ADP Lunch & Learn

Course Materials

Enabling the Digital Enterprise

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4. Enabling the Digital Enterprise

LearningObjectives:

SegmentOverview:

Field of Study:

RecommendedAccreditation:

Required Reading(Self-Study):

Running Time:

Course Level:

CoursePrerequisites:

Advance Preparation:

Expiration Date:

Management Advisory Services

January 13, 2018

Work experience in a corporate staff environment, or an introductory course in management

None

1 hour group live2 hours self-study

Update

“Four Technology Articles from FEI Daily”For additional information on FEI Daily, go to:http://daily.financialexecutives.org/For additional information on FEI and FERFPROS, go to:http://www.financialexecutives.org andhttp://www.financialexecutives.org/KenticoCMS/Research/recognition/ferf-pros.aspx#axzz48YBIlOsl

See page 4–11.

34 minutes

Current technology innovations have brought about a sea changein how we work, live, and conduct business. Enterprises todaymust keep up with these technology changes or suffer theconsequences. Accounting and finance professionals must driveinnovation to realize the goal of a truly digital organization. In thissegment, Vince DeLuca, CEO of Logicalis US, presents cogentinsights as well as best practice examples that will help you moveyour organization along the critical path to becoming a digitallyenabled enterprise.

Upon successful completion of this segment, you should be able to:l Recognize the characteristics common to successful digital

enterprisesl Identify the steps in transitioning to a service-defined

environmentl Recognize the challenges an organization faces in moving to a

services defined environmentl Identify best practices for becoming a digitally enabling

enterprise

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A. Technology Playing a Bigger Role inStrategy

1. Technological innovations haveforced CIOs to rethink the way theysupport enterprise computing

2. In the past most companies woulddevelop a strategy and executionplan

a. And then determine howtechnologies would fit into that

3. Today company strategies areformed around the use oftechnologies

a. And services to deploy thosetechnologies to their endconsumers

4. Customers are looking for speed,agility, ubiquitous use

B. Access to Information BeingTransformed

1. Cloud has changed the waycompanies think about deployingand consuming applications, dataand services

2. Data and information becomingubiquitous

3. Vast amounts of information existthat never existed before

a. 90% of the information availableto us was created in the last 18months

4. Have access to data in ways thatdidn’t used to exist

a. Ability to consume informationvia a services model

5. Need secure underpinning to makesure information and the access to itis protected

a. Companies need to protectthemselves from outside threats

b. Could do a lot of damage ifinformation gets into the wronghands

II. Changing Business Landscape

A. Keep Up or Lose Out

1. Today’s technology innovations haveenabled a change

a. In how we work, live, play andconduct global business

2. Modern enterprises must keep upwith technology change or suffer thedire consequences

3. CIOs and business leaders must alsorise to the occasion by drivinginnovation

a. To realize the goal of truly digitalorganization

B. IT and Business Transformation

1. Advantages that innovativetechnologies and leading edgesolutions have brought to globalbusiness

a. Cloud Computing, Mobile, BigData and Advanced Analytics

2. Transformative technologies havealso initiated significant changeswithin IT departments

3. Logicalis survey of 400 globallybased CIOs:

a. 42 % of CIOs are activelyembracing a new internal serviceprovider

i. To provide increased businessvalue and relevancy

b. 47% of CIOs procuring at least30% of IT services from externalservice providers

i. Enabling better and fasteraccess to technology servicesfor their business colleagues

I. The Current IT Environment

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C. Consumerization of IT

1. Applications extend their capabilityinto traditional business models inways that we would have neverthought of

2. Good example: Uber

a. Friendly way of intersecting aconsumer with transportation

b. Changed the world of taxi cabs,buses and other modes oftransport

3. Uber links customer with a real timeability to see where rides are

a. Don’t necessarily have to swipea credit card to pay it

b. Know enough about thecustomer that they can playfavorite songs a customer mayhave on a play list

“...the experience that peoplehave and how they want thatexperience to be very simple,very common and very easy interms of how they intersect theirpersonal lives with their businesslives.”

