Deloitte SA Blog

Icon

The new International Integrated Reporting Framework

Integrated Reporting Framework

The International Integrated Reporting Framework, published in December 2013, sets the new reporting standard across the globe, and assigns very clear and public responsibility to the Board. The attached guide assists Audit Committee and Board members in their review of the Integrated Report.

Click here to access the full report

The new International Integrated Reporting Framework – A review guide for Audit Committee members

In December 2013 the International Integrated Reporting Council published the International Integrated Reporting Framework (“the framework”). This framework has since been adopted in South Africa and sets the new reporting standard across the world.

It is important for Audit Committees to note that the framework assigns very clear and public responsibility to the Board as explained under the first section below. The overriding question remains whether the Integrated Report explains how the organisation has in the past and plans to create and sustain value into the short, medium and longer term.

The framework includes guiding principles and content elements, all of which needs to be appropriately addressed in order for the organisation to call its report an Integrated Report. This guide has been prepared to assist Board and Audit Committee members in their review of the Integrated Report and is drafted in a question and answer manner to allow for ease of reference.

If you have any questions or require a more detailed discussion on the content of the report, please contact Nina le Riche at nleriche@deloitte.co.za

Executives recognise that “social business” offers promise of progress

social - business

Global companies are maturing in their use of social engagement tools. They are going beyond seeing social as “media” they can use to broadcast marketing messages and, in a very important business trend, weaving social tools and interactions more into their everyday, global operations.

In line with this shift, business executives’ assessment of the value of social is changing rapidly. In a 2011 survey by Deloitte and MIT Sloan Management Review (of 2,500-plus managers across 99 countries and 25 industries), only 18 percent of responding executives said they considered social “important today.”

When the study was repeated in 2012, that figure doubled to 36 percent. And most of the rest saw social capabilities quickly becoming more vital: More than half of the 2012 respondents said that social would be “important within the next year.”

The finding was supported by Deloitte’s 2013 Globalisation Survey, a separate polling of 423 global executives. It found that 61 percent of these executives expect social media to become much more or somewhat more important to their company over the next three years.

To succeed in the years ahead, businesses will likely need the right balance of global reach and a local footprint. They will require a sharp awareness of problems when they arise and the flexibility to quickly reconfigure operations in response.

Leading companies will innovate by collaborating with others. An increasing number of executives now recognise that “social business” offers a promise of progress across all of these dimensions. As corporate ambitions grow, so will the use of social tools. They can allow organisations to “be global” while removing many of the hurdles associated with “going global.”

Read more . . . . Social business, global business 

If you have any questions or require a more detailed discussion on content presented in this article, feel free to contact Rob Latham at Deloitte Digital at rlatham@deloitte.co.za

How to turn your workplace into a productivity machine

Workplace Redesign

Corporate real estate is undergoing a revolution. Companies are tearing down their walls, and the result is that shared spaces like “huddle zones” are crowding out individual workspace – including the corner office, in some cases.

Such overhauls tend to yield big cost savings in the form of rent and construction costs. What many companies fail to take into account, however, is that physical space is just one component of today’s workplace. Two other components, namely virtual interactions and management practices, also play critical roles in shaping how people work and how productive they can be.

In this issue of CFO Insights, we look at why it’s important for companies to create a unified strategy across the three workplace elements and how CFOs can foster the practices that achieve it, based on research and case studies developed by the Deloitte LLP Center for the Edge.

Download the CFO Insights article, “Workplace redesign: Turning your environment into a productivity machine,” to learn more.

Read more . . . . Workplace Redesign: Turning your Environment into a Productivity Machine

Deloitte CFO Insights are developed with the guidance of Dr. Ajit Kambil, Global Research Director, CFO Program, Deloitte LLP; and Lori Calabro, Senior Manager, CFO Education & Events, Deloitte LLP. Special thanks to freelance writer Alix Stuart for her contributions to this article.

About Deloitte’s CFO Program

The CFO Program brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands. The Program harnesses our organization’s broad capabilities to deliver forward thinking and fresh insights for every stage of a CFO’s career – helping CFOs manage the complexities of their roles, tackle their company’s most compelling challenges, and adapt to strategic shifts in the market.

