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Oil and Gas Advanced Analytics and Digital Solutions

Join us for the fourth webinar in this year's insurance hot topics virtual series: Data analytics challenges for insurers. As our digital world evolves, insurance companies are finding more ways to tap into new and existing data sources to better understand their business drivers, expedite processes and uncover actionable business insights. Dave DuVarney, Principal of Enterprise Transformation and Digital Solutions at Baker Tilly, and Phil Schmoyer, Senior Manager within Baker Tilly’s Digital practice, will discuss potential benefits and challenges of formulating and implementing a data analytics strategy. Their discussion will highlight innovative data solutions through the lens of industry examples and use cases. 1 CPE credit will be offered for webinar attendees. Key Learning Objectives:  Recognizing potential opportunities and benefits to be gained from modernizing elements of the insurance transaction. Establishing how to ensure the appropriate level of accuracy exists in automated solutions. Determining measurable benefits resulting from automation - such as time, cost and customer goodwill. Who should attend: Insurance industry professionals involved in operations, accounting, information technology, data science, underwriting, insurtech and/or innovation. Presenters: Dave DuVarney Phil Schmoyer  Information about CPE eligibility There are no prerequisites for this event and advance preparation is not required. There is no cost to attend this event. Level: Overview CPE credit: One (1) hours total credit Field of study: Specialized Knowledge  Baker Tilly US, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

Financial Services

Dave  DuVarney

Insurance

Insurance hot topics virtual series: Transform your insurance data with a digital strategy

Many organizations today seek to better enable their organization and better serve their customers through embracing digital technologies. However, the organization’s ability to drive adoption of the technology and embrace an innovative culture is critical.   As organizations consider digital transformation, they should look at five key categories critical to success:  Vision and strategy: What is the vision of the company and its desired future state?  Data: How will I manage the collection, use, storage, transformation, processing and availability of data?  Technology: What technology should I use to drive insights (cloud, tools, coding platforms, visualization, etc.)?  People: What are the people needs of the organization - skills/roles and organizational design (when to hire, how to structure teams) to support digital transformation?  Process automation and governance: What are the rules that govern the use and distribution of data and processes?   Enablers to digital transformation  For organizations who are willing to embrace this change, digital transformation can provide the opportunity to rethink how they use technology at the most fundamental level. This can help businesses to improve their product and/or service offerings while also building a more meaningful relationship with their new generation of customers.   The question many ask is, where to start?  Begin with the end in mind.   Lead with strategy.  Clearly defined priorities, supported by leadership, are needed to advance operational processes and digitally transform.  Focus on your client or customer experience as an area for innovation. Consider customer strategy, customer journey and user-centric experience design.  Take a strategic look across the value chain to identify the greatest opportunities for the organization. Through business process analysis and design, actively identify savings opportunities and operational efficiencies to drive early wins.  Build a plan that integrates change management. Consider how to support the organization’s move from awareness to understanding and ultimately, to commitment of the vision.  Cultivate an innovative, digital culture, focused on delivering exceptional experiences.  Ensure the support of leadership to champion the change, make critical decisions and drive commitment across the organization.  Encourage collaboration and bring together multi-dimensional teams with both business and technical capabilities, that have a passion for improving the user experience.  Encourage a culture of idea generation, innovation and experimentation. Embrace failures rather than a success-only mindset and champion “stretch” roles and opportunities.  Encourage employees to share innovative ideas and understand the benefits of these changes to their roles. Encourage practices that drive innovation in the industry or organization norms.  Activate with data and technology.   Gain early access to modern technologies and new ways to apply technologies. Understand the technologies, data, and partners available to enhance your existing capabilities.  Be open to experimenting and prototyping new technology solutions to gain early wins and build momentum and excitement within the organization.  Recognize data as a key asset and leverage external sources. Identify analytics that could help support the value chain. Leverage data from the Internet of Things (IoT) and other connected devices. Make sure data is clean, accessible and holistic.  Make the seamless integration of old and new systems a priority as migration to more innovative and powerful technologies occur. Consider the future state of the IT ecosystem.  Enable the organization and prepare for scale.   Ensure continued alignment to the company’s overall strategy and objectives .  Focus on learning and development of the workforce, upskilling and retraining of team members focused on growth. Help employees understand how digital transformation will augment their roles and allow increased focus on analysis and insight.  Create a digital center of excellence to encourage knowledge sharing and cross-team collaboration.  

Many organizations today seek to better enable their organization and better serve their customers through embracing digital technologies, but are unsure where to start. Read this article for 4 tips to start embracing digital transformation in your organization.

