Isle of Man Leads the Way with Signing of new UK Tax Agreement

The Isle of Man has become the first British dependent territory to sign an agreement with the UK Government that extends the automatic disclosure of tax information. Under the accord, the two Governments have agreed to start exchanging information from 2016 on residents’ tax issues. This new deal will extend the current agreement which sees the Isle of Man already sharing information on personal savings income with the UK and other European Union countries.

Allen Bell, the Manx Chief Minister said: “In signing this historic agreement with the United Kingdom we are underlining the message to our neighbours and the wider world that our Island is a responsible centre for top quality international business”. He added: “Today’s signing is a significant step towards that global standard and further proof that the tax haven moniker in relation to the Isle of Man is well and truly dead”.

The UK Government is also seeking to agree a similar deal with the two other dependent territories of Guernsey and Jersey, although at the time of writing, neither has confirmed participation.

Regardless whether or not the term “Tax Haven” is fair, it is clear that many countries are stepping up efforts to force jurisdictions to reveal information on clients suspected of tax abuse. Earlier this year, The Financial Times reported that France has stepped up its assault on tax havens by blacklisting Bermuda, British Virgin Islands and Jersey, in a move that will impose heavy penalties on thousands of French individuals and businesses. The three offshore centres have been added to a list of “non-co-operative jurisdictions”, triggering punitive withholding taxes of up to 75 per cent on payments from France.

Why do these agreements matter?

So what is driving the many recent international efforts in curbing tax evasion? It is hard to quantify the impact of tax evasion on a country’s wealth but, given the estimates shown in the chart below, it is clear that fixing this problem would go a long way in helping to assuage the current austerity measures imposed by many governments to help see them through the most severe recession since WWII.

The Guardian recently published an article stating that the amount of tax lost within the UK through non-payment and avoidance increased last year to £35bn, (according to official figures released in October). What is even more shocking is a statement taken from www.taxresearch.org.uk – that tax evasion is costing the world $3.1 trillion a year – more than 5% of world GDP. The chart below is taken from the tax justice networks research into tax evasion, showing the top ten countries that were affected in 2011.

Tax-Evasion

 

Challenging times ahead

With tax avoidance schemes so widespread and disconnected, it is going to be years, maybe decades, before we can see a clear benefit to the new processes and laws that foster increased co-operation. But it seems things are moving in the right direction.

In a previous blog post – regarding the G20 sharing information Martin Sobotka discussed the huge data volumes that will need be processed and analysed. Technologies such as SAP HANA can help to consolidate huge amounts of information from many different sources, and the connectivity across both analytical and transactional systems can help to remove barriers and provide Governments with a key advantage in identifying data inconsistencies when analysing external tax information.

Martin Sobotka is an expert in Tax & Revenue Management solutions across all continents. For several years, Martin worked for SAP Consulting introducing SAP products to City Councils, Federal States and Government Authorities. He is a well-respected expert and focuses on the functional implementation of new SAP technology in this area.

To find out more on this subject you can contact Martin directly.

Why bigger is not necessarily better when it comes to SAP Support

Exploring the advantages of focussed SAP Support providers.

Scale versus Specialisation?

For years, large global SAP customers have chosen to deal with large global SAP service providers. The reasons for doing so usually start with scale – a large IT estate needs a diverse team of people to provide skills across the many domains, products and functional areas that SAP offers. In addition, peripheral software applications, IT architecture and infrastructure are often subsumed into the same contract – the rationale being that combined support can be delivered at a lower cost through economies of scale. But as technology evolves, and as system complexity grows, can these all-encompassing contracts continue to provide the responsiveness and expertise that delivers best value? Or in trying to be ‘all things to all people’ is buying scale over quality becoming a sacrifice too far?

An article in CIO Magazine a few weeks ago reveals there is a growing shift from tier one outsourcing providers to midsize IT services players. Scale and price, they say, are no longer the sole interest of customers seeking these services. Instead, customers now value traits such as agility, flexibility, vertical alignment, responsiveness and trust — all of which are more likely to be found in smaller, more focused providers.

Commenting in the article, Hansa Iyengar, a sourcing and vendor management analyst with Forrester Research said “As deals get smaller, scale as a major differentiator is losing sheen. The cost arbitrage argument played in favour of larger vendors based on the economies of scale principle. But the tables are turning now, and skills are being valued more than cost.”

Benefits of Focussed Service Providers

Specialisation, in particular, is viewed as a major benefit of breaking down these large-scale contracts into specific components. Today, no large-scale service provider can afford to focus solely on SAP if they are to maintain margins and grow market share. Instead, they must offer an extended set of solutions and services, from many different vendors. This dilution of focus can impact quality. SAP technologies evolve and adapt at an incredible pace and, without significant and continuous investment in education and new skills, quality suffers. The relentless pursuit of growth can also compound this problem. Investment decisions are usually based on areas which offer the greatest profit opportunities. This means that traditional offerings like ERP can be neglected in favour of new product and service categories. So by adopting specialist partners, SAP customers can not only tap into the very specific skills needed to support today’s SAP landscape, but they can access the focussed expertise that will help plan and support their future SAP development road map.

