Innovation

The Reality of Cybersecurity: 5 Steps to Managing Cyber-threats

7 August, 2018
  • Nigel Morriss

    Mercer Investments’ Head of Operational Risk for the Middle East, India, Turkey and Africa

article-img
“Greater cyber-dependency and the exponential rise in cyber-crime are inextricably linked.”

The sophistication and ability of cyber-criminals to successfully penetrate IT infrastructures is growing at a rapid pace. The Middle East’s financial institutions are increasingly being targeted and are not ready for the tidal wave of threats. There is cause for concern among Gulf Corporation Council (GCC) executives.

Cybersecurity is critical. You’re either ready, or you’re not. The alarm has been sounding for quite some time. It is no longer a question of if your organization may be subject to the risks of cyber-threats, but when. The paradigm has shifted, and the harsh realities of cybersecurity are no longer an emerging risk, they have emerged and are a business imperative. Things are only heading in one direction and, left undiagnosed and untreated; the prognosis is alarming. The assets and wealth of financial institutions in the Gulf Corporation Council (GCC) have been identified as prime targets for cyber-criminals. While this is a global issue, the Middle East’s response to combat the threat lags behind the rest of the world.

While asset managers in the GCC seek to grow assets under management, they are failing to attract assets from sophisticated and discerning institutional investors who have already woken to the seriousness of the cyber-threat. GCC institutional investors and investment managers need to protect themselves and their investors from the fallout of financial losses, confidential data compromise, unlimited reputational damage and disruption associated with successful cyber-attacks.

The statistics are not comforting. In a recent Marsh & McLennan Companies and Firefly survey of European institutions, 23% of respondents acknowledged they had been a victim of a successful cyber-attack in the last 12 months. Nearly two-thirds of survey respondents said cyber-risk is among their organization's top five risk management priorities; only 45% of respondents said they formally estimate the financial impact of a potential cyber event as part of risk management.

2017 was the most damaging year for cybersecurity; Wanna Cry ransomware and NotPetya’s “wiper” malware permanently changed the global cyber-landscape. NotPetya is said to be responsible for US$1 billion in economic losses. If not sufficiently alarming, August 2017 saw the loss of 150 million consumer credit customers’ personal records and wiped US$5 billion off market cap. Whichever way you look at it, the prognosis is worrying. Cyber-incidents, once considered extraordinary, have rapidly become commonplace.    

The cost of cyber-crime to businesses over the next five years is expected to be US$8 trillion. In a world with 7.6 billion people, there were an estimated 8.4 billion internet-enabled devices in 2017. The figure is projected to grow to 20.4 billion by 2020. The world is experiencing the rise of cyber-dependency due to increasing digital interconnection of people, things and organizations. Greater cyber-dependency and the exponential rise in cyber-crime are inextricably linked.

In response, the World Economic Forum’s Global Risks Report 2018 upgraded the risk of cyberattacks and data fraud or theft to top five risks by likelihood. In 2017, cyber was not even a standalone risk in The Global Risk landscape rankings. Ernst & Young suggest cyber-risk has evolved as a standalone critical risk category to be viewed not only as a technology issue but as a pervasive business and operational risk with the potential for significant impact on assets, revenues, reputation, confidentiality, and profitability.

In an effort to bring greater investor and consumer protections, while increasing the cyber-standard expected of organizations, a new wave of sweeping regulation is emerging. The General Data Protection Regulation (“GDPR”) will be introduced in 2018 and imposes far-reaching obligations surrounding cyber-breach disclosure. Commentators suggest GDPR will “change the world as we know it” and, while GDPR is EU legislation, other leading global financial centres are rapidly adopting similar, sweeping cyber-laws. GDPR breaches and non-compliance are expected to result in billions of dollars of fines annually. Governments, regulators, supervisory boards, media, and consumers will scrutinize executives’ responses to newly disclosed cyber-incidents which have previously remained below the surface. Financial Institutions in the GCC should not wait for regional regulators to impose similar requirements.

Consider these five steps to managing inevitable cyber-threats: 

1.     Embed C-Suite Accountability

The stakes have changed for the C-Suite: cybersecurity has firmly taken its place on the corporate risk register and cyber-accountability rests with the Board. While the concepts of cybersecurity may be foreign for many executives and board members, protecting your organization against risk is not. Experienced executives understand their limitations and leverage resources to fill the gaps. Setting the tone from the top, Boards should implement formal data and cybersecurity policies with appropriate governance and cybersecurity awareness processes.

2.     Understand the Threat

Undertake an expert assessment to understand the scope of the threat and your organization’s vulnerabilities. Understand the volume and criticality of unpatched software vulnerabilities within your organization’s IT environment.

3.     Implement the Change 

Strengthen your IT infrastructure by comprehensively tackling the vulnerabilities identified in the threat assessment. Further mitigate the risks of penetration by reducing your organization’s attack surface.

4.     Educate your People

The role of human error in successful cyber-attacks should not be underestimated. Human behaviour lies at the core of security strategy. Creative and ongoing employee cyber-awareness and training programs should be implemented.

5.     Monitor your Infrastructure

Establish a framework for continuous IT network monitoring, including responsibility for identifying and applying critical software patches, and escalation to the C-Suite. Re-assess the IT environment and emerging threats regularly to ensure ongoing appropriateness versus the changing landscape. 

Failure to take the reality of cyber-threats seriously is reckless. By embedding C-Suite accountability, understanding the threat, implementing the change, educating your people, and continually monitoring your IT infrastructure, you will be taking important measures towards mitigating the countless cybersecurity risks we all now face.

