Deloitte SA Blog

Icon

The three models for tax compliance and reporting – It’s your choice

Global Tax Compliance & Reporting

The search for a more effective delivery model

There have been significant changes in the business landscape over the last 10 years,  which have materially affected the global tax compliance and reporting processes  for corporate tax payers. These include changes in regulation and tax laws,  electronic filing requirements, risk-based assessment techniques, and advances  in tax technology solutions among others.

If you have any questions or require a more detailed discussion, contact Clinton Eidelman (Associate Director – TMC Technology – Deloitte South Africa) at ceidelman@deloitte.co.za

Commercial objectives

Recent research commissioned by Deloitte, which included 250 interviews with the tax directors of 250 global organisations, shows that the principal commercial objectives for global tax directors are managing or reducing Effective Tax Rate and ensuring sound risk management. Other objectives include a desire for operational efficiency or cost reduction but these are of less importance.

Likewise, where metrics are in place to measure the performance of the tax department, these are based on managing the Effective Tax Rate in the vast majority of cases.

Resourcing and management

The resourcing of global tax functions appears to vary significantly.

What is clear is that outside of the headquarter location there are often inconsistent levels of in-house tax expertise. As tax directors seek to assert more control over global compliance, making sure there is sufficient expertise is very rarely a straight choice between in-house management and outsourcing. Instead, hybrid models prevail with the ultimate requirement being to ensure there is sufficient tax expertise at each stage of the process, regardless of whether it is resourced in-house or externally. However, where resource and expertise does allow, overall there appears to be a preference for in-house management over outsourcing. 65% of the researched companies manage indirect tax compliance solely in-house, 52% manage statutory accounts in-house and 73% manage the global tax provision in-house. Only when it comes to corporate income tax compliance, a minority of companies manage it in-house (36%).

Across every area of compliance and reporting, where management is not solely in-house, total outsourcing is marginal and ‘co-sourcing’ is far more prevalent. This demonstrates the requirement to bring in external expertise mainly to fill the gaps around in-house capability.

Shared services

There is evidence that as part of the in-house management of global compliance and reporting, businesses are using their own shared service centres. 55% of multinationals state that they operate a shared service centre for finance and in just over half of these, some compliance and reporting work is carried out. However, qualitative assessment suggests that only certain data related tasks reside within the service centres and there is no significant tax expertise apparent.

Technology

Conceptually, the potential benefits of technology in compliance and reporting are well acknowledged: only 13% of global tax directors believe that they could not do more with technology.

However, deeper questioning suggests there are barriers to adoption when it comes to new technology. Typically, these revolve around perceptions that implementation will entail significant disruption, the cost is too high, and there is insufficient return on investment or a view that major technology projects are not something that tax functions would embark upon unilaterally within the business.

Compliance and reporting service provider delivery models

Tax directors show a general preference for external expertise delivered at a local level. When asked whether central service centres or local teams work better, 75% express a preference for local teams while 19% think that central service centres work better. The hypothesis here is that more ‘progressive’ global businesses are seeking to outsource non-core business functions or to achieve integration with their own shared service centres.

The three methods of compliance and reporting delivery are:

Decentralised

Delivered and managed locally

All services are managed and delivered locally. This approach relies on local control and responsibility.

Coordinated

Delivered locally, managed centrally

This method involves local delivery of service but introduces a strong element of central coordination and management. This brings greater efficiency, better control, and less risk.

Centralised

Delivered and managed centrally, supported locally

This method shifts the emphasis toward central delivery as well as coordination and management. Crucially, though, local activity, relationships, and support are also maintained.

It is important that whichever model is adopted it should grow and evolve with the organisation to meet their needs now and in the future, wherever they are on the spectrum. Standardised processes and methodologies underpinned by common technologies and tools are essential in this regard. Tools such as Microsoft Office-based solutions (Excel and Word) that have been in widespread use no longer match much better tax technologies in the market for example MS Dynamics NAV (for data management and statutory accounting), 3rd party tax software (for due date tracking, VAT return production and tax provisioning) and web-based dashboard portals.