Responsiveness and trust are other key factors that companies prioritise today in choosing suppliers. Responsiveness, to an extent can be captured and analysed in most Service Level Agreements, but trust is a factor that cannot be directly measured. Bhavesh Godhania, IT Director at life sciences firm AMCo benchmarked several large IT providers when seeking a new SAP support partner. He said: “[support] needs to be very responsive. One of the issues that I faced when looking at large-scale companies was that they weren’t able to give me the same level of attention as a small or medium company”. AMCo have been supported by Invenio for some years now and, of the trust that has built up over the years he says: “For me, it’s important that the relationship is strong and open. Anyone can offer SAP support. They’re all SAP consultants. They’re all certified. But the relationship you build, the bond you build and the trust you build is what counts”.

“One Neck to Choke”

Another advantage of implementing smaller, focussed contracts is that the transition from one supplier to another becomes easier. In an article appearing in PC Advisor earlier this month, Thomas Young, a Partner at outsourcing consultancy firm ISG said: “Back in the day, with the big ‘one-neck-to-choke’ model, when you switched providers you had to switch everything. But as the services supply chain continues to fragment all the way down to out-tasking and implementing point solutions, customers are much more likely to switch out those components. It’s the difference between switching out the stereo in your car and switching out the whole car”.

One more benefit to be found in mid-size service providers is good old-fashioned customer service. Forrester estimate that about 95% of [mid-sized firms] engagements are less than $5 million in value. This means that they must differentiate from scale in order to win (and retain) business. Factors that include specialisation, flexibility, agility and attentiveness become key when differentiating from large scale providers. These attributes are what customers today look for – making firms like Invenio, an ideal partner for those looking for a better SAP support service.

Customer First

At Invenio we have an important and unbreakable rule “Customer First”. It’s true to say that no organisation will say that they are not customer focused – but this is much easier to implement when you don’t need to worry about external shareholders or service delivery across a multiplicity of other vendor product lines. Focus and autonomy gives us the freedom to put our customers at the heart of any business or investment decision we make. We are also careful to hire people not just for their technical expertise but also for their attitude. Our low attrition rate and considered growth strategy also means we are not under constant pressure to sacrifice quality over quantity when it comes to our new recruits. These and many other small actions that we perform on a daily basis means that the “Customer First” ethos is firmly ingrained into our culture, allowing our customers to experience a service that cannot be easily replicated by a large firm, with so many other interests to take care of.

In our next blog post, we’ll be sharing our thoughts on how the new measures by which SAP Support providers should be judged. In the meantime, if you’d like to learn more about how we can provide you with a better SAP Support service contact us.


 

Online Consumer Privacy. How will it affect the media brands you love?

Advertising and the data that helps drive personalised ad targeting dominates the virtual world. For some, it helps to make online browsing, shopping and searching more relevant. But the number of online users not wanting to be seen, or sold to, is increasing – and that is driving a worrying rise in the number of people who are amending their privacy settings to block unwanted ads or promotions.

As consumers, many of us welcome the opportunity to stop annoying pop-ups and continuous ads being served up on the basis of a search we’ve made some days before. But, from a business perspective, what does ad blocking mean for today’s media companies who rely on advertising revenues to help them make money in today’s digital era? And should media companies be looking at ways to offset a potential decline in ad revenues as the adoption of ad blocking technology grows?

A recent report from PageFair – a technology provider that helps businesses detect site visitors using ad blocking – stated that an average of 22.7% of internet users are now blocking ads – and it’s a number that’s growing at around 43% per year. The report said “[The] high adblocking rate translates directly into revenue loss for advertising-funded web businesses. One typical PageFair client site suffers from 25% adblocking, costing them nearly $500,000 per year. This scale of revenue loss can be fatal. Indeed, several sites that formerly reported data are no longer online”.

The chart below breaks down some of the Pagefair findings into industries that are most affected

adblockingSites that attract more technically advanced audiences such as the gaming and technology industries are particularly affected by this trend. These internet-savvy visitors are more likely to know how to block ads and/or change their security settings which shows in the higher incidence of ad blocking on these sites. As for the news and entertainment industries, their ads are currently being blocked by 16% and 18% of visitors respectively. Should PageFair’s reported growth in adoption prove to be accurate, then these figures are likely to climb significantly during the coming years.

