What Is Continuous Accounting?

Elizabeth Milne

Continuous accounting is a paradigm shift for finance professionals responsible for closing the books and producing financial statements. “The way we’ve always done it” is to wait until period end, work long hours, and get the end of the period reporting done. This traditional way of doing things is based on repeating what’s been done period after period in the past. The reports are getting done so if it ain’t broke, don’t fix it. Change is hard.

The concept of continuous accounting is not waiting until the end of the period to execute the multiple tasks that need to happen to close the books. With the advancements in technology over the past years, it is now possible to execute tasks required for the close throughout the period. Similar to the concept of a soft close, continuous accounting provides better visibility into financial results throughout the period – live and in real time.

This does not replace the need for a hard close. The annual report sent to stockholders should not change each time the reader opens it. The core essence of financial reports is a snapshot at a specific period of time. However, being able to have better insight sooner into what that snapshot is likely to be can provide great value.

Certain accounting needs to happen during the end of the period, but much can be accomplished earlier than typically executed. Intercompany reconciliation is an example of a task that can be now run throughout the period. Historically, corporate processes would be the bottleneck as subsidiaries would need to wait until period end for them to collect and run matching reports, which were then returned to the subsidiaries that would then reconcile among themselves, make corrections, resubmit, and then run the matching reports again. With the technology that’s available today, subsidiaries can see their intercompany activity along with their intercompany trading partner’s activity throughout the period. This approach eliminates the need to wait until the end of the period to ensure they are in balance. This is just one example of tasks that can be distributed throughout the period, including account balance reconciliation and attesting, certain accruals, review of equity accounts that are expected not to change, and certain allocations.

The period-end closed is not going away anytime soon. The concept of a real-time consolidation during the period will not provide a complete picture as there is much activity that still happens. But it can start the provide a picture of what is going to come.

Change is hard, and this type of change requires technology change as well as process change. It is a different way of doing things, but the benefits outweigh the pain of change. Lightening the workload at a period-end close speeds the close and contributes to better work/life balance. Additionally, the finance department can provide more accurate visibility into the financial position earlier in the period, enabling better operational decisions that impact the business sooner.

The period-end close and reporting is required, speeding that close is desired, and continuous accounting is inspired and admired.

Learn more about this approach and why it’s important for your business. Watch the replay of our SAP CFO Strategic Webinar: “Continuous Accounting.” And read more in our Continuous Accounting Series. 

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube

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Elizabeth Milne

About Elizabeth Milne

Elizabeth Milne has over 20 years of experience improving the software solutions for multi-national, multi-billion dollar organizations. Her finance career began working at Walt Disney, then Warner Bros. in the areas of financial consolidation, budgeting, and financial reporting. She subsequently moved to the software industry and has held positions including implementation consultant and manager, account executive, pre-sales consultant, solution management team at SAP, Business Objects and Cartesis. She graduated with an Executive MBA from Northwestern University’s Kellogg Graduate School of Management. In 2014 she published her first book “Accelerated Financial Closing with SAP.” She currently manages the accounting and financial close portfolio for SAP Product Marketing. You can follow her on twitter @ElizabethEMilne

Three Ways To Bridge The Finance Talent Gap

Todd McElhatton

Chances are, when I’m not at my day job or with my family, you can find me at my favorite Bay Area wine shop. Before you judge, let me clarify that I am part owner of this particular shop.

Spending my time there, interacting with people of all ages, has validated something for me: Millennials are more willing than any other generation to move on to new opportunities if they don’t feel fulfilled.

As the CFO for a major company, I’ve been thinking about this a lot — mainly because the finance function is changing. It is no longer just about reporting and balancing books, but about shaping a company’s strategy and driving business outcomes.

And in order for the function to continue to evolve, we simply must attract and retain talent. Unfortunately for us, the right talent is in short supply.

Why is there a finance skills gap?

Today, only 33% of CEOs are willing to give their CFOs a passing grade for talent management. In addition, 70% of financial services CEOs are concerned about the availability of key skills in their industry. Why is this happening?

It’s a collection of reasons, but I’ll narrow them down to one: finance’s changing role in business — specifically, finance’s ability to drive business outcomes rather than simply report them.