more in innovation

Editorial Staff | 23 Aug 2019

Blockchain has potential to make a huge impact. Learn about fascinating blockchain trends that are emerging in 2019 and beyond. Blockchain technology was invented to safeguard the cryptocurrency infrastructure (e.g. Bitcoin), enabling secure financial transactions without the need for a bank or a middleman. But blockchain’s ledger technology is now expanding beyond digital currency and financial services, offering great potential to improve upon many areas of our lives.  As blockchain matures and becomes more accessible, companies across various industries are finding compelling use cases for blockchain to make businesses processes more efficient. For example, banks can now reduce infrastructure cost by 30% throughblockchain solutions. This is achieved by encrypting millions of storage points, none of which contain a full name or an account number.  While blockchain is currently only being used by 0.5% of the global population, emerging trends are making it more scalable. It is anticipated that 80% of the population will be using blockchain technology in some capacity within 10 years.  Because the HR department is charged with managing so much sensitive data, blockchain technology will be integrated directly into the HR function through a multitude of possible use cases—adding transparency and trust to an organization’s operations. The evolution of blockchain will also mean companies need a workforce with new skills, so HR will be kept busy with recruitment and talent management.  The following blockchain trends are lifting ledger technology from the obscurity of cryptocurrency and making blockchain part of the mainstream conversation.   1.  More potential real-world uses on the horizon will raise the visibility of blockchain.  While cryptocurrency and financial institutions are the pioneers of blockchain, it is important to note that tokenization and securing payments are just precursors to many potential real-world uses for ledger technology.  Every transaction on the blockchain is on public record and its enhanced security makes it a virtually incorruptible platform. Because no central party will ever be in control of all of the record keeping, blockchain can be used to mitigate financial, political and institutional corruption in corporations and governments, alike.  Blockchain may also be able to improve the political sphere in terms of voting systems. Because records cannot be altered in any way, blockchain is ideal for voter registration, identification and vote tallying. Election corruption and voter fraud would be eliminated, ensuring a more accurate, fair electoral process.   The general public will also be drawn to blockchain’s ability to eliminate transactions fees. Owing to decentralization, sending and receiving money can be expedited and enhanced. This has implications for automated legal procedures, customs payments, ownership transfers and business transactions—allowing widespread disintermediation across industries and economies.  Another mainstream use could be in public records of ownership, citizenship and identity. Even in the thriving digital era, these records are stored in centralized databases for security. However, this exposes them to tampering because of the intermediaries it engages. Blockchain opens up the possibility of a decentralized, public, fixed and consensus-driven ledger of records that could nullify the need for intermediaries. A groundbreaking example of this is Estonia’s E-Citizenship Program, which stores citizens’ information on a blockchain.  The application of blockchain can also be extended to include organizational information for the HR department, where one day a company can maintain one identity stored in a master Blockchain. This could be safely accessed by all stakeholders including vendors, employees, customers and tax authorities. 2.  Blockchain as a Service (BaaS) will facilitate business adoption. A Blockchain-as-a-Service (BAAS) platform is a full-service cloud-based solution that connects developers, entrepreneurs and enterprises on one platform. On the BaaS, stakeholders can develop, test and deploy blockchain applications and smart contracts. Moreover, the BaaS platform provides all the necessary infrastructure and operational support, ensuring that the applications run efficiently.  BaaS providers include major companies like Microsoft, IBM, SAP, Amazon, Oracle, and Hewlett Packard. These providers are nurturing blockchain adoption among business because the platforms enable companies to engage blockchain projects without having to spend anywhere near as much money as they would developing customized blockchain solutions independently.  As more businesses look for convenient and cost-effective ways to implement blockchain technology, BaaS collections will most likely continue to expand. Keeping an eye on the emerging BaaS space can help an HR department choose the right provider for (future) company needs.  3.  Blockchain will be less associated with cryptocurrency & possibly rebranded.  Blockchain was born and bred to protect Bitcoin’s infrastructure— but now ledger technology is leaving the cryptocurrency nest to explore more business endeavors.  Blockchain’s association with the volatile cryptocurrency market has potentially diluted its reputation. There are still negative connotations with cryptocurrencies, including wild price swings and the perceived link to people buying illegal items from the dark web.  But mainstream industries, such as manufacturing and retail, are proving the power of blockchain to improve supply chain management and ownership tracking. To break out of the cryptocurrency pigeonhole, it is expected that the blockchain industry will make a concerted effort to establish an identity that’s separate from cryptocurrency—and better educate the business sphere on the advantages it offers, beyond financial transactions.  To take the rebrand a step further, research from Forrester suggests that it might be beneficial for the blockchain industry to drop the name blockchain and replace it with distributed ledger technology (DLT).  4.  Blockchain enabled Internet of Things (IoT) systems. Gartner predicts that the number of installed Internet of Thing (IoT) will exceed 20 billion by 2020. As HR departments integrate more IoT into companies, there is growing concern because these connected devices often open the door for hackers. The same vigilance applied to computers is sometimes overlooked when ensuring the security of the IoT infrastructure. As a company’s digital ecosystem expands to include more IoT devices, they can be left vulnerable to hacks. Blockchain offers strong protections against data tampering by locking access to IoT devices and shutting down compromised devices within the IoT infrastructure if a security event is suspected.  Blockchain serves to effectively decentralize data, which provides a safety net from hacks and fraud. In the digital age, data is fast becoming the most prized asset a company has. If you store all your jewelry, cash and other valuables in one location of your home, what happens if a burglar enters your home and is able to find this location? Because it spreads data across a large network of computer storage spaces, storing records on a blockchain network is like placing your most valuable digital assets across a multitude of places to mitigate your risk of being severely impacted or wiped out by a hacking event.  One of the first blockchain IoT-specific platforms is IOTA, which provides transaction settlements and data transfer layering for IoT devices. IOTA has launched its  Tangle platform, which developers describe as “going beyond blockchain.” This serves as a blockless, cryptographic, decentralized network, where, rather than outsourcing network verification to data miners, users verify transactions of other users. Such IoT platforms promote greater scalability while also eliminating the need to pay transaction fees to data miners. These are both essential factors in a practical IoT network, which could potentially require the processing of billions of micro-transactions between devices daily.  5.  Hybrid blockchains are promising the best of public & private networks.  As blockchain rapidly comes of age, there are generally two communities that have been established. On one side of the tracks, there is a large community supporting public blockchains and arguing for decentralization. On the other side, there is a more niche community—comprised mostly of businesses and their clients—pushing for private blockchains operated by a single entity that also grants permissions to users.   Traditional blockchains (e.g. Bitcoin and Ethereum) are public and completely open, meaning anyone can join the consensus protocol and participate in maintaining the shared ledger. Users often join public blockchains because, apart from operating in a decentralized system, they can offer incentives for mining or staking.   But public blockchain have limitations, including visibility. Data is completely transparent so anyone can access it, presenting a privacy concern for many uses. In some blockchain use cases, data would need to be restricted and a public blockchain cannot do this. Public blockchains also demand high computational power and consume large amounts of electricity. There are also scalability concerns for public blockchains because the consensus protocol places limits on speed and the number of transactions it can process.  Private blockchains operate similarly to public blockchains with an important exception: they are not open to everyone and require an invitation to join. These blockchains are also permissioned networks and can be customized to interact with certain users differently than the general users. Unlike in the public blockchain, provisions can be outlined to determine who is allowed to participate in the network and what specific transactions they are authorized to conduct. While private blockchains address some data security concerns, the main drawback is that they are not as decentralized as the public blockchains.   To build a bridge, hybrid blockchains are being developed to offer decentralized platforms that can restrict visibility of some information on the network. In particular, this model is appealing to regulated markets because it offers the benefits of public and private blockchains in one network.   Through a hybrid blockchain solution, a company can conduct transactions from certain short-term partners and vendors on the public blockchain side. Since the transaction timeline of these partners is shorter, public blockchain is an ideal solution. It would not require the level of trust needed with a private blockchain. The private side of a hybrid blockchain solution can be used to conduct transactions with long term partners. It would operate with a classic permissioned setup, where authorized parties can view, transact and make changes based on permissions they are given. This private network is fast, scalable and secure. However, adding more parties and establishing their trust takes longer than on a public blockchain so it would only be reserved for transactions with designated users.   6.  Sidechains are improving scalability. For all their power and complexity, blockchains face challenges in scalability and speed. These limit some applications of the relatively new technology. One solution that seeks to improve blockchain efficiency and scalability is the sidechain. As its name indicates, a sidechain is a type of blockchain that accompanies a master chain. In the relationship, the master chain is the parent chain and the sidechain is the child chain.   In order to trade assets from the master chain for assets from the sidechain, the user would first need to send their assets on the master chain to a certain location. This would effectively place a lock on the assets for the time being. After the transaction completes, the sidechain would receive a confirmation and release a designated amount of the sidechain to the user—equivalent to the amount of assets locked up by the main chain times the exchange rate. This also works in reverse to trade assets from the sidechain to the master chain.   As sidechains store data and process transactions, they help to uphold the integrity of the master blockchain while making it smaller and more agile. When implemented correctly, sidechains relieve the master chain of some of the work, helping to solve the inherent scaling problem associated with blockchain solutions. Sidechains have practical applications for stock exchanges.   7.  Artificial intelligence (AI) & blockchain are teaming up.   While both AI and blockchain involve high levels of distinct technical complexity, there is potential for these two technologies to team up and score major technological victories in the next five to ten years.   The first change win might be in optimizing data management. Blockchain currently relies on hashing algorithms for data mining and these operate in a brute force style, meaning the algorithm inputs all possible sequences of characters until it finds the one that matches with the verification process. This demands extra steps, lags and effort. AI can step in to offer an intelligent data mining system that streamlines the entire process and cuts down total costs exponentially. This streamlining also has implications for improved energy consumption for blockchains.   AI can infuse natural language processing, image recognition and multi-dimensional real-time data transformation capabilities into a blockchain’s peer-to-peer linking. This allows data miners to turn a large-scale system into a series of micro-economic environments. In turn, this can optimize data transactions in a secure and effective manner. Most importantly, machine learning intelligence adds flexibility to the process.   On the flipside, blockchain’s data decentralization technology can help AI step up its game in creating better machine learning models. Introducing secure data sharing across systems, which have traditionally stored and operated data in an isolated manner, introduces higher quality data. Richer data means better models, better predictions and better insights.   Data decentralization will offer companies of all sizes access to analytics and insights they could not possibly generate from an individual data source. When AI’s deep learning algorithms gain access to multiple data points from multiple data pools that have been standardized by blockchain, the competitive advantage of an AI technology will no longer be about finding the data itself. Nor will it be about having the resources and funds to gather the most data. Instead the focus will be on writing the most innovative algorithms. This evolution ushers in a new era of scalability for deep learning where AI finds itself in new marketplaces, opens doors for smaller players and gains trust with the public at large.   The future looks bright for blockchain and it will likely innovate business processes in many industries, including human resources. However, its widespread adoption and full potential have yet to be seen. The next phase of development for blockchain will be in addressing scalability and accessibility challenges, which will pave the way for more applications and varied use cases across more industries.   Amid the rapidly evolving digital landscape, one thing is clear: blockchain is in a state of metamorphosis with many disruptive trends on the horizon. For HR professionals, it is important to keep an eye out on how this nascent technology is impacting various industries and making its way to the world of work.  