Research from Google Trends also shows that over a number of years the interest in ad blocking has grown at a significant rate

GoogleTrends

 

Although ad blocking may still be in its infancy, these trends do suggest that the number of internet users deploying ad blockers is highly likely to rise in the future. And with new security settings such as the Google keyword blocking coming into force this month, media brands need to be prepared in the event that these trends do ultimately trigger a decline in revenues from the sale of online advertising space.

Is Paid Content the Answer?

One way to mitigate the possible decline in ad revenues is to offer paid and subscription-based media content. Reports around newspaper giants such as The Sun newspaper which has recently erected a paywall on its site have made the headlines in recent months. Although the paywall has resulted in a substantial decline in the paper’s online readership, The Sun’s owners, News UK, still believe that the overall profit to be gained from the paywall will prove to be a winner in the long term. The rationale behind this move is two-fold: build a revenue stream through subscription based sales, and exploit the rich data set that a subscriber’s digital footprint can offer to sell relevant advertising and cross-sell various products and services.

But of course many of us consumers are used to accessing free information – and are loathe to pay money for content that can be found for free elsewhere. If advertising revenues start to decline, News UK’s move may well be prescient in that a paywall will be one of the very few ways in which news publishers can survive online.

How technology can help protect and grow revenues

Protecting and growing revenues in the midst of shifting consumer behaviour is never easy but using technology to support business decision-making can help. Tools such as SAP solutions for the media industry are specifically designed to help companies address these kinds of challenges. They provide a good supporting mechanism in helping media brands overcoming challenges in a dynamic, ever-changing environment.

SAP Business Intelligences solutions can also help to support decision-making around content and content monetisation which can help media companies to:

  • Improve the delivery of relevant premium content based on current consumer demand.
  • Optimise sales by formulating pricing strategies that accommodate different audience segments.
  • Deliver relevant content and offers that help improve subscriber relationships and foster loyalty.
  • Better analyse feedback and behavioural metrics to assess content popularity.
  • Manage complex financial workflow to improve operational efficiencies.
  • Provide highly granular reporting on all content segments for more informed decision-making
  • Communicate up-to-date key performance indicators to relevant parties throughout the business, quickly and efficiently.
  • Better use intelligence to forecast and predict trends thereby helping to identify challenges and opportunities for increased revenues.
  • Visually represent objectives, goals and key performance indicators for improve internal collaboration and confident decision-making.
  • In today’s business climate, a well-designed technology platform can make the world of difference across many areas of your business – allowing you to take decisions with confidence and chart new courses for growth and profitability.

To explore your options in more detail please get in touch with Kedar

Locked-in. Calling Time on the Multi-Year Support Contract

The challenging economic climate of recent years has affected every one of us. Businesses large and small have had to face the consequences of the credit crisis, and tackle issues that no business continuity plan can prepare them for. We’ve seen the demise of many household names and, despite a recent uptick in many country’s economies, some industry commentators suspect there may be more to follow.

For IT executives and their teams, delivering ‘business as usual’ support through these challenging times may feel like a bit of a misnomer. But, whatever the economy is doing – whether it’s up, down or stagnating – IT still must provide stable, robust systems that can cope with the rigours of an ever changing environment. Many IT departments have coped admirably in balancing a flatlining budget – ensuring that maintenance and support costs are kept in check and investing only in projects where a good return can be made.

One challenge that does seem to persist for many IT executives however, is in the effective renegotiation of multi-year extended support or services contracts that no longer reflect their business reality. These contracts lock-in IT departments to an agreed set of services delivered over a period of several years.

Extended Contracts – the Upsides

Extended contracts are often a result of having agreed terms in better times when planning horizons were longer and companies more confident of long term performance. Indeed, agreements for support services that span several years do seem like good business logic for many reasons. For one, the total value of the contract is usually offered at a highly preferential rate, as the longevity of the contract provides a service partner with guaranteed revenues across the period of several years (meaning that they don’t need to incur cost in finding new business). It also helps the service partner to plan their workforce more efficiently and allocate resources in a more predictable way. For the IT Department, not only is the price more attractive, but the contract longevity means that once the knowledge transfer is complete, it’s a task that doesn’t need thinking about for some time.

The Renegotiation Challenge
In today’s uncertain business climate there can be significant drawbacks to signing a multi-year agreement. Renegotiating the terms of an existing contract due to a change in business conditions is very difficult unless there is some kind of ‘quid pro quo’ factored in – a recent example of which can be seen in the HMRC Aspire contract which was recently renegotiated to include an extension until 2017.65Percent

Indeed, the findings of a survey carried out by sourcing company Alsbridge in June 2013 concluded that almost two thirds of senior IT executives do not think their suppliers would be open to renegotiating IT decision makers outsourcing contracts. The survey, based on the inputs of 250 senior IT decision-makers in mature European markets, said that 65% of respondents believed that suppliers would not be open to renegotiating and 48% think the suppliers would ‘kick up a fuss’ if asked to renegotiate.