This is thanks to the increasing capabilities of digital technology and the emergence of new roles in finance: data scientist, market maker, and social and behavioral scientist. Unfortunately for us, there just aren’t that many behavioral scientists out there well-versed in finance, or vice versa. There’s also a general skills gap when it comes to these jobs. According to a report by McKinsey, there could be a need for 736,000 data scientists in 2024, but estimates point to there being only 483,000 in the workforce by then.

Adding to this, people in finance today — especially finance leaders — are expected to be well-versed in soft skills like communications and leadership. One 2015 survey of financial professionals found that two of the top three skills most lacking among entry-level talent were non-technical skills: leadership, strategic thinking, and execution.

As finance’s importance to the business grows, so too will its importance in guiding strategic decisions. Finance has a seat at the table. That seat requires the ability to collaborate, relationship-build, and lead.

Three solutions for the finance community

Responsibility for solving this problem rests on the shoulders of those of us in the finance community. We need to take the following three steps to boost our pipeline of qualified, smart young talent:

1. Automate

Above all else, the action I’d take first would be to automate. I don’t mean to automate entry-level positions. Instead, I mean automate the menial and boring tasks so your entry-level employees can work on more meaningful tasks.

Take the exceptionally mundane task of budgeting. There’s no reason this should be a manual process done on spreadsheets. The times have changed, and so has the field of finance. Automate and give your younger talent meaningful work — something that will make them feel like they’re having an impact.

2. Empower and entrust

We as finance leaders need to ensure that we’re empowering and entrusting our employees. Given how finance is changing, we need to do everything in our power to set up our employees for success. This involves instituting the right kinds of training and creating an environment where risk-taking is encouraged.

Finance used to be a field constrained by monotony and processes. No longer. What we need are new ideas and new ways of doing old things.

If your team is pushing to acquire new technology, hear them out. If a young hire recognizes an inefficiency, listen. And just as important, make sure they feel empowered enough to voice their opinions in the first place. Culture is shaped at the top, and building confidence is one of the surest ways to help develop those soft skills so desperately needed today.

3. Engage

Engagement is crucial. Your employees need to feel like they’re part of the team — that they’re part of something more than a 9-to-5 day.

Not only are millennials likely to seek new opportunities if the work they do doesn’t fulfill them; they are less likely than previous generations to “pay their dues” doing transactional work. In today’s market, they can make those choices. The rise of the gig economy is a testament to that fact.

Today, people can make a living by providing a service online or through an app. In fact, 43% of the American workforce is expected to be freelance by 2020. Millennials are entering a workforce where short-term gigs that don’t provide benefits are growing in popularity. They’re simply responding accordingly.

To retain your young talent, do the opposite of the gig economy. Show them you appreciate them. Make them feel like they’re valued.

Finance is not the same field I entered two decades ago. As finance leaders, we have two choices. For one, we can meet the change and challenges we’re facing head-on, and do everything in our power to best prepare our organization and today’s early talent for the job at hand. Or we can grumble and hope things change. I’ll close with a quick word of advice: Only one of these is a winning strategy.

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This article originally appeared on CFO.com and is republished by permission.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube

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Todd McElhatton

About Todd McElhatton

As the CFO for SAP North America, Todd oversees the financial activities of the United States and Canada, including forecasting and planning, driving efficiencies, and leadership of the Commercial Finance team, to ensure the overall financial health of the region. Todd brings a 25-year career in finance management, leadership, and business growth with a number of high-profile names in the technology space to his role on the SAP North America executive team. As vice president and CFO of VMware’s Hybrid Cloud business, he led a global team overseeing all finance functions including long-range strategic planning, capital investments, business development and pricing. During his tenure at Oracle as vice president of business, sales and finance operations for Cloud Services, Todd was a key member of the team instrumental in improving the business unit’s profitability, and personally managed a broad array of finance functions that included forecasting and pricing strategy, while leading a global team. After serving in a series of regional and global operations and finance-based roles at Hewlett Packard, Todd assumed overall financial responsibilities as vice president of finance and CFO of Managed Services. He was also previously vice president of finance at WebMD, and started his career as a bank consultant. Todd holds a bachelor’s degree in business administration from Southern Methodist University in Dallas, Texas, and an MBA from the University of Tennessee in Knoxville, Tennessee.

