5 Growing Pains for Chief Data Science Officers

The role of The Chief Data Science Officer (CDSO) is new and evolving – and with evolution comes opportunities and challenges. We’re finding that CDSOs are faced with growing pains on several fronts – and if businesses can’t find a way to properly address some of these issues, the role of the CDSO could be at risk.

CDSOs are joining companies where the business case for their role is left ambiguous. This makes it difficult for them to demonstrate their value the organization. In an effort to define role and responsibilities, CDSOs must work with multiple stakeholders to forge strategic partnerships and carve a pathway to success.

Here’s where to start:

1) Avoid perpetuating “ivory tower” perceptions

The first order of business for CDSOs is to justify their existence and establish how they can contribute value to the organization. Start by building relationships. CDSOs need to work with business owners and subject matter experts to get deep into the business decisions and problems, and identify opportunities where they can use data and analytics to generate insights that enhance decision making. Failure to demonstrate value to the business can raise doubts about the legitimacy of the role.

Often, CDSOs are stepping into companies where there are multiple teams of functional analytics experts managing their data and technology platforms across multiple business units. CDSOs need to work with these existing groups to determine the right organization and operating model that can enhance the value they bring, while not slowing down the existing initiatives of business units.

2) Build Relationships with the C-Suite

Historically, enterprises have focused on traditional data warehousing, reporting and business intelligence in their use of data. But, now that every business function wants to use technology to advance their business goals, the enterprise needs to use data in new ways to make better decisions. Enterprises should use data exploration to inform business analytics. Tapping data to prepare for a possible future is the CDSO’s specialty and everyone’s interest. The CDSO should work with the CIO to educate the C-Suite and beyond on the importance of putting more organizational emphasis on predictive analytics. According to our 5th Annual Digital IQ Survey, C-Suite executives who effectively collaborate are far more likely to outperform their peers.

3) Find the funding

The governance mechanisms for funding in most organizations often confer power to those with the funds – typically P&L owners – and C-level committees. Given the role CDSOs and teams play as a “shared service” traversing IT and business functions, it is important for them to be able to make a direct request for funds as opposed to through one of the many groups they work with or support. To secure funds, CDSOs should pull out all the stops with visualizations, demos and prototypes to “make it real” to business owners how they can enhance their performance with improved analytics.

4) Navigate the vendor landscape

As with any emerging area, the field of data science is filled with a host of start-ups and established companies claiming to offer just the ‘right’ solution for the company. CDSOs must carefully evaluate products based on the organization’s business case – and that’s no easy feat given the multitude of options in today’s crowded marketplace.

Some tools are designed as horizontal offerings that are shallow and not as deep, but more easily integrated across business units. Other solutions plunge into a particular industry or functional area, but are ‘special-purpose’ tools that aren’t versatile nor can be easily integrated with existing solutions.

By the time the company realizes they need something different, executives can sometimes invest a lot of time and money trying to make the product work. It’s a chore trying to move onto something different, especially explaining the shift to senior management. Decisions around when to use proprietary vendor solutions versus open-source alternatives is also a challenge that CDSOs need to grapple with.

5) Change the decision-making mindset of executives

In our recent global Big Decisions Survey, more than 58% of executives made decisions based on their own intuition or experience or those of others. Only 29% relied on data-driven decisions. Executives say they want to use analytics and data, but it’s still not prevalent at companies, in the C-Suite or beyond. Technology companies and younger employees are much more accustomed to using data to steer the ship, but most executives make decisions based on their gut reactions.

Executives can be hesitant to use more advanced data and analytics techniques to inform their actions, especially if the data contradicts what they feel is the right way to go. CDSOs must break deeply ingrained habits using an “art” and “science” approach to data. Creating compelling, visual proof-of-concepts/prototypes with simulation and gaming elements can allow executives to combine their intuition and experience with data & analytics to improve decision making.

We’ve only scratched the surface of the many issues that CDSOs are struggling with as they navigate uncharted waters. We’ll delve into each of these areas more and explore how CDSOs can chart a course for success. In the meantime, let us know if you have any other additions to our list.

Attacks against Israeli & Palestinian interests

This short report details the techniques being used in a series of attacks mostly against Israel-based organisations. The decoy documents and filenames used in the attacks suggest the intended targets include organisations with political interests or influence in Israel and Palestine. Although we are unable to link this campaign to any already documented in open source, it bears similarities to some described by others previously[1],[2].

The earliest samples in the campaign we have identified date back to the summer of 2014. The number of samples discovered and relatively small scale of infrastructure suggest the attackers have limited resources with which to conduct attacks.

More details…

If you have any further questions, please contact us.

Will VENOM’s strike poison your shared infrastructure?

The fangs of a newly-found security vulnerability in virtual computing systems were revealed by security researchers at CrowdStrike last week. Named “VENOM” its announcement calls attention to a previously unrecognized risk that may impact millions of systems around the world, as well as disrupt normal business as IT organizations scramble to patch affected systems.