Benefits

An organisation should ensure it selects a delivery model and service provider that at a minimum provide the following benefits:

  • Increased visibility, transparency, and control over global compliance and reporting
  • Flexibility to maximize use of in-house resources, respond to shifting priorities and the ability to provide expertise at the global and local level
  • Integration and efficiency to control costs, increase accuracy, minimize risk and to respond to regulatory changes
  • A path to improvement without the introduction of significant risks
  • Insight to make informed strategic business decisions

If you have any questions or require a more detailed discussion, contact Clinton Eidelman (Associate Director – TMC Technology – Deloitte South Africa) at ceidelman@deloitte.co.za

Do you have anything to add? We welcome your feedback! Feel free to share this article with your colleagues and network!

Is the Manufacturing Competitiveness Enhancement Programme the answer to the manufacturing industry?

Dr Rob Davies, The Minister of Trade and Industry, has launched the Manufacturing Competitiveness Enhancement Programme (“MCEP”), to assist the manufacturing sector. In this context it is important to remember that, in the past five years, the manufacturing sector has been plagued by the global economic meltdown, rising electricity costs, escalating wage cost and the threat of a carbon tax. Unlike other countries with specific “bail-out” plans, there were no specific measures announced to benefit the ailing manufacturing industry, until it was announced in this year’s budget speech, that a new incentive would be launched during 2012 which would inject R5.8 billion into the distressed manufacturing sector.

If you require more information or a more detailed discussion on the MCEP, contact Newton Cockcroft (Deloitte Research & Development and Government Grants Leader for South Africa) at ncockcroft@deloitte.co.za

In terms of the budget speech, the aims of the program would be “to provide a credible support package to stabilise and grow output, grow employment and grow confidence in the manufacturing sector in the of face or uncertain local and export market conditions arising from the global economic crisis”.

It is heartening to see that the Department of Trade and Industry launched MCEP within 3 months from the announcement in the budget speech. It is also very encouraging to note that the programme will go live on 4 June 2012.

Although this is not aimed to provide the reader with a detailed summary of the MCEP, we hope to raise awareness about the existence of the programme and its benefits.

Who will benefit?

The new incentive programme will focus on providing assistance for participants in the manufacturing and engineering sector including conformity assessment agencies. It should be noted that this incentive programme will not be available to start-ups or companies without at least one year’s manufacturing track record. It is, however, important that all enterprises that are in the manufacturing value chain should take cognizance of MCEP as it may affect them, whether directly or indirectly.

How to qualify for the benefits

Successful applicants will be assigned a benefit ceiling based on entity level manufacturing value add which the applicant will have to claim through the 7 sub-programmes of the MCEP within a 2 year period.

The benefit ceiling is calculated as follows:

Sales /  Turnover

Less: Sales value of imported goods
Less: Sales value of other brought-in finished goods
Less: Material input costs (used in manufacturing process)
= MVA

MCEP consists of  two categories, a production incentive and industrial financing loan facilities. The two categories have seven components in terms of which an applicant can benefit from MCEP. These are:

  1. Production Incentive
    1. Capital Investment
    2. Green Technology and Resource Efficiency Improvement
    3. Enterprise Level Competitiveness Improvement
    4. Feasibility Studies
    5. Cluster Competitiveness Improvement
  2. Industrial Financing Loan Facilities
    1. Pre- and Post-dispatch Working Capital Facility
    2. Industrial Policy Niche Projects Fund

The cash benefit, based on the MVA, which is available through the above listed seven components will amount to the following percentages of the calculated MVA:

Asset Value MVA Benefit
100% Black Shareholding 15%
< R5 million 15%
> R5 million but < R30 million 12%
> R30 million but < R200 million 10%
> R200 million 7%

It is also important to note that an applicant can apply for a combination of the seven components of MCEP and that the benefits can be substantial. As example, benefits for capital investment and green technology and resource efficiency improvements are capped at R50 million per component. If one adds the job creation bonus payment in these 2 categories to this, an applicant meeting all the requirements and creating sufficient job opportunities, can obtain a benefit of as much as R110 million in these two categories. This benefit, if tax exempt as expected, may make the incentive in some instances more attractive than the section 12I Income Tax additional tax allowance. It is in this light, important to note that it seems to be Government’s intention that projects under R200 million should apply for either the Manufacturing Investment Programme (MIP) or the MCEP whilst projects over R200 million should apply for benefits in terms of section 12I of the Income Tax Act. Despite this it is important that any applicant should consider all mandatory and other criteria of all the applicable programmes in order to ascertain which would be the best fit for the company.

