Wednesday, August 15, 2018

Balancing Human and AI Activities

AI and machine learning has been making inroads into many aspects of commerce, with one of the notable areas being retail. Leaders like eBay are using a combination of AI and humans to achieve the best they can in customer service.

In a simplistic sense, AI basically uses data and algorithms to achieve the intended results. While powerful, modern AI has its limitations. For example, humans are better than machines at empathizing. Customers act differently with humans than they do with machines. Humans are better than machines in establishing the contest of particular purchases - for example, wedding and anniversary gifts call for different sensitivities than many other more routine purchases. Machines on the other hand are better at finding nuances in data being used, in determining product categories for particular market segments, even in determining customer clothing sizes.

What this means is that human and machine activities must be carefully thought out and implemented. Experience has shown that these activities should be as discrete as possible, so they don't overlap.

Effective implementation of AI also requires the means to update that strategy as experience accumulates.

For a particular use-case, check out this link. 

Friday, August 03, 2018

How AI is Affecting Accountants

The accounting industry is gearing itself for a major upheaval because of the implementation of artificial intelligence. The massive changes on the way - and already happening - are truly impressive. A recent report by PWC makes this clear.

In a global sense the report states that GDP will be up by 14% by 2030 as a result of AI. A high portion of this growth will come the replacement of workers in routine jobs by AI, something which is not new for technology but will be speeded up and enhanced with AI. And there will be new jobs for those who must manage and supervise the AI applications.

The impact of AI by augmenting or replacing humans is well known. The PWC study goes a lot further. To illustrate, it includes the following example of an AI application:

"An online insurer has leveraged an AI bot to automate the claims process from beginning to end. Instead of the days or even months it traditionally took to settle a claim, the bot is able to complete the entire pipeline from claims receipt, policy reference, fraud detection, payout and notification to customers in just three seconds."

Both accountants and auditors are deeply affected by this kind of application. Both are required to have a knowledge of the control system. Since this control system has been placed entirely under the actions of an AI bot, the accountants and auditors need to have a good understanding of how that bot works - in principle and in practice. They need to know how to test the effectiveness of that bot.

Multiply this by thousands to AI bots and you have an appreciation of why people are calling the AI revolution transformative.

Thursday, July 19, 2018

Digital Transformation is a Long Term Strategy

There are degrees of digital transformation, but the term is generally meant to refer to maximizing the use of digitization in the organization. "Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers", according to The Enterprises' Project.

That's a sweeping project that affects every aspect of the business. It means eliminating many paper based processes, and even whole jobs. It means training in new functionality and systems. It means overcoming the natural resistance to change of people.

Large scale implementation of technology, enterprise systems for example, has taught us that these - the people issues - are the most difficult part of any technology implementations.

So while some companies approach digital transformation as an event - something that just needs to be implemented and then life goes on - other wiser organizations recognize that it is much more than that. It is the beginning of the implementation of a new basic strategy, one that will become an ongoing part of the fabric of the organization. A recent article in Forbes Magazine puts it well, It is a journey.

It starts with strategic planning, with all the implications of that process - consultation, discussion, agreement, strategic objectives formulation, champion identification, project scheduling, action plans, monitoring, assessment and re-assessment and ongoing revision and refinement.

Remember that initial definition above - fundamentally changing how you operate and deliver value to customers. Those are fundamental to the business and any changes like that require a strong commitment by the people involved. Definitely not a one-off project.

Thursday, July 05, 2018

Disaster Recovery in the Cloud

When companies move their applications to the cloud, they need to update their Disaster Recovery Plan. The biggest reason for this is that, in the cloud, there is an increased reliance on independent service providers, or vendors. To do the update, the company needs to assemble and review all the contracts with the vendors. They also need to obtain and review all the Service Level Agreements (SLAs) with those vendors. SLAs deal with such issues as performance, uptime, service response, including any penalties against the vendor for service failures.

The vendors provide security and privacy for the data, which needs to be reviewed. Often audit reports are essential to achieve the necessary level of reliance. This is particularly true in cases of shared environments, where assurance need to be obtained about the level of effort going into ensuring that the privacy of the data is protected.