- Vince DeLuca

D. Challenge to CIOs

1. 90% of CIOs in a study said they’vebeen surpassed by business users

a. Consuming IT via non-traditional channels

2. CIOs have put big transformativeprojects in place

a. To have good and secure controlover what customers consume

b. Have to be fast andtransformative in their approach

3. CIOs who adopt that mindset

a. Will have great user experiences

b. Will be valued by theorganization

4. CIOs who stick to the old paradigm

a. Inevitably will face the challengethat business users are simplygoing around them

II. Changing Business Landscape (continued)

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A. 8 Key Characteristics

1. Willingness to transform

2. Customer-centric

3. Data-driven – aware of the power ofdata and how to exploit it

4. Make good decisions aboutidentifying new revenue sources andcost efficiencies

5. Redefining work by embracing theuse of digitally enabled places andvirtual spaces

6. Security – aware of the dangers,committed to addressing securityrisks

7. Preparing and investing in digital-ready infrastructures

8. They know what ‘fast’ means

a. Aware that rapid decision makingis a must

B. Mindset Around Transformation

1. Mindset to be able to transform witha plan in place

2. Know how to deploy technologies ina way that’s different from thetraditional way

3. Able to use rapid explosion ofinformation to educate businessesabout their end users

a. Retrospectively looking atinformation

b. And proactively and predictivelylooking at information

4. Ability to make intelligent use ofinformation and have that availableto end users

a. Is paramount to the success of afuture organization

5. Need for infrastructures to bemodernized

a. To take advantage of all thecapabilities that exist

b. Having them be assets in termsof how companies useinformation

C. Need Quick & Easy Deployment

1. New generation of serviceconsumption business users

a. Demanding that IT organizationsare fast, agile, have quicklydeployed applications andcapabilities

2. Balance between having a verysecure and manageable environment

a. And being adaptable to demandsbeing placed on all organizations

III. Becoming a Digitally Enabled Enterprise

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A. Factors Changing How Services areConsumed

1. Digital enablement happens throughthe deployment of smart technology

a. Consumption will be throughservices

2. Varying factors out there that enablecustomers to take advantage of allthis capability

a. Advanced technology

b. Software orientation

c. Deployment

d. Continued evolution of howservices are consumed

e. Information explosion

f. Security

g. Modern infrastructure

B. IT’s Role More Critical Than Ever

1. As technology and services aredefining the future of howcompanies operate

a. Role of IT becomes more criticalthan ever

2. IT has to transform in terms of howthey work with their businesses

3. Today technology is at the forefrontof how strategies are beingdeveloped

4. IT can harness that and be front andcenter to business users andexecutives

a. Work with them in different newways

b. Become the critical organizationof future success

C. The “Third Platform”

1. International Data Corporation haslabeled the innovation and changeas the “third platform”

2. “Third platform” refers to differenttrends

a. Things that influence howconsumers use IT

i. Cloud

ii. Mobile

iii. Use of communities or socialvehicles

iv. Information and analytics

3. Our ability to harness information,make it intelligent, use it

a. Completely differentenvironment from what we’veever experienced

IV. Transformation to Service-Defined IT

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A. Fitting All the Elements into YourStrategy

1. Establish a baseline and go throughlogical gates of progression

a. To get to a much more efficientcapability and infrastructure

2. How does social fit into yourstrategy?

3. Where does mobile play? How doesinformation flow?

4. What are the processes thatinformation is exchanged and sharedin an organization?

5. How is all of that secured?

B. Making the Investment

1. Finance professionals are a key tothe success in all of this

a. There is a level of investmentneeded

2. For companies to take this leap therehas to be a degree of investment

a. Finance professionals shouldembrace deployment oftechnologies and services

i. Not just for efficiency andcapabilities in your currentoperation

ii. But what it’s going to do foryou in the future

“You’ll have a business modelthat far exceeds the currentcapabilities that you have inyour traditional business.”

