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How businesses stand to lose more than they save with radical cost cutting

Source: Finance Derivative

Spokesperson: Benjamin Swails, Northern Europe General Manager

For years, my career was focussed on the next big conference, the customer meeting that required a flight and hotel stay, or the big customer dinner where the right bottle of wine really mattered. Since becoming the General Manager of Pleo’s Northern European business, my remit has expanded to understanding how much money we have coming in versus going out. Today, I’m asking whether my teams travel to travel, or because it’s necessary? What are we spending on the tools and applications required to do the job and what is the ROI? How many coffees is my team expensing every day? To some this might seem like overkill, but these details matter to me in 2024. And they should matter for you too.

That’s because, ahead of what’s expected to be a challenging year for UK business, a quarter of small and medium-sized enterprises (SMEs) are looking to reduce business spending in 2024. This is according to Pleo’s CFO Playbook for 2024, which polled over 500 UK financial decision makers. But, when it comes to where these spending cuts will manifest most strongly, 1 in 5 UK businesses are exploring reducing pay for remote workers – a decision that has the potential to impact 16% of full-time British workers. With just under half (41%) of businesses asking their teams to come into the office more, it’s obvious that business leaders are keen to bring back in-person collaboration and make the most of costly office rents. But is reducing pay for remote workers really the answer?

Before they sign off on spending decisions that can have potentially damaging ramifications for employee morale, businesses must first bring some clarity to their spending oversight and find the balance between a leaner business and one that still operates a flexible culture. This means having a tighter rein on spending – including deeper insights and fewer spending blind spots – to reduce the need for radical cost-cutting strategies. Because in 2024, details matter.

Why there is a need to reduce spending

The past few years have undoubtedly been a challenge for UK SMEs. In late 2023, for the first time in over a decade, more businesses were closing down than starting up. Fast forward and 2024 has kicked off with similar uncertainty. Encouraging EY forecasts expect the UK economy to grow 0.9% this year, up from the 0.7% growth projected in October’s Autumn Forecast – while GDP growth expectations for 2025 have been upgraded from 1.7% to 1.8%. But, less than a month on, the UK finds itself in a recession.

This has increased the pressure on organisations to reduce spending for the year ahead. However, only a third (34%) of UK businesses feel they’ve got an excellent grip on managing their spending, and just 28% feel they have strong visibility of their financial health and performance. Yet, curiously, almost 50% of UK businesses believe 2024 will be “easier” than 2023. Something that, in light of the challenges businesses face and the lack of significant investment into spending visibility and performance,  is hard not to interpret as wishful thinking. And businesses risk flying blind in their quest to cut costs without comprehensive spending oversight to navigate them.

Cost cutting shouldn’t be a Hail Mary

Let’s use the notion of reduced pay for remote workers as a case study for making spending decisions without spending oversight. Renewed calls for workers to return to the office is one thing, but this feels like more of a financial misfire that declares the contribution of remote workers less valuable. Pleo is currently thinking about the role of its own office space. But, what’s crucial is that we don’t plan on putting financial pressure on those who prefer to work from home. Instead, we’re thinking bigger and evaluating our office needs for all London-based staff. This ensures we can save money on rent, not people, before investing it into amenities our team wants.

Many of our employees are still working remotely and while, in a perfect world, I would love to see 80% of our team come into the office to help contribute to the culture that makes Pleo so special, we need to strike a balance of office requirement and productivity preferences, and keep our culture intact as we do so. Ultimately all of our employees need to feel valued.

As businesses strive to streamline their spending, the decisions made at the collective level are likely to impact individuals most – from work models and colleagues to pay and progression. And so before making such drastic spending cuts, businesses need to ask themselves how they can manage spending better. Not with broad strokes, but by looking at the detail. And this starts with more comprehensive spending oversight across multiple departments and activities.

Where to start with cost consolidation

Though streamlining costs might present some businesses with a significant shift, it is worth the effort. Better spend management offers an opportunity to truly unlock enhanced efficiency and resilience.