For more information about Deloitte’s CFO Program, visit our website at www.deloitte.com/us/thecfoprogram

Six tenets of intelligent process improvement

Six tenets

If ever there was an ultramarathon in business, process improvement is it. It requires discipline, patience, consistency, and lots of hard work.

When process improvement methodologies first came into vogue in the 1980s and ‘90s, they challenged 50 or more years of conventional manufacturing wisdom, enabling companies to improve manufacturing quality, reduce production waste, eliminate bottlenecks, streamline processes, and cut costs.

Twenty or more years down the path, many variations of standard process improvement techniques and tools have been introduced. Along with them have come many opinions about which techniques and tools are most effective.

However, one incontrovertible fact remains: Lean Six Sigma continues to be one of the most prevalent and consistently productive approaches to process improvement. By following the six tenets described in this paper, companies can continue to leverage Lean Six Sigma for solid results in the modern ultramarathon that process improvement represents.

Click here to download the full article

 We welcome any comments. Is there anything you would like to add? We would love to hear from you!

Cyber risk resilience starts at the board and C-suite level

Changing the game on cyber risk

Deloitte Risk Advisory has published a report which focuses on seven key industry sectors which are prime targets for cyber-attacks, namely high tech, online media, telecommunications, e-commerce and online payments, insurance and retail. The report provides advice, statistics and lessons from the front lines, presenting case studies from each industry sector. An introduction and a link to download the report have been provided below.

Global cyber executive briefing – Lessons from the front lines

In a world increasingly driven by digital technologies and information, cyber threat management is more than just a strategic imperative. It’s a fundamental part of doing business. Yet for many C-suite executives and board members, the concept of cyber security remains vague and complex. Although it may be on your strategic agenda, what does it really mean? And what can your organisation do to shore up its defences and protect itself from cyber-threats?

Click here to download the report

If you have any questions or require a more detailed discussion on cyber crime, potential risks facing your organisation and industry and ways to mitigate this risk, feel free to contact Cathy Gibson at cgibson@deloitte.co.za

How to increase the return on your application investments

driving results with application management

This report examines major trends and challenges in application management and offers practical advice to help organisations increase the return on their application.

Click here to download the full report

Executive Summary

Like a well-trained pit crew, application management can help your business operate at peak performance – which in today’s hypercompetitive business world can be the difference between sipping champagne in the victory lane and crashing into the wall.

Unfortunately, some organisations invest so much time, money, and energy on application development that they do not have anything left for application management. Others mistakenly believe that by deploying a standard ERP package, their application issues will magically disappear. And in many cases, application management organisations that were well-suited to the challenges of the past have simply become obsolete.

While many organisations continue to view application management as a secondary technology function or “helpdesk”, a number of leading organisations have begun to recognise the broad potential of application management and are using it to help boost their business performance and results.

Deloitte has a global AMS practice, and based on our experience, effective application management revolves around eight specific elements:

  1. Strategy: Developing an application management strategy that aligns with the organisation’s overall business strategy
  2. Organisation: Designing an operating model and organisation structure – including external service providers – that fit the needs of the business while increasing application management efficiency and performance
  3. Financials: Using financial tools, such as business cases and chargebacks, to quantify the value that application management is creating and to make investment decisions based on hard data
  4. Talent: Overcoming the global talent shortage through new approaches to recruiting, development, retention, and skills management.
  5. Processes: Using structured process models and/or formal process certification to improve performance.
  6. Technology: Developing hardware and software tools to improve service delivery and reporting.
  7. Service delivery: Defining and measuring success through Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) aligning performance measures and incentives across the entire value chain.
  8. Infrastructure: Planning, architecting, implementing and securing hardware, database and network infrastructure – including related managed services and disaster recovery/business continuity services.

These elements work in concert to define an organisation’s application management capabilities. However, each presents different challenges and elements to achievement of goals – as well as a dizzying array of options. For example, in structuring their application management organisation, organisations can choose from insourcing, outsourcing or a shared service model. Or, they can choose from a large number of hybrid approaches to produce something entirely new.

In the end, every organisation is different – and every application portfolio is different. One way to get started is to take a hard look at your capabilities in each of the eight areas listed above and then to design an application management strategy that fits the particular needs of your business.