Embracing digital transformation: 4 tips to get started

Leveraging your data goes beyond implementing tools. It is a journey your organization will take to understand what is important to measure and how you use that information to drive improved decision making. This article is the first in a series that will walk you through that journey. Step one is setting a baseline of where your organization is and an understanding of why moving forward will provide value in the future. Maturity overview Data maturity and organizational transformation go hand in hand; an organization that gets better at harnessing data will see transformation in its people, processes and overall business results. The word mature can mean “having reached the most advanced stage in a process.” Data analytics maturity happens when an organization advances how they leverage key information to make critical business decisions. Below is Baker Tilly’s Data Analytics maturity model. It shows four phases all organizations will go through in their analytical journey.  All organizations start with a view of their data that shows “what happened.” In this phase, users are viewing events that have already transpired. Their ability to act on those events is minimal, but it does give them insights into what to do going forward. Descriptive analytics is a fundamental component of any business, but has limited effectiveness in today’s quickly changing world. Once an organization knows what happened, they need to move deeper into diagnostic analytics. They need to understand “why did it happen?” Are there trends in the data that are presenting themselves and need to be addressed? As an example, can the organization see that a specific customer, product or territory is performing well? The analysis at this phase must provide a level of detail that allows the end user to draw connections to events and present that information quickly enough to make actionable decisions. Moving further down the maturity model, organizations get into predictive analytics, understanding “what will happen?” This type of insight requires the detailed and timely information created in the diagnostic phase. The tools and methods at this phase will use advanced analytical technologies to both predict and group given outcomes, leveraging both historical data sets as well as current information. Examples would include online shopping carts that suggest additional products or forecasting solutions that show cash flow projections based on current sales and historical payment patterns. The final phase in the maturity model is prescriptive analytics, automated decision making through machine learning and artificial intelligence. The highest-level example of these systems includes automated trading systems. The information moving through those systems moves so fast and in such a massive volume that it would be impossible for a human being to do the analysis. Instead, sophisticated algorithms make those decisions. Google Maps employs this type of intelligence when giving driving directions. If enough slowdowns exist in an area, Google Maps will automatically reroute drivers to an alternate route. Where to start: assess your current maturity level Organizations need to take a close look at the goals of key functional levels of a company – sales, finance, marketing, operations – and identify the data needed to support those goals. Then, an organization has to look at their data from technical and business perspectives. From the technical perspective, the organization should ask questions like: Do we have this data today? How technically feasible is it to get the data? Do we have to collect it or implement new systems to collect it? How clean is the data? What is the volume or quantity of this data?  From a business perspective, the questions include: How does the data align to our strategic goals? Does it drive revenue or reduce cost? Does it exist somewhere already? After looking at all the technical and business factors, an organization can score the data to determine which data has priority for the organization’s success. This is a key part of data maturity: understanding key areas – finance, marketing, sales and operations – and prioritizing based on where the organization has the best data. If an organization hasn’t figured out “what was,” it’s hard to enhance with other data to figure out the “what could be.” If an organization can’t accurately capture sales information – across product or customer geographies – any additional data won’t improve how the organization can predict sales. Keys to success At the lower end of the maturity scale, an organization is hampered by a lag in visibility of what is happening in the business. As organizations become more mature in handling their data, “lag time” becomes tighter and transforms into not “real time,” but rather, “right time” data. “Right time” data is data that an organization can act on. If an organization can’t do anything actionable with their data, then it’s just noise.  An organization that tries to implement or build better data analytics may find detractors. Becoming better at analytics may turn into a larger change management issue for an organization.  While sales is usually where a company focuses its data-improvement efforts, sometimes a “champion” to support change works elsewhere in the company – in finance, marketing or operations. Organizations should look for these champions and develop better data analytics in areas where such a program can have traction and buy-in. When an organization demonstrates that it can add value by using data to make decisions in one area, they can push change into other areas.  Data maturity at an organization is viral. Once one part of the business buys in and builds the discipline and good habits of running as a data-driven organization, that discipline can be instilled into other parts of the organization. Today’s environment The COVID-19 pandemic unleashed an unplanned stress test on most organizations and on how well they could pivot operations based on visibility into their data. It was a catalyzing event that forced organizations to examine their operations and make decisions much quicker than in the past.  Food service companies, like grocery stores and quick service restaurants, needed to make real-time staffing decisions based on demand shifts. Sellers of outdoor equipment of all types, but especially bikes, saw product fly off shelves and out of warehouses. When the pandemic lockdowns started around mid-March, if companies had to wait for month-end results to make decisions, it would have been too late for them to pivot effectively.  Getting good at using core data has become table stakes for successful companies. Whether because of this pandemic or some other black swan event in the future, if an organization can adjust its business based on what it sees in its data, and a competitor cannot, their ability to move faster will outcompete everyone. Organizations from any type of industry can benefit from data maturity, although some industries have more experience than others in handling large quantities of data. Manufacturing and distribution companies have been using enterprise resource planning (ERP) systems for decades. Healthcare providers have ramped up their use of electronic medical record systems in recent years. As an organization grows into the middle market (around $100 million in annual revenue), it needs tighter visibility into its data throughout the organization. That being said, innovation around data analytics in recent years has brought the price point for sophisticated tools down to where smaller organizations can benefit from certain dashboards and technologies. Even smaller organizations can focus efforts on strategies that provide the most value: “What should I sell? What actions should I take?” An organization focusing on the wrong things will get left behind, whereas organizations that have the right indicators at the right time can make better tactical decisions. Organizations can't manage what they can't measure. Conclusion Data maturity is beyond a tool or an application, beyond building a dashboard or a data warehouse. Data maturity in an organization is like developing any skill. Organizations have to practice it and commit to it.  Learn more about our data strategy canvas session and how it can help you begin to develop your data strategy.
 Read part two of the series Data analytics journey: identifying the key roles for a successful project

