UK tax authorities Make Tax Digital, whether businesses want it or not

In a changing world, it is good to know that some certainties remain, such as when companies log their affairs and give up to Caesar what is due to Caesar, that is, pay their tax. In the UK at least, even this constant is under fire. I’m speaking tongue in cheek of course, but the government’s Making Tax Digital (MTD) initiative is proving troubling to more than a few businesses.

On the upside, tax accounting software vendors seem very well furnished with information. There’s a quick start guide which shows JSON and XML formats for information exchange, RESTful API calls and so on. There’s also a developer hub to test remote access to APIs. Less available is information to businesses and accountants, who are largely in the dark beyond a central assumption that everyone is using vendor packages now, aren’t they?

Simply put, if you’re already using a package such as QuickBooks or Xero, you should be OK (according to the list of those whose software will enable auto-uploading to Her Majesty’s Revenue and Customs, HMRC). But many organisations are not, preferring to keep their books as, erm, books or indeed, spreadsheets. So, what if you don’t want to deliver your books digitally? Well, you have to.

As a techie, I find myself strangely nonplussed about this: while I might not have a problem with using a computer, many others whose income passes the £85K threshold (and who have run businesses quite happily without one) are now faced with three new potential costs: the software itself, the training to use it, and the conversion from one package, or spreadsheet, to a certified package.

Software vendor Liquid Accounts will “provide a single company, single user version of Liquid VAT Filer free of charge to any VAT registered business” — this works with MTD and, according to the article, with spreadsheets. Regarding the latter, the HMRC mentions ‘bridging software’ for spreadsheets here, confirmed here. A couple of solutions are now available, as per the article, including the TaxCalc spreadsheet plugin.

But it begs a question: why didn’t the Revenue simply define a file format standard for accountants to use, which all packages could write to and which anyone could upload? Perhaps there is no place for such primitive mechanisms, not in the API economy. For UK businesses meanwhile, waiting for clarity is becoming an increasingly risky option: we have nine months to go before the end of the tax year in April 2019, by which point MTD will be the default approach.

We shouldn’t be surprised that the British Chambers of Commerce are requesting that the roll-out of MTD is delayed, as this press release notes. On the point about British businesses having enough on their plates right now, I have to concur and can only hope our bureaucratic betters see sense before April next year.

What’s a Store For?

