Issue No. 35 - British Polish Chamber of Commercebpcc.org.pl/contact-magazine/issues/24.pdfContact...

Issue No. 35

Contact Magazine Issue No. 35

Editorial note 3

It's all about efficiency and scalability 4

Will digitisation disrupt or transform your business? 6

Smarter ads will follow us everywhere – with our permission 9

New technologies in the service of HR 11

Leading in the digital age 13

Automation and digitisation vs commercial real estate 17

How technology has transformed the travel industry? 19

The role of leadership in building commitment in a company 21

How to humanise technology without dehumanising society? 22

Technology trends change retail trade 24

At the cutting edge of industrial technology 27

Smart contracts and efficient contracting 29

Growing internationally through smart coding 31

Innovation in civil engineering due to TriAx geogrids stabilizing the ground under our infrastructure 33

Future technology in the global automotive sector 35

Travelling into an era of innovation 37

Industry 4.0 – why manufacturing industry has to digitize 38

How can we do better today that which we did yesterday and the day before? 40

The modern office and Polish health and safety regs: How to square the realities of today's activity-based workplace with the legal requirements?41

Networking coffee meeting with a trade mission of manufacturing companies from Sheffield and South Yorkshire41

Business Ferryboat Cruise & Party 42

Real Estate Market Forum 42

Table of Contents

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Chairman and CEO's note – from Antoni F. Reczek, OBE, Chairman, and Paweł Siwecki, CEO 43

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Editorial note

Editorial Note from Michael Dembinski andDorota Kierbiedź.

This issue ofContactMagazine Onlinefocuses oninnovation inbusiness that’sdriven bytechnology.

We’re currently leading our firms into an era wherechange is happening at a pace unprecedentedeven a decade ago. How will this change affect us– will we can ride it like a surfer rides a wave, orsubmerge beyond the choppy waters?

The answer lies in our understanding of how techis evolving; which doors will open to corridors ofrapid growth, and which are just dead ends.Artificial Intelligence (AI) appears in many of thearticles in this issue. Yet 20 years ago, AI wasconsidered to be going nowhere, a theoreticalconcept that offered no practical benefits. Yet withthe growth of computing power and much researchand development, AI is beginning to transformmany sectors of business.

One of our larger IT members, Future Processing,sets out a vision of AI that can either help or harmmankind – especially when it hits that moment of‘singularity’, when machines are learning at anexponential rate and overtake humanity inknowledge. How can we choose the right path?Some suggestions can be found here…

Our three interviews in this issue look at how IT isdisrupting business. Stephan Bienek and AdamPytlik from Interoute are asked about the differencebetween digital disruption and digitaltransformation, and how new ways of doingbusiness are shaking up processes andprocedures. The world of advertising

is being shaken up by technology, which ischanging people’s habits. How can the persuaderscontinue persuading when the target audience isinteracting with content in totally new ways? Howwill smart billboards and virtual reality change theway we shop? Ross Newens of Nova Groupoutlines his vision of advertising in the times of AI.Paying taxes will become easier – and avoidingthem will become harder – as governments beginto introduce tech-driven solutions in what’s beingcalled ‘TaxTech’. Piotr Ciski from Sage talks aboutthe future challenges that tech brings with it, inparticular the danger of skills shortages in a fewyears’ time if schools and universities do notchange their programmes now to reflect thefuture’s needs of the workplace.

Manufacturing industry is also investing heavily inthe future. Factories will change as robots starttalking to robots – the world of Industry 4.0. TheInternet of Things (IoT) is bringing new efficienciesto the factory floor and to the manufacturing supplychain. How will this affect your business? KPMG’sDr Jerzy Kalinowski looks at the imperatives. Theautomotive sector is one where massive structuralchange is expected, whether its from fossil fuels toelectricity or the change in the ownership and usemodel of cars. The impact of technology on thesector is set out in this piece from Mazars. And agreat exemplar of UK best practice is showcased– Renishaw – a world leader in metrology andhealthcare.

Frequent business travellers have witnessed hugeimprovements in convenience; being able to bookflights, reserve hotel rooms, hire cars or buy traintickets online was a huge step forward – but thingsare about to get even better thanks to AI andsmartphone. Two articles, one from Avis and onefrom online booking platform Amadeus, map outthe future of business travel.