- Vince DeLuca

C. Measuring the Enterprise TechnologyExperience

1. Business users today measure theirenterprise technology experience

a. With their experience that theyhave in their personal lives

i. With Apple, Android, Google,Amazon, etc.

2. Business protocols with technologyare typically seen as very rigid, verystrict

a. Not accommodating to how theworld is moving through the useof technology and services

V. Roadmap to Service-Defined IT

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A. Overcoming Mindset of Change

1. Change in and of itself is probablythe biggest hurdle

a. We like to live in the known andthis is a big unknown

2. There is enough proof now thatcompanies, CIOs, executives canaccess

a. Case studies of companies thatdeploy technology to make themefficient in the back office

i. And propel them forward inthe front office

3. One of the most beneficial outcomesunderstanding your customer better

a. Coming up with tailored solutions

B. Need Commitment to Transform fromall Levels

1. Characteristics that exist incompanies that will becomesuccessful

a. Commitment to transform

b. Having executive sponsorship

c. Having a digital officer in thecompany

2. Another key attribute is CIOs thatunderstand the power of information

a. Can architect a strategy to ensurethat information is real andcurrent

3. Having a strategy and plan tomodernize infrastructure andapplications

4. Having a plan to secure everything

C. Best Practices

1. Embrace the challenge, embrace thechange

2. Look at how your company can takeadvantage of evolving technology

a. Have a plan that embraces thesenew technologies and services

3. Get to know your customer better

a. Use that information andintelligence to extend yourcapabilities far beyond yourcurrent capacity

VI. Challenges and Best Practices

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1. What did the Logicalis survey revealabout the technology changes companiesare dealing with today? How does ourorganization match up with thesefindings?

2. What are the characteristics common tosuccessful digital enterprises?

3. What’s the new role for technologyleaders? Will the role of IT diminish?

4. What are the steps in transitioning to aservice-defined environment?

5. What is our organization technologystrategy? Do we have a service-definedenvironment? If so, how is it structured?If not, why not?

6. What are the challenges an organizationfaces in moving to a service-definedenvironment? How can an organizationnavigate the challenges?

7. According to Mr. DeLuca, what are thebest practices for organizations makingthe move toward becoming a digitallyenabled enterprise?

Discussion Questions

Group Live Option

You may want to assign these discussion questions to individual participants before viewingthe video segment.

4. Enabling the Digital Enterprise

l As the Discussion Leader, you shouldintroduce this video segment with wordssimilar to the following:

“In this segment, Vince DeLuca presentsinsights as well as best practiceexamples that will help you move yourorganization along the critical path tobecoming a digitally enabledenterprise.”

l Show Segment 4.

l After playing the video, use thequestions provided or ones you havedeveloped to generate discussion. Theanswers to our discussion questions areon pages 4–9 and 4–10.

l After the discussion, complete theevaluation form on page A-1.

Instructions for SegmentFor additional information concerning CPE requirements, see page vi at the beginning of this guide.

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s1. What did the Logicalis survey reveal

about the technology changes companiesare dealing with today? How does ourorganization match up with thesefindings?l Logicalis Survey of 400 CIOs

v 42% of CIOs are “activelyembracing a new internal serviceprovider model that will allow themto provide increased business valueand relevancy to their line ofbusiness colleagues and internal ITusers.”

v 47% of CIOs “procuring at least30% of their IT services fromexternal service providers.”