The Automotive, Clothing, Textiles, Leather and Footwear sectors that qualify for support under AIS, APDP, MIDP, CTCP and CTCIP have been disqualified from this incentive programme. Automotive manufacturers which earn less than 25% of its turnover from the motor vehicle supply chain may, however, apply for the MCEP.

There are more stringent requirements for certain industries, as listed below:

Industry

Must Prove

Manufacturers of paper pulp and paperboard; Petroleum refineries/synthesisers; Processing of Nuclear fuel; Manufacture of basic chemicals; Manufacture of basic iron   and steel, Manufacture of basic precious and non-ferrous metals Direct, quantifiable downstream jobs; and/or Benefits to other applicants in the value chain (access to new markets/introduction of new products and processes); and/or Sector is in cyclical distress

The swift release of the MCEP incentive programmes is welcomed by Deloitte. It should however, be noted that an applicant’s benefit will be based on the historical asset cost and, if one adds the 20% expansion requirement in order to qualify for the programme to this, we feel that this may lead to a large scale disqualification of large manufacturers from the programme. Large manufacturers have, as their smaller counterparts, suffered as a result of the recession and one must hope that measures would be implemented that will prevent the disqualification of large manufacturing companies from the programme.

It is also concerning that more difficult qualification criteria have been set for certain industries, which have been specifically earmarked in IPAP 3 as priority sectors, which should be grown and supported. One would have expected that these priority sectors would have received beneficial treatment or easier qualification criteria.

Other aspects that must be seen as positive are the relative short timespan within which and successful applicant will be able to claim benefits. It was expected that a B-BBEE hurdle (Level 4) would be in place and the fact that non-compliant companies would be given four years to achieve such status would also tend to be on the lenient side.

In closing, it is important that MCEP, and the substantial benefits that it will inject into the manufacturing industry, be implemented and administered swiftly and efficiently. In this regard the relative short timespan between the announcement of MCEP in the Budget and the release of the final programme shows that the DTI and Government realise the needs of the manufacturing industry in South Africa.

If you require more information or a more detailed discussion, contact Newton Cockcroft (Deloitte Research & Development and Government Grants Leader for South Africa) at ncockcroft@deloitte.co.za

Did you find this useful? We welcome your comments and feedback! Please share this article with your colleagues and network!

Addressing Africa’s Infrastructure Challenges

 

Inadequate infrastructure remains a major obstacle towards Africa achieving its full economic growth potential. With Africa seen as one of the world’s fastest growing economic hubs, meeting the demand for key infrastructure has been identified as a priority. This translates into exciting opportunities for global investors who need to look past the traditional Western view of Africa as a homogeneous block, and undertake the detailed research required to understand the nuances and unique opportunities of each region and each individual country.

This detailed piece of thought leadership looks at the importance of adequate infrastructure within Africa, as it is crucial to long-term growth, backlogs as an opportunity, funding, Public-Private Partnerships (PPP) and Deloitte’s involvement in infrastructure development.

Read the full article . . . . Addressing Africa’s Infrastructure Challenges

Would you like more information or do you require a more detailed discussion? Andre Pottas, Corporate Finance Advisory Leader for sub-Saharan Africa, would love to hear from you! André may be contacted at apottas@deloitte.co.za

Do you have anything to add? We welcome your feedback! Feel free to share this article with your colleagues and network!

Business transformation starts with people and processes and technology follows

Market pressures and corresponding growth strategies push business transformation to the top of many organisations’ agenda and best practice companies are using business process models to achieve such transformation and ensure increased shareholder value.