Complex Tasks Require More Than A Spreadsheet

Bill Meyers

More than 1 billion people use batch spreadsheet software such as Excel. If it were a language, Excel would be one of the world’s most common.

So it’s no wonder that when The Wall Street Journal published an article last fall headlined, “Stop Using Excel, Finance Chiefs Tell Staffs,” it kicked open a hornet’s nest. Such was the furor that the Journal published a second-day lead headlined, “Finance Pros Say You’ll Have to Pry Excel Out of Their Cold, Dead Hands.”

The Journal’s coverage didn’t ignite a debate over the importance of batch spreadsheet software for FP&A professionals, but it revealed it. For decades, spreadsheet software has offered a fairly simple, very flexible approach for gathering and analyzing data.

Some experts are grateful for Excel’s role in the financial revolution that started in the late 1980s. “Excel’s transparency has played a big part in the democratization of financial information,” Bloomberg Gadfly columnist Nir Kaissar recently wrote. “For decades, financial data was controlled by Wall Street and academia. Both realms had armies of analysts to pore over the numbers. But beginning in the 1990s, the Internet made much of that data publicly available, and Excel allowed a single user to do the work of many analysts.

“Seemingly overnight,” Kaissar added, “anyone with a computer could challenge the claims long made by Wall Street—about the accuracy of analysts’ market predictions, about the skill of active fund managers, and about the effect of fees on the performance of financial products. It’s no exaggeration to say that Excel paved the way for indexing, ETFs, smart beta, and all the now widely accepted ideas that Wall Street once tried to stamp out.”

All that may be true but increasingly, finance professionals are worried that the flexibility doesn’t answer for the ever-more-complex job. In January, AFP published its annual risk survey. It found that 97% of corporate practitioners used spreadsheets to manage their companies’ risk, but only 28% viewed spreadsheets “as an efficient risk management tool.”

“Excel should be viewed as a fantastic productivity tool, but organizations get into trouble when it becomes a financial system,” said Mitch Max, a partner at consulting firm BetterVu.

So far, most practitioners have elected to stay with traditional spreadsheets. Fully 70% of all companies rely heavily on spreadsheet reporting across all their business units, according to a recent survey by CEO.com. And 40% of companies surveyed by KPMG in 2015 said that they relied on spreadsheets alone to produce their forecasts.

Some folks’ devotion to Excel can seem a bit eccentric. We talked to one practitioner who used Excel grids to recreate a portrait of his wife. But while the consensus among the practitioners seems to be that Excel offers flexibility, ubiquity, and economy, it is a lot trickier for complex or sophisticated data analytics. Other vendors’ software—or home-built tools—can either patch those gaps or obliterate them.

While spreadsheets still dominate, many practitioners are actively evaluating other technologies to help manage risk within the finance function. Download the 2018 AFP Risk Survey to see what’s being considered.

For more on this topic, read this blog.

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Bill Meyers

About Bill Meyers

Bill Myers covers FP&A issues for the Association for Financial Professionals and leads the association’s FP&A Advisory Council, helping corporate practitioners and thought leaders stay ahead of trends in their profession. He can be reached at bmyers@afponline.org.

More Than Noise: Digital Trends That Are Bigger Than You Think

By Maurizio Cattaneo, David Delaney, Volker Hildebrand, and Neal Ungerleider

In the tech world in 2017, several trends emerged as signals amid the noise, signifying much larger changes to come.

As we noted in last year’s More Than Noise list, things are changing—and the changes are occurring in ways that don’t necessarily fit into the prevailing narrative.

While many of 2017’s signals have a dark tint to them, perhaps reflecting the times we live in, we have sought out some rays of light to illuminate the way forward. The following signals differ considerably, but understanding them can help guide businesses in the right direction for 2018 and beyond.

When a team of psychologists, linguists, and software engineers created Woebot, an AI chatbot that helps people learn cognitive behavioral therapy techniques for managing mental health issues like anxiety and depression, they did something unusual, at least when it comes to chatbots: they submitted it for peer review.

Stanford University researchers recruited a sample group of 70 college-age participants on social media to take part in a randomized control study of Woebot. The researchers found that their creation was useful for improving anxiety and depression symptoms. A study of the user interaction with the bot was submitted for peer review and published in the Journal of Medical Internet Research Mental Health in June 2017.