The real estate and construction sector is facingdisruption too, as changes in retailing mean ever-growing numbers of online customers wantingdirect-to-door delivery. How will this affect themarket for warehouse and retail space? Here are

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some pointers from Cushman & Wakefield. Andwhat are the latest trends in retailing? This articlefrom Deloitte looks at the growing symbiosisbetween bricks & mortar and e-commerce.Innovation in construction is not just about IT –continuing improvements in materials technologycan extend the operation life of our infrastructure.Tensar’s innovative ground stabilisation system isone such example.

Legal firms are facing huge disruption as AIprepares to sweep away large swathes of routinefact-checking work. Smart contracts –transactions shifted into the digital space – willmake life easier for both parties while cutting outthe need for lawyers. One example is flight delayinsurance – the moment a plane lands later thanset out in the contract, a payment can beimmediately made to the traveller, without anyhuman intervention. But not all contacts can go‘smart’. Find out which ones will still be done bylawyers in future in this article from WierzbowskiEversheds Sutherland.

We mentioned Future Processing as a great PolishIT company with sights on large export markets(over 80% of the firm’s sales come from abroad).Another IT firm doing well is Order of Code, whichis selling smart coding to clients across Europeand North America. The BPCC’s UrszulaKwaśniewska visits the firm’s Rzeszów HQ.

The coming revolution requires new ways ofmanagement. If firms are to maintain thecommitment of their workforces, they need tomanage them in different ways. This article fromGrant Thornton looks at the the challenges facingleaders who want to maintain effectiveness in anage of change.

The effect that technological innovation has onleadership in a time of rapid change is discussed inthis article from ACCA, while the benefits thatcome from putting smart IT solutions to use inlanguage training and assessment are consideredin this article from the British Council.

There are many fascinating insights of value in thisissue of Contact Magazine Online, it's worthreading all the articles for an all-round overview ofthe changes that await us!

It's all about efficiency andscalability

Piotr Ciski, country manager of Sage in Poland,talks to Michael Dembinski about theaccelerating pace of IT-driven innovation ischanging the business environment.

We begin by discussing the huge steps taken bythe Polish state in terms of the digitising tax. Nowthat the Single Audit File – Tax (SAF-T, or JPK)has been fully implemented, and split payment ofVAT is being introduced (from 1 July, voluntarily atfirst), we can see how the Polish tax authorities areusing digital tools to improve the process ofcollecting (and checking) tax payments. This isone global digital trend in which Poland is ahead ofthe curve; in others, it has some catching up to do.

“What we're seeing now is an acceleration ofdigitisation to achieve efficiency and scalability”,says Mr Ciski. “Digitisation of tax reflects thistrend, as tax authorities begin to migrate fromtraditional tax inspections to digital verification. It'smore efficient – for the tax payer and for the taxauthority. Expensive human resources and travelcan be replaced by scaleable technology; theeffectiveness of tax collection is no longerdependent on the number of people who are doingthe collecting.”

“With new digital tools available, the tax authoritiesare becoming much better at making a tax systemthat is watertight and not open to abuse or fraudfrom criminals,” he says. But as new solutions arebeing introduced, there will be a one-off cost thatcompanies will need to pay, mainly for newsoftware and staff training. But once that's done,and the new system is working, it will be a hugeimprovement over the old ways of paying tax. “Interms of the political and legal changes,

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there's no dispute as to whether this process isright or wrong – everyone agrees that it needs tobe done. There will be a one-off cost of executingthis process for the state too – substituting HRcost for IT cost – but it will offer scalability,” saysMr Ciski.

This is part of a general trend – “it's not just abouttax systems. Companies need efficiency andscale,” he says. Around the world, in everyeconomy, these are the two watchwords –efficiency and scalability; businesses' insatiabledemand for digitally driven innovation means that“the market for the people who can do this for themis becoming more demanding.” A growingeconomy and finite human capital means thatemployers are looking for IT systems that can dothe jobs once done by people. It means adislocation in the labour market.