l Based on your organization

2. What are the characteristics common tosuccessful digital enterprises?l Characteristics Common to Digital

Enterprises

1. Willing to transform

2. Data-driven organizations

3. Financially savvy

4. Have identified new revenuesources and cost efficiencies

5. Redefined work

6. Addressed security risks

7. Preparing and investing in digital-ready infrastructures

8. They know what “fast” means

3. What’s the new role for technologyleaders? Will the role of IT diminish?l New Role for CIOs and IT leaders

v A source of strategy and guidancefor the organization

v Create agile organizations thatrespond to business and consumerdemands

l Will the role of IT diminish?v The role of IT will become more

critical!k However, IT will need to

transform how they work withbusiness

k If they do, IT will be a catalystfor business growth

4. What are the steps in transitioning to aservice-defined environment?l Service-Defined Environment: The

Stepsv First, look at current infrastructure

and establish a baseline v Work through the logical gates of

progressionv Organization increases efficiency

and improves infrastructure

5. What is our organization technologystrategy? Do we have a service-definedenvironment? If so, how is it structured?If not, why not?l Based on your organization

6. What are the challenges an organizationfaces in moving to a service-definedenvironment? How can an organizationnavigate the challenges?l Service-Defined Environment: The

Challengesv Change is probably the biggest

hurdlev The leap to “next gen” technology

is not inexpensive v To have a successful outcome you

must understand the customerl Service-Defined: Navigating the

Challenges v A commitment to transformv Must have executive sponsorshipv Consider employing a digital officer

for the companyv CIOs must understand the power of

informationv Modernizing the infrastructure and

applications is keyv Have an effective security strategy

4. Enabling the Digital Enterprise

Suggested Answers to Discussion Questions 4 – 94 – 94 – 9

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7. According to Mr. DeLuca, what are thebest practices for organizations makingthe move toward becoming a digitallyenabled enterprise?l Becoming a Digitally Enabled

Enterprise: Best Practicesv Embrace the challenge, embrace the

changev Ensure the organization is

structured to accommodate thebusiness

v Plan for new technologies v Make sure there is a solid services

strategy to deliver capabilitiesv Modernize your infrastructurev Use information effectivelyv Have effective security protocols in

place

Suggested Answers to Discussion Questions (continued)

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Self-Study Option

1. Viewing the video (approximately 30–35 minutes).

2. Completing the Required Reading (approximately 25–30 minutes). The Required Reading for this segment starts below.

3. Completing the online steps (approximately 35–45 minutes).

Please see pages iii to v at the beginningof this guide for instructions oncompleting these steps.

When taking an FMN segment on a self-study basis, an individual earns CPE credit by doingthe following:

Instructions for Segment

Required Reading (Self-Study)

For additional information on FEI Daily, goto: http://daily.financialexecutives.org/For additional information on FEI andFERFPROS, go to:http://www.financialexecutives.org andhttp://www.financialexecutives.org/KenticoCMS/Research/recognition/ferf-pros.aspx#axzz48YBIlOsl

CFOS NEED TO INVESTMORE IN DIGITAL TO BECOMPETITIVE

By Aneel Delawalla, FEI Daily, April 27, 2016 For additional information, go to:http://daily.financialexecutives.org/cfos-need-invest-digital-competitive/

CFOs must do more to drive a broad costmanagement mandate. What can CFOs doto harness opportunities and strengthencompetitiveness?

Strategic cost management offers a radicalapproach to disrupting enterprise costs fromthe inside, a structural transformationpowered by digital technologies. This is notstatus-quo cost reduction focused on doingthe same things for less. It makes deliberate

and durable changes to the business oroperating model to sustain 20 to 50 percentin cost reductions to reinvest for growth.

Cost reduction is central to the role of theCFO and has contributed significantly toearnings growth over the last few years. Butas CFOs pivot to growth, many risk leavingthe cost flank exposed. Just six percent ofCFOs say that cost management will be theirtop strategic priority in 2016. This is the caseeven though they expect costs to increaseyear over year from 2015 to 2017. Yet aflexible cost structure is essential to fuelprofitable and sustainable growth.

What can CFOs do to harnessopportunities and strengthencompetitiveness?

Go beyond blind cost cutting. The morecosts that CFOs can take out of the businessnow, the bigger the investments companiescan make toward profitable growth – inproduct and service innovation, adoptingdigital technologies, improved productivity,better customer experiences, new marketentry or other areas. By attacking costscomprehensively and strategically, CFOsafford companies a longer runway offinancial viability to buy time for growth

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FOUR TECHNOLOGY ARTICLES FROM FEI DAILY

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measures to work. Businesses also benefitfrom optionality in pricing, lower pricingwithout sacrificing profitability thanks tolower margins.

