. There is no right or wrong definition. To me, big data is the ability to use lots of data to support decisions.

That begs 3 questions:

First question: What kind of data? Let’s start with where I live (GPS), who lives with me or next to me, what I read and buy on the internet (cookies), how I use my phone & iPad, my car (GPS), what I buy (credit cards), what we watch on TV (Set Top Box) or listen on radio (DAB), what our neighbours are like (post code socio demographic and behavioural data). And of course a very thorough picture of my health profile. There is one thing which isn’t known (or should not be known), it is my name, as it will have been taken out of the data and replaced by a number. Marion Oswald talked briefly about getting the right law and regulation. There was a great article in the Evening Standard developing these points.

Second and third questions: Data to do what? And for whom? We can use big data to improve health, to improve security and detect frauds. In which cases, the beneficiary overall is “society” – and that’s all of us. Big data can also be used to help me get a cheaper car insurance. It requires me fitting a “black box” monitor that allows my insurance company to know how I drive, which presumably will demonstrate with real time data that I respect speed limits and do not drive erratically. In that case, I benefit and the car insurance company too (and the manufacturer of the black boxes, and those employed to build them).

Automatic Decisions

Big data has also come to imply that decisions are made by computer programmes, or with Artificial Intelligence, automatically. For some, alarm bells start ringing. Let’s look at two examples and check the benefits and the dangers:

Many organisations are already equipped with software that processes invoices automatically. The software checks: “Is this invoice matching a contract we have? Has the invoice been authorised by an approved person? Is the amount within the authorised payment bands? Do we have enough funds to pay now?” That saves the organisation time and improves accuracy, which means suppliers can be paid in a timely manner. When these software packages are well tuned, the entire payment process is more efficient and effective. That seems to be a good thing.

But some would say that isn’t really big data, but simply automation of repetitive, standardised tasks. That’s true. Big data comes in the next step: using all these payment transactions, over a few years, to help organisations manage the overall picture of what they spend, with whom and when. Big data can help describe what has been spent, then it can help predict where the spend will be. It can help detect “abnormal” payments. It can help predict whether there is too much risk concentrated into a few suppliers. Think Fukushima and the problems caused indirectly to Apple and its super-efficient but perhaps too concentrated supply chain.

The second example builds on my car insurance example. What happens if somebody in my family starts driving the same car with the black box, but starts speeding regularly, and has a few “erratic” driving episodes? The insurance company may reserve the right to terminate its coverage of my car. Not great – but at least I should have known.

Extending further to the health sector: What happens if personal health conditions are used to impact eligibility to jobs, promotions, healthcare coverage?

It is easy to predict that big data applications to automate decisions to improve efficiency and effectiveness will continue to grow. For example, one could imagine that IBM’s Watson computer will soon lead to create better call centres through the application of excellent Natural Language Processing proprietary software.

Next step: Bring individuals truly in

Will there be more big data applications where the stakes are more personal? It depends if the public and organisations can work together to improve Awareness and Choices and build Trust.

First, Awareness:

Do we know what data about us is stored by what organisation? I found that of the 20 or so respondents to an informal survey in the PwC Data Analytics community, about 50% felt there were at least 50 organisations holding some of their sensitive data. Personally I stopped the exercise at around 35, knowing full well that the total is probably north of 150.

And it is not easy to find out what is held about each of us, as it seems one needs to ask each organisation that has some of your date what they hold. Those organisations in the EU are legally bound to give you an answer.

Second, Choices:

Are we truly given a choice to let our data being collected (and how much), stored (where), aggregated (with what other data, from what sources), passed on /sold on (to whom and for what purpose)? My view is that organisations probably need to become more customer centric and much more explicit about what they do with “our” data … which they seem often to consider “their” data.

Third, Trust:

I have three adult children, all quite digital. And the debate has been raging. Should we or not be bothered about sharing our “data” and trusting organisations to use our data ethically? The traditional line is “if you don’t have anything to hide, why would you worry.” That seems to be generation dependent. I don’t believe I have much to hide. I am sure I don’t want to share all of my life with every organisation.

We all have organisations we trust more than others. Personally, I will tend to be more trusting of organisations with a public-interest purpose. For example, the BBC, the British Library and the British Museum have missions to expose people to old and new content. Would I trust them to help me achieve a goal (e.g., learn more about French Modern History)? If getting a BBC/BL/BM recommendation of books to read, shows to watch or listen to, and exhibitions to visit requires me to share my goals, my reading list and habits, my diary, my viewing and listening habits, then I would.

A new data deal

Alex Pentland at MIT talks about the need for a new data deal. My colleague, Carlo Gagliardi, talks about putting the customer in charge of their data in a blog for the Management Consultancies Association. Working on raising Awareness, increasing Choices and building Trust – or ACT as a simple acronym to remember our next steps – is today’s challenge for organisations wanting to take advantage of enormous opportunities with big data. Without active promotion of Awareness, Choices and Trust it will much more difficult to realise the phenomenal potential of big data, as it will be seen by many to present more danger than benefits.

One final observation if I may. When we stop exercising, our muscles become weaker. I wonder if each of us relies too much on big data to make decisions for us, we will lose the opportunity to “practice” making simple decisions, and thus lose some of our sharpness in making choices. Remember being able to read a map?

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< The beta blog | Oct 15, 2014

A new way of funding visionaries?

