Category: Helpful Articles

Contributing to a tax-advantaged retirement plan can help you reduce taxes and save for retirement. If your employer offers a 401(k) or Roth 401(k) plan, contributing to it is a smart way to build a substantial sum of money.

If you’re not already contributing the maximum amount allowed, consider increasing your contribution rate. Because of tax-deferred compounding (tax-free in the case of Roth accounts), boosting contributions can have a major impact on the size of your nest egg at retirement.

With a 401(k), an employee makes an election to have a certain amount of pay deferred and contributed by an employer on his or her behalf to the plan. The contribution limit for 2020 is $19,500. Employees age 50 or older by year end are also permitted to make additional “catch-up” contributions of $6,500, for a total limit of $26,000 in 2020.

The IRS recently announced that the 401(k) contribution limits for 2021 will remain the same as for 2020.

If you contribute to a traditional 401(k)

A traditional 401(k) offers many benefits, including:

• Contributions are pre-tax, reducing your modified adjusted gross income (MAGI), which can also help you reduce or avoid exposure to the 3.8% net investment income tax.
• Plan assets can grow tax-deferred — meaning you pay no income tax until you take distributions.
• Your employer may match some or all of your contributions pre-tax.

If you already have a 401(k) plan, take a look at your contributions. Try to increase your contribution rate to get as close to the $19,500 limit (with an extra $6,500 if you’re age 50 or older) as you can afford. Keep in mind that your paycheck will be reduced by less than the dollar amount of the contribution, because the contributions are pre-tax — so, income tax isn’t withheld.

If you contribute to a Roth 401(k)

Employers may also include a Roth option in their 401(k) plans. If your employer offers this, you can designate some or all of your contributions as Roth contributions. While such contributions don’t reduce your current MAGI, qualified distributions will be tax-free.

Roth 401(k) contributions may be especially beneficial for higher-income earners because they don’t have the option to contribute to a Roth IRA. Your ability to make a Roth IRA contribution for 2021 will be reduced if your adjusted gross income (AGI) in 2021 exceeds:

• $198,000 (up from $196,000 for 2020) for married joint-filing couples, or
• $125,000 (up from $124,000 for 2020) for single taxpayers.

Your ability to contribute to a Roth IRA in 2021 will be eliminated entirely if you’re a married joint filer and your 2021 AGI equals or exceeds $208,000 (up from $206,000 for 2020). The 2021 cutoff for single filers is $140,000 or more (up from $139,000 for 2020).

Contact us if you have questions about how much to contribute or the best mix between traditional and Roth 401(k) contributions. We would love to discuss the tax and retirement-saving strategies that will benefit you the most. © 2020

 

Digital Transformation in the Pandemic and Post-Pandemic Era

If there were any lingering doubts about the necessity of digital transformation to business longevity, the coronavirus has silenced them. In a contactless world, the vast majority of interactions with customers and employees must take place virtually. With rare exception, operating digitally is the only way to stay in business through mandated shutdowns and restricted activity. It’s go digital, or go dark.

This digital mandate isn’t new; it’s simply been brought into sharp focus. Prior to the pandemic, a paradigm shift towards digitization and servitization of the economy was already underway. Current events have accelerated the paradigm, as evidenced by the marked shift in spending towards digital businesses.

And this is just the beginning.

The pandemic is a reality check for businesses that have been reluctant to embrace digital transformation and now find themselves woefully unprepared. On top of the stress of potentially health-compromised employees, a sudden and dramatic drop-off in demand and total economic uncertainty, these digital laggards are now scrambling to migrate their operations and workforce to a virtual environment. While fast and furious is the name of the game when it comes to digital innovation, fast and frantic can lead to mistakes.

On the other hand, businesses that had not only developed digital strategies but executed on them prior to the pandemic are now in a position to leapfrog their less nimble competitors. That isn’t to understate the COVID-19-related challenges they now face, irrespective of their current level of digital maturity.  Going digital in and of itself isn’t a panacea to all that ails businesses in the current economic environment. They do, however, have significantly more tools at their disposal to not only weather the storm, but to come out the other side stronger for it.

Don’t write off the digital laggards just yet, however. Crisis breeds ingenuity, and good ideas put into practice can propel any business to breakout performance. Organizations that rest on their existing digital laurels can be surpassed by those that invest in adapting their digital capabilities for the post-coronavirus future—a future that looks very different from the world pre-pandemic.

Spotlight: The Digital Advantage

Organizations that embrace digital solutions have greater resiliency in the face of adversity—and a leg up on the competition that will enable them to recover faster and pivot from playing defense to chasing growth.