While Woebot may not revolutionize the field of psychology, it could change the way we view AI development. Well-known figures such as Elon Musk and Bill Gates have expressed concerns that artificial intelligence is essentially ungovernable. Peer review, such as with the Stanford study, is one way to approach this challenge and figure out how to properly evaluate and find a place for these software programs.

The healthcare community could be onto something. We’ve already seen instances where AI chatbots have spun out of control, such as when internet trolls trained Microsoft’s Tay to become a hate-spewing misanthrope. Bots are only as good as their design; making sure they stay on message and don’t act in unexpected ways is crucial.

This is especially true in healthcare. When chatbots are offering therapeutic services, they must be properly designed, vetted, and tested to maintain patient safety.

It may be prudent to apply the same level of caution to a business setting. By treating chatbots as if they’re akin to medicine or drugs, we have a model for thorough vetting that, while not perfect, is generally effective and time tested.

It may seem like overkill to think of chatbots that manage pizza orders or help resolve parking tickets as potential health threats. But it’s already clear that AI can have unintended side effects that could extend far beyond Tay’s loathsome behavior.

For example, in July, Facebook shut down an experiment where it challenged two AIs to negotiate with each other over a trade. When the experiment began, the two chatbots quickly went rogue, developing linguistic shortcuts to reduce negotiating time and leaving their creators unable to understand what they were saying.

Do we want AIs interacting in a secret language because designers didn’t fully understand what they were designing?

The implications are chilling. Do we want AIs interacting in a secret language because designers didn’t fully understand what they were designing?

In this context, the healthcare community’s conservative approach doesn’t seem so farfetched. Woebot could ultimately become an example of the kind of oversight that’s needed for all AIs.

Meanwhile, it’s clear that chatbots have great potential in healthcare—not just for treating mental health issues but for helping patients understand symptoms, build treatment regimens, and more. They could also help unclog barriers to healthcare, which is plagued worldwide by high prices, long wait times, and other challenges. While they are not a substitute for actual humans, chatbots can be used by anyone with a computer or smartphone, 24 hours a day, seven days a week, regardless of financial status.

Finding the right governance for AI development won’t happen overnight. But peer review, extensive internal quality analysis, and other processes will go a long way to ensuring bots function as expected. Otherwise, companies and their customers could pay a big price.

Elon Musk is an expert at dominating the news cycle with his sci-fi premonitions about space travel and high-speed hyperloops. However, he captured media attention in Australia in April 2017 for something much more down to earth: how to deal with blackouts and power outages.

In 2016, a massive blackout hit the state of South Australia following a storm. Although power was restored quickly in Adelaide, the capital, people in the wide stretches of arid desert that surround it spent days waiting for the power to return. That hit South Australia’s wine and livestock industries especially hard.

South Australia’s electrical grid currently gets more than half of its energy from wind and solar, with coal and gas plants acting as backups for when the sun hides or the wind doesn’t blow, according to ABC News Australia. But this network is vulnerable to sudden loss of generation—which is exactly what happened in the storm that caused the 2016 blackout, when tornadoes ripped through some key transmission lines. Getting the system back on stable footing has been an issue ever since.

Displaying his usual talent for showmanship, Musk stepped in and promised to build the world’s largest battery to store backup energy for the network—and he pledged to complete it within 100 days of signing the contract or the battery would be free. Pen met paper with South Australia and French utility Neoen in September. As of press time in November, construction was underway.

For South Australia, the Tesla deal offers an easy and secure way to store renewable energy. Tesla’s 129 MWh battery will be the most powerful battery system in the world by 60% once completed, according to Gizmodo. The battery, which is stationed at a wind farm, will cover temporary drops in wind power and kick in to help conventional gas and coal plants balance generation with demand across the network. South Australian citizens and politicians largely support the project, which Tesla claims will be able to power 30,000 homes.

Until Musk made his bold promise, batteries did not figure much in renewable energy networks, mostly because they just aren’t that good. They have limited charges, are difficult to build, and are difficult to manage. Utilities also worry about relying on the same lithium-ion battery technology as cellphone makers like Samsung, whose Galaxy Note 7 had to be recalled in 2016 after some defective batteries burst into flames, according to CNET.