With this background, the DR plan needs to be developed and tested in conjunction with the vendors. For more, click this link.

Friday, June 29, 2018

Business Needs to Look After the People

Possibly the most important issue we face in the modern world is the fact that economic "progress" of the post war (WW2) period has left a lot of people behind. It's true that economic progress has been phenomenal, with vast numbers living better lives than anyone has in history, nevertheless a lot of people have been left behind or, equally importantly, have felt they have been left behind.

This became an issue in the popular mind when we started talking about the 1%. Attention turned to the growing gap in personal incomes such as that between workers and CEOs. Now we see it in the growing populist movements around the world, and it is abundantly clear that the end result of these movements could be, and is likely to be, very ugly.

It also appears to be clear that we cannot rely on governments to resolve this issue. There is growing recognition that business helped to create the problem and needs to help to resolve it.

But what exactly should they do?

PWC recently released a report that offers some guidance on what business can do.

  1. Global connectivity and local initiative must go hand-in-hand

    Increasingly corporate performance is measured globally. However, their work has major impacts on local communities. Overall objectives and initiatives need to be aligned between global objectives and local community objectives.
  2. Look beyond financial performance

    Corporate performance has traditionally been measured on financial results only. It rings hollow to certain communities, however, when a company announces that it has achieved record profits but has closed several plants, some of which were the lifeblood of those communities. Over recent years, some change in corporate reporting has been made. Corporate performance has increasingly included sustainability reporting, that focuses on impact on the environment. That's great, and is starting to have a positive impact on corporate behaviour. Corporate reporting has also been expanded to include ESG (Environmental, Social and Governance)  But it is questionable whether the change in behaviour has extended to the impact on society and communities. The reporting has in many cases, but there is much more to be done. Companies can't be totally responsible for those communities, but they can be held responsible for significant actions they take that impact on the communities.
  3. Technology doesn’t care. But we must.

    Technology is people neutral. If people are harmed by the effect of technology in a corporation, only the management and other people in the corporation can help direct that effect to as positive a result as possible. 
  4. Educate for the future

    Education and retraining must be a responsibility of the companies involved. They are often the first to see the need for new skills and the opportunities for education to develop those skills. They need to play a role in meeting the needs of the future.  

The changes needed in corporate reporting recognize that we are at a crossroads in our society and significant change is required to make it sustainable. Failure to do so will result in a governmental and environmental upheaval .

A better explanation of these guidelines is included in the PWC report.

Monday, June 25, 2018

Digital Transformation - Change Management on Steroids

KPMG recently released their 2018 Global Manufacturing Outlook, a survey of 300 CEOs, part of a larger study which involved obtaining data from 1300 CEOs in 11 countries.

The results point to larger trends in business and are relevant far beyond manufacturing. All of the trends we know about are represented there - digital transformation, with growing use of artificial intelligence and the consequent encroachment on human activity by machines. This is probably the biggest worry to people working in manufacturing - or most other businesses.

The survey shows that this will increase in intensity, along with greater integration and collaboration across the world among companies. Of course this leads to the need for people to constantly learn new skills, which is not new but now a permanent part of the landscape. For example, there is a strong indication that the need for data scientists will continue to grow.

We started to hear about change becoming the only constant back in the 1960s. Since then, that has been a fact of life.  But now the pace of change has accelerated to the point that it is likely to bring about radical societal change. Of course, this will bring resistance from some quarters. Some people always resist change. So the study identifies a resurgence of territoriality (political and economic) as one of the major risks of doing business over the next twenty years. Of course, we see this already.

In a broad sense, the transformation going on today boils down to a huge exercise in change management, with a need for strong leadership, clear foresight, good strategic planning, and tight management of the risks. It's change management on steroids.

The survey is available on the KPMG website.

Thursday, June 14, 2018

How Analytics can be Used to Fact Check News Items

Companies have been focusing on the capture of big data using tools such as Hadoop for a few years now. However, it appears that many of them still do not identify big data as a strategic resource worthy of enterprise wide analysis. As a result, while there is much data available, it is being used in scattered ways by various departments operating in silos.

Some of the major analytical tools - Cloudera, Hortonworks and Map R have responded with high level and sophisticated offerings using artificial intelligence and machine learning techniques. They feel this will make the tools easier to use and more powerful.