Leveraging your data goes beyond implementing tools. It is a journey your organization will take to understand what is important to measure and how you use that information to drive improved decision making. Read this article to learn how to set a baseline of where your organization is and an understanding of why moving forward will provide value in the future.

Data analytics journey: where to start

video For most organizations, lacking data is not an issue but determining how to prioritize data and put it into action is a common challenge. Baker Tilly has organized the major components of a data strategy into four pillars: People, Process, Technology, and Organization. Listen to the recording of this one-hour session, where we will utilize a data strategy worksheet to review each of these pillars and their components, and how to identify the strengths and weaknesses in your data solutions. After assessing how your organization performs in each of these areas, you will be able to develop a targeted plan to improve the effectiveness of your data. Speakers Christie Vick, Manager, Consulting, ETDS Digital Nathan Olson, Senior Consultant, ETDS Digital Learn more about our data strategy canvas session and how it can help you begin to develop your data strategy. For more information or to learn how our Enterprise Transformation and Digital Solutions specialists can help, contact our team.

Listen to the recording of this one-hour session, where we will utilize a data strategy worksheet to review each of these pillars and their components, and how to identify the strengths and weaknesses in your data solutions.

Industry 4.0

Cybersecurity

Data strategy canvas discussion: identifying opportunities and developing actionable solutions for your data 

video The manufacturing industry is the #2 industry attacked by cybercriminals. As business leaders focus on the challenges of running their complex business operations during the course of the global Covid-19 pandemic, bad actors are taking advantage of the situation. Hackers have stepped up their activities and are penetrating the cyber business defenses.   As enterprise business leaders are hyper focused on their technology investments, they’re discovering the value in integrating the shop floor with Industry 4.0 enterprise system technologies and scaling them across the organization.  Listen to this presentation that explores learn how you can leverage technology (and, more importantly, advanced technologies) to propel your business ahead of competitors.  Speakers Peter Pearce, Principal, ESS Supply Chain and Manufacturing  Brian Nichols, Director, CT RIAC Dallas For more information or to learn how our Enterprise Services and Solutions specialists can help, contact our team.

Baker Tilly webinar hosted by OESA - better understand how to assess your organization’s 4.0 security capability and layer security into shop floor applications and integrations. 

Manufacturing & Distribution

Mobility & Transportation

Enterprise Risk Management

Data security and shop floor integration/IIoT

video Institutions are pursuing digital transformation initiatives by leveraging new technologies and analytics to enhance academics, research, and administration productivity and performance. A digital transformation initiative will challenge your institution to integrate intelligent automation (e.g., business process management, artificial intelligence, robotics process automation) and analytics, while making it more agile to adapt to the changes we all face, as well as to meet its strategy and goals in the future. Listen to this presentation that explores how internal auditors can provide value to institutional leaders and their boards in this rapidly changing technology environment. Strengthen your awareness for how to asses digital transformation risks and auditing these technologies.  Speakers Claudio Garcia, Director, Enterprise Transformation and Digital Solutions  Mike Cullen, Director, DC Risk Advisory Saleem Khan - Senior Manager, Information Technology Audit, Emory University 
For more information or to learn how our Enterprise Transformation and Digital Solutions specialists can help, contact our team.