Do more than dabble in digital. Strategiccost management identifies and removesactivities and processes that do not drivebusiness value, sizes the business forremaining tasks, assigns the right people in apurpose-built organization to complete them,and tracks outcomes. It also enablescompanies to reinvest savings to drivegrowth. This happens better, faster andcheaper with digital technologies. Digitalinterventions are inherently less expensive toimplement and natively allow for agile anditerative changes.

For those CFOs who are actively pursuingstrategic cost management, mobility (54percent) and moving technology to the cloud(52 percent) are their most commoninvestments. In three years’ time, CFOsexpect to make additional investments inrobotics (44 percent) and big data analytics(40 percent) to support strategic costmanagement.

Get in the driver’s seat. Over the pastdecade, the CFO has moved from corporatebean counter to enterprise value architect.Consider that 75 percent of respondents toAccenture Strategy’s latest HighPerformance Finance Study say that theCFO’s role in strategic decision-makingincreased in the past two years. What’s more,70 percent believe that the CFO’s leadershipin driving business transformation initiativesis on the rise. By positioning themselves ascatalysts for digitally-driven strategic costmanagement, CFOs can extend their role.The good news is that 56 percent of CFOsalready have performance objectives in placethat make them responsible for strategic costmanagement on a daily basis. The challengenow is to act on these expectations withoutdelay.

Disruption demands that senior leaderschallenge and stretch their own roles. Just asevery company has a leader who owns theagenda for innovation for the outside aroundmarkets, channels, products and customers,someone must own innovation for the insidewith strategic cost management. This is a

natural fit for CFOs. It is a position ofstrength for them, a place where they canguide the business to compete to win. Bothdespite disruption – and because of it.

BLOCK CHAIN TECHNOLOGY101 AND HOW IT COULDTRANSFORM OURFINANCIAL SYSTEMBy Henner Schliebs, FEI Daily, March 9, 2016 For additional information, go to:http://daily.financialexecutives.org/block-chain-technology-101-transform-financial-system/

The digital transformation of finance is anincreasingly popular topic of conversationacross the industry, and the opportunitiesand challenges presented by Bitcoin andthe block chain have become majorelements of these discussions in recentmonths.

While it is unlikely the likes of Bitcoin willreplace traditional currency, enthusiasm forthe topic continues to grow – less because ofthe monetary value behind bitcoin and morearound the potential of block chain, theunderlying technology behind bitcoin. Theblock chain offers the potential of making agreat number of actions, from healthcarerecords to smart technologies and evenfinancial transactions, more secure andtrustworthy.

What is the Block Chain?

The block chain is a type of database thatrecords digital events between many differentparties. Think of it as a sequentialspreadsheet of transactions, constantlyupdated on a global network of computersthat serves as a distributed ledger. The ledgeris encrypted as it’s being written so thetransactions it contains can be verified safelyby legions of other computers across thenetwork.

To break this down in other terms, blockchain serves as a solution to an age-old logicpuzzle known as the “Byzantine GeneralsProblem.” In this puzzle, a Byzantine generalsends a messenger to deliver an order to

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other generals in the army about whether ornot to attack an enemy. The challenge is,every general knows that at least one of thegenerals is a traitor – so how can thereceiving generals be sure that the sameorder was sent to the other general and he’snot being ordered to attack his own troops?How could they know if the other generalswouldn’t try and undermine the plan andkeep the order from their troops? There hasnever been an unbiased third party who canguarantee authenticity.

In the financial system, this is why third-party institutions such as banks exist. Banksprovide a strong level of trust that is requiredin verifying financial transactions and canguarantee that individual parties have themoney they claim to possess, and that themoney is transferred as agreed.

How Could the Block ChainTransform the Finance System?