However, when made right, the batteries are safe. It’s just that they’ve traditionally been too expensive for large-scale uses such as renewable power storage. But battery innovations such as Tesla’s could radically change how we power the economy. According to a study that appeared this year in Nature, the continued drop in the cost of battery storage has made renewable energy price-competitive with traditional fossil fuels.

This is a massive shift. Or, as David Roberts of news site Vox puts it, “Batteries are soon going to disrupt power markets at all scales.” Furthermore, if the cost of batteries continues to drop, supply chains could experience radical energy cost savings. This could disrupt energy utilities, manufacturing, transportation, and construction, to name just a few, and create many opportunities while changing established business models. (For more on how renewable energy will affect business, read the feature “Tick Tock” in this issue.)

Battery research and development has become big business. Thanks to electric cars and powerful smartphones, there has been incredible pressure to make more powerful batteries that last longer between charges.

The proof of this is in the R&D funding pudding. A Brookings Institution report notes that both the Chinese and U.S. governments offer generous subsidies for lithium-ion battery advancement. Automakers such as Daimler and BMW have established divisions marketing residential and commercial energy storage products. Boeing, Airbus, Rolls-Royce, and General Electric are all experimenting with various electric propulsion systems for aircraft—which means that hybrid airplanes are also a possibility.

Meanwhile, governments around the world are accelerating battery research investment by banning internal combustion vehicles. Britain, France, India, and Norway are seeking to go all electric as early as 2025 and by 2040 at the latest.

In the meantime, expect huge investment and new battery innovation from interested parties across industries that all share a stake in the outcome. This past September, for example, Volkswagen announced a €50 billion research investment in batteries to help bring 300 electric vehicle models to market by 2030.

At first, it sounds like a narrative device from a science fiction novel or a particularly bad urban legend.

Powerful cameras in several Chinese cities capture photographs of jaywalkers as they cross the street and, several minutes later, display their photograph, name, and home address on a large screen posted at the intersection. Several days later, a summons appears in the offender’s mailbox demanding payment of a fine or fulfillment of community service.

As Orwellian as it seems, this technology is very real for residents of Jinan and several other Chinese cities. According to a Xinhua interview with Li Yong of the Jinan traffic police, “Since the new technology has been adopted, the cases of jaywalking have been reduced from 200 to 20 each day at the major intersection of Jingshi and Shungeng roads.”

The sophisticated cameras and facial recognition systems already used in China—and their near–real-time public shaming—are an example of how machine learning, mobile phone surveillance, and internet activity tracking are being used to censor and control populations. Most worryingly, the prospect of real-time surveillance makes running surveillance states such as the former East Germany and current North Korea much more financially efficient.

According to a 2015 discussion paper by the Institute for the Study of Labor, a German research center, by the 1980s almost 0.5% of the East German population was directly employed by the Stasi, the country’s state security service and secret police—1 for every 166 citizens. An additional 1.1% of the population (1 for every 66 citizens) were working as unofficial informers, which represented a massive economic drain. Automated, real-time, algorithm-driven monitoring could potentially drive the cost of controlling the population down substantially in police states—and elsewhere.

We could see a radical new era of censorship that is much more manipulative than anything that has come before. Previously, dissidents were identified when investigators manually combed through photos, read writings, or listened in on phone calls. Real-time algorithmic monitoring means that acts of perceived defiance can be identified and deleted in the moment and their perpetrators marked for swift judgment before they can make an impression on others.

Businesses need to be aware of the wider trend toward real-time, automated censorship and how it might be used in both commercial and governmental settings. These tools can easily be used in countries with unstable political dynamics and could become a real concern for businesses that operate across borders. Businesses must learn to educate and protect employees when technology can censor and punish in real time.

Indeed, the technologies used for this kind of repression could be easily adapted from those that have already been developed for businesses. For instance, both Facebook and Google use near–real-time facial identification algorithms that automatically identify people in images uploaded by users—which helps the companies build out their social graphs and target users with profitable advertisements. Automated algorithms also flag Facebook posts that potentially violate the company’s terms of service.

China is already using these technologies to control its own people in ways that are largely hidden to outsiders.

According to a report by the University of Toronto’s Citizen Lab, the popular Chinese social network WeChat operates under a policy its authors call “One App, Two Systems.” Users with Chinese phone numbers are subjected to dynamic keyword censorship that changes depending on current events and whether a user is in a private chat or in a group. Depending on the political winds, users are blocked from accessing a range of websites that report critically on China through WeChat’s internal browser. Non-Chinese users, however, are not subject to any of these restrictions.