Would you like more information or do you require a more detailed discussion? Kamal Ramsingh, Head of Technology at Deloitte Consulting, would love to hear from you! Kamal may be contacted at kramsingh@deloitte.co.za. Have a look at the new Deloitte Consulting Technology home page!

Business Process Before Technology

Although common business operations have three dimensions: people, process and technology, many organisations, when they embark on transformation and require one view of the business, choose to lead with the implementation of technology, such as a new Enterprise Resource Planning (ERP) system. Deloitte’s experience has shown that smart leaders don’t try to lead transformation through technology. The right way to transform an organisation is to:

  • Begin with people and process
  • Make sure that technology is set up to follow the people and process rollout in an integrated manner

A pure technology-led effort often poses the threat of becoming overly technology centred, resulting in low acceptance and a lesser than expected positive business impact. This should be seen in contrast to a significant number of organisations which prefer to lead the transformation of their business with structured and well thought through process- and people-related efforts to gain early benefits. These are then embedded and expanded through a relatively low-key technology entrenchment.

Read the full article . . . . Business Process Before Technology

Would you like more information or do you require a more detailed discussion? Kamal Ramsingh, Head of Technology at Deloitte Consulting, would love to hear from you! Kamal may be contacted at kramsingh@deloitte.co.za. Have a look at the new Deloitte Consulting Technology home page!

Do you have anything to add? We welcome your feedback! Feel free to share this article with your colleagues and network!

Large retailer saves millions by tax optimising their enterprise resource planning system

Unlocking tangible value from your ERP implementation

Enterprise Resource Planning (“ERP”) provides an opportunity for companies to track and monitor business flows. While this creates a significant benefit across the highly regulated and diverse landscapes in which companies operate, there is additional value to be unlocked through a carefully designed ERP system.

If you have any questions or require a more detailed discussion, contact Clinton Eidelman (Associate Director – TMC Technology – Deloitte South Africa) at ceidelman@deloitte.co.za

Organisations in the midst of implementing or upgrading an ERP system often overlook the importance of the tax department as stakeholders of the system. The organisations invest in deep operational improvements, but ignore broader issues of structural tax planning or they make supply chain decisions without understanding their full tax implications.

Taxes are directly affected by a company’s overall operating model and as such, constitute a structural cost. The choices made today – how contracts are negotiated, who controls manufacturing processes, how inputs are sourced, how products are distributed – determine the structural tax obligations in future. Only when strategic tax planning forms an integral part of the overall business vision will it be possible to drive down a company’s structural tax rate.

However, effective and long term tax planning requires an understanding of the group’s strategic objectives, goals and constraints. Simultaneously, businesses increasingly require their tax functions to provide insight for critical decisions. Fast, accurate delivery of the tax provision and tax calculations for financial reporting purposes, as well as reporting on tax compliance filings and for management decision making, are all minimum expectations today.

Frequently, the unique needs and requirements of the tax function are not adequately addressed when implementing an ERP system, as the current “as is” tax structure is implemented with the new ERP system, relinquishing potential tax benefits and forcing the tax department to continue inefficient manual processes for tax compliance, planning and forecasting.

Therefore, according to Forrester, “Smart (technology) buyers have started to include a new factor in their sourcing decisions: tax implications. Understanding how taxes will be affected can help companies make better sourcing decisions and fund new projects.” In many cases cash tax savings can often deflect the cost of the overall ERP system implementation.

Tax Enabled ERP Solutions: Direct and Indirect Tax Benefits

A well designed Tax Enabled ERP Solution can increase speed, accuracy and data integrity — all of which are important, particularly when working through last minute updates at either quarter-end or year-end.

These improved data collection processes also help companies better manage workflow, which in turn increases visibility. Furthermore, it provides greater control over information and the associated movement or flow of work allows the tax function to be more effective and to report virtually in real time. This makes the organisation more nimble when it comes to business decisions and the related tax implications of such decisions and frees up the tax department to spend more time performing value-added activities such as strategic income tax planning.