Click here to download the full report

If you have any questions or would like to unpack the content presented in the report in more detail, please contact Glen Krynauw at Deloitte Technology at gkrynauw@deloitte.co.za.

Is there a future for manufacturing in South Africa?

Frontier Forum Blog Image

Written by: James Ueckermann

“The country is in a negative head space, a fractious environment of low trust between stakeholders” – Martyn Davies

Manufacturing in South Africa has been a hot topic in recent times and there is some uncertainty around the future thereof. Are we able to react to the warning signs and obstacles facing our economy? What does the future look like and how will South Africa recover?

At the Frontier Forum a respected group of individuals engaged in a discussion to address these questions in order to provide comfort on the topic. Martyn Davies, CEO of Frontier Advisory, states that South Africa is the only country that sticks to reindustrialisation, which is clearly a setback as we are not moving forward, but repeating the same mistakes.

The biggest debate between the panel of astute individuals was around labour and how this negatively impacted the state of South African economy.

Jonas Mosia, Coordinator for Industrial Policy from COSATU, mentioned that we have to fix the issues of procurement as there is no coordination behind it. He wants businesses to employ more unskilled labourers in order to minimize the unemployment rate, but protecting and creating low-skill, low-pay jobs will simply be economically irrelevant in ten years’ time.

Raymond Padayachee, Head of the Industry and Manufacturing Sector SA and Africa from Siemens, challenged this statement. He feels that SA is an attractive market, but the level of unskilled workers is not of much value to the economy as there is no progression in the industry and therefore creating escalating costs which, SA cannot afford at this stage. The future of manufacturing will be limited if we keep heading in this direction and further contributing to the pandemonium.

Jeff Nemeth, President and CEO from Ford Motor Company of South Africa, added that his company has the fastest line of productivity in Africa, but the short term trends in South Africa has lead to 17% inefficiency because of the strikes. He also feels that we have to find a way to drive local demand as the African Customer finds safety in multi-national brands and not supporting its local economy.

Deloitte professional services group added some hope as they foresee an exciting future ahead regarding new developments in the manufacturing sector.

“Future jobs in successful economies will be high-tech jobs, not low-tech. To this end, Deloitte is globally spending time working with leading universities, and the public and private sectors in various countries to understand and shape the future of manufacturing, and what this means for local economies such as South Africa. We have no option but to play in this space – the only question is how soon we do so,” said Mr Pillay.

Bronwyn Kilpatrick, Automotive Leader and Assurance Partner mentioned exciting developments in the automotive industry such as the ‘Uber App’ (which is an easy to use transport service and thereby introducing mobility), the Google Car (that drives on its own) and also covered was 3D-printing (the move towards additive manufacturing).

Deloitte Advanced Materials System Specialist, Jason McPherson spoke about the need to deliver systems versus materials in order to lead the race in value creation. What this means is that a new materials development process should start at addressing unmet wants and needs and then working backwards to determine what materials would be required to deliver a solution for these.

Deloitte Audit Partner and Forestry, Paper Pulp & Packaging Leader – Roy Campbell, told of interesting facts about the forestry sector and the impact of the iPad (as many are now reading the news on tablets). This however does not mean the end of paper in our time as most of the cellulose in trees is used in manufacturing these iPads and even in the clothes we wear and the food we eat.

Dr Martyn Davies concluded that for South African economy to re-industrialise we are going to have to diversify and differentiate ourselves by focusing on what we’re good at.

If you have any questions, feel free to contact Antoinette Shand (Manufacturing Marketing Lead – Deloitte) at ashand@deloitte.co.za

Integration technology flashback

integrationThe integration strategies over the past decade have leveraged centralized Enterprise Resource Planning (ERP) technologies, middleware standard and systems integration resources, to fulfill systems integration requirements. This was used to create a knitted business process solution after the evolution from mainframe systems to the client server environment.

It was an approach we saw widely being used to integrate ERP (off the shelf packaged applications), legacy applications and data. What this left behind were integrated Business solutions which required extensive integration monitoring.

This gave rise for the need of an Enterprise Architect to govern these integrated solutions after implementation. The run or support factor of these integration layers required monitoring and strong governance. This left certain considerations to be noted when looking at re-architecting these integration layers.