A good example come from Cloudera, in the form of their application Reuters Tracer. This remarkable tool is used by Reuters News Agency for analyzing twitter feeds, fact checking them and producing results in a matter of milliseconds.

They recognize that Twitter has become a major news source but that it is difficult for people to sort through all the "noise" and determine what is true and what isn't. Reuters Tracer "processes about 13 million tweets daily, capturing events as they happen and determining: is an event true, is it newsworthy, and what is the scope and impact of that event."

"If a tweet is an opinion, Reuters Tracer can determine whether it comes from a recognized expert, and is therefore of news value. In delivering its results, it provides journalists and businesses with a 'newsworthiness score' for each event that rates its assessed level of accuracy and credibility." These results can be produced in as little as 40 milliseconds - basically real time.

Fact checking in the old sense has become something of an industry Reuters Trace can automate, if not  all, much of the fact checking needed to provide a sound basis for decision making.

Many companies are considering applications like this for their own business purposes, perhaps with a big data source like customer or supplier activity with analytics embedded to focus on key strategic decisions. Auditors can definitely use tools like this to improve the analytical techniques used in audits - something that is badly needed.

For more, check out these references - A recent article on the subject and the Cloudera website.

Monday, June 11, 2018

Digital Transformation requires BPR

In the current frantic push of enterprises to digitize their operations, in the form of digital transformation, there is one old process they can't get away from and that's Business Process Reenginering (BPR).

BPR has been around forever, but really came into prominence during the heyday of big ERP (Enterprise Resource Planning) implementations in the 80s and 90s. Those implementations were very difficult and costly and it soon became obvious that BPR was necessary in order to fit the technology and the business together and at the same time make best use of the technology to optimize the business.

Now, the situation of ERP systems is very different. They are well established in, and in many cases, central to the processes of the business. Where once they were the disruptive technology, now they are the legacy systems. Many companies are moving them to the cloud.

Cloud based ERP systems are different from those legacy ERP systems. Partly because ERP has evolved in recent years, and partly because of having transformed to cloud applications, which require new and different operational and security processes.

In the process of digital transformation, many organizations are now using DevOps, which involve automating the processes of software development and IT teams. Since the IT teams must necessarily be concerned with BRP, the DevOps processes must be consistent with the BRP efforts, particularly where they meet.

All of this means that digital transformation can be a tremendously complex affair.

Here's another article on this general topic.

Thursday, June 07, 2018

Blockchain and the Accounting Revolution

It is being said that blockchain will revolutionize accounting, because it enables an independent record of all transactions in a separate distributed ledger which is available, shared, independently recorded and unchangeable. Essentially, the entries would flow from the record of smart contracts, under which commitments entered into by parties to a transaction would become part of the shared distributed ledger and then the settlement of that contract would be automatically implemented by the contract and also recorded in the distributed ledger. Thus all parties to the contract would have a record of the entire transaction stream from beginning to end. Since these entries flow from the agreed contract and are then generated by that contract independently of the parties, it forms a tremendously valuable part of the audit trail for those transactions. Some have even suggested that this would eliminate the need for auditors, and although this is an overstatement of its effect, there is absolutely no doubt that it will transform the way that auditors work.

The aspect of blockchain that involves creation of the distributed ledger has been referred to as triple-entry accounting. For those with some knowledge of accounting history, this is a jarring nomenclature, as it evokes memories of Yuji Ijiri, the noted professor at Carnegie Mellon University who published a monograph of that name in 1982 along with a paper in The Accounting Review in 1986 outlining the nature of triple-entry accounting. Some academic writing has focused on this similarity and asked the question is the triple-entry accounting of Ijiri the same idea as that of blockchain? Some have said no and others yes, at least conceptually.

It’s not a simple issue. The essence of Ijiri’s model was the introduction of a new measure of performance called momentum and a Statement of Force that shows the rate of change in the organization. The addition of the Force Statement to the traditional Balance sheet and Income statement gives rise to the triple entry concept.

In blockchain, the third element to the accounting process arises from the creation of the distributed ledger that shows a complete record of all transactions in the enterprise – a very different concept.