A large building materials company recently implemented SAP globally. Tax SAP specialists conducted a systems audit of tax processes, including reviewing and documenting the tax processes end to end, highlighting any controls and training needs going forward and recommending changes required to reduce the risk of tax mis-declarations.

Deficiencies were identified in the following areas: missing/duplicate SAP master data, ownership of processes/data, limited documentation / training, manual processes without robust controls and incorrect tax coding within the Shared Service Centre.

A Tax Enabled ERP Solution provides opportunities to benefit from tax savings ideas directly and indirectly associated with ERP implementations such as: maximising R&D tax credits and deductions, training incentives, transfer pricing, customs and excise, VAT optimisation and other appropriate strategies.

By considering the tax implications during the ERP design or transformation process, companies are able to ensure that the ERP system produces the critical tax-relevant data and information needed to streamline tax compliance processes, more effectively identify and implement tax savings strategies, and provide better audit support. Currently many ERP-systems do not give visibility of many indirect taxes (VAT and Customs) which results in much data manipulation outside the system to effectively manage these taxes.

A Tax Enabled ERP Solution should be designed and configured to easily provide financial information that may historically have been inaccessible and enable improved capture processing and reporting throughout the financial and tax processes. In addition, it should enable improved data collection processes, allowing the tax department to work more efficiently and to deliver value to the organisation in new ways.

A large international retailer serving over 200 million customers weekly was suffering from tax issues that included inability to track provisions in sufficient detail, lack of fixed asset information and insufficient P&L granularity. Tax SAP specialists were brought in to run the full tax work stream with the responsibility for all tax design, build, testing, remediation and go-live activities with the end result of Tax savings running into the millions.

As organisations redesign processes and install enterprise-wide systems to create a competitive advantage, they often consolidate legacy systems and initiate process improvements that at best, do not enhance the tax reporting process, and at worst: actually impede access to tax-sensitive information and do not take advantage of potential tax savings.

Tax Enabled ERP Solutions: Overcoming the Challenges Faced by Global Organisations

Operating a global organisation poses very specific challenges in the area of tax management and reporting. These may include unusual taxes being imposed (such as withholding taxes on administrative and technical fees); regulatory approval that is required for certain types of transactions, combined with a lack of relief in terms of double tax agreements. Group Tax Managers need to constantly be up to date with the issues existing in those countries to avoid lengthy delays in payments and penalties. While it is not possible to foresee all challenges, organisations that have, or intend having, a multinational presence can reduce one of their significant risks by ensuring that their ERP solution is tax enabled.

If you have any questions or require a more detailed discussion, contact Clinton Eidelman (Associate Director – TMC Technology – Deloitte South Africa) at ceidelman@deloitte.co.za

We value any feedback and comments. Please share with your network!

Understanding global tax exposure for businesses selling or distributing digital products in South Africa

As consumers worldwide shift their media consumption from the tangible to the digital, they are taking their books, movies and music with them on one device, and leaving behind a tangle of tax implications – particularly when it comes to VAT in South Africa. That is why businesses that sell or distribute electronic products to overseas consumers via the Internet would benefit from a clear understanding of their increasing regulatory and financial exposure, as well as a strategy to turn these changes into a competitive advantage.

If you have any questions or require a more detailed discussion, contact Severus Smuts (Director – Value Added Tax at Deloitte South Africa) at ssmuts@deloitte.co.za

European countries have been slowly clarifying their position in relation to this type of service.  In November 2011, Iceland became the latest country to tax the electronic supply of services by non-resident businesses to domestic consumers. Norway introduced a similar rule in July 2011 and Switzerland at the beginning of 2010, as did the European Union (“EU”) in 2003. Additionally, tax authorities in other jurisdictions with a VAT or Goods and Services Tax system are looking to Europe with a keen eye on whether such steps would be practical in their own jurisdiction. Financial executives of global businesses, regardless of where they are based, should understand the compliance and planning implications of these new rules or suffer adverse financial consequences.