The block chain is ultimately disruptive tothe financial system because it removes theneed for trusted third parties to guarantee atransaction. By combining distributedarchitecture with powerful encryption, theblock chain itself coordinates agreementsamong all the parties in a transaction – anddoes so in a way that’s highly resistant tointerference.

Entries in a digital ledger of sorts are createdand protected with cryptography thatbecomes more secure as a growing numberof people participate in it. In the case ofBitcoin, individuals are paid – throughmining or small transaction fees – for theirwork in verifying the transactions. Sincethousands of participants verify eachtransaction, there is little point in conspiringto undermine the system, as it quicklybecomes difficult and costly. Rewards forhonest behavior are built into the process anddishonest behavior isn’t rewarded.

One challenge, and point of irony, is thatcryptocurrencies – or forms of block chaincurrency such as bitcoin – have becomeattractive to criminals. In February,Hollywood Presbyterian Medical Centerbecame the latest victim of hackersdemanding ransom in the form of bitcoinafter the cyber criminals seized control of thehospitals computer system. The security

behind the block chain is attractive tocriminals as the modern equivalent to the“briefcase full of unmarked cash.”

However, while criminals are increasinglytrying to leverage cryptocurrencies in illicitactivity, the block chain technology itself isnot inherently criminal. In fact, ownershipand provenance of a transaction can beembedded in the block chain from an earlystage to ensure verification.

The potential of the block chain has a widearray of applications, from validating theauthenticity of documents like birthcertificates and passports, establishingownership of intellectual property, andenabling trade in stock and bonds. And wehave already started to see a number ofcompanies jump in the ring to explore theapplications – Nasdaq for one is currentlytesting out a system to allow investors tosecurely vote in shareholder meetings andSony recently announced plans to develop aneducational platform powered by the blockchain.

In the financial sector, block chaintechnology presents a highly secure andtamper-resistant structure to verify almostany kind of transaction. In today’sincreasingly insecure world, this presents atempting alternative, especially in theevolving digital finance landscape where thepressure to aggregate and transport largeamounts of sensitive data securely continuesto grow. Chief financial officers have to put astrategy in place to include block chain as avalid option in their finance processes so notto be overrun when this becomes moremainstream.

NEW STUDY: FINANCIALPLANNING TECHNOLOGYOFTEN FALLS SHORT

By Henner Schliebs, FEI Daily, February 3, 2016For additional information, go to:http://daily.financialexecutives.org/new-study-financial-planning-technology-often-falls-short/

CFOs face mounting pressures to contributeto the overall success of their respectivecompanies, and the status quo approach to

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financial planning and analysis (FP&A) isnot enough to meet the new demands onfinance.

In fact, in a recent study by SAP and CFOMagazine, more than two-thirds of financialexecutives noted that in the last five years, ithas become harder for a company tomaintain a competitive advantage in itsrespective market, and 59 percent feel doingso is only going to get more challenging inthe coming years.

In adapting the finance department tosucceed, technology innovation emerged asan overall trend echoed by financialexecutives across industries.

Agility Key to Staying AheadMore than three-quarters (77 percent) ofsurvey respondents noted that greater agilityin responding to business threats andopportunities has become a larger source ofcompetitive advantage in the last five years.

For financial leaders, having an agilebusiness is closely tied to their ability todeliver real-time analysis. Beyond reportingon historical data, finance executives whowill lead the pack in the coming years willbe able to deliver clear, actionable, future-looking insights to company decision-makers. By working closely with IT, andleveraging technology to automate outdatedsystems and standardize financial reportingacross an organization, CFOs can not onlywiden the breadth of data insights available,but also deliver those insights more quickly.

Current IT Systems Fall ShortWhile technology is key to improving real-time insights and overall business agility, thestudy also found most financial executivesfeel their current FP&A systems fall short. Infact, more than half of respondents feel theircompany often trades off when it comes tothe depth of data and complexity ofcalculations used for financial planning andbusiness analysis to produce reports in atimelier manner.