However, the distributed ledger could easily be used to create Force Statements as it contains verifiable dates of all events through cryptographic methods. So, a logical conclusion is that the Ijiri and blockchain concepts are very different but at the same time that the two are very compatible. Will the Ijiri concept make a comeback? Who knows?

Blockchain is being adopted quite extensively, particularly in situations where smart contracts make sense. And an industry is forming around it. But it has not reached the level of general adoption across the spectrum of accounting. Whether it will remains an open question. But there is no question that it will be a major force in accounting providing new and better accounting controls and perhaps leading to the extension of accounting into new dimensions, like those of Ijiri, or something like that.

Wednesday, May 16, 2018

Digital Transformation Driving Companies Back to the Basics

Digital Transformation is the latest mantra for companies; the latest big buzzword.

Of course, it's more than that. There's reality to the phrase as a survey recently released by PointSource confirmed. "At least a quarter of companies plan to invest more than 25% of their budgets in artificial intelligence (AI), blockchain, voice-activated technologies or facial-recognition technologies. Yet over half of these organizations (53%) feel that they’re unprepared to effectively use the technologies they plan to acquire."

This is a telling finding. The companies recognize the potential of these technologies, and are jumping into their acquisition, but have not clearly determined how exactly they are going to use them.

The most basic element of strategic planning, whether it be corporate planning or IT planning, is to study the overall objectives of the organization and develop a plan that is consistent with those objectives - a plan that helps the organization to achieve those objectives.

Yet, Greg Ng, vice president of digital engagement at PointSource, points out that "Digital solutions and strategies exist to solve so many of the problems companies face today. But decision makers consistently struggle to parse down to just the digital capabilities that are right for them."

Therein lies the problem. finding those solutions that actually fit with the corporate objectives and will help to achieve them. It's an old problem, and the solution has been around for years - focusing on that aspect of corporate strategic planning that begins with defining the objectives, identifying the potential solutions, analyzing which solutions are likely to work the best, and writing action plans that will make them a reality. It's not as simple as it sounds, and not as romantic as re-imagining the company, but it's as essential an approach as it ever was, perhaps even more so. For more, see this article and the related study.

Friday, May 11, 2018

Fully Integrated Corporate Reporting

There has been a great deal of change in corporate reporting to shareholders and other stakeholders in recent years. Notable has been an increased reliance on the investor relations section of websites and inclusion on the sites of data oriented disclosures that encourage and facilitate downloading select data for analysis.

There are other changes that have been regularly promoted by various people and organizations but not yet widely adopted. This would include integrated reporting, under which sustainability and financial reporting are combined in an integrated fashion to provide a wholistic picture of the operations of the company.

Some companies provide a separate integrated report, whIch leaves the company with a situation in which they have three different reporting vehicles out for consumption – the integrated report, the traditional annual report and the IR section of the Website.

While these companies deserve recognition for their efforts to innovate, nevertheless, this multi-report world seems an inefficient and wasteful approach.

Perhaps it would make more sense to integrate all three into one single IR Website. At present, the annual report is usually included as a PDF in the Website. Sustainability and governance disclosures are usually included as separate sections of the website, separate from the IR Section. But it is never integrated. This despite the fact that the annual report is a relic of the age of print, and people rarely read the print version any more. Also, it is in most provinces not a legal requirement.

Although companies are usually tight for time in simply complying with legal and regulatory requirements and don’t have a lot of time for innovation, nevertheless innovation of this kind, where the number of reports could actually be reduced, would seem to be a form of innovation that could be very viable.

Perhaps reporting companies should include fully integrated reporting in their set of objectives for their business reporting activities.

Wednesday, May 02, 2018

How to Build a Smart Decision Making System

You want a smart decision making system? OK, it goes like this. Start with a body of good solid data. Not necessarily big data but data that is comprehensive in a particular important aspect of your business. Then, identify the business decisions that are prime subjects for automation. Add advanced data analytics that can be used to identify trends and dominant features of the data. Blend in some AI, that uses machine learning to identify the trends, anomalies and other characteristics and spit out optimum courses of action to advance business interests. Finally, identify the business processes that are used to make those decisions. Integrate the technology with the business processes, adjusting and modifying the processes where necessary.