		Efficiency advantage: They harness digital technologies to streamline operations and automate manual processes—resulting in greater speed, less waste and more focus on revenue-generating activities.
		Productivity advantage: Their employees were already set up to work remotely, so their focus is on leveraging collaboration technology and tools to maximize workforce productivity and sustain company culture.
		Security advantage: They are better prepared for and more resilient to the proliferation of cyber threats in the current environment.
		Customer advantage: They mine customer data to monitor for shifts in demand and uncover emerging customer needs.
		Agility advantage: They leverage data-driven insight to make decisions faster and act on them faster. They have built-in cultural flexibility to adapt or change course at any point.

 

New Reliance on Digital Solutions During COVID-19

Under COVID-19, the world has, by necessity, gone into isolation. Social distancing is currently the most effective way to slow the spread of the virus until a vaccine can be found to protect the population. As a result, anything that relies on human-to-human contact–which is to say, most aspects of our lives–must be amended to account for the dangers of the virus.

Digitization has stepped in to bridge the gaps left by mandated shutdowns and social distancing measures. Without digital tools and technologies, we would have no way to work, shop, go to school, and more.

Let’s take a closer look at how digitization is keeping society–and businesses–afloat during the pandemic:

• Remote Work: Before the pandemic, only 30% of U.S. employees worked remotely 100% of the time, according to Owl Labs. For the other 70%–including the 38% of the total U.S. workforce that only worked on-site—the transition to working remote full-time has been a shock to the system—figuratively, and in some cases, quite literally, when user demand has exceeded system bandwidth. But the silver lining is that with such a high percentage of the working population now remote, digital collaboration is improving in leaps and bounds, both in terms of the sophistication of the tools to facilitate it and workers’ level of comfort with it.
• Omnichannel Commerce: As many physical business locations are shut down, consumers are turning to online shopping to meet their needs, even those who had historically been reluctant to do so. In particular, grocery delivery services, such as Instacart, have been in high demand. Consumers can choose their groceries, pay online, and leave feedback all on one convenient app. Businesses are blending the physical and the digital to provide for their customers through delivery methods such as curbside pickup and contactless delivery. Physical-digital integration is more important now than ever before.
• Digital Content Consumption: Homebound consumers are turning to digital content providers to meet their entertainment needs. 51% of internet users worldwide are watching more shows on streaming services due to the coronavirus, according to data from Statista. Netflix alone saw 16 million new signups for its service in the first three months of 2020.  Meanwhile, many film studios have been pushing new releases to streaming services early to captive audiences.
• Platformification: Institutions and organizations of all types are trying out digital platforms to stay above water during the pandemic. The fitness industry has shifted to holding virtual classes on streaming services, both live and pre-recorded. Almost every school, from elementary schools through graduate programs, have shifted to online courses. Large-scale conferences and events are being held virtually. The NYSE has moved entirely to online trading. While some businesses will revert to their traditional models when the crisis abates, others may opt for a hybrid approach as they recognize the benefits of recurring revenues.
• Digital Health Solutions: Much of America’s healthcare system has gone digital to alleviate some of the strain imposed by the coronavirus. Telemedicine and remote diagnostics are helping patients get medical advice and diagnoses at home so they don’t need to come in to the doctor’s office or hospital, and 3D printing is being used to expedite the production of critical medical supplies, such as PPE. In the absence of a vaccine or proven treatment, the best preventative medicine is information-sharing. Digital contact tracing has already been used to effectively slow the spread of COVID-19 in East Asia. The technology itself is at least a decade old but has struggled to gain traction in the Western world where views on privacy have been prohibitive. Whether American citizens (and those that govern them) will be willing to trade individual privacy rights for the greater public good remains to be seen, but there may be more leniency around data collection going forward.

The pandemic serves as a widespread test case for the effectiveness of these digital solutions, many of which will be permanent fixtures and lead to long-term changes for many businesses.

The Case for Digital Transformation in Crisis

The economy is now mired in a downturn, which may outlast the current (and hopefully sole) wave of the pandemic. Some organizations may be inclined to retrench on their digital transformation plans, as part of a broader belt-tightening agenda. A good cost reduction program focuses on trimming the fat without cutting away the essential parts of the business that are necessary to sustaining current levels of business performance. If we view an organization as a living organism, digital transformation powers the backbone, muscle, brain and heart of the organization. Halting digital innovation efforts in crisis will significantly compromise overall business health.