South Africa is one of those countries looking at what Europe is doing.  The present position in South Africa is one of uncertainty because there are no clearly defined rules and promises of clarity have been made but not fulfilled for a number of years. However, the legislation is so unclear that it is not possible to make any definitive statements for these global businesses except to say that they are likely to have a VAT liability in South Africa. It may be possible to obtain a ruling in certain circumstances that says otherwise.  One of the main issues for the tax authority in South Africa (SARS) is how to enforce the payment of VAT when the consumer is an individual not registered for VAT.   Strictly speaking under the terms of the present legislation, the individual should voluntarily pay the VAT owing where the purchase exceeds ZAR 100.  It is easier for the authorities to say that the global business should register and pay the VAT, which means that the ZAR 100 threshold will not apply.

Defining electronically supplies services

In South Africa there is no legislative definition of electronically supplied services for VAT purposes.  In South Africa it is clear that intangible goods are defined as services for the purpose of the VAT Act but that is as far as it goes.

In the EU, electronically supplied services include those which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology. The definition of services is wider than an ordinary definition and includes digitized products and what may be referred to as “intangible goods,” such as electronic publications, applications (or “apps”), and software.

The South African definition of services will cover the following affected businesses within the media and entertainment industries which include, but are not limited to:

  • Publishers or distributors of electronic publications such as books, magazines or video content
  • Suppliers of visual or audio media over the Internet

VAT and online gaming

Business scenario:

Video game suppliers regularly fall under the provisions of the electronically supplied services rules, even when supplying the actual game free of charge. While the games are free to play, players are often given the option to purchase additional credits – often referred to as “in-app purchases”– virtual currency or items that are supplied to continue game play.

Activity in this area has increased exponentially with the surge in sales of tablet devices such as the Apple iPad and the countless apps that market content directly to consumers.

VAT implications:

While the original supply of the game may not be subject to VAT, it is likely that for the purposes of South African legislation these are “imported services” and the unregistered individual is liable for the VAT.  However, the distributor could possibly also be liable for VAT registration and VAT at 14% if the business is carrying on an “enterprise” in South Africa.  The reasoning behind this is that the services are consumed in South Africa and VAT is a tax on consumption.  However, it could be argued that the services are not performed in South Africa (unless the server is here) and the activity is a passive one.  In that instance perhaps the liability should only fall on the individual.  It is important to determine who was liable to account for the VAT as the recipient may as a defence argue that the supplier was liable to collect the VAT.  While specific place of supplies are not forthcoming it would be prudent to obtain a ruling from SARS when these services are marketed to consumers in South Africa.

If there is a liability to account for the tax on these intangible goods by the business in question, it may fall on either the producer or distributor of the content depending on the distribution model – whether the distributor is acting as a disclosed agent or an undisclosed agent or commissionaire.

If you have any questions or require a more detailed discussion, contact Severus Smuts (Director – Value Added Tax at Deloitte South Africa) at ssmuts@deloitte.co.za

Your comments are most welcome. Please share this article with your network!

Is the Protection of Personal Information Bill a necessary evil or opportunity?

The corporate world is currently debating the Protection of Personal Information Bill (PPI) which will soon be promulgated. Much of this debate centres on how onerous the minimum requirements for compliance will be, how long organisations will be given to comply and what the cost implications are likely to be.

Want to learn more about the Protection of Personal Information Bill? Visit the Deloitte Protection of Personal Information Bill website or contact Dean Chivers at dechivers@deloitte.co.za or Daniella Kafouris at dkafouris@deloitte.co.za.

Some companies have chosen to take a ‘wait and see’ approach. “Those companies that see regulatory changes as an opportunity for increasing business value adopt a more positive, proactive approach and also spend considerably less in achieving compliance over the long term,” comments Dean Chivers, Director Deloitte Legal, at Deloitte. “They are able to link compliance requirements to the entire value chain of the business so that each functional area buys into its importance, realises the value that can be delivered to the business and collectively bring about change to realise this value.”

Chivers cautions that companies should implement PPI compliance as prudently as possible. “Be realistic – your organisation may not be completely compliant by the time the Act is promulgated. PPI is not exclusively an IT or legal or a process or a security issue, it’s a combination of all of these. Create the framework within which PPI will be managed within your organisation, and then build awareness amongst staff around both PPI and your entities PPI compliance framework. This will start to drive PPI issues into your framework, thereby facilitating a proactive, self-regulating model.