The censorship is also designed to be invisible. Messages are blocked without any user notification, and China has intermittently blocked WhatsApp and other foreign social networks. As a result, Chinese users are steered toward national social networks, which are more compliant with government pressure.

China’s policies play into a larger global trend: the nationalization of the internet. China, Russia, the European Union, and the United States have all adopted different approaches to censorship, user privacy, and surveillance. Although there are social networks such as WeChat or Russia’s VKontakte that are popular in primarily one country, nationalizing the internet challenges users of multinational services such as Facebook and YouTube. These different approaches, which impact everything from data safe harbor laws to legal consequences for posting inflammatory material, have implications for businesses working in multiple countries, as well.

For instance, Twitter is legally obligated to hide Nazi and neo-fascist imagery and some tweets in Germany and France—but not elsewhere. YouTube was officially banned in Turkey for two years because of videos a Turkish court deemed “insulting to the memory of Mustafa Kemal Atatürk,” father of modern Turkey. In Russia, Google must keep Russian users’ personal data on servers located inside Russia to comply with government policy.

While China is a pioneer in the field of instant censorship, tech companies in the United States are matching China’s progress, which could potentially have a chilling effect on democracy. In 2016, Apple applied for a patent on technology that censors audio streams in real time—automating the previously manual process of censoring curse words in streaming audio.

In March, after U.S. President Donald Trump told Fox News, “I think maybe I wouldn’t be [president] if it wasn’t for Twitter,” Twitter founder Evan “Ev” Williams did something highly unusual for the creator of a massive social network.

He apologized.

Speaking with David Streitfeld of The New York Times, Williams said, “It’s a very bad thing, Twitter’s role in that. If it’s true that he wouldn’t be president if it weren’t for Twitter, then yeah, I’m sorry.”

Entrepreneurs tend to be very proud of their innovations. Williams, however, offers a far more ambivalent response to his creation’s success. Much of the 2016 presidential election’s rancor was fueled by Twitter, and the instant gratification of Twitter attracts trolls, bullies, and bigots just as easily as it attracts politicians, celebrities, comedians, and sports fans.

Services such as Twitter, Facebook, YouTube, and Instagram are designed through a mix of look and feel, algorithmic wizardry, and psychological techniques to hang on to users for as long as possible—which helps the services sell more advertisements and make more money. Toxic political discourse and online harassment are unintended side effects of the economic-driven urge to keep users engaged no matter what.

Keeping users’ eyeballs on their screens requires endless hours of multivariate testing, user research, and algorithm refinement. For instance, Casey Newton of tech publication The Verge notes that Google Brain, Google’s AI division, plays a key part in generating YouTube’s video recommendations.

According to Jim McFadden, the technical lead for YouTube recommendations, “Before, if I watch this video from a comedian, our recommendations were pretty good at saying, here’s another one just like it,” he told Newton. “But the Google Brain model figures out other comedians who are similar but not exactly the same—even more adjacent relationships. It’s able to see patterns that are less obvious.”

A never-ending flow of content that is interesting without being repetitive is harder to resist. With users glued to online services, addiction and other behavioral problems occur to an unhealthy degree. According to a 2016 poll by nonprofit research company Common Sense Media, 50% of American teenagers believe they are addicted to their smartphones.

This pattern is extending into the workplace. Seventy-five percent of companies told research company Harris Poll in 2016 that two or more hours a day are lost in productivity because employees are distracted. The number one reason? Cellphones and texting, according to 55% of those companies surveyed. Another 41% pointed to the internet.

Tristan Harris, a former design ethicist at Google, argues that many product designers for online services try to exploit psychological vulnerabilities in a bid to keep users engaged for longer periods. Harris refers to an iPhone as “a slot machine in my pocket” and argues that user interface (UI) and user experience (UX) designers need to adopt something akin to a Hippocratic Oath to stop exploiting users’ psychological vulnerabilities.

In fact, there is an entire school of study devoted to “dark UX”—small design tweaks to increase profits. These can be as innocuous as a “Buy Now” button in a visually pleasing color or as controversial as when Facebook tweaked its algorithm in 2012 to show a randomly selected group of almost 700,000 users (who had not given their permission) newsfeeds that skewed more positive to some users and more negative to others to gauge the impact on their respective emotional states, according to an article in Wired.