Though it may seem counterintuitive, crisis is the ideal time to double down on digital transformation. Rather than putting digital transformation plans on hold, organizations need to go all in.

It shouldn’t be prohibitively expensive. Many businesses are understandably reluctant to loosen the purse strings in the current environment of uncertainty. While digital transformation is often viewed as a massive upfront investment in long-term results, it doesn’t need to be. Some of the most successful transformation projects start with low-cost pilots and limited resources that are scaled up once the kinks are worked out and the results are proven. Done in the right way, digital transformation can be self-sustaining, with each incremental improvement paying for the next leg of the journey.

You can actually save money. Past recessions show that controlling costs by improving operational efficiency—a task for which digital solutions are perfectly suited—is more effective in sustaining businesses through financial turbulence than traditional cost-cutting measures alone. For example, companies that rely primarily on workforce cuts to manage costs only have an 11% chance of “breakaway performance” coming out of a downturn, whereas companies that focus on operational efficiencies over layoffs are more likely to experience breakaway performance, according to research from Harvard Business Review.

The biggest efficiency play is automation. With automation projects, ROI is realized near-instantaneously, offsetting the upfront investment. Robotic process automation allows organizations to automate certain types of work processes to reduce the time spent on costly manual tasks and reallocate resources elsewhere. The economics of automation are simple: the same work is performed faster and with fewer mistakes, while human capital resources can be redeployed to higher-value tasks or to fill critical gaps. More sophisticated machine learning tools can be used to identify and address unforeseen areas of waste.

Business reinvention isn’t always a choice. Many businesses are experiencing devastating financial consequences from the pandemic, whether because of supply chain impacts, forced shutdowns, a significant pullback in consumer spending, or all of the above. Consumer discretionary manufacturers and retailers, oil and gas companies, and the service industry are among the sectors that have been struck the most grievous blows. To avoid catastrophic revenue losses, these companies have no choice but to shift focus to their business’s existing digital channels or make a bigger pivot to a digital business model. But again, there is a silver lining: The innovations that are made out of necessity could become lasting pillars of the business that help it to thrive well beyond the pandemic.

There will be no “return to normal”. The coronavirus is permanently reshaping the way we live and work. Some of the behaviors developed in crisis—including wide-scale digital adoption—will outlast the pandemic, well after restrictions on activity are lifted. To stay competitive, organizations must respond to these behavioral changes and meet emerging customer demands. Savvy organizations will focus now on leveraging advanced analytics to extract insights from their customer data and continue internal and external data integration efforts to develop a more holistic view. Detecting those signals of change early will be crucial to optimizing the customer experience and redefining customer value propositions in line with evolving preferences and needs.
COVID-19 Trends Here to Stay

• Remote Work Arrangements
• Digitization of Customer Service
• Shift to e-Commerce
• Greater Use of Self-Service
• Contactless Delivery Options
• Outsourced IT
• Customers Focusing on Spending Less and Saving More
• Increased Focus on Safety, Cleanliness and Health
• Bulk-Buying and Stockpiling
• Use of Online and On-Demand Platforms

 

Summary

Digital transformation is more necessary during this crisis, not less. But that doesn’t mean it will look the same as it did before the pandemic. Resources—both in terms of talent and money—will likely be constrained. Digital initiatives may need to be reprioritized based on relevance in the current environment. New problems and opportunities may come to light with greater urgency. For some businesses, the forces of disruption may be so great that the long-term strategic vision will need to be overhauled. And any digital transformation roadmap that does not deliver value at every increment will need to be reimagined. The key is continuing to experiment and innovate with digital solutions front and center. With the right approach, businesses can come out of the fray stronger, more agile, and more customer-centric than before.

 

The COVID-19 pandemic has threatened the health of our communities, businesses and the global economy.

The stakes are too high to allow room for error when decision-making is often a matter of life or death. From a societal standpoint, both human lives and livelihoods hang in the balance. For many businesses, actions taken in the coming months may determine their survival.

In this climate where the complexity of the problem exceeds the limitations of a judgment-based approach, we must turn to a more powerful tool than human experience alone: data analytics.

Predictive data models are essential tools for ensuring the next hot spot of infection has the right number of beds, medical staff, personal protective equipment, and ventilators on hand.

Data analytics can project how much policy measures—such as stay at home ordinates, the closure of nonessential businesses, or mask mandates—will flatten the curve. And these insights can help local leaders determine the appropriate timing and approach to reopening the economy without unnecessarily risking a resurgence in illness.