Editorial Staff | 17 Aug 2019

There is a huge opportunity for blockchain to establish itself in the healthcare sector. Learn more about specific use cases that can help innovate how HR departments deliver healthcare & wellness benefits. Blockchain technology is one of the most disruptive technologies on the market today, with multiple industries adopting it to optimize processes and innovate the way companies function. It has proven to be a game changer in the business arena and the global blockchain technology market is estimated to amass US$20 billion in revenue by 2024. Meanwhile, SAP reports that 71% of business leaders who are actively using blockchain believe it plays a key role in advancing technology and reestablishing industry standards.  While blockchain has already been widely integrated in processes for supply chains, banking and cryptocurrency (e.g. Bitcoin), the healthcare industry has also been identified as one of the top industries likely to be disrupted. Blockchain technology could offer solutions to some of  healthcare’s greatest challenges, from securely managing patients’ medical data to tracking large databases of drugs through the supply chain or extracting healthcare data from clinical trials. As the technology advances and becomes more readily available, more healthcare organizations across the industry will be adopting blockchain solutions to redesign the global healthcare ecosystem.  HR serves a critical function for the healthcare industry and is an intermediate between employees and one of the most valued aspects of life: their health. According to Bitfortune, 55% of healthcare applications will adopt blockchain platforms for commercial deployment by 2025. Meanwhile, adoption seems to be ramping up with multiple governments around the world announcing plans to invest in blockchain and encourage its implementation. For example, Singapore’s government has announced financial incentives to enterprises for adopting the technology. Amid an evolving industry, it is imperative HR professionals stay current with how blockchain’s ledger technology is disrupting the healthcare industry. They should especially keep a pulse on the implications blockchain holds for delivering the employee experience with improved healthcare and other benefits. Use cases: how blockchain can help HR transform in delivering healthcare & benefits   While the use of blockchain technology is still more commonly associated with payment functions, its disruption to HR will be profound and pervasive in coming years with many possible use cases across the functions of an HR department. To prepare for the coming blockchain revolution, HR departments should focus on identifying problem areas and inefficient processes that could be addressed by the transparency, accuracy and speed that blockchain provides. The processes most primed for blockchain disruption are those that are burdensome and expensive with substantial data collection and third-party verification. For this reason, healthcare and benefits could be the ideal match for an HR department looking to adopt blockchain technology. 1.  Enhancing fraud prevention & cybersecurity for sensitive data in HR. HR teams conduct some of the highest-volume financial transactions for an organization and handle sensitive employee data related to healthcare (as well as, banking, disciplinary records, performance records, expense reimbursement, and more). Unfortunately, all of the data an HR department maintains is at risk of being exploited and, as more companies face data breaches, it is becoming increasingly important that proper measures are in place to maintain security and prevent fraud. A company’s cyber risks largely emerge from an underlying lack of transparency and accuracy in its data systems. Because of its capacity for promoting transparency and accuracy, blockchain technology is being lauded as a solution for combating cybersecurity crime and protecting data. While blockchain’s popularity grows among large companies and companies that hold critical, sensitive data (for example, Lockheed Martin is trusting it to secure data), it is also being used by nonprofits to collect donations securely. It is important to consider that blockchain technology can mitigate both internal fraud and external hacks of sensitive employee records. Access to the blockchain is limited and controlled—even those who have access are not able to modify the records. This limits both internal fraud and external hacks of sensitive employee records. In the digital age, data is a major asset for a company. Blockchain essentially functions to decentralize data and places it across a large network of computer storage spaces to reduce the risk that a single hacking event could usurp all the data a company has. By using blockchain, HR departments can introduce a solid measure of security against cyber threats to protect their employees’ health information. 2.  Improving health insurance, health records & patient experience with ‘smart contracts.’ Much of blockchain’s power comes in the application of ‘smart contracts’, which many organizations are using to make payments to employees, contractors and vendors. In fact, it is reported that 45% of early adopters of blockchain are already implementing smart contracts within their organizations. A smart contract codes a set of parameters using statements in ‘if this, then that” (IFTTT) language. These contracts are designed so that, once executed, the entire process is dictated by these codes. It is also made irreversible unless of course terms of a contract need to be updated. While smart contracts have many applications for HR functions in terms of payroll, there are some very important considerations HR departments should be aware of in terms of healthcare. Smart contracts have the potential to be used for insurance, including how patients buy insurance. Through a smart contract, all details of an insuree’s policy could be stored in a patient profile. This profile would then be stored on the blockchain platform in a safe and secure ledger that is less prone to hacks than the databases currently used.  Smart contracts could also impact the insurance claim process by eliminating the need for lengthy forms and time lags. If an insuree undergoes a medical procedure covered by the policy, a smart contract would be automatically triggered to transfer money from the insurance company’s account straight to the hospital or medical provider. The automation cuts out delays and hassles, allowing for correct payment of the medical service. There are also numerous implications for electronic medical records, information and medical data sharing. Storing patient’s electronic health records (EHR) on secured ledgers, for example, would allow a patient to move easily from one hospital to another without having to fill out numerous forms. The blockchain network would safely store their records, allowing their new physician to access them without delay. While hospitals and healthcare providers currently rely on a number of databases filled with patient data, these can be too centralized and restrictive for sharing potentially life-saving insights around the globe. If health records were to be kept in a smart contract stored on the blockchain, the data analytics would be available to hospitals, providers and research institutions everywhere. With widespread adoption of this healthcare blockchain technology, an individual could essentially walk into any hospital in the world for treatment and, with their private key, their health data would be accessible instantly. 3.  Offering better access to healthcare & other benefits. Blockchain’s ‘smart contracts’ could also change how employees gain access to healthcare and benefits. Once the employer outlines the terms of employment prior to hiring, HR is charged with upholding the conditions in the contract. These terms include provisions that employees value in their employee experience, such as healthcare insurance, wellness programs or other benefits. The current model of manually delivering benefits runs risks of errors and could get in the way of properly servicing employees. With blockchain, HR could seamlessly deliver upon these benefits by implementing smart contracts that automate the process. For example, if a company outlines that an employee’s benefits packages begins after a specific waiting period, the smart contract would be written to automate these benefits at the right time and in the right fashion. Not only does blockchain have the potential to improve security and automation of benefits, it is possible for benefits to be more personalized to each individual employee. In today’s digital world, consumers are accustomed to enjoying personalized experiences and this trend of hyper-personalization is reaching the workplace. Through blockchain’s smart contracts, which could be integrated with artificial intelligence (AI) and IoT technology, companies would be able to empower employees with benefits packages and wellness programs that are tailored specifically for them and their evolving needs. These personalized packages could become a critical tool for enhancing the employee experience. Challenges HR faces in implementing blockchain to deliver benefits   Blockchain is a quickly evolving technology with new applications and trends regularly emerging. Though it is becoming more widely adopted across a variety of industries, it is inevitable that first-time users will run into issues and challenges in implementing it. For HR departments, it is imperative to consider these challenges as they explore which processes might be impacted by blockchain. 1.  Data standardization & integration with legacy systems. With blockchain being a new technology, protocols and standards for its application are not yet established. When the internet began to commercialize, it initially struggled without proper protocols. But over time, controls were implemented to allow for browser compatibility, cross-platform multimedia and better interconnectivity between servers. As more sectors adopt blockchain—especially healthcare which handles sensitive and personal data—ensuring that blockchains offer an industry-wide benefit will require widespread collaboration and standardization. For example, it will have to be determined when private, as opposed to public, if blockchains make sense. Otherwise, this could impact the security and functionality of blockchain technology. All industries will have to get over a major hurdle when it comes to integrating blockchain solutions with legacy systems—or replacing legacy systems altogether. But the hurdle is especially high for HR and healthcare, which are often bound to specific legal regulations and already have very specific HR or healthcare systems in place that incorporate these parameters. Synching these systems or replacing them with blockchain technology could prove to be difficult. 2.  Adoption & incentives for participation. Despite enthusiasm and a strong record of success, blockchain adoption has proven to be difficult for companies. Greenwich Associates surveyed companies that have implemented blockchain and 57% reported its integration has been harder than expected. In terms of scalability, 42% of respondents reported it as a major issue, 39% said it is a minor issue and 19% said it is no issue at all. Much of the challenges are culture or people-related, rather than technical. For example, most people resist change and, if they do tolerate it, they generally prefer it to happen gradually and incrementally. The oppositions to change could be even more pronounced for those in HR, especially with employees across an organization resisting how healthcare and employee benefits—which are very personal—is administered. Some of the proposed uses for blockchain would result in systemic changes that rapidly transform the entire system. Even if employees and management are open to change, HR still has work cut out in hiring, education and training. Blockchain will require companies to hire more research and analytical staff as well as offer training on how to properly implement it. But this is where HR thrives. By helping to cultivate a culture of digital transformation, HR departments can also guide companies on their blockchain journey. 3.  High costs of developing & operating blockchain technology. The adoption of blockchain technology is likely to offer long-term benefits in regard to productivity, efficiency, timeliness, and reduced costs. However, one of the greatest obstacles to widespread adoption of blockchain is the high cost to initially install it. The software required to implement blockchain within an organization must typically be developed specifically for each individual company. This makes it expensive to obtain, whether hiring in-house or buying from a developer. Moreover, even after the blockchain software is developed, the company would also have to purchase specialized hardware to be used with it.  In addition to the software development costs, companies must also find qualified personnel to operate the technology.  The blockchain space is new and growing so rapidly that the demand for professionals in the field outweighs the supply. This makes hiring qualified blockchain experts—either in-house or as consultants—quite costly. Currently, it appears that the world’s largest corporations are the only ones benefiting from blockchain because they have the money, resources and data to spare. Furthermore, the technology itself seems too new and not yet fully understood for SMEs to adopt in droves. However, this is all likely to change over time. The commercialization of the internet was gradual and in the early days it required companies who wanted to go online to put up a substantial amount of money upfront and invest in customized solutions. Eventually, as blockchain becomes more mainstream, it will also become much less expensive, more streamlined and more accessible to companies. Blockchain is already demonstrating its potential to disrupt business as we know it. Because the HR department guards and manages large amounts of sensitive data that are critical to employees’ lives and how a company operates, it is likely that blockchain technology will be infused directly into the HR function to add transparency and trust to various processes. Healthcare and benefits administration is one of the processes that blockchain technology is likely to directly transform. Though there are challenges in cost, scalability and perception to overcome, HR departments could potentially use blockchain technology to provide employees with greater access to more personalized benefits packages. Furthermore, as time is freed up by automated processing, HR departments will be able to turn their efforts to more value-adding activities such as building employee engagement and experience.