Baker Tilly webinar hosted by ACUA - how internal auditors can provide value to college and university leaders as they assess digital transformation risks and audit the technologies.

Higher Education

Digital Transformation in Higher Education

video Hospitals and health systems are increasingly looking to improve productivity, decrease administrative costs and create better patient experiences. Robotic process automation (RPA) can deliver reduced error rates, time efficiencies in processes and reduction of low value repetitive tasks (helping to increase productivity and employee retention). Listen to our on-demand webinar to understand how RPA can enhance your hospital/health system’s operations. Listen to relevant use cases about how organizations are navigating the process of applying RPA in their operations and creating a culture of automation.  Key learning objectives Understand where and when hospitals can apply RPA to their operations (and where/when they cannot) Understand the framework of an RPA implementation roadmap Understand how to create a culture of innovation within your organization
Presenter Michael Duke 
Principal, Baker Tilly For more information on this topic, or to learn how Baker Tilly specialists can help,  contact our team.

Listen to our on-demand webinar to hear relevant use cases about how hospitals and health systems are navigating the process of applying RPA in their operations and creating a culture of automation.

Healthcare & Life Sciences

Hospitals & Health Systems

Healthcare Automation Services

The value of robotic process automation for hospitals and health systems

Authored by Mike Duke Healthcare providers across the industry are integrating intelligent automation into a variety of areas within their operations. Through advanced technologies such as robotic process automation (RPA) and artificial intelligence (AI), providers can help reduce operating costs, increase efficiencies in operations and provide better patient experiences. The below use cases explore a variety of ways healthcare providers can leverage intelligent automation technologies to add value. Third party insurance claim status Providers can help streamline the third party claims process through implementing a standard rules-based automation technology. By streamlining this process, providers are able to gather real-time data from payer portals to “hot route” account workflows. This gives providers the ability to drive activities to the next most appropriate and knowledgeable worker as efficiently as possible as well as reduce the amount of full-time employee (FTE) intervention. Treatment authorization obtainment Providers that are trying to obtain authorization through the phone or online often need to meet certain conditions, with some information needing to be transmitted back and forth. Automation technology can help reduce the amount of time employees spend collecting this information. Although automation can only go so far, it can save significant time for the employer by collecting basic criteria before needing to bring in a knowledgeable worker to assist further.  Third party rejection/denial auto processing Providers can use an unattended, cognitive machine learning system to streamline non-routine tasks requiring judgment to be performed entirely without human intervention. By utilizing AI technology solutions, providers are able to quickly go into an electronic medical records (EMR) database, grab specific data, package it up and present it to a knowledgeable clinic worker to auto appeal specific denials and pull information from various sources to compile an appeal.  For more information about intelligent automation or to learn how Baker Tilly’s Value Architects™ can assist your organization, visit our website at bakertilly.com or contact our team.

Understand how healthcare providers are implementing RPA, AI and other forms of automation technologies into business operations by reading about applicable use cases within the industry.  

Behavioral Health

Healthcare Provider Financial Sustainability

Implementing automation technologies for healthcare providers: real-life examples and use cases