In this unprecedented time, we have seen governments and health organizations recognize that no matter the wisdom and experience of leadership, determining the “best decision” requires the examination of a range of factors and consequences that cannot possibly be processed through human judgement alone. Rather, to decide upon the most optimal action to take under such stressful, high-risk conditions, decision-makers must consult the data and look at the models to determine with clarity “what would happen if…”
Data Analytics-Driven Decision Making is a Business Imperative

In this challenging climate, middle market businesses are doing all they can to stay afloat, from cutting costs to overhauling their revenue models. Under pressure to take swift and decisive action, the most resilient businesses will leverage data analytics to light the way forward.

The business case for transforming into a data-driven enterprise is already well-established: “Insights-driven” businesses grow at an average of more than 30% each year and were predicted to take $1.8 trillion annually from their “less-informed peers,” according to research from Forrester.

While most businesses are shifting focus from capturing growth to preserving value and mitigating risk, data-driven decision-making is no less essential. In fact, it’s more essential—gut feel doesn’t cut it when human lives and livelihoods are at stake.

Business intelligence systems for big data gained popularity in the wake of the 2008 recession. While IT budgets were slashed in 2009, investments in business intelligence platforms continued to tick up, as companies began to recognize the value of information access and real-time insight.

In the 12 years since the last recession, business intelligence tools and techniques have evolved dramatically to meet the demands of the big data environment. Visualization and clustering techniques, for example, are used to more easily inventory and categorize raw data. New data preparation tools can automate the extraction of data into an analytics-ready format. Greater processing power and edge computing has enabled organizations to collect and analyze data from mobile devices and embedded sensors. Advanced analytics and machine learning applications can be used to solve more complex business problems and form a predictive response. These advanced applications are enabling organizations to do far more with their data, from driving new operational efficiencies to detecting anomalies or threats to uncovering emerging customer behaviors.

In a COVID-19 climate, data analytics can help businesses to:

		·       Decide which products and services, capital projects, markets, and people to invest in.
		·       Determine which disruptive events might require a change in strategy.
		·       Monitor for anomalies and patterns that may indicate a threat or opportunity.
		·       Pinpoint the best actions to take if these disruptive events occur.
		·       Smooth friction in the business operations, product portfolios, or supplier relationships that might constrain ability to act with speed.

However, with capital constraints an issue for many during this time, the journey toward operationalizing analytics across the enterprise can and should start small, with ad-hoc adoption of analytics in dashboards and reporting. Even with ad-hoc projects, it’s important to keep the end game of insight-led innovation in mind, which is the premise that today’s innovations should pave the way for tomorrow’s. Every innovation should enable more informed, data-driven, strategic business decisions down the road.

As companies position themselves to adroitly navigate COVID-19, management teams can learn valuable data analytics lessons from the present pandemic.
COVID-19 Lesson #1: Success Hinges on Addressing “the Data Problem”

Accurately forecasting the trajectory of COVID-19 is easier said than done. Even with the brightest minds in the world on the case, and highly sophisticated artificial intelligence (AI) models, predicting when the current pandemic wave will end with a high degree of certainty still eludes us.

It’s a data governance problem. How COVID-19 data is reported varies significantly from country to country, and even from state to state. Some reports include presumptive positives in their numbers, while others do not. Many reports categorize cases by severity or demographics, but don’t use the same parameters to do so. Methods of calculation have changed midway, resulting in discrepancies within the same data set. Divergent testing approaches may have also impacted the comparability of the data. Without a uniform reporting standard, the underlying data points that support COVID-19 projection models aren’t necessarily reliable.

The lesson for businesses? Insights are only as good as the underlying data on which they are based. A significant portion of enterprise data collected is either trivial, irrelevant with no business value, or cannot be read by the systems in place. Extracting insight from data is also constrained by inconsistent naming conventions, duplicate data and incomplete records. According to research by Gartner, poor data quality is estimated to cost organizations an average of $15 million in losses per year and, for some businesses, that figure is much higher.

According to a 2019 IDC infobrief, data workers waste 44% of their time each week on data preparation alone—time that could be better spent on analysis to yield insights. Streamlining the insight discovery process starts with getting your data house in order. Harnessing analytics more effectively can also help bring dark data into the light, yielding significant insights from information that otherwise might grow stale or remain unanalyzed.
COVID-19 Lesson #2: Culture and Talent Can Bring About Data-Backed Thinking—or Hold it Back

As COVID-19 made its way from Wuhan to the United States, California was among the first hit, with the first death in the state traced back to as early as February 6th. California acted swiftly, moving forward with a stay-at-home ordinance before any other state—giving the Governor and the hospital systems the valuable time they needed to prepare.