Editorial Staff | 09 Aug 2019

Digital transformation is here and it is disrupting HR functions in various ways. Learn about the latest digital transformation trends emerging in 2019. The digital transformation is well under way with over a third (34%) of businesses already implementing digitalization programs, representing a 30% increase over last year. Meanwhile, two-thirds of global CEOs report they will embrace a digital-first focus by the end of 2019. In recent years, digitalization has profoundly enhanced the customer experience to drive more value for brands. But digital transformation is transcending the customer experience to impact the employer experience as well. Employees, who have become accustomed to the digital experience in their personal lives, are increasingly expecting to have a digital relationship with their employers as well. This shift has implications across the human resources function, including recruitment, onboarding, training, L&D, and more.  The following digital transformation trends and new technologies are disrupting the business model for companies of all sizes, across various industries. But these innovations also represent unprecedented opportunities for HR leaders to improve the employee experience and better adapt for the future of work.  1.  Blockchain adoption is increasing. While just 0.5% of the global population is currently using blockchain technology, its popularity is rising and it is projected that 80% of the population will be engaged with blockchain technology in some capacity within 10 years.  Blockchain technology is perhaps best known for its role in safeguarding the cryptocurrency infrastructure (e.g. Bitcoin)—but ledger technology is leaving the cryptocurrency nest to explore more business opportunities. As the technology matures, companies across various industries are reporting compelling use cases for blockchain. For example, banks can now reduce infrastructure cost by 30% through blockchain solutions. This is achieved by encrypting millions of storage points, none of which contain a full name or an account number. Because the HR department is the guardian of so much data that is critical to employees’ lives and how a company operates, the human resources space is welcoming blockchain for cybersecurity reasons. Ledger technology will likely be integrated directly into the HR function through a multitude of use cases—lending transparency and trust to an organization’s operations.   Despite current challenges in cost and scalability, the case for blockchain HR is strong. To prepare for the coming blockchain revolution, HR departments should focus on identifying pain points and inefficient processes that could be improved by the transparency, accuracy and speed that blockchain facilitates  The processes most suitable for blockchain disruption are those that are burdensome and expensive with substantial data collection and third-party verification. For this reason, healthcare and benefits could be the ideal starting point for an HR department looking to adopt blockchain technology. The healthcare industry has been identified as one of the top industries likely to be disrupted by blockchain and, according to Bitfortune, 55% of healthcare applications will adopt blockchain platforms for commercial deployment by 2025. HR departments will therefore need to keep a strong pulse on how blockchain is impacting the healthcare landscape so they can continue delivering healthcare plans and wellness programs to employees. As blockchain technology becomes more mainstream and accessible, it is possible that many processes of daily workflow will transform: recruitment, tapping talent pools, running background checks, verifying employment history, engaging contract workers with smart contracts, onboarding, maintaining employee data, maintaining employees’ personal data, handling financial transactions and managing payroll systems.  2.  Businesses are investing in cloud platforms. Cloud computing and its various functions have been a hot topic for the human resources industry. It is not a relatively new technology but still the forecast is calling for more clouds. By 2020, a staggering 83% of global enterprise workloads will be stored on the cloud.  For the HR space, cloud’s success is owed to its acclaimed ability to organize data, centralize processes, scout high-quality talent and boost performance. But most importantly, cloud computing lends transparency to an organization’s processes and can subsequently enhance the employee experience, from the recruitment process all the way through to L&D and exit interviewing.  The traditional recruitment process can be rather tedious, requiring the company to advertise the position, shortlist candidates and conduct interviews. Cloud computing streamlines at least some of the process, offering everyone in the department immediate access to the data about a candidate. Feedback can be shared and decisions can be made using cloud software, all with the click of a button.  The implementation of a multicloud ecosystem can also automate several HR processes for employees that include large amounts of data such as timesheet submission, performance reviews and vacation requests. Employees can take ownership of their employee data forms through the cloud, including tax information and emergency contacts. Many companies are also using public clouds to automate employee signatures on various documents, such as employee handbooks, sexual harassment training, L&D, webinars, etc. Performance reviews are also being managed on the cloud, offering employees better access and insight.  Automatic software updates are another benefit of the cloud and these can simplify compliance. The HR department is often required to generate several comprehensive reports at specific intervals of time. Paperwork, time and hassle can be reduced by having the cloud software’s process automation generate these reports instead.  Cloud computing technology is inherently developed with security woven into its DNA. By replacing physical filing cabinets, data can be protected from theft or natural disasters. For example, if a company’s office were to become inaccessible due to flooding, employees would still have remote access to the programs they work with on a daily basis. Furthermore, data would be protected.  3.  Conversational User Interface (UI) & chatbot experiences are improving. According to Gartner, by 2021 more than 50% of enterprises will spend more per annum on bots and chatbot creation than traditional mobile app development. And, as other conversational UIs improve on voice recognition and reasoning frameworks, their understanding of the user’s needs and wants will also grow.   HR departments are engaging chatbots and other conversational UIs to streamline processes and eliminate redundancies. These technologies can provide employees with immediate and consistent answers to commonly asked questions related to holiday leave, compensation, benefits, company policies and legal rights. Even some aspects of recruitment, employee reviews, onboarding, benefits and L&D can be assisted by chatbots and other conversational UI.   Nudge-based technology is being implemented in tandem with conversational UI to suggest behaviors for employees and subsequently improve workflow. For example, a software program can monitor employee activity at a computer workstation and, after a certain amount of time, send a message to the employee that it might be time to take a break. Nudge-based technologies can also be used in lieu of repetitive communication from the HR department. Automatic reminders can even be sent to managers to fill out performance evaluations, with conversational UI then stepping in to assist with that process.  As self-service platforms, the conversational UIs free up time for both employees and employers while still delivering the right information at the right time. This HR technology also allows the team to focus on more urgent questions and complex issues that require special attention. 4.  Data & people analytics continue to be important. Information as a critical business asset is still in the infancy phase, making it a competitive differentiator for companies as they transition to the digital age. For leading companies, big data and analytics are becoming strategic priorities and key drivers for digital transformation initiatives. While fewer than 50% of documented corporate strategies currently cite data and analytics as fundamental elements for enterprise growth, Gartner predicts that this number will jump to 90% in 2022.  