The first e-commerce transaction—a music CD, pizza, or weed, depending on who you ask—took place around thirty years ago. That means that first truly native ecommerce generation is now in charge of their own foot traffic and armed with at least one device that spares them the trouble of leaving the house. This, paired with the broader shift in consumer behavior across all generations, means brick and mortars need to find new ways to compete with digital to inspire visits and sales. Stores are evolving and, along the way, challenging the very notion of what a store is for.
Up against digital
A big part of brick and mortar’s evolution is digital integration. Today, retailers are working to enhance and personalize customer experience by connecting to consumers in-store through their mobile devices—building apps, targeting ads, and using beacons. You can find many examples of digital integration today, though online retailer Rebecca Minkoff’s flagship store in New York offers one of the more comprehensive ones; its interactive wall and dressing rooms have been credited with tripling expected clothing sales. Timberland also just launched its first connected store while Nordstrom’s commitment to digital integration has been credited with 50% growth in revenue over 5 years. (They just hired a former Amazon exec to serve as CTO.) Target, too, is getting into the mix, launching an LA25 initiative where it’s testing 50 of its top enhancements in 25 Los Angeles stores.
The IRL advantage
But digital integration is not the only strategy; retailers can also draw on the in-real-life [IRL] advantages of the physical space. Immediacy comes in here, with more retailers enabling online ordering and pick up in store or curbside. It’s competitive because fewer exclusively online retailers can offer this instant gratification, but is not necessarily a long-term strategy given that online fulfillment will continue to evolve and speed up.
More effective is the opportunity to build community. Oftentimes, this comes in the form of caffeine; Barnes and Noble was an early innovator here, adding a Starbucks to a New Jersey store back in 1993. Since then, many retailers have adopted or tested in-store cafes, including Urban Outfitters, Target, Restoration Hardware, and Kohl’s. Along the same lines, Target, Whole Foods, and Nordstrom, among others, are offering cocktails in some stores. When trying to attract customers and increase dwell time, there’s an advantage in offering something that can’t be instantly downloaded, like coffee, booze, and yes, maybe even tattoos. (See Whole Foods.)
Meanwhile, another concept that keeps popping up is—ahem—the pop up shop. The pop up shop’s currency is urgency; if customers don’t come now they risk missing out forever. Bloomingdales is hosting a pop up inspired by the musical Hamilton while Macy’s is bringing in pop ups as part of the reinvention of its Brooklyn store. The pop up also presents a low-risk testing ground for online retailers, one compelling example being Warby Parker’s touring store that was housed in a school bus.
But…is it a store?
As brick and mortar adapts, becoming deeper integrated with digital, acting a fulfillment center and expanding to offer drinks and other services, the classic definition of “store” begins to fragment. Already, the “store” has lost its longstanding position as the finale of the customer purchase funnel; in no small part because that purchase funnel itself is an antiquated concept. Savvy retailers and brands in general now think of the consumer experience as an ongoing loop, with consumers moving from digital to physical and back until, eventually, there may be no clear delineation between the two. This emphasis on the overall experience changes the expectations of stores. It also opens opportunities for more types of brands to invest in physical locations.
For example, last year, there was an more than an hour wait at the Museum of Feelings in downtown New York City. The museum invited visitors to walk through a sensory presentation of each feeling: Optimism, Joy, Invigorated, Exhilarated and Calm, while its exterior changed color to reflect the social mood of New York. You might argue that this wasn’t actually a store, but then it wasn’t actually a museum either; The Museum of Feelings was a branded retail experience for Glade, generating buzz for an otherwise not-so-buzzed-about brand.
More recently, Samsung launched Samsung 837, a “first-its-kind cultural destination, digital playground and marketing center of excellence.” Samsung 837 serves as a showcase for innovation, offering what may be the first virtual reality experience for many visitors and providing Instagram-friendly experiences like the walk-through Social Media Gallery. But what’s unique about Samsung’s space is that there is nothing sold there. It’s an experience—an opportunity for Samsung to tell its story and give visitors a way to get excited about the brand they’ll buy in the future.
In cases like these, brick and mortars serve as a marketing vehicle—an opportunity for brands to curate their own presence for customers, just as social provided the format to operate as a media company. It’s a trend that makes Amazon’s decision to open its own brick and mortars seem strategic. But is the return there?
It always comes back to data
The ability to more accurately track consumer activity gives brick and mortars a host of insights. Not only can the more connected store know what was purchased, they can also see what products compelled the most research, price comparisons, or inspired trips to the fitting room. They can engage with in-store customers via social media as well as encourage and measure posts from their store and, increasingly, tap into emotional analytics. Further, more sophisticated attribution measurement is making it possible to determine what investments drove traffic to the store, even without purchase.
Though it would be inaccurate to suggest that traffic and sales aren’t still the key performance indicators for most stores, this broader set of data, if put to use, can help a retailer optimize beyond the limits of its four walls—especially critical at a time when stores are closing so rapidly that CNN wrote “Store Closings are the Hottest Trend in Retail.”
Where to go from here
Digital has an odd way of creating challenges and then presenting solutions for those challenges it creates. It offers a range of ways of to add genuine value, from brand awareness to interaction, coupled with pop-up flexibility. If retailers are savvier about embracing this value, they’ll stand a better chance of attracting customers. If not, they’re not only missing out on opportunities in the near term, they’re limiting their future prospects for growth—after all, isn’t it a waste to see a store as a fulfilment outlet?