If handled right, the demographic dip that Poland isexperiencing can be evened out by labour forceautomation. If handled badly, the miss-matchbetween the skills that employers need and thelack of people with those skills in a shrinkingpopulation will exacerbate the problem. “Somepeople won't be able to find jobs, while on the otherhand, obsolete jobs will remain on the market,making the economy less competitive,” says MrCiski. “This is evolution. We can't stop it.”

So what is the role of the state? There are twoissues to consider. One is investment in R&D. Theother is education and training. Governments andprivate investors around the world are investingheavily in AI; the UK, the EU, China all haveprogrammes intended to support its development –the AI sector has the potential to add hundreds ofbillions of dollars to the global economy by 2030.

Poland is way behind in many areas of digitisation;according to Eurostat's Digital Economy & SocietyIndex for 2017, Poland is in 23rd place out of 28EU member states when it comes to the digitalmaturity of its economy. Polish private-sectorbusinesses are ahead of only Romania when itcomes to their uptake of ERP

(Enterprise Resource Planning) software thatintegrates core business functions within a firm.And research conducted by the Polish statisticaloffice (GUS) between 2013-17, shows that Polishfirms are sill scared of IT. Only 10% of businessesuse cloud computing; one-third of all Polishbusinesses don't have a website while one in tendoesn't even have internet access. “Polishcompanies are behind – they have some catchingup to do. EU funds help to accelerate this changefor our SMEs,” says Mr Ciski.

“It is crucial that if Poland is to avoid a situationwhereby employers can't find people with the skillsthey need, and employees can't find work becausethey don't have those skill, there needs to becloser cooperation between the authorities,business and academia,” says Mr Ciski.

“If Poland is to be a global challenger, it needs tobe ready. The change has to happen at secondaryschools. IT is a really important subject atsecondary level! Teachers need to be prepared toteach IT in the right numbers. At the universitylevel, it's already too late. The number of studentswilling to pursue IT studies at tertiary level isdetermined by the quality of teaching at secondaryschools,” he says. There are signs that somethingis changing – the government has increased thenumber of hours of IT teaching for pupils aged 11-18 from 210 hours to 280 hours. And teaching IT tothe very youngest primary school children is alsocominHowever, this raises the question of whetherthere are enough IT teachers on the market – andwhether they'll be good enough.

“If we look at the number of IT graduates leavingPolish universities each year, we can see a there'sshortage of tech people. A further problem is this -not all programmers at all universities are reallyaligned with today's labour market. Freshgraduates need half a year before they canexecute their jobs properly. Employers are forcedto take on the costs of ramping them up. Somegraduates can adapt in two to three months beforethey get working productively. Some take morethan a year,” admits Mr Ciski.

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But these are short-term needs. “We need anongoing discussion with universities to structuretheir IT programmes for the next five to ten years.And this means the need for a dialogue betweensecondary schools and the university professors.”

I ask whether every person employed in IT needsto have a Master's degree in IT science. “Not alljobs in IT require graduate-level education. Thelabour market has changing needs. And if we lookat the balance between graduates with a Masters'degree versus those with a Bachelors' degree... Aprogramme can be done in three years atuniversities. Those extra two years to gain aMaster's degree don't really bring too much benefitto employers. A four-year university course wouldbe totally sufficient to prepare graduates for work.But more importantly, whatever their length, theprogrammes at universities shouldn't focus ontoday's needs on the labour market, but the skillsthat employers will be looking for in the future,” hesays. “Sage in Warsaw has people from eightdifferent nationalities working here. More and morediversity is also a part of the solution.”

“We need to consider also re-educating older ITworkers, those with over ten years' experience inthe sector, to retrain them mid-career; generally weneed to learn how to teach adults new skills.” I askMr Ciski how those skills needs will change in thenear future. “Language – interface,” he replies.“Programmers will be able to write code usingvoice interface, rather than a keyboard, usingnatural language commands. And we are changingthe way we consume IT – across many platformsand channels; the user interface will becomeinfinitely adjustable to suit individual preferences.Security will also be an increasingly importantissue across the industry – technology createsdifferent threats to society, but I believe that theywill be tackled,” said Mr Ciski.