The importance of a  . data-driven culture is being especially emphasized in the world of work. For years, people analytics was mired in complexity. But today it is being leveraged as a critical people management instrument that can be applied at every level of the HR function, ranging from the recruiting process all the way to talent development and exit interviewing.  For recruitment, people analytics can increase the chances of finding the right people for the right jobs. It can also be useful for building employee engagement and satisfaction, as it cultivates data about employees’ attitudes and moods. People analytics can also facilitate collaboration within an organization, providing insights about how well certain people and groups work together.  When it comes to performance management, people analytics helps eliminate the human bias that often comes with manual evaluations. It also allows for an evaluation of both the process and outcome, which can help HR teams distinguish variables (such as luck or coincidence) from real, applicable skills that an employee has.  It’s important to note that people analytics is more than just data—it can be translated to guiding insight. With new analytics capabilities, HR teams are unearthing deep insights into the company’s organizational health. In turn, this insight can be used as a basis for proactive programming and support. Overall, people analytics helps cultivate a digital culture where decisions are informed by data.  5.  Internet of Things (IoT) adoption is accelerating. As digital transformation progresses, we are connecting more devices to the internet at home, at work and on our person. Thus, the market for the Internet of Things (IoT) is flourishing.  For HR, the starting line for IoT integration is usually with mobile smartphones and tablets—central hubs in IoT. In our personal lives, these devices offer centralized, easy access to our personal data and allow us to carry about a lot of our business. For example, we can share our thoughts on social media, communicate with friends via SMS and even buy products on our mobile devices.  Employees are increasingly expecting to migrate their work onto mobile devices, demanding access to data, analytics and communication. This helps employees and employers alike by enabling continuous performance management and a flexible workplace where employees can be productive no matter where they are.  Employers have leveraged IoT to drive health and wellness initiatives. As companies recognize that healthy people perform better and are more engaged, they are taking measures to help encourage wellness and offering employees devices like smart watches, heart rhythm trackers and similar devices. These fitness trackers are not intended to track where employees are but how they are.  IoT can be being leveraged by companies to enhance employee engagement and improve productivity. But as IoT in HR advances, companies are also delving into the data provided by user devices. If gathered collectively, the cumulative data becomes a great source of information for the company. 6.  Artificial intelligence & machine learning applications continue to increase. Artificial intelligence (AI) and HR may seem incompatible at first—it is ‘human’ resources after all—but the HR department is increasingly steered by non-human capabilities. A slight majority (51%) of companies have already deployed AI and machine learning and there are a variety of trending use cases for HR.   With AI, employers are in a position to greatly improve the assessment of candidates. For starters, a notable feature of AI is its potential to mitigate the effects of unconscious bias in the hiring process. With AI, candidates are sourced, screened and filtered through large quantities of data. The programs combine data points and use algorithms to identify who will likely be the best candidate. These data points are looked at objectively, completely removing the biases, assumptions and oversight that humans are susceptible to. Virtual reality (VR), by placing candidates directly into in virtual situations, can potentially provide more insight about a candidate than what is written on their resume or what they say in an interview. This can reveal candidates’ capabilities as decision makers and lead to assessment based on behavior and action rather than words.  Meanwhile, machine learning tools can help with recruitment by tracking a candidate’s journey throughout the interview process. HR tools can calculate a holistic score for new talent, drawing data derived from digital screening and online interview results. This score system can help hiring managers objectively arrive at decisions based on data.  On the opposite end of the interview table, machine learning tools can also help deliver streamlined feedback to applicants much faster and objectively than manual methods can.  Augmented reality (AR) could be implemented to transform the employee onboarding experience into something fun and interactive. Employees might start the job with an AR tour of the office where information about key locations, company history and colleagues pops into view as they move around.  Machine learning also has implications for employee retention. HR is charged with courting top talent so they stay with the company and this often involves identifying risk attrition. Through advanced pattern recognition, machine learning draws from an array of variables to recognize attrition risks and patterns in a company’s workforce. These pertinent variables can include years at company, satisfaction rates from surveys, education, department, time at company, training times, time since last promotion, attendance, etc. Once an employee is identified for possible attrition, the HR department can act accordingly.  When it comes to assessment and development, L&D programs can be boosted by machine learning to identify high-potential employees with the skills and qualifications the company needs. Notably, it has been found that the employees ranked highest by the machine learning software aren’t usually those on the promotion track. Instead these high potential employees may be overlooked by traditional methods of assessment.  7.  The rise of headless architecture. In today’s competitive, customer-centric business environment, the race is on for organizations to deliver innovative, personalized customer experiences across various platform. This omnichannel movement is impacting digital content publication and giving rise to “headless architecture” in website design.   In traditional approaches to digital publishing, the front-end and back-end are tightly bound to each other. But in the headless model, they are decoupled and instead communicate through an application programming interface (API). With just one back-end in place, multiple front-end delivery systems can be developed to seamlessly publish the content on various channels such as desktop, mobile and IoT devices. Headless offers more flexibility and choice, allowing companies to choose the front-end framework that makes sense for them. Furthermore, because the headless architecture model keeps the back-end and front-end separated, companies can easily upgrade and customize digital assets without compromising the website’s performance. Digital assets can accumulate as the company grows.  By offering the freedom to innovate, headless architecture can help companies reinvent user experiences as needed. This also helps to future proof their websites because they can revamp the design without replacing the entire content management system. It allows them to migrate existing content already on the platform and integrate it with new tools and frameworks as they emerge.  As the voice for human capital, amid a rapidly evolving workforce, HR plays a critical role in guiding a company’s digital transformation journey. After all, effectively integrating new digital technology requires the right people in the right positions. Despite disruptions from AI and automation, the world of work remains people-centric at its core.  As employees continue to demand a more experiential and omnichannel approach to work, HR teams must be deeply involved in a company’s digital transformation strategy. Keeping pace with  digital trends will help HR do what it does best: merge the best in human skills with state-of-the-art digitalization to create a vibrant, enriching workplace.