Chivers recommends that a response strategy be established, with the responsible person being one who understands what the law requires.

“Decide on your corporate ethics policy and define and communicate it, teaching your organisation to look out for problems,” says Chivers. “If and when a problem arises, react quickly and correctly to deal with it and close the loophole. Look for triggers that indicate your processes are not working properly.”

According to Chivers, the PPI Bill will be the catalyst for companies to add value while achieving compliance. They should engage with their customers in the process and use it as an opportunity to build customer trust in the company by highlighting the company’s efforts to treat customer’s personal information with respect and confidentiality.

The following are just some of many opportunities:

There is tremendous advantage to be gained from proactively engaging customers ahead of promulgation, for example:

  • Positive customer approvals are more likely to be obtained prior to promulgation and prior to the market being flooded with requests
  • Valuable insights can be obtained from a company’s existing customer database now, ahead of customer requests for data deletion.
  • Customers will become aware of the fact that PPI  will result in the protection of their personal information, something most  people will appreciate.
  • Companies who lead the market in becoming PPI  compliant will gain customer respect and loyalty.

PPI can also deliver many potential positives within a company, to name a few:

  • Technology gets the budget go-ahead for  middleware and data warehouses, new SAP modules, data security upgrades, etc, which  add value when linked to the overall business strategy.
  • Data analysis of personal information for  purposes of PPI compliance can yield significant useful information around  customers and markets.
  • Provides positive motivation to interface with  customers, alumni, potential employees, personal networks.
  • Employee files get updated and remain up-to-date.
  • Contracts are reviewed and updated and may even  be better than before.

Chivers recommends that the initial step should be a quick  start process prior to promulgation, followed by detailed design and implementation of value-adding initiatives. This will allow the company to gain  momentum and build a platform for future opportunities. Firstly, understand the  extent of PPI impact on customer and channel strategy, brand positioning and  employee proposition; determine possible impacts on people, processes,  technology and systems; and define key data requirements for business  sustainability.

Thereafter, look at the following opportunities:

  • Identify value-adds beyond minimum compliance
  • Design customer interactions to increase market share
  • Realign processes for a more customer focused organisation
  • Link to other initiatives such as process streamlining, productivity improvement and employee communication
  • Select technology to support more than just data integration, e.g. non-intrusive technology options ranging from cloud technology, to separate software and simple upgrades
  • Build the customer focused organisation by digging deeper into existing customer data
  • Use an approach that first establishes the organisational needs and gaps before moving to an ‘all ends at once’ implementation
  • Adopt a ‘build to last’ approach for ongoing organisational sustainability

In summary, organisations can gain measurable business performance improvements by approaching the Protection of Personal Information Bill as a strategic opportunity rather than an onerous compliance cost. Realising this potential value from the Bill, however, requires a shift in organisational mindset.

“Don’t be limited or restricted by your existing database,” says Chivers. “Use it as a contact list and first cut segmentation, design a meaningful database for future strategy and populate it by means of an automated permission campaign; don’t be restricted to a single tool or methodology – select those which are most appropriate for your needs; ensure your approach is strategic. Include change management in your implementation; don’t be purely focused on data analytics, ensure that your approach is aligned to your business priorities as well as people, process, technology and system enablers.

Chivers goes on to say “Understand how PPI affects your IT, legal, process and security options before jumping on the analysis bandwagon. Analyse the options and consider the best process for your company. There are a number of options, so give yourself the best chance of adopting the most appropriate one for your company.”

Want to learn more about the Protection of Personal Information Bill? Visit the Deloitte Protection of Personal Information Bill website or contact Dean Chivers at dechivers@deloitte.co.za or Daniella Kafouris at dkafouris@deloitte.co.za.

Is there anything you would like to add? We value your feedback and comments! Please share this article with your network!