VENOM stands for Virtualized Environmental Neglected Operations Manipulation. It affects some, but not all, virtualization management systems in use within organizations and cloud service providers today. It highlights a weakness in some virtual systems where a hacker after gaining access to one company’s secure network could then jump to other independent companies that just happen to share virtual server space.

This new vulnerability appears to be of a similar scale to the Heartbleed vulnerability discovered in OpenSSL last year; however, this new issue has the potential to impact across organizational and company boundaries. Most organizations use server virtualization in some form today. The use of “cloud” servers crested the 50% mark this last year and is expected to hit 86% adoption by 2016, according to CIO Insights.

Read more…

If you have any questions, please contact us.

When data hinders, not helps

Many organizations operate a dedicated department specifically for combatting Cyber Security threats. These are typically called “SOCs”, or Security Operation Centres.

The SOC collates information from across the organization and from external agencies to form a strategy to prevent, detect and respond to cyber attacks and security issues. The more data the SOC has access to, the more accurate a security picture they can obtain, and more detailed analysis can be performed, either to investigate issues or help prevent them from occurring. But more access means more data to analyse.

The nature of security threats has changed significantly in recent years and the “security in depth” principle has led to the implementation of numerous security-specific technologies into the organization. Which creates yet more data for the SOC to monitor and react to.

This creates a new problem; how much data is too much data?

Let’s examine a fictional 250-person company, and watch what happens to the amount of data the SOC has to process.

In 2005, this organization would have had a number of servers, a firewall, some first generation anti-virus programs, a basic network, and some basic web services. It typically generated around 6.5gb of log data per day; all of which the SOC would examine for specific signs of security issues. With a small team, and in a 2005 threat landscape, this was achievable.

However, in 2015, that same organization has doubled in size. It has new offices, it has VPN and mobile devices, it has new business applications, it has additional security technology such as malware filters, data loss analysers and intrusion detection systems. It has the latest generation of web technology. The threat profile is now very different and much more advanced. The resulting log data per day is now 30gb per day.

The net effect? An increase in log volume of over 450%

When data hinders

Chances are, the organization has not invested in resources for the SOC for financial reasons after the financial crisis, so the existing team is now overstretched and in danger of not being able to correctly detect and prevent security issues.

In addition there is a heightened awareness of cyber risks at senior levels in organisations and increased regulatory scrutiny of how cyber risks are being managed, creating additional expectations and pressure on the SOC.

This combination of factors makes managing a SOC and meeting the increasing expectations of key stakeholders a challenge. There are however some useful strategies that can help to address this very modern problem. I will discuss them in more detail in future blogs, but here is a quick overview:

  1. Know the Enemy
    The SOC is responsible for detecting and preventing security issues from occurring, but it can only do this effectively if it knows what it is supposed to be detecting. Leading SOCs invest in external intelligence sources to help prioritise SOC spend and resource to focus on the threat detection and mitigation with the greatest risk.
  2. Know the business
    Often a large organization will operate in silos, with departments not necessarily communicating its activities to other areas. This can have a dramatic affect on the SOC, as something as simple as an application upgrade can suddenly increase log data with no warning. An effective SOC will establish a two-way dialog with key business areas regarding security trends, recent findings, and upcoming business activities.
  3. Know the assets
    A good SOC knows where all the important assets are, and focuses its energies on monitoring and protecting those assets. Each asset has a formal security rating, and the rating will dictate the security precautions required. For example, protecting customer data is far more important than protecting the stationery ordering service.
  4. Know the data
    Knowing the difference between a message and a warning is a key skill of the SOC, and it makes sense to invest in a working framework and SIEM applications which help filter and prioritise messages. Create dashboards which show only security-specific information. For example if there were 10,000 successful logons on to an e-banking service this is not really a security concern; however, if a customer logs on from 3 countries at the same time, that is an issue that needs a SOC reaction.
  5. Know your staff
    Managing the SOC often involves lots of repetitive activity watching data. This can quickly lead to complacency and missed signals. Just as important, it can result in demotivation, burn out, reduced performance and even loss of staff. One way SOCs are overcoming this is to rotate staff around functions, so every member of the team is required to spend 25-30% of their time working on new dashboards, on new filters, improving forensic performance, trend analysis, attending security events and interacting with the other departments.

Transforming the SOC to meet the challenges of today requires an intelligent approach to how companies manage cyber security and its own critical information assets. To discuss how PwC can help you improve the effectiveness of your cyber security management, please contact Euan Ramsay.