More from Voice on Growth

Editorial Staff | 23 Aug 2019

Blockchain has potential to make a huge impact. Learn about fascinating blockchain trends that are emerging in 2019 and beyond. Blockchain technology was invented to safeguard the cryptocurrency infrastructure (e.g. Bitcoin), enabling secure financial transactions without the need for a bank or a middleman. But blockchain’s ledger technology is now expanding beyond digital currency and financial services, offering great potential to improve upon many areas of our lives.  As blockchain matures and becomes more accessible, companies across various industries are finding compelling use cases for blockchain to make businesses processes more efficient. For example, banks can now reduce infrastructure cost by 30% throughblockchain solutions. This is achieved by encrypting millions of storage points, none of which contain a full name or an account number.  While blockchain is currently only being used by 0.5% of the global population, emerging trends are making it more scalable. It is anticipated that 80% of the population will be using blockchain technology in some capacity within 10 years.  Because the HR department is charged with managing so much sensitive data, blockchain technology will be integrated directly into the HR function through a multitude of possible use cases—adding transparency and trust to an organization’s operations. The evolution of blockchain will also mean companies need a workforce with new skills, so HR will be kept busy with recruitment and talent management.  The following blockchain trends are lifting ledger technology from the obscurity of cryptocurrency and making blockchain part of the mainstream conversation.   1.  More potential real-world uses on the horizon will raise the visibility of blockchain.  While cryptocurrency and financial institutions are the pioneers of blockchain, it is important to note that tokenization and securing payments are just precursors to many potential real-world uses for ledger technology.  Every transaction on the blockchain is on public record and its enhanced security makes it a virtually incorruptible platform. Because no central party will ever be in control of all of the record keeping, blockchain can be used to mitigate financial, political and institutional corruption in corporations and governments, alike.  Blockchain may also be able to improve the political sphere in terms of voting systems. Because records cannot be altered in any way, blockchain is ideal for voter registration, identification and vote tallying. Election corruption and voter fraud would be eliminated, ensuring a more accurate, fair electoral process.   The general public will also be drawn to blockchain’s ability to eliminate transactions fees. Owing to decentralization, sending and receiving money can be expedited and enhanced. This has implications for automated legal procedures, customs payments, ownership transfers and business transactions—allowing widespread disintermediation across industries and economies.  Another mainstream use could be in public records of ownership, citizenship and identity. Even in the thriving digital era, these records are stored in centralized databases for security. However, this exposes them to tampering because of the intermediaries it engages. Blockchain opens up the possibility of a decentralized, public, fixed and consensus-driven ledger of records that could nullify the need for intermediaries. A groundbreaking example of this is Estonia’s E-Citizenship Program, which stores citizens’ information on a blockchain.  The application of blockchain can also be extended to include organizational information for the HR department, where one day a company can maintain one identity stored in a master Blockchain. This could be safely accessed by all stakeholders including vendors, employees, customers and tax authorities. 2.  Blockchain as a Service (BaaS) will facilitate business adoption. A Blockchain-as-a-Service (BAAS) platform is a full-service cloud-based solution that connects developers, entrepreneurs and enterprises on one platform. On the BaaS, stakeholders can develop, test and deploy blockchain applications and smart contracts. Moreover, the BaaS platform provides all the necessary infrastructure and operational support, ensuring that the applications run efficiently.  BaaS providers include major companies like Microsoft, IBM, SAP, Amazon, Oracle, and Hewlett Packard. These providers are nurturing blockchain adoption among business because the platforms enable companies to engage blockchain projects without having to spend anywhere near as much money as they would developing customized blockchain solutions independently.  As more businesses look for convenient and cost-effective ways to implement blockchain technology, BaaS collections will most likely continue to expand. Keeping an eye on the emerging BaaS space can help an HR department choose the right provider for (future) company needs.  3.  Blockchain will be less associated with cryptocurrency & possibly rebranded.  Blockchain was born and bred to protect Bitcoin’s infrastructure— but now ledger technology is leaving the cryptocurrency nest to explore more business endeavors.  Blockchain’s association with the volatile cryptocurrency market has potentially diluted its reputation. There are still negative connotations with cryptocurrencies, including wild price swings and the perceived link to people buying illegal items from the dark web.  But mainstream industries, such as manufacturing and retail, are proving the power of blockchain to improve supply chain management and ownership tracking. To break out of the cryptocurrency pigeonhole, it is expected that the blockchain industry will make a concerted effort to establish an identity that’s separate from cryptocurrency—and better educate the business sphere on the advantages it offers, beyond financial transactions.  To take the rebrand a step further, research from Forrester suggests that it might be beneficial for the blockchain industry to drop the name blockchain and replace it with distributed ledger technology (DLT).  4.  Blockchain enabled Internet of Things (IoT) systems. Gartner predicts that the number of installed Internet of Thing (IoT) will exceed 20 billion by 2020. As HR departments integrate more IoT into companies, there is growing concern because these connected devices often open the door for hackers. The same vigilance applied to computers is sometimes overlooked when ensuring the security of the IoT infrastructure. As a company’s digital ecosystem expands to include more IoT devices, they can be left vulnerable to hacks. Blockchain offers strong protections against data tampering by locking access to IoT devices and shutting down compromised devices within the IoT infrastructure if a security event is suspected.  Blockchain serves to effectively decentralize data, which provides a safety net from hacks and fraud. In the digital age, data is fast becoming the most prized asset a company has. If you store all your jewelry, cash and other valuables in one location of your home, what happens if a burglar enters your home and is able to find this location? Because it spreads data across a large network of computer storage spaces, storing records on a blockchain network is like placing your most valuable digital assets across a multitude of places to mitigate your risk of being severely impacted or wiped out by a hacking event.  One of the first blockchain IoT-specific platforms is IOTA, which provides transaction settlements and data transfer layering for IoT devices. IOTA has launched its  Tangle platform, which developers describe as “going beyond blockchain.” This serves as a blockless, cryptographic, decentralized network, where, rather than outsourcing network verification to data miners, users verify transactions of other users. Such IoT platforms promote greater scalability while also eliminating the need to pay transaction fees to data miners. These are both essential factors in a practical IoT network, which could potentially require the processing of billions of micro-transactions between devices daily.  5.  Hybrid blockchains are promising the best of public & private networks.  As blockchain rapidly comes of age, there are generally two communities that have been established. On one side of the tracks, there is a large community supporting public blockchains and arguing for decentralization. On the other side, there is a more niche community—comprised mostly of businesses and their clients—pushing for private blockchains operated by a single entity that also grants permissions to users.   Traditional blockchains (e.g. Bitcoin and Ethereum) are public and completely open, meaning anyone can join the consensus protocol and participate in maintaining the shared ledger. Users often join public blockchains because, apart from operating in a decentralized system, they can offer incentives for mining or staking.   But public blockchain have limitations, including visibility. Data is completely transparent so anyone can access it, presenting a privacy concern for many uses. In some blockchain use cases, data would need to be restricted and a public blockchain cannot do this. Public blockchains also demand high computational power and consume large amounts of electricity. There are also scalability concerns for public blockchains because the consensus protocol places limits on speed and the number of transactions it can process.  Private blockchains operate similarly to public blockchains with an important exception: they are not open to everyone and require an invitation to join. These blockchains are also permissioned networks and can be customized to interact with certain users differently than the general users. Unlike in the public blockchain, provisions can be outlined to determine who is allowed to participate in the network and what specific transactions they are authorized to conduct. While private blockchains address some data security concerns, the main drawback is that they are not as decentralized as the public blockchains.   To build a bridge, hybrid blockchains are being developed to offer decentralized platforms that can restrict visibility of some information on the network. In particular, this model is appealing to regulated markets because it offers the benefits of public and private blockchains in one network.   Through a hybrid blockchain solution, a company can conduct transactions from certain short-term partners and vendors on the public blockchain side. Since the transaction timeline of these partners is shorter, public blockchain is an ideal solution. It would not require the level of trust needed with a private blockchain. The private side of a hybrid blockchain solution can be used to conduct transactions with long term partners. It would operate with a classic permissioned setup, where authorized parties can view, transact and make changes based on permissions they are given. This private network is fast, scalable and secure. However, adding more parties and establishing their trust takes longer than on a public blockchain so it would only be reserved for transactions with designated users.   6.  Sidechains are improving scalability. For all their power and complexity, blockchains face challenges in scalability and speed. These limit some applications of the relatively new technology. One solution that seeks to improve blockchain efficiency and scalability is the sidechain. As its name indicates, a sidechain is a type of blockchain that accompanies a master chain. In the relationship, the master chain is the parent chain and the sidechain is the child chain.   In order to trade assets from the master chain for assets from the sidechain, the user would first need to send their assets on the master chain to a certain location. This would effectively place a lock on the assets for the time being. After the transaction completes, the sidechain would receive a confirmation and release a designated amount of the sidechain to the user—equivalent to the amount of assets locked up by the main chain times the exchange rate. This also works in reverse to trade assets from the sidechain to the master chain.   As sidechains store data and process transactions, they help to uphold the integrity of the master blockchain while making it smaller and more agile. When implemented correctly, sidechains relieve the master chain of some of the work, helping to solve the inherent scaling problem associated with blockchain solutions. Sidechains have practical applications for stock exchanges.   7.  Artificial intelligence (AI) & blockchain are teaming up.   While both AI and blockchain involve high levels of distinct technical complexity, there is potential for these two technologies to team up and score major technological victories in the next five to ten years.   The first change win might be in optimizing data management. Blockchain currently relies on hashing algorithms for data mining and these operate in a brute force style, meaning the algorithm inputs all possible sequences of characters until it finds the one that matches with the verification process. This demands extra steps, lags and effort. AI can step in to offer an intelligent data mining system that streamlines the entire process and cuts down total costs exponentially. This streamlining also has implications for improved energy consumption for blockchains.   AI can infuse natural language processing, image recognition and multi-dimensional real-time data transformation capabilities into a blockchain’s peer-to-peer linking. This allows data miners to turn a large-scale system into a series of micro-economic environments. In turn, this can optimize data transactions in a secure and effective manner. Most importantly, machine learning intelligence adds flexibility to the process.   On the flipside, blockchain’s data decentralization technology can help AI step up its game in creating better machine learning models. Introducing secure data sharing across systems, which have traditionally stored and operated data in an isolated manner, introduces higher quality data. Richer data means better models, better predictions and better insights.   Data decentralization will offer companies of all sizes access to analytics and insights they could not possibly generate from an individual data source. When AI’s deep learning algorithms gain access to multiple data points from multiple data pools that have been standardized by blockchain, the competitive advantage of an AI technology will no longer be about finding the data itself. Nor will it be about having the resources and funds to gather the most data. Instead the focus will be on writing the most innovative algorithms. This evolution ushers in a new era of scalability for deep learning where AI finds itself in new marketplaces, opens doors for smaller players and gains trust with the public at large.   The future looks bright for blockchain and it will likely innovate business processes in many industries, including human resources. However, its widespread adoption and full potential have yet to be seen. The next phase of development for blockchain will be in addressing scalability and accessibility challenges, which will pave the way for more applications and varied use cases across more industries.   Amid the rapidly evolving digital landscape, one thing is clear: blockchain is in a state of metamorphosis with many disruptive trends on the horizon. For HR professionals, it is important to keep an eye out on how this nascent technology is impacting various industries and making its way to the world of work.  