One area of opportunity that’s set to become more key in 2024 is addressing technology investments and tool consolidation. We know that digital transformation is well underway for many businesses, yet consolidating platforms and software is languishing towards the bottom of the priority list. Only 16% in the UK see it as a big ambition for 2024 – something they might want to reconsider considering the average worker is overburdened across 9 tools every day. Such ‘digital overwhelm’ is not only a concern for the workforce and productivity, but budget too.

Another opportunity for consolidation isn’t necessarily about cost, but mindset. Too often, businesses conceive of spend and expenses as two separate things. The former more likely to be high-value items such as office rent, ad spend and international business travel; the latter more likely to be smaller cost items like coffees, office supplies and local travel costs. In fact, despite only 19% of businesses thinking of expenses and spend as the same thing, only 27% of organisations had clear guidelines on what separates them – potentially opening up a black hole in terms of unaccounted outgoings.

At the end of the day, businesses just want to know how much they have coming in vs going out. Whether it’s an expense or spend, it’s all outgoing. And when 25% of decision makers say they use different platforms, this fractured view of company outgoings is allowing a lot to slip through the cracks.

The priority of pocket repair

There is no doubt that UK businesses face a challenging 12 months ahead. In order to focus on revenue growth and filling their pockets in the coming months, business leaders first need to check there aren’t any holes in them. This means ensuring their spending oversight is exhaustive and leaves no stone unturned – and no finance strategy half-baked.

This is how businesses can reduce business spending and, crucially, avoid doing so as part of a trade-off with working culture and productivity. Because without financial oversight and strategy, ill-conceived cost cutting will remain a bigger risk and could potentially end up costing business leaders in more ways than one.

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Business

Driving business success in today’s data-driven world through data governance

Source: Finance derivative

Andrew Abraham, Global Managing Director, Data Quality, Experian

It’s a well-known fact that we are living through a period of digital transformation, where new technology is revolutionising how we live, learn, and work. However, what this has also led to is a significant increase in data. This data holds immense value, yet many businesses across all sectors struggle to manage it effectively. They often face challenges such as fragmented data silos or lack the expertise and resources to leverage their datasets to the fullest.

As a result, data governance has become an essential topic for executives and industry leaders. In a data-driven world, its importance cannot be overstated. Combine that with governments and regulatory bodies rightly stepping up oversight of the digital world to protect citizens’ private and personal data. This has resulted in businesses also having to comply e with several statutes more accurately and frequently.

We recently conducted some research to gauge businesses’ attitudes toward data governance in today’s economy. The findings are not surprising: 83% of those surveyed acknowledged that data governance should no longer be an afterthought and could give them a strategic advantage. This is especially true for gaining a competitive edge, improving service delivery, and ensuring robust compliance and security measures.

However, the research also showed that businesses face inherent obstacles, including difficulties in integration and scalability and poor data quality, when it comes to managing data effectively and responsibly throughout its lifecycle.

So, what are the three fundamental steps to ensure effective data governance?

Regularly reviewing Data Governance approaches and policies

Understanding your whole data estate, having clarity about who owns the data, and implementing rules to govern its use means being able to assess whether you can operate efficiently and identify where to drive operational improvements. To do that effectively, you need the right data governance framework. Implementing a robust data governance framework will allow businesses to ensure their data is fit for purpose, improves accuracy, and mitigates the detrimental impact of data silos.

The research also found that data governance approaches are typically reviewed annually (46%), with another 47% reviewing it more frequently. Whilst the specific timeframe differs for each business, they should review policies more frequently than annually. Interestingly, 6% of companies surveyed in our research have it under continual review.

Assembling the right team

A strong team is crucial for effective cross-departmental data governance.  

The research identified that almost three-quarters of organisations, particularly in the healthcare industry, are managing data governance in-house. Nearly half of the businesses surveyed had already established dedicated data governance teams to oversee daily operations and mitigate potential security risks.

This strategic investment highlights the proactive approach to enhancing data practices to achieve a competitive edge and improve their financial performance. The emphasis on organisational focus highlights the pivotal role of dedicated teams in upholding data integrity and compliance standards.

Choose data governance investments wisely

With AI changing how businesses are run and being seen as a critical differentiator, nearly three-quarters of our research said data governance is the cornerstone to better AI. Why? Effective data governance is essential for optimising AI capabilities, improving data quality, automated access control, metadata management, data security, and integration.