Baker Tilly and NACD: 2020 Governance Outlook Projections on Emerging Board Matters Baker Tilly and the National Association of Corporate Directors  (NACD), the authority on boardroom practices representing more than  20,000 board members, released the 2020 Governance Outlook: Projections on Emerging Board Matters, featuring Baker Tilly’s 2020 Strategic Risks for Boards. The outlook serves as an annual roadmap to guide corporate directors and senior executives as they tackle business and governance risks and issues throughout 2020. Baker Tilly’s 2020 Strategic Risks for Boards focuses on critical disruptive forces and risks affecting boards and organizations including: Mergers & acquisitions International trade International and domestic tax Privacy Boards must tackle an increasingly complex set of disruptive risks–both domestically and internationally–which are reshaping the world in which they do business. Effective board directors provide proactive guidance and demonstrate meaningful oversight in the face of an accelerated pace of change, innovation and disruption within and outside of their organization. The report also highlights NACD survey findings on the top board priorities for 2020 and highlights issues related to preparing for the next recession, regulatory changes, legal risks, board composition, the digital frontier and other topics.
Baker Tilly and NACD roundtable blog article and video: Is your board keeping up with evolving expectations around privacy NACD and Baker Tilly hosted a board-level discussion on The Power of Privacy: The Board’s Role in Privacy Oversight. The discussion involved  understanding the current privacy regulatory environment and emerging  risks that can affect oversight. Boards hold a significant role in  ensuring management takes a risk-based approach to protect, respond to  and address a widening list of data privacy regulations and  requirements. The blog below provides a summary of the discussion and  highlights the importance of using a comprehensive data privacy program  to assist the board in privacy oversight. Read the article. Watch the roundtable highlight video.
Baker Tilly – NACD BoardTalk Blog Article: Anticipating Disruptive Innovation and Digital Transformation To stay competitive and relevant in a rapidly changing business  landscape, organizations in every industry must navigate an increasingly  disruptive, technology-enabled environment. Companies that do not  address and embrace new and emerging technologies will be less  competitive or may even face obsolescence. Advanced digital technologies  bring with them both opportunities and challenges for boards. Boards  must become knowledgeable about these digital disruption trends in order  to be able to conduct meaningful oversight that management can use  successfully as the company embraces new technologies. Read the article.
Baker Tilly – NACD BoardTalk blog article To Stay Competitive, Leave No Risk Behind Authored by Raina Rose Tagle In order to stay ahead of enterprise risks, directors should ask  management questions that illuminate gaps in strategy. Boards can enable  organizations to gain an edge through a sometimes overlooked area: the  intersection of strategy and enterprise risk management (ERM). The  integration of ERM and strategy enables enterprise risks to be  identified in the context of your strategic plan. It also allows  strategic execution to consider the potential impacts of enterprise  risks. Read the article.
Related insights Data privacy legislation tightens across the globe California passes furthest reaching privacy law to date The Center for Audit Quality releases new guidance on Cybersecurity Risk Management Oversight: A Tool for Board Members

Government Contractors

Real Estate

Law Firm & Professional Services

Not-for-Profit

Risk Advisory

International

Board & Audit Committee Governance

Privacy

Internal Audit

NACD (National Association of Corporate Directors)

In today's competitive landscape, the pace of commoditization is rapid. Technology has created a form of disintermediation, where customers have the ability to leverage publicly available content online to educate themselves about a product or service.  As a result, it's more challenging to differentiate your value to customers and prospects.  We are in an "experience" economy, where companies that create, sell and/or deliver a positive product or service experience enjoy competitive positioning and premium pricing advantages. Organizations need to consider customer experience management and experience innovation as two of the most important strategies to transform and grow your business in this experience economy.  Consider these three digital technology innovations focused on engagement effectiveness, engagement efficiency and engagement intelligence to improve your customer's experience and enable your organization's desired level of growth.

In today's competitive landscape, the pace of commoditization is rapid. Technology has created a form of disintermediation, where customers have the ability to leverage publicly available content online to educate themselves about a product or service.  As a result, it's more challenging to differentiate your value to customers and prospects. 