David Anderson | 22 Aug 2019

The smart city. The connected city. The intelligent city. The agile city. The data-driven city. The integrated city. The blockchain-powered city. The sustainable city. The future-proof city. There is no shortage of vision, aspiration and genius when it comes to today's cities. Still, they must attract foreign direct investment, along with blue-chip firms, start-ups and top talent, and have access to the best technology to drive growth. But growth in the world's GDP won't come from the same old sources. It will follow the fortunes of tomorrow's most competitively smart cities, many of which are overlooked urban areas with opportunities to leapfrog established megacities that were once the de facto homes to the world's most successful employees and businesses. Through investment in information and communication technologies that enhance the quality and performance of urban services, such as energy and mobility, these smart cities are competing for the highly skilled workers who will sustain their organizations and ensure growth. The Questions Facing Employers and Talent   Deciding where to work, live and raise their families, these employees prioritize the human and societal factors cited in Mercer's recent study, People First: Driving Growth in Emerging Megacities. Workers were asked to rank 20 decision-making factors by importance against four vital pillars: human, health, money and work. When deciding which city to live and work in, respondents ranked human factors — such as overall life satisfaction, safety and security, environmental considerations and proximity to friends and family — as the most important. The study also looks at how some of the fastest-growing global cities, from Kolkata, India, to Lagos, Nigeria, grow economically, attract people, enable new residents to thrive and lay a path toward a better life for its citizens. From these insights, city leaders and policy makers around the world can glean valuable lessons on what is not only needed to sustain but also power growth. Indeed, in an increasingly urbanized world, where highly skilled talent is scarce, employers and cities are asking important existential questions: ·  What makes professionals move to and stay in a particular city? ·  How can employers and cities retain talented workers with the high-level skills demanded by rising start-ups, upcoming unicorns and global brands in emerging hot spots? ·  What, exactly, do productive employees want from an employer and home city? The answers may lie in how well the world's emerging megacities prioritize their transformation from urban afterthoughts to global power players. Thus, it's helpful to take a comparative look at a sampling of cities that show serious potential to succeed and sustain their success over the long term. What they have in common is a commitment to regional superiority of opportunity and resources, to establishing themselves, in their way, as versions of Silicon Valley — where tomorrow's most highly skilled talent can thrive, building purposeful lives amid the evolution of artificial intelligence and advanced technology. From 'Cyberabad' to Other Contenders   A prime example of an emerging megacity is Hyderabad, the capital of India's southern state, Telangana. With a population of eight million, Hyderabad is the sixth most populous urban agglomeration of India and is popularly known as Cyberabad — the "Silicon Valley of India" — for its growing reputation as a global hub for information technology. (Megacities are defined as having populations of 10 million or more; the cities discussed in this article have either reached that milestone or are projected to.) Along with IT, though, Hyderabad is experiencing growth in the automotive industry and pharmaceuticals, as well as its traditional agricultural base. With extensive investment in digital and property infrastructure, the city is upgrading itself to host IT companies, especially via the development of its HITEC City, a township with state-of-the-art tech facilities for American IT giants. Retail has thrived, as well, as international and national brands open stores in the city. By contrast, the somewhat larger city of Chennai (a 2017 population of 9 million and a $59 billion GDP as of 2014) is known as the "Detroit of India" and leads the nation's automotive industry, but growth in software services, medical tourism, financial services and hardware manufacturing (along with petrochemicals and textiles) also add to its economic depth. It's also a major exporter of IT and business process outsourcing services. For sheer economic scale, the emerging megacities of China are impressive. With a 2014 GDP of $234 billion and a 2017 population of 14 million, Chengdu is Western China's No. 1 metropolitan area, and it thrives with emerging industries — notably an energy conservation and environmental protection industry that makes it an attractive destination for skilled workers. Indeed, the emphasis on "new energy" industries (in materials, hybrid and electric automobiles and IT) is propelling Chengdu. Meanwhile, China's second largest eastern city, Nanjing (with a 2014 GDP of $203 billion and a 2017 population of seven million) is dominated by service industries, led by financial services, culture and tourism. IT, environmental protection, new energy and smart power grids are becoming additional pillars of Nanjing, and a wealth of multinational firms have been establishing research centers there. Nanjing's unemployment rate has been below China's national average for several years. From Kenya to Jalisco   While China and India may dominate the scale of emerging economies, other geographies are very much on the emerging megacity map. Nairobi is not only the capital and largest city in Kenya; it is also on track for population growth from four million in 2017 to 10 million by 2030. Home to more than 100 international organizations, such as the United Nations Environmental Programme and The World Bank, as well as regional headquarters for major manufacturing and IT corporations, Nairobi shares its agricultural preeminence with a foothold in today's and tomorrow's economy. Likewise, Guadalajara (a 2014 GDP of $81 billion; 2017 population of five million) is more than the capital and largest city of Mexico's Jalisco state. It's known as the "Mexican Silicon Valley," according to the Financial Times, and is considered the city with the highest investment attraction potential in Mexico. It's the sort of social/cultural center — with an International Film Festival and International Book Fair — that strongly complements the growth of high-tech industry, chemical and electronic manufacturing, making it a hemispheric magnet for talent. These cities each make their case for talent in their own ways, creating an environment for highly skilled employees to thrive across multiple dimensions. This requires putting people first and focusing on what matters most to them. Mercer's Emerging Megacities study shows that employers often misunderstand what motivates people to move to a city and remain there: Human and societal factors are more important than money and work factors. For emerging megacities, the model of Silicon Valley may be a potent aspirational strategy, but in each case, they must prove themselves as places to live—today and tomorrow. Originally published in BRINK News.