Commenting on the findings, Alsbridge Managing Partner, Rick Simmonds says: “…if the business need or the technology world has changed, then it is incumbent on suppliers to be receptive and not keep their clients in the stranglehold of an outdated contract”. The survey findings however, suggest this is not always the case.

In a similar vein, an article in Computer Weekly on the subject of contract renegotiation cites the economic conditions as a driving force that is seeing many buyers looking to cut costs and improve the performance of services suppliers. Kit Burden, head of technology sourcing at law firm DLA Piper said: “As a customer’s business has constricted during the recession, the pricing regime hasn’t flexed as much as intended and so the deal has become uneconomic”. Economics alone however, is not always the key driver for renegotiation, with Peter Schumacher, CEO at management consultancy Value Leadership Group, pointing out that “A typical problem is that incumbent suppliers – offshore and traditional – become complacent over the years. Contracts are often renegotiated or a second supplier introduced to keep the prime supplier on its toes and create a wake up call”.

Calling Time on the Multi-Year Contract

There are a number of ways in which companies can attempt to extricate themselves from contracts that are delivering on neither value nor performance, but it’s not always straightforward, and in almost all cases, it will involve some goodwill on the part of the supplier. There is plenty of advice available online, and of course there are many professional service companies and law firms specialising in just these issues for those who are currently considering their options.

Moving forward however, there is a way to eradicate the issue altogether – and that is not to sign a multi-year contract. Sounds simplistic and actually, it is. At Invenio, we encourage our customers to opt for a one year contract period. For customers who prefer the security of a contract that maps out service and support provision across a five year period, we simply insert a break clause that clearly states the customer is free to curtail the contract at any time – with no penalty. Crucially, whether it’s a one – or five – year contract, the cost is the same (thereby alleviating any concerns about whether or not a customer has secured the best deal for their company!).

A ‘no lock-in’ policy brings other benefits too, in that our support teams must be at the top of their game – day in and day out. There is no room for complacency to set in and therefore no cause for our customers to terminate their agreements with us. The result of this approach is that all our customers have had the freedom to choose our SAP support services over many years – and all of them have chosen to stay with Invenio.

Whilst this may be a radical departure from the norm – we think it’s a good one. After all, supporting ‘business as usual’ sometimes calls for an unusual approach.

In our next piece we’ll be taking a closer look at how those involved in ‘business as usual’ can help minimise the disruption of a new system implementation.

 

What to Consider when Choosing a SAP Support Partner……

As pressure continues to grow within organisations to rationalise support and maintenance spend, it is now more important than ever to mitigate as many risks as possible when choosing your SAP Support Partner. The last thing any IT Head or CFO wants to do is try to justify expenditure on support providers that can’t deliver.

As part of the selection process, you will want reassurance that the partner(s) you are considering have the right expertise and experience necessary to provide the service levels you need. You need to be confident that your partner can deal with every eventuality that may arise, promptly and effectively, so that you can ensure your critical SAP applications can maintain optimal levels of operation.

However, with so many partners in the market, finding the right one for your specific needs can be a challenge. To help you get a sense of what you need to consider, here are the top three points our customers considered critical when looking for a new partner:

1. A responsive, knowledgeable service
All consultants dealing in any aspect of support must be fully trained and qualified for the job. Sounds like a simple request, but many companies may use inexperienced or under-qualified staff as resources on projects. As an example, many customers came to Invenio for help because of frequent call escalations and delays in previous query resolutions. A primary culprit for this was in dealing with junior personnel who lack the required depth of SAP knowledge.

Potential support partners should always make it clear to you how they go about recruiting, training and also retaining their staff. And they should always commit to only deploying fully trained, experienced consultants as a part of your agreement.

2. A commitment to service standards
SAP sets clear standards, guidelines and accreditations for a good reason. There are many companies in the market today that claim to have the right SAP implementation and support expertise, but fail to deliver on that promise. This is why SAP introduce accreditations such as the SAP Partner Centre of Expertise Accreditation (PCoE).

The certification process itself is a rigorous assessment that covers a SAP Partner’s entire support centre, including support staff, support processes and infrastructure. Certification validates that a support organisation can meet every requirement needed to provide high-quality services to its customers, and it is now a mandatory process that partners must achieve when selling and delivering SAP support. If your support partner of choice isn’t showing this badge, consider why and whether they are the correct support partner.

3. A proven track record
Finally, you want to look for a support partner that has a proven history in delivering and supporting high quality, well managed projects. A support partner needs to be transparent with its customers. Reassurance should always be sought by soliciting customer references on how well a partner is meeting their service and support commitments. Any company that hides this information is hiding something for a reason (and probably not a good one!)

Next steps…
If you are looking to find a new SAP Support partner but are unsure about the options available for your business, Invenio offer in-depth, advisory meetings to help you explore the most suitable option available for your business. For more information contact us