He mentions AI's rising star – everyone seems tobe talking about AI. “It existed ten years ago, 30years ago, it's had its ups and its downs, it's beenthrough autumn now it spring again, its on thecover of magazines. It is introducing new

technologies, it will lower barriers, AI-driven voicerecognition means you can talk to your software –our Sage Chatbot allows you to talk to your data.At the moment, AI is doing only a fraction of what itcan do, it is not yet used on an important scale,” hesays.

But what about jobs? What will happen when AIdoes become commonplace, when the machinehas learnt far more than it knows today? “AI willsteal jobs – but – the sheer increases inproductivity it offers will be of huge benefit tosociety. Look at the banking sector, for example. Itis still a large employer of people, despite thetechnological advances that have occurred overthe decades since the advent of the ATMs andonline banking. The use of electricity on a broadscale didn't destroy jobs. It's just the nature of thejobs that has changed. Different types of skills areneeded, different types of skills will be hired,following the same pattern. Jobs involving dataentry will disappear as will many other repetitiveforms of work that do not involve analysis anddecision-taking. Even so there will be resistance –people don't want to be substituted by robots or AI.But such has always been the nature oftechnological evolution – it's normal. As some jobsand technologies become obsolete, new ones willspring up to take their place,” says Mr Ciski.

Will digitisation disrupt ortransform your business?

Michael Dembinski talks to Stephan Bienek,regional lead VDC product specialist, andAdam Pytlik, sales and development director,Poland, from Interoute (Currently GTT ), abouthow the evolution of IT is changing everybusiness in the economy.

Michael Dembinski: What's the difference betweendigital disruption and digital transformation?Stephan Bienek: There's a negative and a positiveelement to both. Disruption changes entirebusiness models, it overturns existing hierarchies,it dethrones dominant players, allowing

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upstarts to come from nowhere are become thenew market leader. Transformation is whenbusinesses can use digital tools to develop newways of getting to their clients.

MD: What's the biggest obstacle in the way ofdigital transformation – is it cultural, or technical?SB: Technically, it's the legacy issue. Manysuccessful corporations are based around an ITplatform that's a decade or so old, and getting olderby the day. Replacing it with new platform is ahuge project that's expensive and risky. But thendoing it piecemeal – patching things as they break– is also risky. Doing nothing means you loseground to your competition.

Adam Pytlik: Every firm wants to be able to dothings cheaper, faster, better and smarter. The oldsolution was a mega-project, typically purchasedfrom one IT integrator. This could be an enterpriseresource planning (ERP) system, such as SAP orOracle. These proprietary systems, while robustand able to support most business functions, canhold back companies from making those bold,disruptive steps that can create new value.

SB: Today's approach is more agile, based aroundcooperation with start-ups that offer solutions tocorporate problems, or else developed in-housewith employees bringing their own devices(BYOD), or by using 'shadow IT' wherebyemployees use external IT service provides (suchas WordPress for example). Younger ITemployees are said to be 'cloud native', neverhaving had to work on mainframe or stand-alonePC servers. For them, software-as-a-service andindeed infrastructure-as-a-service is the way to go,not being stuck with a mainframe-based legacysystem.

AP: For employers, there's a balance to be struckbetween 'faster' and 'safer'. Doing things the oldway is safer; it's compliant with regulations (suchas the new GDPR), but such businesses run therisk of being overtaken by competitors with a moreagile approach.

SB: “Faster vs safer – it's all about getting thebalance right. Today, firms at the leading edge arecontinually improving their customer experience,their employee experience. The iterative approachmeans you never end up with a final product, it hasto be made better and better all the time. We talkabout Mode 1 companies, which are steady andsafe in their approach, and approach IT projects ina top-down way, and Mode 2 companies which areagile and fast, ready to move quickly into newmarket opportunities and have a bottom-upapproach . Mode 1 companies can lose out to tothe Mode 2 companies. Mode 1 and Mode 2approaches have risks, but they are different.Mode 1 risks are getting it massively wrong – theplatform is not fit for purpose, massive costoverruns, delays. Mode 2 risks are more to do withcompliance – a more anarchic approach can leadto problems with the regulator, or securitybreaches. With GDPR coming up soon, the risksassociated with personal data can be verydangerous for companies with an over-flexibleapproach to IT development.