As computers, smartphones, and televisions come ever closer to convergence, these issues matter increasingly to businesses. Some of the universal side effects of addiction are lost productivity at work and poor health. Businesses should offer training and help for employees who can’t stop checking their smartphones.

Mindfulness-centered mobile apps such as Headspace, Calm, and Forest offer one way to break the habit. Users can also choose to break internet addiction by going for a walk, turning their computers off, or using tools like StayFocusd or Freedom to block addictive websites or apps.

Most importantly, companies in the business of creating tech products need to design software and hardware that discourages addictive behavior. This means avoiding bad designs that emphasize engagement metrics over human health. A world of advertising preroll showing up on smart refrigerator touchscreens at 2 a.m. benefits no one.

According to a 2014 study in Cyberpsychology, Behavior and Social Networking, approximately 6% of the world’s population suffers from internet addiction to one degree or another. As more users in emerging economies gain access to cheap data, smartphones, and laptops, that percentage will only increase. For businesses, getting a head start on stopping internet addiction will make employees happier and more productive. D!


About the Authors

Maurizio Cattaneo is Director, Delivery Execution, Energy, and Natural Resources, at SAP.

David Delaney is Global Vice President and Chief Medical Officer, SAP Health.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Neal Ungerleider is a Los Angeles-based technology journalist and consultant.


Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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The “Purpose” Of Data

Timo Elliott

I’ve always been passionate about the ability of data and analytics to transform the world.

It has always seemed to me to be the closest thing we have to modern-day magic, with its ability to conjure up benefits from thin air. Over the last quarter century, I’ve had the honor of working with thousands of “wizards” in organizations around the world, turning information into value in every aspect of our daily lives.

The projects have been as simple as Disney using real-time analytics to move staff from one store to another to keep lines to a minimum: shorter lines led to bigger profits (you’re more likely to buy that Winnie-the-Pooh bear if there’s only one person ahead of you), but also higher customer satisfaction and happier children.

Or they’ve been as complex as the Port of Hamburg: constrained by its urban location, it couldn’t expand to meet the growing volume of traffic. But better use of information meant it was able to dramatically increase throughput – while improving the life of city residents with reduced pollution (less truck idling) and fewer traffic jams (smart lighting that automatically adapts to bridge closures).

I’ve seen analytics used to figure out why cheese was curdling in Wisconsin; count the number of bubbles in Champagne; keep track of excessive fouls in Swiss soccer, track bear sightings in Canada; avoid flooding in Argentina; detect chewing-gum-blocked metro machines in Brussels; uncover networks of tax fraud in Australia; stop trains from being stranded in the middle of the Tuscan countryside; find air travelers exposed to radioactive substances; help abused pets find new homes; find the best people to respond to hurricanes and other disasters; and much, much more.

The reality is that there’s a lot of inefficiency in the world. Most of the time it’s invisible, or we take it for granted. But analytics can help us shine a light on what’s going on, expose the problems, and show us what we can do better – in almost every area of human endeavor.

Data is a powerful weapon. Analytics isn’t just an opportunity to reduce costs and increase profits – it’s an opportunity to make the world a better place.

So to paraphrase a famous world leader, next time you embark on a new project:

“Ask not what you can do with your data, ask what your data can do for the world.”

What are your favorite “magical” examples, where analytics helped create win/win/win situations?

Download our free eBook for more insight on How the Port of Hamburg Doubled Capacity with Digitization.

This article originally appeared on Digital Business & Business Analytics.

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Timo Elliott

About Timo Elliott

Timo Elliott is an Innovation Evangelist for SAP and a passionate advocate of innovation, digital business, analytics, and artificial intelligence. He was the eighth employee of BusinessObjects and for the last 25 years he has worked closely with SAP customers around the world on new technology directions and their impact on real-world organizations. His articles have appeared in publications such as Harvard Business Review, Forbes, ZDNet, The Guardian, and Digitalist Magazine. He has worked in the UK, Hong Kong, New Zealand, and Silicon Valley, and currently lives in Paris, France. He has a degree in Econometrics and a patent in mobile analytics.