The impact of Swiss Corporate Tax Reform III (CTR III)

Position paper of PwC Switzerland

Background

CTR III is a consequence of the tax dispute between Switzerland and the EU and a response to the internationalisation of tax competition. In the face of increasing pressure, Switzerland relented and reached an agreement with the EU, under which it must align its corporate taxation with international standards. Specifically, this involves the equal treatment of foreign and domestic income, the abolition of tax benefits for certain types of companies and the reconsideration of tax reliefs.

Objectives

With CTR III, the Swiss Federal Council has laid the foundations for Switzerland as an attractive business location. The new system is intended to strengthen Switzerland’s position as a competitive tax location and a reliable partner for domestic and international groups and Swiss SMEs. This should help to create and maintain attractive jobs and to consolidate the prosperity of Swiss society. In addition, the system seeks compliance with international standards and the safeguarding of a balanced corporate tax base.

Read more in our position paper.

If you have any further questions please contact:

Andreas Staubli
Partner, Leader Tax & Legal
andreas.staubli@ch.pwc.com
+41 58 792 44 72
Armin Marti
Partner, Leader Corporate Tax
armin.marti@ch.pwc.com
+41 58 792 43 43
Laurenz Schneider
Director Corporate Tax
laurenz.schneider@ch.pwc.com
+41 58 792 59 38
Claude-Alain Barke
Partner Tax & Legal Romandie
claude-alain.barke@ch.pwc.com
+41 58 792 83 17
Remo Küttel
Director Tax & Legal
remo.kuettel@ch.pwc.com
+41 58 792 68 69
Gil Walser
Senior Manager Tax & Legal Romandie
gil.walser@ch.pwc.com
+41 58 792 67 81
Benjamin Koch
Partner, Leader Transfer Pricing and
Value Chain Transformation
benjamin.koch@ch.pwc.com
+41 58 792 43 34

Moving HR to the Cloud?

Navigate key barriers to boost success.

It’s no surprise that more and more companies are moving their HR applications to the cloud to boost innovation, increase flexibility and control costs. The shift, now at a frenzied pace, is fueling tremendous growth in the HR technology space. It is also creating uncertainty for HR business and technology leaders who are struggling with important questions such as:

  • Is the cloud right for my organization?
  • Does it make sense to move everything to the cloud or just certain process areas?
  • Is the move paying off for the early adopters?
  • What challenges are organizations facing with their migrations to cloud?

PwC’s 2014 HR Technology Survey of nearly 270 US-based companies, including a range of industries and company sizes, provides insight into these and other important issues facing today’s HR business and technology leaders. Clearly, the shift from on-premise Human Capital Management (HCM) to cloudbased HCM applications is a significant trend that cannot be ignored. Yet, despite high levels of satisfaction, HR business and technology leaders are finding that moving to the cloud requires a transformational mindset — one that many seem to undervalue and oversimplify.

The HR technology options to enable today’s business and people strategies can be overwhelming. In this paper, we’ll first look at the industry landscape, including the types of organizations moving to the cloud, top HR technology investments, and major trends driving HR cloud adoption. Next, we’ll look at primary challenges that HR business and technology leaders are encountering along the way. We’ll also provide key considerations to help smooth the transition and help make the journey worthwhile.

Download the survey results here.

If you have any further questions please contact me.

The Liechtenstein common-benefit foundation

A mainstay of the Principality’s financial centre strategy Liechtenstein_EN

 

People are increasingly adopting sustainability as a basis for their actions and investments, and the number of charitable foundations and organisations is growing all around the world – nowhere less than in the Principality of Liechtenstein. In 2008, Liechtenstein completely revised its foundation law, an integral component of the Principality’s financial centre strategy. Since then, many things have changed.

Read more here.

News on IFRS: May 2015

Our latest IFRS news contains some information about revenue recognition and employee benefits.

IASB proposes deferral and continues to look at clarifications

The IASB has proposed moving the effective date of IFRS 15 back by one year to 1 January 2018. An exposure draft on the effective date is expected in May 2015 followed by an exposure draft on other clarifications in Q3 2015.
Read more…

Employee benefits back in the spotlight

Richard Davis from Accounting Consulting Services brings us up to speed on renewed attention at the IASB on employee benefits.
Read more…

Cannon Street Press

  • Disclosure initiative
  • Annual improvements 2014-2016
  • Fair value of quoted investment

Read more…

Know your IFRS ‘ABC’: Z is for Zoos… not in the scope of IAS 41, but what is?

Ruth Preedy from PwC’s Accounting Consulting Services examines the scope of IAS 41, a standard that even the most experienced accounting experts don’t know much about.
Read more…

 

Are you interested in more regular updates?