Right away, we see some of the challenges. How good, really, is the data. Is it readily available, balanced, nuanced, rich? Is it in usable format and platform independent? Are the data analytics reliable, accurate and consistent? Will the decisions reached with the AI be consistent with business policy and culture? Fundamentally, how well can the data, analytics, AI and processes be integrated? What if any will be the role of people? How will we manage the changes in people activity?

With this quick glance at the landscape, it's easy to see why AI implementation is proceeding slowly. Management can envisage the benefits. But the devil is in the details.

Nevertheless, there is a lot of activity in the business world developing smart decision making systems. We can expect to see a lot more over the next few years.

Monday, April 30, 2018

Plan Carefully in Moving to the Cloud

Various surveys show that a priority of many IT Directors is to move applications to the cloud. We also know that a great many companies have a large number of legacy applications, which means they will be faced with the issues around moving those old applications to the cloud - often referred to as lift and shift.

In some cases, this will mean that significant advantages of the cloud will be sacrificed, notably that of scalability. This could mean you pay more for less.

Selecting the right cloud vendor is one of the early and most important decisions. As is the selection of an IT migration specialist to help wth the transition. And then there's establishing suitable and effective channels of communication, especially if there is a high volume of data, as there usually is with business applications.

High volumes of data also raise the issue of storage cost, which can be a substantial part of the overall cost of cloud based applications.

Of course, moving applications to the cloud usually is a significant project, requiring extensive and careful planning and execution, not to mention maintaining security. These few comments are the very top of the tip. Suffice to say that established pre-conceptions about the benefits of cloud computing cannot be taken for granted.

For more detail on this topic, check out this link.

Friday, April 27, 2018

Priorities Among IT Professionals Not What You Might Expect

Solarwinds has released its 2018 survey of IT professionals. This time, they contacted 803 professionals from North America, the UK and various other points around the globe as to their views on IT priorities now and in the near future.

The conventional wisdom as to priorities focuses on artificial intelligence (AI), machine learning (ML), and blockchain. But there is a hype cycle at work here and with some of these, the cycle has not yet reached the stage of disillusionment. Nevertheless, C-Suites are trying to explore these technologies and how they might help them in their businesses.

IT Professionals, on the other hand are those charged with the job of inplementing technologies, and have a huge say in what ultimately goes live. The survey reveals that Cloud/hybrids are the top priority for this group. Second is the more general category of automation and third is big data analytics. Maybe these technologies are further along than others in the hype cycle. At the bottom of the heap are AI, ML and Blockchain.

What the survey indicates is a certain dissonance between what the C-Suite is looking at and the priorities of the IT Professionals. However, these two groups have a common goal - using technology to maximize productivity and efficiency. The survey may simply be indicating that some technologies are less advanced in terms of implementability than others.

Solarwinds recommends that organizations continue to focus on the development of cloud/hybrid technologies. In particular they emphasize implementation of Containers, which are technologies that improve the abilities of operating systems to share applications most efficiently.

As the report puts it, "investment and skills development perspective. IT professionals must remain grounded in the here and now, understanding that containers represent lower-hanging fruit in terms of investment, requirements, and barrier to consume. Specifically, containers enable application portability and promise consistent deployment, scalability, and development agility—all of which are key benefits in hybrid IT environments."

For the report, check out their site.

Friday, April 20, 2018

How Companies Become Digital Champions

PWC has published a study in which they interviewed 1,155 manufacturing executives in 26 countries to develop an index that ranks companies by digital operations maturity, from Digital Novices, Digital Followers, Digital Innovators to Digital Champions.

Out of that study, they developed a blueprint as to how companies can build themselves into digital champions, a distinction that only 10% of companies hold.

Digital champions are defined in the study as companies that have fully integrated digital technology into their systems end-to-end. They analyzed the data according to four ecosystems, which were Customer Solutions, Operations, Technology and People. It's important to note that these are not separate systems in the conventional sense but rather layers of systems within the company. Integration using digital technology is the key.

"Digital Champions distinguish themselves by advancing their capabilities through all four ecosystem layers, creating an organizational environment that takes the greatest advantage of the opportunities from digitization."