Additionally, data migration is another areawhere respondents feel IT systems should bedoing more to automate processes. Eighty-three percent of respondents believe their

companies would financially benefit fromdevoting less time, attention and resources todata migration and manual reconciliation.

By reevaluating current IT systems, andimplementing new technologies that allowfor greater automation, finance leaders canensure they have the tools needed to staycompetitive in the market, especially asagility becomes a core element of success.So what can CFOs do to improve financialplanning and maximize the impact ofadvanced technology?

There are four steps CFOs can take toimprove the reporting process:

Step One: PlanThe key to the planning step is centralizingand standardizing. CFOs need to assess theirexisting checklists and design templates foreach process. By comparing the steps takenby each entity, finance departments canidentify best practices while weeding outnegative steps.

Step Two: ExecuteAfter the plan has been made, it is time forthe execution stage. Using the templatescreated in the previous step, financial leadersshould create a task list with hard deadlines.In the execution phase, it is critical toidentify what tasks can be automated andleverage an advanced technology solution tohelp in that automation process.

Step Three: MonitorClose monitoring helps finance teamsidentify issues, overdue tasks and resourcebottlenecks earlier in the close cycle. This isanother area where the right technology canplay a critical role in allowing you tomonitor progress and drill down into specificdetails. Being able to monitor effectivelyhelps the whole process run smoothly.

Step Four: AnalyzeAnalyzing the results of a planning processeffectively with manual tools like Excel canbe extremely difficult. Tools that canautomatically record results are critical forfinance departments in helping to analyzehow long it took to complete each task and

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to compare completion to the plan. Havingthe ability to analyze this makes it easy toidentify bottlenecks in the process andhighlight areas for improvement.

As CFOs are increasingly challenged toimprove their contributions to high-valueplanning and analysis, finance is becomingreliant on IT integration to deliver insightsthat help inform company decision-making.Finance leaders need to put pressure on ITand evaluate current support systems to staycompetitive and opportunistic in the market,and drive overall business value.

SOCIAL MEDIA ANALYTICSIN CORPORATEINVESTIGATION TOOLBOX

Dave Pelland, FEI Daily, January 4, 2016For additional information, go to:http://daily.financialexecutives.org/social-media-analytics-in-corporate-investigation-toolbox/

As people spend more time on socialmedia platforms, the digital trails theyleave are playing a larger role in corporateinvestigations.

From helping companies identify suspiciousactivity to highlighting connections thatwarrant further investigations, morecompanies are using analytics tools toexamine social media content and potentiallyuncover evidence or indications ofundesirable behavior. FEI Daily spoke withWendy Schmidt, a Forensics &Investigations principal at Deloitte, about thegrowing use of social media analytics.

FEI Daily: Are you seeing more interest incompanies using social media ininvestigations?

Wendy Schmidt: Absolutely. The amount ofsocial data amassing every day has become avirtual treasure trove for companies andinvestigators. Whether it’s HR-focused orfocused more on deals or investigations, newtechnologies enable us to tap into the socialweb to capture information in ways thatwe’ve never been able to do before.

In the area of litigation support and trialintelligence, we use it quite frequently. Weuse it in the context of M&A transactions

where we’re looking to find out as much aswe can about a target company and theiroperations. We’ve used it in the context ofinsider threat investigations, internalinvestigations, security investigations or toevaluate activist threats.

FEI Daily: What kinds of data are youtypically examining?

Wendy Schmidt: That would really dependon what the company is looking for. So forexample, if it’s a transaction, you’re going tobe looking for information about the target.In addition to traditional investigative orpublic record sources, you would also look atsocial media sources to find out as much asyou can. If it’s in the context of a fraudinvestigation or an insider threatinvestigation, you’re going to be looking fora very different type of information.

FEI Daily: If you were to do an insiderthreat investigation, what would that tend tolook like?