Ad Blocking and Tackling: What 2015’s Ad Blocking Means for 2016’s Marketing

2015 was the year when an unprecedented number of users took action against the ads that slowed web pages and turned the online content experience into a frustrating game of close-that-ad. According to a PageFair and Adobe report, U.S. ad blocking grew 48% in the twelve months leading up to June 2015. That’s 45 million users—16% of the population—who just said no to digital and, in particular, mobile web advertising by downloading ad blocking applications.
With eyeballs and revenue on the line, thought leaders debated whether the ad blocking trend would destroy or save advertising. The Association of National Advertisers (ANA) blamed the digital ecosystem. The Internet Advertising Bureau (IAB) blamed themselves for having “lost track of the user experience.” (They also notably took ad blockers to task for disingenuous practices, most specifically paid “whitelists” for publishers.)
The cost of ad blocking is significant, with an estimated $781 million dollar loss for the industry. But another resonating impact of the Great Ad Rebellion of 2015 will be found in its influence on marketing investments. What will marketers do differently to navigate the digital/mobile landscape in 2016?
Revisiting advertising
Lest there is any question, ad blocking will not prompt an all-out surrender by the ad ecosystem. Some publishers, like GQ, Forbes and more recently Wired, are fighting fire with fire, by blocking users with ad blockers. But the longer term strategy is to address the issues with ad experience. Some of this responsibility falls on publishers, who determine the degree of disruption that must be tolerated to access content, as well as the ad tech landscape, where fierce competition can inspire extreme approaches to ad engagement. (To steer publishers and platforms to a more user-friendly approach, and as part of its mea culpa, the IAB introduced new guidelines that emphasize ‘light, encrypted, ad choice supported, non-invasive ads’.)
But no change can succeed unless marketers direct ad dollars to those that are innovating in favor of an improved experience. This isn’t a simple task, given that site-by-site scrutiny can work against the efficiency gains of programmatic buying, a practice that has itself been blamed for the surge in ad blocking. As such, there will also be other moves to optimize ad impact, including increased investment in emotionally-aware ads, where data is used to extrapolate insights about a user’s psychological state in a given moment. Incorporating a measure of receptivity into ad delivery could prove to be the much-needed difference between engaging a consumer and ticking them off.
Thinking beyond advertising
Ongoing concerns about ad ROI will prompt more marketers to deepen investments in other approaches. Native advertising, the modern day equivalent of the advertorial, offers a worthy complement to traditional ads. Content marketing and branded content will help brands meet the need to feed social channels. Influencer marketing will gain practitioners as marketers struggle to connect with elusive millennial audiences. We’ll also see more brands practicing corporate social responsibility and, of course, promoting those good deeds via social channels.
Each of these tactics offer a subtler alternative to the traditional advertising message. And while this can be a strength in an oversaturated landscape, there is a fine line between subtle marketing and the calculated manipulation of audiences. The FTC tuned into this, releasing guidelines to ensure consumers can distinguish native advertising from content. But marketing’s most powerful critics are the consumers themselves, which leads to the next point…
Embracing feedback—in all forms
In a world of 24/7 marketing, brands are constantly challenged to creatively and authentically engage consumers in “conversation”.  The always-on dialogue represents tremendous opportunity, but it doesn’t come without risk. Today consumers are quick to call brands out when they’ve missed the mark, even when it’s as seemingly innocuous as Red Lobster’s slow response to a shout out from Beyoncé. Success doesn’t grant immunity either, as is evidenced by the less than warm welcome REI received on Reddit following its widely-celebrated #optoutside campaign.
This vulnerability could make one want to crawl back into the safe confines of traditional marketing, but of course that’s not an option. In 2016, more marketers will have strategies in place that allow them to creatively participate in the two-way dialogue while also managing the inherent risk. This means more than having an ear to the ground; brands need a plan that allows them to quickly gauge when and how—or if—it makes sense to engage or respond. (Arby’s farewell to their consistent critic Jon Stewart is a stellar example of a brand creatively and effectively steering into negative feedback.)
It may be that consumer ad blocking is really only part of this feedback cycle— less a mass exodus from advertising than it is an aggressive critique of its current form. Either way, it is a milestone in the ongoing transition from one-way marketing, perhaps one of the last nails in the coffin. Today, consumers have more than just a voice—they control the levers on which messages they receive and when. Marketers will need to keep in mind throughout the execution of every strategy and tactic to have an edge in 2016 and beyond.