Today’s integration challenges

However simplified enterprise integration can be, these knitted solutions still have their own set of challenges.

It’s about monitoring

  1. Many of businesses today use EAI solutions for their day-to-day operation. Once these processes are set up, they are expected to be up and running 24x7x365. Any downtime or mis-routing can cause the business to virtually stop. This requires much integration monitoring.

It’s about niche skills

  1. The skills required to maintain an Enterprise Application Integration (EAI) solution are quite scarce. Troubleshooting complex problems requires a combination of functional and technical skill sets including insight into business scenarios, which are generally spread across various individuals. When staffing new integration enhancements or integration maintenance projects, these niche skill sets must be noted and expect a strong people collaboration aspect to this mixture as well.

It’s about governance

  1. Lack of standards is another major challenge. Though many standards have evolved and been adapted across multiple EAI tools, not all EAI tools agree or work on the same standards. Added to this are the extensions to the standards which provide a means of increased customization into the normal integration method. A significant contributor to this situation is that the integration standards which were initially used have not been followed nor aligned to, over the years. Governance is lacking.

  It’s about integration mapping insight

  1. Most of the EAI tools use eXtensible Markup Language (XML) for exchanging information. XML is a free-flowing language where the tags can be marked up as and when needed. Hence, when we talk about interoperability, one still needs to resolve the semantic differences between these XML standards. This is time consuming and requires significant technical and business insight. Further qualifying these XML data mappings is significant effort.

It’s about qualifying the cloud promise around integration

  1. To add to this complex situation the drive to utilize cloud integration solutions is also a disruptive factor to conventional integration trends. It certainly does provide food for thought on data privacy around the interchange of data in integration scenarios and the service level measurement for integration monitoring for a cloud based offering amongst others.

Now that the integration challenges facing business are understood, what are the potential solutions to these challenges?

Technology Integration Solutions

One of the most suitable answers is SAP HANA, a next generation platform that now powers SAP Business Suite Applications. This platform brings together transactions and analytics into a single, in-memory system and features powerful integration tools like SLT, Replication Server, Data Services and Smart Data access to facilitate the integration of data in real-time or batch.

Businesses can benefit from the platform by fully leveraging the power of hardware and the advanced capabilities such as predictive, text analytic, spatial processing, and data virtualization on the same architecture. That means single database, one environment and therefore reducing TCO by consolidating heterogeneous servers into SAP HANA servers. This directly reduces the hardware, lifecycle management, and maintenance costs.

Integration efficiency is not the only benefit derived from this platform. The ability to get real-time insights along with the speed that it processes data gives you the potential to fundamentally reshape and improve business processes and becomes a strategy enabler and not hindrance.

If you have any questions or would like a more detailed discussion around this, please contact Arun Jagroop, Michael Bell or Richard McWilliams.

How to transform IT from cost centre to strategic partner

Value driven AMS

This article discusses the shift from service-level maintenance to value-driven management and how it helps IT to transform from a cost centre to a strategic partner of the business.

The revenge effects of Application Management Services

The history of business is filled with stories of new ideas that come back to bite companies – unintended consequences that can ricochet through the value chain like bullets. They’re called revenge effects – and you can find them all over the outsourcing marketplace.To the extent that you’re supporting applications through a low-cost labour pool that’s isolated from the business; you can expect huge opportunity costs. Performance improvements in efficiency, knowledge transfer and automation can all suffer. Inertia can swamp agility. And you can sacrifice the value of innovation.

The problem usually starts with low expectations. Traditional AMS can create a divide between applications support and the rest of the world. Even worse, the support function gets moved to denominator of the value equation, where the measure of success is cost reduction through labour. So, when you finally do get around to looking for improvements, the people and resources aren’t in place to deliver. Organisations then end up shuffling talent, hiring consultants, relearning and rebuilding. And the practical knowledge needed to respond quickly to changing business demands is hidden in the heads of a floating labour pool, out of reach except at prohibitive cost.

Click here to download the full article

If you have any questions or require a more detailed discussion on the content of this article, feel free to contact Glen Krynauw at gkrynauw@deloitte.co.za and Sharryn van Tonder at svantonder@deloitte.co.za.