The state has partnered with a broad swath of technology companies from pandemic early warning AI company BlueDot to California-based data giant Facebook. Through these partnerships Governor Newsom has been able to use mapping technology and anonymized cell phone data to evaluate the effectiveness of stay at home policies in real time and spot potential problem areas before it is too late. California’s plan for reopening similarly hinges on data-backed contact tracing powered through Bluetooth.

A year ago, this approach, and these partnerships would have been politically and culturally impossible. But the stakes of COVID-19 had lead political leaders to shift their thinking and form new alliances—altering the policy decision-making process to mirror the culture prevalent throughout Silicon Valley companies: hinged on data-driven insights.

For many businesses the pathway to exploiting the full benefits of data analytics is helped or hindered by company culture. Perhaps data-driven decision-making is not a part of the company DNA. Current approaches to decision-making may be so culturally ingrained that there is real resistance to doing things differently. This can be especially challenging when these institutionalized practices have achieved desired results in the past, and thus seem effective due to anecdotal evidence. In short: comfort, or even complacency, with “the way we do it” is more handicap than advantage.

How can you encode data-driven decision-making into your business DNA?

1. Treat data as invaluable. Leadership can begin the wave of cultural change by inspiring employees to view data as a lever to unlock business value. That starts with establishing KPIs to measure not only the value of your data assets, but your data analytics assets—the dashboards, applications and tools your organization has at its fingertips. The best way to value these assets is to tie their use to the business decisions and operational functions they power.
2. Facilitate smart information sharing. Data is only as valuable as it is useful. Connect disparate “pockets” of analytics and leverage tools like real-time dashboards designed to summarize relevant insights for key stakeholders.
3. Don’t silo your data scientists. A successful analytics function must have direct access to business leaders and a deep understanding of business challenges. A number of structures can work, but it’s critical to ensure that those with data expertise and deep business knowhow have the opportunity to work in lockstep to solve difficult business challenges.
4. Define what “good” looks like. Establish policies, protocols and practices for individual data stewardship responsibilities, provide guidance on how and when data analytics should be used, and formalize the decision-making process.
5. Foster data literacy. While it’s unrealistic to turn your company into an army of data scientists overnight, it’s critical to train employees responsible for inputting data to do so accurately and to teach business leaders throughout the organization to partner with the data team to extract insights. It is best to offer training right before employees can put these skills into practice—giving them the chance to absorb the concepts.
6. Make it part of the job description. Develop clear roles for data analytics-related responsibilities. Structure compensation and leadership positions to reflect each employee’s part in the stewardship of the data they interact with—not just the data they “own.”
7. Incentivize good behavior. Recognize employees for good data stewardship and reward the employees who drive data analytics-related financial or operational improvements.
8. Practice what you preach. Engraining data into decision-making processes is like teaching the workforce to build a new muscle or adopt a new healthy habit. Managers must lead the way by offering data in support of their business decisions and sharing that reasoning with their teams openly. Role modeling these actions can set new cultural norms. Staff should come to believe that in order to build buy-in, you must explore a range of options, weigh tradeoffs, and come to the table with an evidence-based recommendation.
9. Manage ethical implications. With big data comes big responsibility. Consider ethical and privacy concerns to inform a company-wide code of conduct for ethical data use.

 

COVID LESSON #3: Bring Data Analytics into the War Room

South Korea is a coronavirus success story. South Korea had its first confirmed case of COVID-19 on Jan.20. Four months later, South Korea has a total of just under 11,000 cases and fewer than 300 deaths. The government had relaxed social distancing guidelines—and reinstated lockdowns when data showed it would help prevent a second wave.

While so many other nations have struggled, South Korea managed to successfully flatten the infection curve. What did they do differently? They leveraged data to its fullest extent. A public contact tracing app is used to collect geospatial, transactional and image and video data to provide a full picture of a confirmed patient’s movement, including their location history, when they were there, how long they were there, and even the transportation mode they used to get there and leave. A dependable test kit was rolled out in under three weeks using an artificial intelligence system with big data on pathogen and disease information. Between contact tracing and an aggressive approach to testing, South Korea arguably has the most complete view of the virus in the world—and they’ve been able to act swiftly because of it. In the words of Lee Sang-won, an infectious diseases expert at the Korea Centers for Disease Control and Prevention, South Korea has “acted like an army.” They brought data to fight the war.