In addition, almost every business surveyed said it will invest in its data governance approaches in the next two years. This includes investing in high-quality technologies and tools and improving data literacy and skills internally.  

Regarding automation, the research showed that under half currently use automated tools or technologies for data governance; 48% are exploring options, and 15% said they have no plans.

This shows us a clear appetite for data governance investment, particularly in automated tools and new technologies. These investments also reflect a proactive stance in adapting to technological changes and ensuring robust data management practices that support innovation and sustainable growth.

Looking ahead

Ultimately, the research showed that 86% of businesses recognised the growing importance of data governance over the next five years. This indicates that effective data governance will only increase its importance in navigating digital transformation and regulatory demands.

This means businesses must address challenges like integrating governance into operations, improving data quality, ensuring scalability, and keeping pace with evolving technology to mitigate risks such as compliance failures, security breaches, and data integrity issues.

Embracing automation will also streamline data governance processes, allowing organisations to enhance compliance, strengthen security measures, and boost operational efficiency. By investing strategically in these areas, businesses can gain a competitive advantage, thrive in a data-driven landscape, and effectively manage emerging risks.

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The Benefits of EV Salary Sacrifice: A Guide for Employers and Employees

As the UK government continues to push for greener initiatives, electric cars have become increasingly popular. The main attraction for both employers and employees is the EV salary sacrifice scheme.

By participating in an EV salary sacrifice scheme, both employers and employees can enjoy cost savings and contribute to environmental sustainability along the way! This article will delve into the specifics of how these schemes operate, the financial advantages they offer, and the broader positive impacts on sustainability.

We will provide a comprehensive overview of the mechanics behind EV salary sacrifice schemes and discuss the various ways in which they benefit both employees and employers, ultimately supporting the transition to a greener future in the UK.

What is an EV Salary Sacrifice Scheme?

An EV salary sacrifice scheme is a flexible financial arrangement that permits employees to lease an EV through their employer. The key feature of this scheme is that the leasing cost is deducted directly from the employee’s gross salary before tax and National Insurance contributions are applied. By reducing the taxable income, employees can benefit from substantial savings on both tax and National Insurance payments. This arrangement not only makes EVs more affordable for employees but also aligns with governmental incentives to reduce carbon emissions.

For employers, implementing an EV salary sacrifice scheme can lead to cost efficiencies as well. The reduction in National Insurance contributions on the employee’s reduced gross salary can offset some of the costs associated with administering the scheme. Additionally, such programmes can enhance the overall benefits package offered by the employer, making the company more attractive to prospective and current employees.

Benefits for Employees

1. Tax and National Insurance Savings

By opting for an EV salary sacrifice scheme, employees can benefit from reduced tax and National Insurance contributions. Since the lease payments are made from the gross salary, the taxable income decreases, resulting in substantial savings.

2. Access to Premium EVs

Leading salary sacrifice car schemes often provide access to high-end electric vehicles that might be otherwise unaffordable. Employees can enjoy the latest EV models with advanced features, contributing to a more enjoyable and environmentally friendly driving experience.

3. Lower Running Costs

Electric vehicles typically have lower running costs compared to traditional petrol or diesel cars. With savings on fuel, reduced maintenance costs, and exemptions from certain charges (such as London’s Congestion Charge), employees can enjoy significant long-term financial benefits.

4. Environmental Impact

Driving an electric vehicle reduces the carbon footprint and supports the UK’s goal of achieving net-zero emissions by 2050. Employees can take pride in contributing to a cleaner environment.

Benefits for Employers

1. Attract and Retain Talent

Offering an EV salary sacrifice scheme can enhance an employer’s benefits package, making it more attractive to potential recruits. It also helps in retaining current employees by providing them with valuable and cost-effective benefits.

2. Cost Neutrality

For employers, EV salary sacrifice schemes are often cost-neutral. The savings on National Insurance contributions can offset the administrative costs of running the scheme, making it an economically viable option.

3. Corporate Social Responsibility (CSR)

Implementing an EV salary sacrifice scheme demonstrates a commitment to sustainability and corporate social responsibility. This can improve the company’s public image and align with broader environmental goals.