Sales, Marketing & Service

Customer Experience

Customer Experience Management 

Technology transformation in the age of the customer

Software development and technology companies are experiencing constant pressure to remain competitive, and surpass competitors, in a fast-evolving market of new technology trends such as internet of things (IoT), artificial intelligence (AI), blockchain, machine learning, cloud computing, data analytics, automation and cybersecurity, forcing these companies to reevaluate and change the ways they design and develop products and platforms.  Companies today are not only devoting extensive efforts, expenditures and time into developing new innovative offerings using these technologies, but also spending significant resources to reinvent the way they do business, blurring the line between technology companies and other industries. More companies are investing in the development of innovative technology offerings as well as transforming their businesses by adopting time- and money-saving technologies, such as automation, AI and machine learning. Fortunately, federal and state governments offer R&D credits for organizations of all sizes developing or incorporating these technologies. R&D credits result in a dollar-for-dollar reduction in income taxes and, if qualified, payroll taxes, providing cash flow for future investments in technology. The activities need only be evolutionary to the organization itself, not to the industry as a whole, in order to qualify. Projects or activities must meet four criteria in order to include the related wages, supplies, cloud service provider costs or contract research costs in the R&D calculation.  1. The activity must be technological in nature. The activity must be based on the principles of a hard science like software engineering or computer science. 2. The activity must be for a permitted purpose. The activity must involve the creation of a new or improved level of: function, performance, reliability or quality. 3. The activity must involve the elimination of uncertainty. The activity must explore what was not known at the start of the project. Can we develop it? How will we develop it? What is the appropriate design? 4. The activity must involve a process of experimentation. Substantially all activities must include elements of experimentation such as: Evaluating one or more alternatives Performing testing or modeling Examining and analyzing hypotheses Refining or abandoning hypotheses A wide range of technical activities related to the development of these products and platforms may qualify for the R&D credit. Consider the examples below: Any software design/development activities directed at resolving software development uncertainties through an iterative process Designing and developing new products and/or product enhancements Developing product specifications or requirements, such as functional, design or test specifications Designing and integrating applications and technologies Developing new or improved technologies (e.g., new algorithms or methodologies) Designing, developing and testing client-specific applications Designing and developing software architecture Programming software source code Conducting functional and/or technical testing to validate design Compiling and testing source code Involvement in technical design/development meetings Direct technical supervision/support of the above activities The following demonstrates how a technology organization may take advantage of the R&D credit: Case study A technology company’s in-house engineering and development teams create innovative platforms that integrate their customers’ disparate payment channels into one. The development team has grown over the years in order to address technical challenges and uncertainty associated with the activities related to new integrations, new product features and higher volume, which means the R&D credit has also grown:  As the company continues to innovate, it will keep receiving benefits from the R&D credit, including: Reduce its tax liability Increase its cash flow Increase and optimize its investment in new technology Take advantage of R&D credit opportunities Baker Tilly has an experienced team of R&D professionals who will work with you to develop an efficient and cost-effective approach for identifying and documenting eligible R&D activities and costs. We have assisted many clients in a variety of industries in identifying, documenting and sustaining federal and state R&D credits through a comprehensive understanding of their business operations. Senior Consultant Logan Monson contributed to this article. For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team. -- The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Fortunately, federal and state governments offer R&D credits for  organizations of all sizes developing or incorporating these  technologies. R&D credits result in a dollar-for-dollar reduction in  income taxes and, if qualified, payroll taxes, providing cash flow for  future investments in technology.

Software & Technology

Research & Development Credits

R&D credit opportunities for software and technology companies

While physical robotics are commonly used in food processing, a new category of robotics—robotics process automation (RPA)—is likely to be more popular in the food industry in the near future. Read this article to hear Baker Tilly's perspective on the ways RPA improves the quality and safety of food.

Read this article to hear Baker Tilly's perspective on the ways RPA improves the quality and safety of food.

Food & Beverage

Is Robotics Process Automation an Up-and-Comer for Food Safety?

Listen to this episode of "Go Beyond Disruption" where Baker Tilly discusses the basic jargon of RPA and AI, why you should understand the tech before you put it all together, and how to identify the goals of the digital transformation. He also outlines his "3 Fs" process for fighting the factors of failure. Listen to the full podcast here. 

Listen to this podcast to learn more about the basic jargon of RPA and AI, why you should understand the tech before you put it all together, and how to identify the goals of the digital transformation.

Reality Bytes: Demystifying Digital Transformation

As companies continue to embrace digital transformation, modern business process management tools are finding a place in their digital transformation toolkit. Look at the BPM space through the lenses of digital transformation’s 3 major objectives – efficiency, transparency and insight - for a comprehensive view of this critical business functionality. Read the article.  For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

As companies continue to embrace digital transformation, modern business process management tools are finding a place in their digital transformation toolkit. Look at the BPM space through the lenses of digital transformation's 3 major objectives – efficiency, transparency and insight - for a comprehensive view of this critical business functionality.