The Gift Card Sector Comes of Age. Part 2 of 5: The Business, Social and Technology Trends Driving E-Gift Card Adoption, Innovation and Investment

In Part One of our look at the gift card sector, we provided an overview of the accelerated activity characterizing the sector over the past 4 years. Now in Part Two, we will examine some of the drivers behind the segment’s growth.
The Investment Perspective
FinTech in general is hot. And Square’s meteoric rise, led by Twitter CEO Jack Dorsey, made retail POS – and payments in general — sexy in that “ripe for innovation” kind of way. As a segment within the FinTech category that correlates closely with the growth of mobile payment technologies, e-gift cards are understandably an area of interest. And an area that is not yet saturated or highly visible (relative to say, the post-Square POS me-too frenzy), enabling even smaller funds to get in on a good deal.
Mobile Device and App Proliferation
The ubiquity of smart phones and the emerging use of mobile wallets makes e-gift card transactions a logical next step in ecommerce adoption for early adopter/tech savvy consumers. And for the underbanked, who are increasingly mobilized, e-gift apps can be the first and/or are the only step available to them for participating in the electronic purchase of goods and services.
Consumer Migration To All Things Digital
U.S. consumers are clearly weary of the physical store. This season’s unprecedented boycott of in-store Black Friday by some major retailers like REI and consumers’ growing weariness with, and wariness of the physical retail store experience this year reached an inflection point, morphing from mere disenchantment to angry action, with growing support for the consumer boycotting of Black Friday.
Rather than abandoning the retailers, consumers continued to engage with their favored brands online, with REI experiencing a 10-26% rise in online sales during the Thanksgiving holiday, according to digital analytics company SimilarWeb. Other retailers saw even more dramatic increases in online sales, with GameStop and Staples experiencing a one-day rise of 120%+, PetSmart a rise of 69% and Nordstrom and Pier1 both reporting a 54% one-day rise in web traffic. Overall, Black Friday in-store sales dropped by more than $1 billion – or 10% from previous year holiday sales while online sales increased. In fact, a National Retail Federation (NRF) survey found that indeed more people shopped online (103 million) than at the store (102 million) during the Thanksgiving/Black Friday period.
Gift cards are playing a part in this migration online, with consumer attitudes about gift cards changing as the sector provides more value-added features that increase the level of both physical and e-gift card personalization available to consumers, and that provide the convenience of allowing users to add value, store and transact with the cards anytime, anywhere. Moreover, marketplaces like Raise, Cardpool and Giftcards.com are enabling people to buy gift cards online for a discount, making gift cards even more appealing in some cases than the purchase of a discounted physical good as you could theoretically double dip – use the full value of a discounted card to buy a wanted item when it goes on sale.
At the same time, in both the U.S. and Canada, e-gift cards are not only viewed as acceptable, but increasingly as the preferred way to show gift appreciation.
In the next Part Three of this series about the gift card sector, we’ll look at how the growth of gift card business model and technology innovation is not just about the convenience of the pre-paid card, but about a larger trend towards the de-centralization of consumer finances, driven by such factors as millennial distrust of the bank as the sole institution for housing one’s money, and the broadening ranks of the under-banked.