Deloitte East Africa Private Equity Confidence Survey Report


2012 looks promising: The results of the second private equity confidence survey indicate that there is an increased appetite for investment in private equity ventures in East Africa. East Africa experienced a significant influx of private equity interest in 2011. New East Africa-focused funds are targeting high-growth small and medium enterprises in consumer-driven sectors. Investors have also begun to explore deals in new markets in Ethiopia, South Sudan and the Democratic Republic of Congo.

While investment sizes remain limited, several large deals were closed in 2011, and investors expect deal size to creep up over time. General partners with wider African mandates are also moving into the sub-region. These funds are active across infrastructure, real estate, health care, agribusiness and green energy, in addition to consumer-driven sectors. Venture capital (VC) funding is still scarce. However, Kenya has begun to stand out as an ICT hub, with help from technology incubators and increasing interest from local and international VC firms.

Many investors see East Africa’s strong growth potential as a driver of better investment performance than in South Africa: This is a huge shift in private equity attitudes toward Africa, which have been historically focused on South Africa. East African investment potential is seen as roughly on par with West Africa, where similar growth dynamics are at play.

Optimism brought about by positive changes in the East African private equity landscape has led to increased investor confidence. There is a dominant investment mood exhibited by GPs, and the survey indicates that the investment appetite is growing. As private equity enthusiasm continues to spread across Africa in 2012, East Africa will certainly be a hot spot to watch.

We trust that you will find this survey insightful and informative in your undertakings in East Africa.

Download the full report . . . .East Africa Private Equity Survey 2011

If you have any questions or require a more detailed conversation, contact Alexander van Schie, Director, Corporate Finance Services (Deloitte East Africa) at avanschie@deloitte.co.ke.

Your feedback and comments are most welcome. Please share this article!

 

 

Is your security capability evolving with your business strategy?

Any experienced leader knows that little is accomplished by those who try to get things done. That’s because good leaders don’t confuse effort with results. Yet when it comes to security risks associated with technology, where a critical breach can bring a business to its knees, there’s a great deal of trying going on. And not nearly enough doing.

Not surprisingly, many executives today believe their organizations are well-protected. With broad policies in place for technology governance, risk and compliance, most have assigned responsibility for security to their IT shops, confident that their fiduciary and legal obligations are being met. But a closer look at the real risks and threats reveals a different picture. Organizations that take a compliance-oriented approach to enterprise and IT risk may not be managing many of the threats that matter most.

It’s not uncommon for companies to equate compliance and security. That’s what happened recently when a major retailer was hacked, exposing several million debit and credit card numbers to the risk of theft. The company appeared to have a rock-solid compliance program in place, asserting that they followed all the security requirements mandated by the credit card brands and others. But that wasn’t enough. A number of back-end systems were left unpatched, leaving some of their software vulnerable to exploitation. Hackers were able to penetrate the company’s systems despite their most diligent compliance efforts. Thousands of cases of fraud were linked to the breach, exposing the company to legal, reputational and financial risks.

A risk-based approach using a layered defense could have helped prevent such an incident.

Download the full article . . . .  Evolve or fail

We welcome you to visit the Deloitte South Africa Technology Risk Advisory website. If you have any questions or require a more detailed conversation, contact Cathy Gibson at cgibson@deloitte.co.za

Your feedback and comments are most welcome. Please share this article!

Global economic outlook and trends for retailers in the coming months

This Deloitte report identifies the 250 largest retailers around the world, based on publicly available data. The report also provides an outlook for the global economy, trends for retailers to consider in the coming months, and an analysis of market capitalisation in the retail industry.

Download the full report . . . .  Global powers of retailing 2012

If you have any questions or require a more detailed discussion, contact Rodger George at rogeorge@deloitte.co.za

Please share this article with your colleagues!

Subscribe to our blog

Subscribe to our newsletter

We share topical, role specific thought ware no more than once a week.

  • Click here to subscribe
  • Download our apps

    You can keep up to date with all the thought leadership and insights posted on this blog via our mobile apps.

  • iPad
  • Android
  • iPhone
  • Subscribe to our RSS Feeds

    Switch to our mobile site