BPM and digital transformation

Historically, insurance companies have not been prime candidates for the research and development (R&D) credit, a tax credit available to companies that develop or improve new products or processes, with the exception of the development of new policy administration systems. Under the R&D credit rules, these policy admin systems would be considered internal use software (IUS) used for general and administrative functions facilitating or supporting the conduct of the business – “back-office functions” like financial, human resource management and support services. In order to be eligible for the R&D credit, IUS must meet, along with the general four-part test requirements (must be technological in nature, for a permitted purpose, involve the elimination of uncertainty and include a process of experimentation), an additional three criteria – must be innovative, must involve significant economic risk and may not be commercially available for use. Although there are regulations for this high threshold of innovation test, IUS is closely scrutinized by the IRS. Wages and contract research costs associated with R&D projects and activities are included in the credit. For many traditional insurance companies developing policy admin systems, the company does not have in-house computer scientists/software engineers and uses third-party contractors for the software development. Often, the contractors are paid on a fixed fee basis for business reasons (versus hourly/time and materials). These costs may not qualify as the company does not have financial risk in the success of the development by the contractor. Considering the potential IRS risk associated with IUS and the disadvantageous payment terms to third-party contractors, traditional insurance companies generally have not been able to capture the R&D credit benefits on millions of dollars of development spent. Enter InsurTechs – insurance companies that use technology and innovation to reach their customers through digital platforms to increase efficiencies and savings. Because these new digital platforms are used to provide computer services to customers, the software development should not be subject to the high threshold of innovation test under the IUS rules discussed above. Examples of qualifying software development activities include: Designing and developing new products and/or product enhancements Developing product specifications or requirements, such as functional, design or test specifications Designing and integrating applications and technologies Developing new or improved technologies (e.g., new algorithms or methodologies) Designing, developing and testing client-specific applications Designing and developing software architecture Programming software source code Conducting functional and/or technical testing to validate design Compiling and testing source code Unlike the short-term need for third-party contractors to develop a policy admin system, InsurTechs have their own teams of computer scientists/software engineers to do the coding and development. Not only does this eliminate the need to evaluate the contractor financial risk, qualified employee time is captured at 100 percent versus a 65 percent haircut of contractor costs, significantly increasing the credit. With the advancement of innovative software development platforms that are “low-code” or “no-code,” we will continue to see more citizen developers emerge in organizations – decreasing the level of effort traditionally needed for software development and testing. However, these platforms require significant R&D work to ensure the end users are working with intuitive and user-friendly tools. Furthermore, organizations must still consider the primary roles of the application creators (professional versus citizen developer), the types of applications needed (data-centric versus process-centric) and the complexity of the resulting apps (simple and easy to template versus complex and fully custom). Since many InsurTechs are startup companies, they may also be eligible for the R&D payroll tax offset. Because the R&D credit is a nonrefundable credit, startup companies are often limited in their ability to claim the R&D credit in the current tax year because they do not have current income tax liability to otherwise offset the credit. The company receives no immediate tax advantage from the R&D credit, especially for years in which R&D activities may be high. The Protecting Americans from Tax Hikes (PATH) Act of 2015 allows certain small businesses to offset the R&D credit against payroll taxes instead of income taxes. Up to $250,000 of annual federal R&D credits can be allocated against payroll tax liability for tax years that begin after Dec. 31, 2015. To qualify in 2018, a business must have gross receipts of less than $5 million in 2018 and may not have had gross receipts for any tax year before the five-tax-year period ending with 2018. For example, if the credit-claiming year is 2018, a company must have had less than $5 million of gross receipts in 2018 and no gross receipts prior to 2014. As InsurTechs expand their platforms and development teams, the R&D credit may grow exponentially. Generally, the federal R&D credit equates to about 5 to 7 percent of eligible R&D expenses. The ability to monetize the R&D credit through the payroll tax offset increases cash flow as well as the ability to increase investments in team members and new technology. Baker Tilly has an experienced team of R&D professionals who will work with you to develop an efficient and cost-effective approach for identifying and documenting eligible R&D activities and costs. We have assisted many InsurTech clients in identifying, documenting and sustaining federal and state R&D credits through a comprehensive understanding of their business operations. For more information on this topic, or to learn how Baker Tilly tax specialists can help, contact our team. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

With the advent of InsurTech, companies that wouldn’t normally qualify for the R&D credit suddenly have new opportunities.

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InsurTechs and the R&D credit

Commercial real estate companies face a serious problem: paperwork. Director of Innovation Baker Tilly talks with Bisnow on ways that Robotic Process Automation can help. Read the article.  For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

Commercial real estate companies face a serious problem: paperwork. Director of Innovation Baker Tilly talks with Bisnow on ways that Robotic Process Automation can help.