This conversation is now playing out in Washington. During a recent Senate coronavirus hearing, funding for data modernization and the development of predictive analytics capabilities was a topic of interest.

To effectively respond to crisis, businesses should bring real-time insights into the company war room. Speed is of the essence, but fortunately, significant infrastructure investments and integration efforts aren’t a prerequisite to getting access to relevant insights. Databases, machine learning components and data automation tools can all be spun up in matter of minutes. Unlike more complex analytics projects with undefined parameters, if you know what KPIs to track, it’s just a matter of mapping your data to these pre-defined metrics.

Of course, this does assume that your data foundation is already in good shape. Ungoverned data requires significantly more time to prepare for analysis. A complete information governance overhaul is impractical when the insights you need are for a crisis scenario, so your best bet is to prioritize cleansing the source data you need to meet specific project requirements.

Key KPIs For Your Analytics War Room

• FINANCIAL HEALTH – Real-time visibility into your liquidity position and net working capital can help you ensure the accuracy of your cash flow forecast and identify potential cash crunches before it’s an issue.
• CAPITAL SPENDING – Do you know where your money is going? Monitor procurement costs and track delivery performance overall to identify cost savings and uncover anomalies. See how you’re tracking against individual project budgets as well as budget roll-ups to prevent overspending and resources are appropriately allocated.
• OPERATIONAL HEALTH – Understand the efficacy of business processes and monitor overall business performance to identify inefficiencies and potential vulnerabilities.
• EMPLOYEE HEALTH – Protect essential employees’ health through symptom monitoring and temperature tracking, and map compliance to following social distancing guidelines in the workplace. Track remote workers’ computer activity and time spent working to gauge productivity and performance levels.
• CUSTOMER HEALTH – Insight into customer interactions will be critical to protecting revenue and increasing customer satisfaction. Is revenue going up or down? Are customer complaints on the rise? Are payments coming in on time and what our delinquency rate? Are you responding appropriately to customer contacts and unpaid bills? Access to these metrics can make the difference between losing a customer and keeping them.

 

Applying Data Analytics in COVID-19

Essential Business Application
Imagine a grocery store struggling to keep pace with demand as household cleaners and pantry staples fly off the shelves. The store may only be allowed to permit a few customers into the store at a time to protect customers from infection. Lines are long, and customers are reluctant to wait only to find that most desired products are missing from the shelves.

The company could capitalize on demand and thrive during these challenging times, but only with accurate, predictive insights.

What if that same store leverages point-of-sale transactions and sensors to collect data, such as: What products are in highest demand? Are customers at specific times of the day (e.g. senior hours) more in need of specific products? Are staples such as bread, eggs, and toilet paper most needed immediately following payday? Is the store becoming congested in particular aisles? How can they rearrange products to optimize customer flow?

By culling, centralizing, and analyzing data from in-store sensors and POS digital payments, the grocer can forecast demand, minimizing food waste and capturing full potential revenue.

Nonessential Business Application
Picture a professional services business which has asked its employees to work from home for the duration of the pandemic. The company is expecting decreased demand during the crisis—and uncertain how much liquidity it will need to bridge through to the recovery. Since it may be able to qualify for a forgivable loan through the stimulus package, the company wants to avoid layoffs if at all possible.

With collection of data on capital expenditures, the ability to forecast demand and analysis of the workforce’s productivity while working remotely, the management team may be able to make more informed determinations around: a. how much liquidity they need to procure, b. which costs to cut (e.g. would the company benefit from eliminating their lease and moving to remote only?) and c. how to pivot the business model by offering a new service or realigning talent around an offering with higher demand.

Crisis Moments Call for Evidence-Backed Decisions
The case for engraining data analytics into business decision-making has been longstanding. But in times of crisis when stakes are raised, time is of the essence and emotions run high, data analytics comes in where human judgement falls short: Turning information into insight, evaluating a wide range of potential actions and objectively predicting their consequences, both intended and otherwise.

All too often companies move to digitally transform data without a strategic or proactive approach to cybersecurity and data privacy. As a result of the COVID-19 pandemic, there has been a dramatic, sudden, and unexpected increase in people working, learning, teaching, and consulting from home. This largely unplanned transition from office-based and school-based network access to remote/home access has created some unique capacity, operational, and cybersecurity challenges. Many organizations who conduct digital transformations have realized gains in digital productivity, via increased speed and access to data, more rapid data analysis, and related data storage cost savings, especially when cloud-based data storage is included. However, increasingly these same organizations have encountered costly cyber-attacks in the form of socially-engineered spear-phishing attacks, business email compromise (BEC) or spoofing attacks, and/or ransomware attacks, because they did not adequately or proactively begin their digital transformation with cybersecurity in mind.