Wendy Schmidt: The way that wouldtypically start is that you would get ananonymous letter, a whistleblower allegationor other information indicating thatsomebody within your ranks is potentiallyconnected to a terrorist organization, or ispotentially contemplating some illicit ordangerous activity. What you would like todo in that context is try to identify a profilefor that person in social media, and then lookto see what they are saying and who they’reconnected to – and, particularly, are theyconnected to any other employees within theorganization? Can you pick up any publiccommunications that they are having withother employees that would indicate apotential threat to the organization?

That will give you leads as to who topotentially interview in an insider threatinvestigation. It’s smoke, it’s not fire, but it’sa valuable investigative tool. And then basedon that, you will conduct more traditionalwork with regard to that potential threat.

FEI Daily: How about financial fraud?

Wendy Schmidt: Let’s say there’s potentialvendor procurement fraud. What we can dois look for people who are employed by thatvendor, who you suspect could be involvedin a fraud, and then you can look at their

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profiles. Through the use of analytic toolsand keyword searches, you can see whothey’re connected to on social media, withemployees of your company, and that willagain, give you leads for your investigativeteam. That’s one way you can use it.

We also use it, for example, in ForeignCorrupt Practices Act investigations, wherewe’re trying to explore individuals’connections to government officials. And sowe look at individuals who are suspected ofwrongdoing, and look at their connections topublic officials. It doesn’t mean that becauseyou’re friends with somebody on socialmedia, that there’s anything illicit about thatrelationship, but it’s a lead to follow up on.

FEI Daily: Do people engaged in suspiciousactivity they think that what they’reexchanging is private, or is it more a case ofpeople being careless online?

Wendy Schmidt: We think it’s acombination of both. There are a number ofsituations where people use social mediaovertly to attract support for their causes.That can be in the context of recruitingpeople to shareholder activism cases orpotential terrorist activity. On the other hand,we see people who are communicating onthe dark web, which is not part of socialmedia per se, but we see a lot of illicitactivity on the dark web, and you needspecial tools to be able to investigate andgather information there.

Even if somebody’s profile is set with veryhigh security settings, we may not be able toview that person’s profile directly, butthrough the use of analytic tools, we’resometimes able to look at their activitiesthrough other people they’re connected to.

Essentially, you’re only as safe as yourweakest link. So if there are people withinyour network who have low privacy settings,we can often find information out aboutconnections and communications between asubject and another person, based on theinvestigation target’s connections.

FEI Daily: What are some of theadvantages analytic tools can offer?

Wendy Schmidt: These new technologiesallow us to tap into the social web and

capture information in ways that we havenever been able to do before. In a fewminutes, these tools allow for the collectionand correlation of information in a way that’sreally not possible by a human being alone.And uncovering information aboutrelationships that would take months for aninvestigator to uncover manually, if theycould even discover it at all.

FEI Daily: Are you seeing more adoption insome industries versus others?

Wendy Schmidt: That’s a tough questionbecause it’s so new. I believe this is industry-agnostic, but I would say that in myexperience so far, energy, financial services,and transportation are the industries that wework more closely with in this regard.

FEI Daily: Are there any common obstaclesor mistakes that companies have to guardagainst as they explore this tool?

Wendy Schmidt: You can’t look at this in avacuum. There are many other aspects ofinvestigations that have to be conducted. Inparticular, when you’re looking at a personand their social media profile, you wouldn’twant to look at that alone – you also wouldwant to look at social data in tandem withavailable public record information as well.

In addition to that, the investigative team,through forensic review of books andrecords, may have other information, so allof that information needs to be analyzed andput together in context.

You also need to work very closely withlegal counsel because there are a variety ofrules and laws that you have to follow whenyou use social media, and so it’s veryimportant to take advice from counsel as tothe nature and extent of the use of socialmedia for any particular purpose.

Despite that, though, businesses areoverwhelmingly recognizing the value ofsocial media data in so many differentcontexts and in a variety of situations. Withthe growth in social media data and its use,this is going to grow in importance as a toolas new analytical solutions and platformsemerge.

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