This Digital Transformation is Not the One You’re Looking For

I was sorting through some browser tabs that had been open for a couple of weeks on my laptop and rediscovered a press release that had caught my attention earlier. After rereading it, I realized that I had left the release up in my browser because it could be the poster child for the inane manner in which technology vendors and IT consulting firms are talking about and selling what they very much want to be the next big thing – Digital Transformation.
CA Technologies’ press release was a horrific example right from the start. It’s title, “CA Technologies Study Reveals Widespread Adoption of Digital Transformation”, nearly made me spit coffee all over my laptop. Really? Is Digital Transformation (DT) something that can be adopted? Hardly. After all, DT is not a discrete technology. Rather, it’s a never-ending journey that organizations undertake to better the efficiency and effectiveness of their operations.
DT involves making changes to business objectives, strategies, models, cultures, processes and so many other elements. Many of those changes can be supported by the deployment and adoption of enabling technologies, but DT isn’t about the technology itself. It’s a mindset, a way of thinking and acting as an organization that spans across all of its planning and execution.
In that regard, DT is very much like the discipline known as Knowledge Management (KM) that was similarly a darling of technology vendors and their consulting partners nearly 20 years ago. Most large enterprises at least considered implementing KM practices and technologies. In fact, many did, although the majority of those ‘efforts’ failed to survive an initial pilot program. In the end, only a few big companies, the ones that treated KM as something more than a technology set to be adopted, whole-heartedly embraced the discipline and successfully wove it into nearly every aspect of their businesses.
We’ve seen the same phenomenon play out with Social Business. McKinsey & Company has been tracking the deployment and impact of social constructs, behaviors and tools in a cohort of roughly 1,500 enterprises for nearly 10 years now. Earlier this month, in a teaser to its complete report of annual survey results, McKinsey published these related and telling findings:

“…35 percent of the companies had adopted social technologies in response to their adoption by competitors. Copycat behavior was also responsible for their diffusion within organizations, though at a slightly lower rate: 25 percent of all employee usage. Roughly a fifth of the companies we studied will account for an estimated 50 percent of all social-technology usage in 2015.”

Most organizations and individuals tried to ‘adopt’ social technologies because they felt competitive pressure to do so (thanks, in part, to vendors and consultants), not because they had investigated and understood how ‘being social’ at work could change how well their organization actually performed relative to both its current state and its competitors. On the other hand, a minority of organizations (20% in McKinsey’s survey) have made the dedicated, all-in commitment needed to succeed with Social Business.
Today, we are beginning this cycle all over again, this time under the moniker of Digital Transformation. Consider these findings from CA’s study:

“Digital Transformation is being driven as a coordinated strategy across a majority of organizations (55 percent)…  As a result, 45 percent of respondents have already seen measurable increases in customer retention and acquisition from their digital transformation initiatives and 44 percent have seen an overall increase in revenue.”

In other words, if you aren’t “adopting” DT already, you’re toast. At least that’s what CA and other technology vendors and consultants want you to believe in a fresh state of panic. Hence these findings from CA’s study:

Digital Disrupters have two times higher revenue growth than mainstream organizations. They report two and a half times higher profit growth than the mainstream organizations.”

That may be accurate, but surely those “Digital Disrupters” did not achieve the reported results merely by adopting technology, whether it be from CA or another vendor. They’re the ones who have taken a comprehensive view of DT and, as CA itself puts it, have “…many projects underway in multiple areas of the company, including customer services, sales and marketing, and product/service development.” It’s not a coincidence that CA was only able to include 14% of the organizations surveyed in the group it labeled “Digital Disrupters”. That matches up pretty well with McKinsey’s finding of just 20% of organizations surveyed making more than a token effort at becoming a social business.
All of this is to say beware of vendors and consultants selling technology as the cornerstone of DT initiatives. Yes, technology is an invaluable piece of the puzzle, but it’s not the only or most important one. DT can’t simply be adopted; every aspect of it must be considered and actively embraced by the entire organization.