Frequently, organizations of all sizes, and from every industry, consider cybersecurity to be an afterthought. However, these organizations are learning this leads to costly lessons on cyber fraud and/or data breaches. In 2019, the estimated global damages from cyber fraud and data breaches exceeded $4 trillion, according to the Gartner Group. Rather, cybersecurity should be at the forefront of strategic business planning for all digital projects. IBM Security reported the average cost of a cyber data breach now exceeds $8.2 million.

As both the level of sophistication and the number of cyberattacks increases every year, it has become painfully evident that the benefits of digital information including: speed, easy data access, rapid data analysis, data visualization, and related cost savings, can be completely lost or stolen as a result of damages. The damages can come from many forms such as: cyber-attacks, cyber fraud, cyber data breaches, cyber-related law suits for cybersecurity negligence, federal and/or state regulatory penalties for cybersecurity/data privacy compliance failures, and negative impacts to an organization’s reputation due to inadequate information security. In addition, the global cybersecurity and data privacy regulatory landscape is increasingly complex. This leaves the door open to potential massive class-action lawsuits for cyber data breaches disclosing consumers’ personal identifiable information, such as the new California Consumer Privacy Act (CCPA) enacted in January 2020. The CCPA clearly states an organization cannot ensure data privacy without “reasonable security.”
Begin with Cybersecurity in Mind

So, what exactly does it mean to begin a digital project or digital transformation of an organization with cybersecurity in mind? Simply said, it means to start all digital project planning by asking the right cybersecurity related questions up-front, including the following:

20 Key Cybersecurity Questions To Consider:

1. Will this project and/or the organization require access to any of the following types of data or information, including:
   • Second level Personal Identifiable Information (PII) of employees, partners, or consumers Protected Health Information (PHI)
   • Payment Card Information (PCI)
   • Intellectual Property (IP)
   • Controlled Unclassified Information (CUI)
   • Covered Defense Information (CDI)
   • Classified Information (CI)
   • Company Sensitive Information (CSI)
2. Who will need access to the project and organization data?
3. How will information access be controlled, internally and with vendors/subcontractors/clients?
4. Where will the project and organization information reside/be stored and how will it be secured?
5. Who will develop and manage the organization’s information governance plan, information system security plan, and data resilience or back-up plan?
6. Does the organization have the right people/resources to effectively lead cybersecurity and data privacy strategic planning and implementation?
7. What project and organization data segmentation or compartmentalization (i.e. zero trust data architecture) is needed to protect the information?
8. What identity, access, and data control procedures should be implemented, including: encryption, biometrics, multi-factor authentication, etc.?
9. Does the project or the organization’s data need to be compliant with one or more specific industry cybersecurity or data privacy regulatory or contractual requirements? If so, which specific requirements (i.e. National Institute of Standards & Technology [NIST] Special Procedure 800-171,ISO 27001, Payment Card Industry Data Security Standard [DSS], New York Department of Financial Services [NYDFS] Cybersecurity, Health Insurance Portability & Accountability Act [HIPAA]Cybersecurity, HITRUST – Common Security Framework [CSF], the new U.S. Department of Defense [DOD] Cybersecurity Maturity Model Certification [CMMC], European Union General Data Protection Regulation [GDPR], and/or the California Consumer Privacy Act [CCPA], etc.)?
10. What cybersecurity vulnerabilities currently exist within the organizations email system, network/information system, software applications, and endpoints?
11. Does the organization currently conduct 24/7/365 data monitoring, cyber intrusion detection, and cyber incident response for all information? If not, are these services provided by a highly qualified Managed Security Services Provider (MSSP)?
12. Has the organization developed, documented, implemented, and tested effective cybersecurity policies, plans, and procedures for project information, including:
    • Incident Response Plan (IRP)
    • Business Continuity Plan (BCP)
    • Disaster Recovery Plan (DRP)
13. Which cyber threat actors (nation-state cyber-attack groups, organized criminal cyber-attack groups, and/or hackavists) would be most interested in the information involved with this project, the organization, the leadership, and the supply-chain?
14. What cyber threat vectors would cyber-attackers most likely exploit within the organization in order to gain access to valuable information?
15. How susceptible are the organization’s employees from top to bottom to socially-engineered spear-phishing cyber-attacks and business email compromise (BEC) attacks?
16. Does the organization currently outsource the Information Technology (IT) services to a Managed Services Provider (MSP) or outsource the cybersecurity to a Managed Security Services Provider (MSSP)? Is the C-suite of the organization satisfied with the outsourced IT or cybersecurity services?
17. When did the organization most recently conduct a cyber-attack simulation or tabletop exercise with the C-suite and board of directors?
18. What percent of the organization’s annual IT budget is spent on cybersecurity?
19. Does the organization have adequate cyber liability insurance coverage?
20. How effective is the organization’s cybersecurity education and training program?