4. Employee Well-being

Providing employees with a cost-effective means to drive electric vehicles can contribute to their overall well-being. With lower running costs and the convenience of driving a new EV, employees may experience reduced financial stress and increased job satisfaction.

How to Implement an EV Salary Sacrifice Scheme

1. Assess Feasibility

Evaluate whether an EV salary sacrifice scheme is feasible for your organisation. Consider the number of interested employees, potential cost savings, and administrative requirements.

2. Choose a Provider

Select a reputable provider that offers a range of electric vehicles and comprehensive support services. Ensure they can handle the administrative tasks and provide a seamless experience for both the employer and employees.

3. Communicate the Benefits

Educate your employees about the advantages of the scheme. Highlight the financial savings, environmental impact, and access to premium EV models. Provide clear guidance on how they can participate in the programme.

4. Monitor and Review

Regularly review the scheme’s performance to ensure it continues to meet the needs of your employees and the organisation. Gather feedback and make adjustments as necessary to enhance the programme’s effectiveness.

Conclusion

The EV salary sacrifice scheme offers a win-win situation for both employers and employees in the UK. With significant financial savings, access to premium vehicles, and a positive environmental impact, it’s an attractive option for forward-thinking organisations. By implementing such a scheme, employers can demonstrate their commitment to sustainability and employee well-being, while employees can enjoy the benefits of driving an electric vehicle at a reduced cost.

Adopting an EV salary sacrifice scheme is a step towards a greener, more sustainable future for everyone.

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Business

Machine Learning Interpretability for Enhanced Cyber-Threat Attribution

Source: Finance Derivative

By: Dr. Farshad Badie,  Dean of the Faculty of Computer Science and Informatics, Berlin School of Business and Innovation

This editorial explores the crucial role of machine learning (ML) in cyber-threat attribution (CTA) and emphasises the importance of interpretable models for effective attribution.

The Challenge of Cyber-Threat Attribution

Identifying the source of cyberattacks is a complex task due to the tactics employed by threat actors, including:

  • Routing attacks through proxies: Attackers hide their identities by using intermediary servers.
  • Planting false flags: Misleading information is used to divert investigators towards the wrong culprit.
  • Adapting tactics: Threat actors constantly modify their methods to evade detection.

These challenges necessitate accurate and actionable attribution for:

  • Enhanced cybersecurity defences: Understanding attacker strategies enables proactive defence mechanisms.
  • Effective incident response: Swift attribution facilitates containment, damage minimisation, and speedy recovery.
  • Establishing accountability: Identifying attackers deters malicious activities and upholds international norms.

Machine Learning to the Rescue

Traditional machine learning models have laid the foundation, but the evolving cyber threat landscape demands more sophisticated approaches. Deep learning and artificial neural networks hold promise for uncovering hidden patterns and anomalies. However, a key consideration is interpretability.

The Power of Interpretability

Effective attribution requires models that not only deliver precise results but also make them understandable to cybersecurity experts. Interpretability ensures:

  • Transparency: Attribution decisions are not shrouded in complexity but are clear and actionable.
  • Actionable intelligence: Experts can not only detect threats but also understand the “why” behind them.
  • Improved defences: Insights gained from interpretable models inform future defence strategies.

Finding the Right Balance

The ideal model balances accuracy and interpretability. A highly accurate but opaque model hinders understanding, while a readily interpretable but less accurate model provides limited value. Selecting the appropriate model depends on the specific needs of each attribution case.

Interpretability Techniques

Several techniques enhance the interpretability of ML models for cyber-threat attribution:

  • Feature Importance Analysis: Identifies the input data aspects most influential in the model’s decisions, allowing experts to prioritise investigations.
  • Local Interpretability: Explains the model’s predictions for individual instances, revealing why a specific attribution was made.
  • Rule-based Models: Provide clear guidelines for determining the source of cyber threats, promoting transparency and easy understanding.

Challenges and the Path Forward

The lack of transparency in complex ML models hinders their practical application. Explainable AI, a field dedicated to making models more transparent, holds the key to fostering trust and collaboration between human and machine learning. Researchers are continuously refining interpretability techniques, with the ultimate goal being a balance between model power and decision-making transparency.

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