Real Estate Investors

CRE automation will overhaul much more than just repetitive tasks

Authored by Amanda Klein, Ollie East and Taylor Ball The holistic shift to customers expecting a seamless digital experience accelerates the need for digital transformation. The rapidly advancing technology landscape gives rise to new and ever more convenient services that dramatically improve the customer experience and overall business processes in such a way that, if unaddressed, will heavily impact legacy insurers. This new paradigm is predominantly enabled by advances in intelligent automation, AI, IoT connected devices, and advanced analytics, with benefits across the entirety of the value chain. To better understand the current “digital state” of the industry, we will take you on a journey into how these innovations are impacting current business processes and leave you with an understanding of  how you can evolve to utilize all the benefits that come with advancing your digital maturity. New products and features As a result of aggregating internal and external sources of consumer data, new products and features have recently been launched into the insurance marketplace. An example of this is micro-insurance, a product that allows single assets not typically covered by legacy insurers to be covered for specific time periods, saving customers money by allowing them to turn off coverage when their assets are not used for commercial business.  Similarly, usage-based offerings allow for dynamic premiums which fluctuate based on how often the insured asset is used, again saving the customer money and improving their experience. These are just two examples of how big data is leading to the creation of innovative products that meet the ever evolving needs of the customer. Digital distribution and effective channel partners While product offerings are a key area impacted by this digital revolution, sales channels are rapidly evolving also, as digitization is accelerating the adoption of online and mobile app-based channels, meeting the needs of millennial buying preferences. Research, purchase, and management of insurance products in a single application and seamlessly execute with accuracy, speed and quality.  These digital distribution and self-service channels, enabled through advances in cloud-based technologies and twinned with the high penetration of smartphones, are leading to increased customer satisfaction, and perhaps more importantly, retention. Accelerated underwriting and personalized pricing Automation has removed the human processing element of certain activities and is freeing up time to focus on more value-added work, while consequently improving the customer experience.  In addition to benefits such as improved underwriting, insurance policies are now being priced, purchased and bound in near real time, transforming the entirety of the internal process through intelligent automation. Not only are these policies being priced in real time, but they are leveraging new sources of internal and external consumer data to personalize policies.  With automation improving both internal efficiencies and the customer’s experience, and big data building highly personalized and accurate consumer profiles, technology is providing the necessary solutions insurers need to meet the increasing demands of the customer.  Improved claims management  The claims management process is fast becoming “hands free,” streamlining the process and eliminating human error with intelligent automation. Claims entry, confirmation, routing and resource assignment and payment are all rapidly being automated.  Major operational efficiencies include lower processing costs, reduced compliance risk and streamlined operational staffing models. Advances in AI are also leading to new types of fraud detection, technology that is allowing insurers to focus compliance resources elsewhere, not only reducing risk but also improving internal efficiencies.  Customer and performance management Insurance customers are reaping the benefits of advanced technology pervading the industry even beyond the cases we discussed. Connected devices enable hyper-personalization and predictive capabilities with the ability to send customers predictive alerts about issues before they arise as well as accurately predict likelihood of claims. Enhanced platforms are supporting customers in preventative maintenance across all types of insurance and becoming more advanced in the functionality they offer. Ever more realistic chat bots help to facilitate immediate customer service queries and solve problems with minimal wait time and inconvenience. Technologies of all types are creating opportunities for insurers to exceed customer demands and maintain customer loyalty.  How do insurers avoid disruption? Insurers who are willing to embrace this technology and change their current way of doing business can fundamentally improve their service offerings and relationships with customers.  Insurers need to take a strategic look across the value chain and identify the greatest opportunities for their organization. Clearly defined priorities, supported by leadership, are needed to advance operational processes and digitally transform.  Leadership needs to bring together multi-dimensional teams with both business and technical capabilities, with a specific passion for improving the user experience. Insurers need to understand the new technologies, data and partners available to enhance their existing capabilities.  Leaders must enable an innovative, digital culture focused on delivering exceptional experiences. Employees must be encouraged to share innovative ideas, and understand the benefits of these changes to their roles. For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

Disrupt or be disrupted – the mantra of many legacy insurers as technology continues to transform the insurance industry.

Digital transformation in insurance

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Digital and emerging technologies are changing the nature of work, and the digital experience is the next frontier for rethinking work in many enterprises.  It is more about “how” we work and how we put advanced digital capabilities to work across a growing web of connected people, animals, objects and devices.

Employees demand anytime, anywhere, flexible, collaborative, always-on ways to work; on their terms. With the advancement of digital technologies, we can equip, enable and optimize the enterprise.

Baker Tilly provides our clients with thought leadership, case studies, rapid prototyping and implementation on emerging technologies so they will be ready when these technologies become more mature.

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We are focused on cutting edge technologies that have the promise of becoming a mature offering, but haven't been adopted by the larger market. Our Baker Tilly Digital lab allows organizations to create emerging technology prototypes and proof of concepts without making a large investment, in order to find out if it's right for your organization.

The innovation and investments in emerging technologies may present an R&D credit opportunity. Benefits from R&D credits include the dollar-for-dollar reduction in tax liability and an increase in cash flow that can be used to increase, optimize and fund investments in new technology and related resources.

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Analytics are being used to harness vast amounts of internal, external, structured and unstructured data to extract insight for more intelligent decision making.

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