They found that companies in the Asia-Pacific area have the most leaders.

The report is available on the PWC website.

Monday, April 16, 2018

AI - Develop, Outsource or Buy?

A recent Gartner survey showed that 4% of companies have implemented Artificial Intelligence and 46% plan to do so. That shows two things - AI is in it's infancy and interest in it is strong.

How they actually implement is an open question. They can develop it on their own, but that's really expensive and requires a major effort. Or they can outsource it from providers like Amazon or Google. A third approach is to buy it from their software provider, which involves waiting until they offer it, and then determining if it fits their organization.

The latter approach is bound to be quite popular for the larger organizations and many medium ones that use SAP or Oracle, because a great many do use one or the other of these. Also, typically SAP or Oracle as the case may be will usually have invested in learning about the needs of the company and can help develop solutions that will be most likely to be a fit.

Most companies will not build their own AI apps. So either of the other approaches, the issue will be how to establish a competitive advantage.  Forrester Research's Brandon Purcell has the answer to that issue, "Data will be the key source of competitive differentiation in the world of AI -- emerging data sources, innovative data transformations, and business-infused data understanding will lead to better models and ultimately better results from AI.

Once again, data rules the day.

For more, check this article.

Wednesday, April 11, 2018

The Future of Corporate Reporting is Digital

The UK’s FRC Lab issued a deep dive report in December that urges regulators, companies, investors and technology providers to work together to realise fully the potential of XBRL and to respond to the challenge of a new European Single Electronic Format (ESEF) for digital corporate reporting due to come into effect in 2020.

XBRL has become the leading technology in the world for digital reporting. It is required by more than 100 regulators in 70 countries, including the SEC, which last year implemented requirements for foreign private issuers to file their reports in XBRL. That was a significant requirement for all FPIs around the world using the IFRS accounting standards. This includes over 300 companies in Canada, most of its largest companies.

In the EU, the ESEF requirement takes effect in 2020. That requirement calls for the use of XHTML combined with iXBRL to present reports. All EU Companies will be required to follow this approach. In the UK, iXBRL is already required by the tax authority and some 2300 companies must comply. Also, over 2000 companies file their reports in iXBRL with Companies house, the national companies registry.

The deep dive report was triggered by the forthcoming advent  of ESEF and a recognition that preparation is required to make it work properly.

The movements of the US, UK and others towards digital reporting point to the fact that a world where corporate reporting is based on paper is rapidly coming to a close. In an increasingly digital world, where companies are engaged in digital transformation at all levels, the expectation of a continuance of paper based reporting is absurd. Paper reports will survive for some time, but they will be secondary reports, expensive relics of the past.

The deep dive report fully supports the power of XBRL and contains several important suggestions, including:
  • for regulators to work together to align reporting requirements and thereby reduce reporting burden.
  • for executives and Boards to ensure that suitable governance is in place so that digital reports meet the needs of users. Companies need to have appropriate processes and procedures in place to manage disclosure in a digital age.
  • for users to familiarise themselves with Inline XBRl and structured financial statements, to ensure that they can maximise the benefit that digital disclosure of fundamental data can deliver.
  • for software vendors to work to educate the market and to continue to innovate in the delivery of high quality software that is easier, more intuitive and more accessible for the preparer community.
Here is a link to the (PDF!) report.

Monday, April 09, 2018

Need for A Stronger Role for Libraries in Digital Information Consumption

With all the fuss during the past year on the reliability and truth of information, especially that available through the digital media and the news media, has led to renewed interest on how people can be confident about the information they have available to them.

As part of the research on this topic, Pew Research Centre did a survey last year on the types of information available and the feelings and attitudes of people about that information. They explored factors such as the following. "How interested are they (consumers) in the subject? How much do they trust the sources of information that relate to the subject? How eager are they to learn something more? What other aspects of their lives might be competing for their attention and their ability to pursue information? How much access do they have to the information in the first place?"

An analysis off these factors led to a conclusion that two main elements contribute to the level of their enthusiasm about information - "their level of trust in information sources and their interest in learning, particularly about digital skills."