The technology sector has had its ups and downs. With every boom there has been a bust. But tech is still the VC darling. Why?

It’s an important why. Because many chattering techies have been questioning whether the current tech boom/bubble is sustainable.

Tech is having a crisis because the current valuation hike seems to be sustained – to some extent at least - by mega IPOs or trade sales that cause huge ripples right down to seed funding. In short, mega-deal IPOs (like Facebook and Twitter) also result in mega-deal acquisitions, like the eye-watering WhatsApp valuation of £19Bn (by Facebook). In short, the value placed on businesses (that have some desirable IP) by mega-rich corporations, is very different to the valuations we might see in a more normal market. So people are beginning to ask if the market is about to normalise.

The other feature of the current tech market is a relative lack of real innovation – akin to the types of innovation we saw after the launch of various flavours of micro-computer in the 1980s. The three decades after Bill Gates did his DOS-deal with IBM created a phenomenal increase in computing power, a transformation of data storage, the creation of the World Wide Web and the arrival of true, pervasive connected computing with the dawning of the smart phone. The organisations and individuals behind these innovations focused on very difficult tech – requiring new methods of computing, electronics and data transmission. The companies that grew fastest during this period were extraordinarily innovative – companies like Intel, IBM, and Seagate – as evidenced by patent filings and PhDs employed.

However the current big valuation wave is dominated by companies that have, by comparison, less obviously ‘difficult’ intellectual property – companies like Facebook, Twitter, and WhatsApp. Indeed some would argue that these companies’ fixations on user generated content results in companies that are little more than aggregators of trivia. Moreover, they have inspired a sub-generation of entrepreneurs dazzled more by the valuations associated with these firms than by the underlying tech that drives them. Hence we’re seeing absurd valuations again for firms that create ever more niche social networks or ‘communities’. In short, it’s beginning to feel a bit like how it felt before the dot-com bust.

There’s another consequence arising from the current strange valuation wave. The expectation, on the part of some VCs, for quick win exits, has also created a phenomenon known as the A-round crunch. Many of the most prominent Sand Hill Road VCs are more likely, these days, to invest at the seed round rather than at later rounds. There’s an expectation that if a company hasn’t developed a community of tens of millions of users within months of seed-round there’s little hope of a valuable exit. Big social networks need to augment their communities more than they need tech. This mind-set potentially stifles the types of businesses that take time to develop game-changing technologies.

Hence we’re seeing the emergence of a new breed of entrepreneur that relies less on venture capital than on innovation. Indeed, historically, some of the world’s most successful tech companies were boot-strapped – companies like Microsoft and Qualcomm.

In the UK we’re seeing significant growth in alternative funding sources that support these types of entrepreneur who may, indeed, be more technically brilliant, and more focused on creating compelling and sustainable businesses based on intellectual property. PwC works with Funding Circle – a new type of funding market for businesses (and not just technology businesses) that need money but have chosen to take a route other than venture capital. To date, Funding Circle has helped more than 5,500 businesses borrow £370 million through its marketplace. Funding Circle is now the sixth largest net lender to small businesses in the UK. PwC’s My Financepartner will refer small business clients seeking alternative sources of finance to Funding Circle.

These and other alternative funding sources show that venture capital is not the only way. For many business owners the alternatives also represent a means of financing the business that also creates more self-reliance and a greater sense of independence. These are two things that some of the most visionary entrepreneurs need to retain.

This article was written by Suzanne Houghton of My Financepartner – PwC’s new accounting service for growing private companies.

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< The beta blog | Oct 9, 2014

In a world that's in beta, are new consumer risks looming just around the corner?

As the volume of digital interactions between people & businesses continues to grow, so does the amount of data created and available to those businesses. The challenge of analysing that data for commercial gain is becoming ever more urgent and apparent, as organisations seek ways to derive value from this expanding asset.

But insight from data has the potential to do more than just result in commercial gain. It can also help regulated businesses ensure compliance, drive better customer outcomes, and build more trust in their brand. We are seeing increased activity and interest in these areas from Financial Services organisations in particular. Aggregated and integrated data about customer transactions is now being routinely collected by many FS organisation. It should be relatively easy for a bank, for example, to avoid selling a product or service to a customer when it’s clear from that customer’s transactional history that such a product would be inappropriate.

Data can and is being collected about employee behaviour as well as customer behaviour. For example web-based tools can help organisations understand how employees behave when faced with key dilemma's and trade-off's. It is how people behave in these moments that can give a real insight in to the culture of the organisation, which is something regulatory bodies around the world are putting an increasing focus on. These same tools can then translate these behaviours into a level of "Conduct Risk" for the organisation which can in turn be correlated with customer outcome data.

The amalgamation of this data is now enabling many FS organisations to take pro-active measures to change employee behaviours in service of better customer outcomes, regulatory compliance and, ultimately, more sustainable profits.

We have developed our own tool which we've called Conduct First which is a scenario based survey tool that organisations use with their employees to understand what actions they would take when faced with a difficult dilemma or trade-off. It enables the organisations to understand the conduct related risk associated with their actions and predict future risk based on the behavioural norms of the organisation.

The solution has been designed for service-based organisations that want to ensure that poor service standards, mis-selling activities and customer complaints are minimised. Find out more about it on the PwC UK website here.

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