The twenty (20) key cybersecurity questions to consider are just a starting point for a deeper discussion about developing and implementing a strategic, proactive, and comprehensive cybersecurity program. An organization’s responses to the above stated questions will certainly help paint a picture of their current level of cyber defense, potential cyber threats, and known cyber vulnerabilities, which will help cybersecurity experts to build a customized road-map for enhanced cybersecurity and data privacy.
Summary

Too many organizations make critical mistakes when embarking on large-scale digital transformation for their organization. Many fail to develop a strategic, proactive, and threat-based cybersecurity program and under-investing in the following five (5) key elements of cybersecurity:

• Provide cybersecurity education/training for all members of the organization from the top to the bottom.
• Hire the right people to lead the organization’s cybersecurity and data privacy strategic planning and implementation from the start.
• Engage independent firms to conduct periodic cybersecurity diagnostic testing, including: computer vulnerability scanning, penetration testing, email system cyber-attack assessments, spear-phishing campaigns, and dark web analysis, to understand the organization’s cyber vulnerabilities and threats.
• Ensure continuous 24/7/365 information monitoring, intrusion detection, and rapid cyber incident response services either internally or via outsourced Managed Security Services Providers (MSSP).
• Implement and test appropriate information resilience plans and procedures via cyber incident response plans, cyber business continuity plans, and disaster recovery plans.

The key to success is to begin all digital transformation projects with cybersecurity in mind. By engaging with cybersecurity experts from the start of a project, or new business venture, an organization can ask the right questions then develop a proactive and threat-based cybersecurity program. Remember, in the digital age an organization can only achieve information integrity and data privacy through effective cybersecurity.

By now, some businesses have completed their 2021 budgets while others are still crunching numbers and scrutinizing line items. As you put the finishing touches on your company’s spending plan for next year, be sure to cover the finer points of the process. This means not just creating a budget for the sake of doing so but ensuring that it’s a useful and well-understood plan for everyone. 

Obtain buy-in 

Management teams are often frustrated by the budgeting process. There are so many details and so much uncertainty. All too often, the stated objective is to create a budget with or without everyone’s vision for how to get there. To put a budget in the best position for success, every member of the leadership team needs to agree on common forecasting goals. Ideally, before sitting down to review a budget in process, you and your managers should establish some basic ground rules and reasonable expectations. If you are already down the road in creating a budget, it may not be too late. Call a meeting and get everyone on the same page before you issue the final product. 

Account for variances 

Many budgets fail because they rely on purely accounting-driven, historically minded budgeting techniques. To increase the likelihood of success, you need to actively anticipate “variances.” These are major risks that could leave your business vulnerable to high-impact financial hits if the threats materialize.

 One type of risk to consider is the competition. The COVID-19 pandemic and its economic impact have reengineered the competitive landscape in some markets. Unfortunately, many smaller businesses have closed, while larger, more financially stable companies have asserted their dominance. Be sure the budget accounts for your place in this hierarchy. 

Another risk is compliance. Although regulatory oversight has diminished in many industries under the current presidential administration, this may change next year. Be it health care benefits, hiring and independent contractor policies, or waste disposal, factor compliance risk into your budget. 

A third type of variance to consider is internal. If your business laid off employees this year, will you likely need to rehire some of them in 2021 as, one hopes, the economy rebounds from the pandemic? Also, investigate whether fraud affected this year’s budget and how next year’s edition may need more investment in internal controls to prevent losses. 

Eyes on the prize 

Above all, stay focused on the objective of creating a feasible, flexible budget. Many companies get caught up in trying to tie business improvement and strategic planning initiatives into the budgeting process. Doing so can lead to confusion and unexpectedly high demands of time and energy. You’re looking to set a budget — not fix every minute aspect of the company. 

Our firm can help review your budget-setting process and recommend improvements that will enable you to avoid common mistakes and get optimal use out of a well-constructed budget for next year. Contact ATA for more information.  © 2020