MD: Is there an optimal way of getting this balanceright? Safe and stable plus fast and agile at thesame time?

AP: This is what Interoute offers. The hybrid cloudallows for companies to mix Mode 1 and Mode 2approaches. This calls for a blended approach thatcan integrate the new approach with legacysystems; the best way is in the cloud with all thesecurity that cloud computing offers, at the sametime a cloud that offers interoperability betweenplatforms, architectures and systems.

MD: Consumers today are highly aware of thequality of their experience when interfacing withbusinesses online, be it shops, airlines or banks.The user experience/user interface (UX/UI) is akey competitive differentiator. Get it wrong, andyour customers will switch to a rival with a betterinterface. With the growth of artificial intelligence(AI), it's likely that UX/UI customisation willdevelop, based on the user's IT skills, age,eyesight, aesthetic preferences,

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with interfaces tailoring themselves to suit theindividual user. This will become increasinglyimportant with an ageing demographic; onlinebanking or buying airline tickets online can beconfusing to elderly people especially if ever-changing user interfaces make the processunfamiliar and challenging. On the other hand,security is essential. Again, getting the balanceright is key.

SB: Customers are telling businesses what they'llwant tomorrow; businesses should be able todeliver it, and quickly. However, if they are over-agile, with heavy usage of their own devices andshadow IT, firms may run foul of data privacy andsecurity compliance. The solution is to integratecloud and non-cloud based services.

MD: There's also a balance to be struck betweenshort-term profit, boosting the numbers everyquarter, satisfying the increasingly demandingshareholders, with long-term sustainability.

AP: The key is competitiveness. In an economythat's become totally dependent on IT, the answerlies in a hybrid cloud-based solution that can dealwith data from new platforms, legacy systems andexternal servers. At Interoute, we can integratesolutions from Sage, Google, Adobe, MicrosoftOffice and SAP or Oracle through the cloud – thisis the best way. Interoperability is key.

SB: It makes sense to outsource your data to thecloud in cases where there's no differentiationbetween you and your competitors in that data; ifit's generic data – such as payroll, customerrecords etc – then it makes sense to have ithosted by people who can do that better than you.If it's proprietary data that is intellectual property,companies like to hold it as close to themselves aspossible.

We talk about hosting servers and data centres.AP: Did you know that between 60% and 70% ofthe energy used in a data centre goes on cooling?Some of the larger ones use 10MW/h of electricity.Cloud computing is about economy of scale; the

computing needs of business will grow massivelyas AI and technologies such as augmented realitybecome commonplace.

As we sat discussing the future of the cloud, MrPytlik receives the news from HQ that Interoutehas just connected the Vatican's new portal. A signfrom above – cloud computing at the next level!

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GTT Completes Acquisition of Interoute

MCLEAN, Va., May 31, 2018 — GTTCommunications, Inc. (NYSE: GTT), the leadingglobal cloud networking provider to multinationalclients, announced today the completion of itsacquisition of Interoute, operator of one of Europe’slargest independent fiber networks.

“The acquisition of Interoute represents a majormilestone in delivering on our purpose ofconnecting people across organizations, aroundthe world and to every application in the cloud,”said Rick Calder, GTT president and CEO. “Ourenhanced scale, expanded network footprint andaward-winning product capabilities reinforce ourposition as a global leader in cloud networking. Welook forward to bringing the benefits of thisacquisition to our valued clients across the world.”

The addition of Interoute:

Significantly augments scale, expanding GTT’sTier 1 global IP network with one of Europe’s mostextensive fiber footprints;

Creates the most comprehensive and competitiveglobal cloud networking platform in the industry;

Adds a large base of marquee multinational clients,balanced across geographies and verticals, withvery high levels of recurring revenue;

Strengthens GTT’s leadership in software-definedwide area networking (SD-WAN); and

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Enhances GTT’s global team with a world-classsales, operations and customer serviceorganization.

GTT expects to complete the integration ofInteroute within three to four quarters after closing.