In brief – A look at current financial reporting issues

IFRS in brief

 

Swiss Federal Supreme Court rules in Withholding Tax Case for Danish banks

The Swiss Federal Supreme Court has delivered two judgements regarding Swiss withholding tax refund cases for two Danish banks involved in derivative transactions over dividend ex-date with Swiss equities. In both cases, the Swiss Federal Supreme Court ruled in favour of the Federal Tax Authority (FTA) and overruled the previous decisions taken by the Federal Administrative Court

The cases under scrutiny

In the first case, a Danish bank entered into various total return swap transactions with counterparties in the EU and the US relating to Swiss equities. To hedge the exposure from the total return swaps, the Danish bank bought the necessary Swiss equities from various parties. Upon the maturity of the total return swaps, the shares were sold to different parties than those from whom the bank had previously sourced the shares. Under the swaps the Danish bank had to pay to the counterpart an amount equivalent to the dividend received.

The second case relates to a subsidiary of a Danish bank that had entered into derivative transactions by selling (OTC) SMI futures through Eurex and a broker and that had hedged this short position by buying the necessary Swiss equities from a different platform/broker. Upon the maturity of the SMI futures, the derivative positions were either closed (and the Swiss equities sold) or rolled into further SMI future contracts.

In both cases, dividends received during the maturity of the trade were subject to 35% Swiss withholding tax for which a full refund was claimed under the former Swiss-Danish double tax treaty (the current amended treaty only provides for a partial refund on portfolio holdings). In both cases, the FTA had denied the refund of Swiss withholding tax and was then overruled in the Federal Administrative Court.

Decisions of the Swiss Supreme Court

In its public hearing of 5 May 2015, the Swiss Supreme Court overruled the decisions taken by the Federal Administrative Court and decided in favour of the FTA.

Regarding the first case, the court was of the opinion that the Danish bank should not be regarded as being the beneficial owner of the dividends. This ownership was given up at the moment in time where the funds received as dividends were paid out to the counterparty of the swap agreement as there was, in the view of the Swiss Supreme Court, an on-payment obligation under the total return swap agreements entered into by the Danish bank. Further to this obligation, the bank was no longer in a position to freely dispose of the dividend proceeds received and, in addition, the total return swap entered into put the bank in a position of being fully relieved of any risk associated to the underlying long position in Swiss equities. Hence, the bank had given up its beneficial ownership of the underlying Swiss equities.

In the second case, the underlying facts were more abstract and, in the view of some judges, insufficiently established by the FTA. Nevertheless, the Swiss Supreme Court was of the opinion that it would have been the Danish claimant’s call to assist the FTA in establishing the right facts and circumstances. Hence, the majority of the judges were of the view that the volumes of SMI futures traded and the fact that only a limited number of parties were involved in the transaction were sufficient evidence to conclude that the bank had given up its beneficial ownership and had to forward the dividend proceeds, the prices for which had been partially pre-determined in the sold (OTC) SMI futures.

Appraisal of the decisions

The Swiss Supreme Court has now issued two leading decisions with regard to the question of beneficial ownership which will have an important impact on the numerous other cases pending with the Swiss courts and the FTA. Although the Swiss Supreme Court’s exact line of argumentation will only be available in a couple of weeks, after the entire decisions including the motivation have been published, these decisions are effectively increasing the hurdles for a refund of Swiss withholding tax for derivative transactions with underlying Swiss equities – not only in an international but also in a domestic context.

It is now clear that the Swiss Supreme Court is of the view that anyone transferring a received dividend to a counterpart of a derivative instrument while not being in a risk-taking position will most likely have relinquished their beneficial ownership to the underlying Swiss equity and with this their right to claim Swiss withholding tax.

Pending claims as well as new derivative transactions that may give rise to a Swiss withholding tax refund claim should carefully be evaluated on the basis of the recent decisions of the Swiss Supreme Court once the written decision is available.

Victor Meyer
Partner Corporate Tax
victor.meyer@ch.pwc.com
+41 58 792 43 40
Martin Büeler
Partner Corporate Tax
martin.bueeler@ch.pwc.com
+41 58 792 43 92
Dieter Wirth
Partner Corporate Tax
dieter.wirth@ch.pwc.com
+41 58 792 44 88
Luca Poggioli
Director Corporate Tax
luca.poggioli@ch.pwc.com
+41 58 792 44 51

The most extraordinary technology of all

The role of people in a digital world

Capture In the digital world, everyone can be heard and everyone can contribute. We live in an age where Twitter has created an army of frontline news reporters at major events and disasters and where community forums such as tripadvisor and glassdoor roar the opinions of millions. The omnipresence of mobile devices has accelerated this trend; last year we reached the point where the number of mobile-connected devices in circulation exceeds the world’s population. Digital success is not about securing the best technology; the true value comes from the way your people use it.

During a transformation as rapid and life-altering as the digital age, the most dangerous thing an organisation can do is lose sight of the value of its people. The best, most innovative technology in the world won’t create value on its own. Success in the digital age doesn’t come down to securing the latest technology or by cutting costs through automation; it comes down to striking the right balance between digital and human innovation. A people strategy for the digital age.

Read more here.