Other studies have shown that people must have some trust in the information in order to be able to use it intelligently. But what to trust in the digital world, particularly that of the internet, is a difficult challenge. Levels of sophistication about information reliability tend to vary with levels of education. Also, gaining access to the information requires a certain level of digital skill with the tools being used. This in turn requires some desire to learn those technologies. This desire to learn varies as well. Often the level of sophistication about the information and the desire for learning follow the same track in tandem.

While the Pew study concluded that there is not a "typical user" out there because of the spread of the variations across the population, there is an obvious possible role for a learning mechanism for those who are at all willing to take part in learning activities, which according to the results constitute a large proportion of the population. Pew points to the libraries as a possible resource in this effort.

AS the Study says, "Library users stand out in their information engagement. Overall, about half (52%) of adults have visited a public library or connected with it online in the past year. Those library users are overrepresented in the two most information-engaged groups. Some 63% of the Eager and Willing were library users in the past year, while this is true for 58% of the Confident. Additionally, both groups are much more likely than others to say they trust librarians and libraries as information sources."

Something to think about, especially for those who think that libraries are obsolete. Here's a link to the Pew Study.

Wednesday, April 04, 2018

What we Mean by Information Integrity

With the growing focus on data for purposes of decision making, whether it be big data or regular internal data, there is a growing need for a focus on information integrity. However, what exactly is meant by information integrity is not widely understood.

In 2013, the AICPA Assurance Services Executive Committee’s Trust Information Integrity Task
Force in conjunction with the Canadian Institute of Chartered Accountants published a paper on this topic. The paper provides a full explanation of the meaning of information integrity.

In that paper, "information integrity is defined as the representational faithfulness of the information to the underlying subject of that information and the fitness of the information for its intended use."

These two concepts - representational faithfulness and fitness for intended use - form the core of information integrity.

Representational faithfulness is determined by how well the information "represents the subject that it purports to represent. For example, a weather report is the representation of the weather. Therefore, the integrity of the weather report depends on how well it represents the weather."

The other concept - fitness for use, is clearly related to the concept of representational faithfulness since if the information does not fairly represent the subject, it will be of little use.  But fitness for use goes well beyond this idea. The paper points out that "information is prepared for a specified purpose and includes: (1) the observations about the characteristics of the specific events or instances to which it pertains, (2) information about the environment in which the events occurred or the instances existed and (3) other information necessary for the observations to be used for their intended purpose."

This additional information is often referred to as meta-information. "Information integrity is determined based on both the information’s consistency with its meta-information and its representational faithfulness. Therefore, information integrity includes the accuracy, relevance, precision, timeliness and completeness of the information and its meta-information. Information that is accurate, relevant, precise, timely and complete for a particular purpose can be termed to be “fit for purpose.”

That's quite a handful to deal with. It requires some dedicated effort by management to assess the integrity of the information it is using, but this effort is crucial to making sound decisions.

The paper has some ideas for how management can obtain the assurance they need, ranging from making sure they understand the context of the information to obtaining an independent report from an information assurance professional. It's an area that deserves a lot of attention. A copy of the ASEC report can be obtained on the AICPA site.

Tuesday, April 03, 2018

The Need for Trust in Data

The rise of usage of big data, often from outside the company, with the use of data analytics enhanced by Artificial Intelligence in making decisions has led to a confluence of issues around the question of whether the data can be trusted. Since automated decision making can often operate independently of people intervention, and in fact operates along with people, the issue becomes one of governance.

C-suites are beginning to consider this issue since they are in charge of overall governance. They are asking - how does the involvement of machines in decision making affect corporate governance?

In a recent study commissioned by KPMG International, Forrester Consulting surveyed "almost 2,200 global information technology (IT) and business decision makers involved in strategy for data initiatives.The survey found that just 35 percent of them have a high level of trust in their own organization’s analytics."

This is an important issue. Trust is essential in order for people to interact effectively with machine generated decisions. Lack of trust will inevitably lead to the development of informal workaround processes that will not serve the organization well in the long term.

What it means is that machines making decisions need to be managed along with people. So organizational responsibility for data and for analytics needs to be assigned. To establish trust, there needs to be some assurance about the quality and integrity of the data and the integrity of the analytics (models and algorithms) being used.

It's a major challenge. Check out the KPMG Report here.