A fundamentally different approach is needed when dealing with cyber risk

Changing the game on cyber risk

This report encourages businesses to gain more situational awareness to threats that are prevalent within their industry in general as well as those that are unique to their business. It helps them understand where threats are coming from, what their motives might be, and what can be done in advance to anticipate or respond to an incident.

Despite heightened attention and increased spending on cyber security measures, the number of cyber incidents – and their associated cost – continues to rise. This phenomenon is attributed to the growing sophistication of hackers, a rapid evolution of technological and digital landscapes and an increased reliance from business on technologies aimed at improving the efficiency of their operations.

According to a report released by Deloitte Risk Advisory team on Changing the game on cyber risk 2014”,the scary truth is that these days your business strategic models aimed at business growth are at the heart of the cyber risks that your organisation faces.

Business and the digital landscape

Business efforts to use digital tech to grow, serve and differentiate offerings in the market are now targeted by attackers, as such information can be used against you.

Given that technology touches every point of business it becomes clear that protecting everything, while not impossible, would become economically impractical and would impede most of your organisation’s strategic initiatives.

By developing an ongoing cyber programme aimed at being more secure vigilant and resilient your organisation can be more confident in defending against cyber risk, which in turn will justify the spend on such an investment.

Being Secure

You can’t secure everything equally. Being secure means focusing your protection efforts around the risk-sensitive assets at the heart of your organisations mission. Attackers motivated by financial gain tend to operate on a cost or reward basis. A strong cyber defence raises the risk of completing a job most likely deterring any efforts to attack your business.

It is important to address weak points across the business process, most importantly the following areas: data applications, specialised control systems and critical infrastructure need focused security attention from organisations. Sensitive data can be found anywhere across your business and may be viewed by more users than necessary, opening the door to potential risk incidents.

Being vigilant

Organisations need to develop threat awareness throughout their processes and developing the capacity to detect patterns of behaviour which may detect or even predict the compromise of critical assets.

Keys to being vigilant

Take heed of the following:

  • Know your industry landscape
  • Understand the specific business risk your firm faces
  • Design threat detection systems
  • Consider and plot the potential motivations for cyber threats from your competitors
  • Consider the implications of an accidental incident borne from your employees or partners

Being resilient

To be resilient an organisation must be geared toward rapidly containing the damaged caused by a targeted threat, having the capacity to mobilise all resources to minimise the impact of the threat safe guarding against:

  • Loss of revenue
  • Brand reputational damage
  • Operational disruption

Response to cyber incidents are viewed primarily as a technical function for business, however resilience not only requires investment toward technical capabilities to handle a cyber crisis, but also to a complete set of crisis management capabilities that involve a host of business unit leaders and decision makers. Protection against these threats must become an entire business responsibility.

It won’t work without governance

To drive a secure a secure, vigilant and resilient cyber risk programme over the traditional standard IT driven security programme, your business must realise that the approach is not driven by spending money high tech security programmes. It’s about tailoring and identifying what assets and operations are most important to the business and protecting them from cyber attacks.

Where to begin if you haven’t started

The report lists this 4 step process to help you get your business on the right cyber protection direction:

  1. Appoint a senior executive to the project: A cyber crisis requires a strong leader to drive cohesive and decisive action
  2. Map the threats to the business assets that matter: Gather your top business executives and threat intelligence specialist to pre-emptively discuss who or what could cause harm to your organisation.
  3. Launch pilot initiatives: Identify tests which directly affect your business or your mission achievements to drive a secure, vigilant and resilient culture within the business.
  4. Accelerate behavioural change through incentives and experience based awareness campaigns: Create active learning scenarios that give a deeper understanding of the impact of cyber risk exposure.

For more information on how to become secure vigilant and resilient download the report here

If you have any questions or require a more detailed discussion, feel free to contact (Cathy Gibson), Africa Leader, Cyber Risk and Resilience, Deloitte Risk Advisory.

Subscribe to our blog

Subscribe to our newsletter

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

  • Click here to subscribe
  • Download our apps

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

  • iPad
  • Nokia Ovi
  • iPhone
  • Subscribe to our RSS Feeds

    Our authors

    Meet the Deloitte Thought Leaders who have made this blog possible. You can follow their individual tweeting and get in touch via LinkedIn from this page as well.


    Meet our authors

    Switch to our mobile site