Katie Kuehner-Hebert | 22 Aug 2019

As companies continue to migrate to all things digital, this wave of transformation will inevitably wash over every area of work, digitizing everything from finance functions and tax compliance to data analytics and beyond. Approximately 73% of executives predict significant disruption within their industries in the next three years, according to Mercer's Global Talent Trends 2019 report. This number, up from 26% in 2018, is greatly due to digital transformation. More than half of executives also expect AI and automation to replace one in five of their organization's current jobs. While this might worry some organizations, these two earthquake changes stand to create 58 million net-new jobs by 2022. Business leaders responding to Mercer's annual survey have mixed opinions on the economic growth these technological advances will have across the globe. Digitization may promise increased opportunity, but it also bodes increased competition from a host of new — and possibly more nimble — players. Assessing the Economic Outlook Across the Globe   The turbulence within the global economic landscape is compounded by uncertainty over how trade tensions between the U.S. and China are resolved, according to the Mercer report Economic and Market Outlook 2019 and Beyond. The U.S. economy may slow somewhat due to higher interest rates, while the Chinese economy will remain dependent on how the trade tensions are resolved. Other emerging market economies should continue to grow at roughly the same pace, with the possibility of stronger growth when trade tensions ease. Mercer's Themes and Opportunities 2019 research report notes "mounting evidence of over extension of credit" is creating further white-water turbulence, with the uncertainty over how the central banks' retreat from market involvement after massive liquidity infusions will impact economies. The report also notes that there is a distinct possibility "the pace of globalization could slow, pause or even go into reverse" due to political influence, particularly on trade. In addition, there are increasing expectations from governments, regulators and beneficiaries to have asset owners and investment managers incorporate sustainability as a standard action. Digitally Transforming Tax Compliance   Companies navigating all these shifting sands will increasingly look to digitization to help manage and respond to both opportunities and obligations — including tax compliance across geographies. This is also a moving target, particularly in Asia, as some countries are now implementing digital technologies to improve their tax collection efforts. In 2015, the average tax-to-GDP ratio for 28 economies in the region was only 17.5%, which is just over half the average tax ratio of 34% among OECD economies. There has been a great deal of progress with the use of electronic filing of tax returns for major taxes in India, Kazakhstan, Malaysia, Mongolia, Nepal, Singapore and China. Moreover, mandatory electronic payments are now required by revenue bodies in the People's Republic of China, Indonesia, Mongolia and Vietnam.1 Digitization and increased tax regulation are also intended to vastly improve collection efforts, though much more push is needed. Governments are making great strides within their tax administration efforts with the aid of digitization — including sending eAssessments to businesses for taxes owed, based on electronic auditing systems.2 If the systems find discrepancies within sellers' monthly tax reports, it automatically issues an eAssessment that includes interest and penalties. Andy Hovancik, President and CEO at Sovos, puts it plainly: "Bottom line — tax enforcement is now embedded in the most important business processes, changing the world of tax and disrupting decades old business processes. As a result, tax is driving digital transformation in finance and accounting departments. Now more than ever, businesses need a new approach to tax automation to ensure compliance."2 Finance executives agree, including Michael Bernard, chief tax officer for transaction tax at Vertex Inc. He states, "Governments worldwide are turning to new forms of compliance, like e-invoicing regulations, which require IT departments to embed workflows in core processes, and real-time VAT compliance checks. In 2019, finance organizations will begin to factor tax considerations into their digital transformation strategies. An effective road map will include actions for using data to link business processes and tax compliance obligations."3 Guiding Business Strategy With Compliance   Digitization alone won't enable companies to better comply with new tax regulations — making compliance a central business strategy will. This includes implementing training sessions across the enterprise to help employees develop a state of mindfulness when it comes to compliance. But in this era of increased accountability, Leila Szwarc, global head of compliance and strategic regulatory services at TMFGroup, states that companies should re-imagine the notion of compliance as a "business enabler" that can distinguish it from competitors.4 According to Szwarc, "Compliance should be seen as a business enabler rather than as a drain on development, but this can only happen if businesses work in an integrated way to bring creative solutions to the related organizational challenges." She continues, "As APAC firms face up to a new regulatory era, compliance teams have a key role to play in both protecting their firms' interests and helping to drive long-term competitive advantage." With an uncertain market ahead and vast changes on the horizon, it's more important than ever to get ahead of the curve and think about how your business can not only survive the wave of digital transformation coming but also thrive with it. Start planning your business strategy, placing compliance and digitization at the heart, with these considerations in mind today, and you'll be better off tomorrow. Sources: 1.Suzuki, Yasushi; Highfield, Richard. "How digital technology can raise tax revenue in Asia-Pacific." Asian Development Blog, 13 Sept. 2018, https://blogs.adb.org/blog/how-digital-technology-can-raise-tax-revenue-asia-pacific./ 2.Hovancik, Andy. "How Modern Taxation is Driving Digital Transformation in Finance." Payments Journal, 16, Jul. 2018, https://www.paymentsjournal.com/how-modern-taxation-is-driving-digital-transformation-in-finance/. 3. Schliebs, Henner. "2019 CFO Priorities: Experts Predict Top Trends." Digitalist Magazine, 18 Dec. 2018, https://www.digitalistmag.com/finance/2018/12/18/2019-cfo-priorities-experts-predict-top-trends-06195293. 4.Szwarc, Leila. "Regulatory compliance – The new business enabler." Risk.net, 18 Mar. 2019, https://www.risk.net/regulation/6485861/regulatory-compliance-the-new-business-enabler.

Contact Us

Speak with a Mercer consultant.

back_to_top