Research Agenda of Larry Hawes, Lead Analyst

Greetings! As my colleague Stowe Boyd announced yesterday, I am part of a fabulous group of smart, well-respected people that have joined the rebooted Gigaom Research as analysts. I was affiliated with the original version of Gigaom Research as an Analyst, and am very pleased to be taking the more involved role of Lead Analyst in the firm’s new incarnation, as detailed in Stowe’s post.
For those of you who don’t know me, I’ve spent the last 16 years working as a management and technology consultant, enterprise software industry analyst, writer, speaker and educator. My work during that time has been focused on the nexus of communication, collaboration, content management and process/activity management within and between organizations ─ what I currently call ‘networked business’.
I intend to continue that broad line of inquiry as a Lead Analyst at Gigaom Research. The opportunity to work across technologies and management concepts ─ and the ability to simultaneously address and interrelate both ─ is precisely what makes working with Gigaom Research so attractive to me. The firm is fairly unique in that aspect, in comparison to traditional analyst organizations that pigeonhole employees into discrete technology or business strategy buckets. I hope that our customers will recognize that and benefit from the holistic viewpoint that our analysts provide.
With the above in mind, I present my research agenda for the coming months (and, probably, years). I’m starting at the highest conceptual level and working toward more specific elements in this list.

Evolution of Work

Some analysts at Gigaom Research are calling this ‘work futures’. I like that term, but prefer the ‘evolution of work’, as that allows me to bring the past and, most importantly, the current state of work into the discussion. There is much to be learned from history and we need to address what is happening now, not just what may be coming down the road. Anyway, this research stream encompasses much of what I and Gigaom Research are focused on in our examination of how emerging technologies may change how we define, plan and do business.

Networked Business

This is a topic on which I’ve been writing and speaking since 2012. I’ve defined ‘networked business’ as a state in which an interconnected system of organizations and their value-producing assets are working toward one or more common objectives. Networked business is inherently driven by connection, communication and collaboration, hence my interest in the topic.
While the concept of networked business is not new, it has been gaining currency in the past few years as a different way of looking at how we structure organizations and conduct their activities. As I noted in the first paragraph of this post, there are many technologies and business philosophies and practices that support networked business, and I will do my best to include as many as possible in my research and discussions.

Networks of Everything

This research stream combines two memes that are currently emerging and garnering attention: the Internet of Things and the rise of robots and other intelligent technologies in the workplace. In my vision, networks of everything are where humans, bots, virtual assistants, sensors and other ‘things’ connect, communicate and collaborate to get work done. The Internet, Web, cellular and other types of networks may be used in isolation or, more likely, in combination to create networks of everything.
I’ve had a book chapter published on this topic earlier this year, and I’m looking forward to thinking and writing more about it in the near future.

Microservices

How do we build applications that can support business in a heavily networked environment? While the idea of assembling multiple technology components into a composite application are not new (object-oriented programing and Service Oriented Architecture have been with us for decades), the idea continues to gain acceptance and become more granular in practice.
I intend to chronicle this movement toward microservices and discuss how the atomization of component technology is likely to play out next. As always, my focus will be on collaboration, content management and business process management.

Adaptive Case Management and Digital Experience Management

These two specific, complementary technologies have also been gathering more attention and support over the last two years and are just beginning to hit their stride now. I see the combination of these technologies as an ideal enabler of networked business and early exemplars of component architecture at the application level, not the microservice one (yet).
I’ve written about ACM more, but am eager to expand on the early ideas I’ve had about it working together with DEM to support networked business.

Work Chat

Simply put, I would be remiss to not investigate and write about the role of real-time messaging technology in business. I’ve already called work chat a fad that will go away in time, but it needs to be addressed in depth for Gigaom Research customers, because there are valid use cases and it will enjoy limited success. I will look at the viability of work chat as an extensible computing platform, not just as a stand-alone technology. Fitting with my interest in microservices, I will also consider the role that work chat can play as a service embedded in other applications.
Phew! I’m tired just thinking about this, much less actually executing against it. It’s a full plate, a loaded platter really. The scariest thing is that this list is likely incomplete and that there are other things that I will want to investigate and discuss. However, I think it represents my research and publishing interests pretty  well.
My question is, how does this align with your interests? Are there topics or technologies that you would like to see me include in this framework? If so, please let me know in a comment below. Like all research agendas, mine is subject to change over time, so your input is welcomed and valued.