About GTT

GTT is redefining global communications to servea cloud-based future, connecting people acrossorganizations, around the world and to everyapplication in the cloud. Our clients benefit from anoutstanding service experience built on our corevalues of simplicity, speed and agility. A FortuneFuture 50 company, GTT owns and operates aglobal Tier 1 internet network and provides acomprehensive suite of cloud networking servicesto any location in the world. For more informationon GTT, please visit www.gtt.net

Smarter ads will follow useverywhere – with our permission

Ross Newens, co-founder of Nova Group, andpresident of the board of 4fun Media SA talksto Michael Dembinski about how technologicalinnovation is revolutionising advertising.

We begin the interview with an overview of4FunTV, which Mr Newens launched in 2004, but itsoon becomes clear that the future is offering animmensely broader palate of possibilities foradvertisers than just music TV. Yet it's music TV –with its demographic of digitally-native youngerviewers, all geared up towards interactivetechnologies – that is a great place to start whenapproaching the digital future of advertising.

The 4Fun.TV brand at the core of 4Fun Media S.A.(in which Nova Group is a significant investor) isaimed at 16-36 year olds, but the company hasmade an enormous transition into the digital out-of-home (DOOH) advertising market, with nearly70% of the total digital screens in Poland. The firmis also moving into the e-commerce world. “Withone million Facebook fans, 300,0000

Android app users and 30,000 users regularlyinterfacing with our chatbot tool – there isconversion from music – through interactivity. Weare moving towards e-commerce, allowing usersto print their own goods, monetising their favouritebrands. Get the balance right between clicks andbricks – the retail experience offline – buy more –online – buy more consistently.

“I can't imagine a better place to do business rightnow than Poland – there's a can-do attitude and areal will to get on with it!” As we speak, Mr Newensis in the middle of communicating 4Fun Media'sQ1 results. “Investor confidence in themanagement is the driver. So communicating withthe market is crucial. We have a relatively smallmarket capitalisation, the Warsaw market [the firmis listed on GPW main exchange] is not very liquid,but our share price has grown from 4zł to 15zł overthe past two years,” he says.

The younger demographic market audience isdynamic, ready to use new technologies as theyappear. “One such trend is watching two screensat the same time, it's a good example of whereadvertising is going.” You're watching the sameprogramme – a TV series, say, along with severalof your mates in different locations and you'recommenting on the action via a communicator applike Messenger or WhatsApp.” This new behaviourhas huge implications for advertisers. For one, itgets around the problem of ad blockers. You can'tblock what you're actively watching. Advertisingagencies today divide their budgets between TVand internet spend. But in three to four years' time,the divide will be blurred. In the battle to wrestconsumers' increasingly diluted attention, hybridagencies, such a FCB Bridge2Fun, part of 4funMedia , offer digital content targeting specificaudiences, spanning TV and online. “This is whereadvertising is going. Content, more then everbefore, is king – the content carries the message,”says Mr Newens.

Another place where advertising is heading is outof the home. Not necessarily 'outdoors', becausemuch of it is indoors – inside

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shops, malls, airports, railway stations, petrolstations – hence 'out-of-home'.

“We have over 20,000 digital screens, out ofaround 30,000 across Poland,” says Mr Newens.“These are clustered into networks; for example,we have 45 locations, 135 screens and ninevideowalls in Empik stores which can be targetedfor example at parents and children, with a 'back toschool' message. In Lukoil stations, we target themale traveller. We have screens in gyms, insupermarkets – in Carrefour alone we have 577screens.” The real magic of DOOH is what youcan program it to do. The smart part is thesoftware, not the digital screens. “With DOOH youcan sell day parts. Between 7:30 and 9am there'sa different audience, hurrying to work, there's adifferent message, for different products orservices. Ads for Specsavers – when it's sunny,advertise sunglasses. When it's darker, readingglasses. Those ads that tell you that you're 2kmfrom the nearest McDonalds – we can do betterthan that. In heavy traffic, it may take you 10minutes to get there; when traffic's flowing freely, itmay take you five. We can link the digital ad to atraffic database. Or to an air-pollution database topromote air-purifying products from Phillips. At3pm, a special offer on kiełbasa or evening mealideas,” suggests Mr Newens. “We need to educatethe advertiser about the stuff that we can do.”

Another huge advantage of DOOH is that it allowscities to de-clutter their outer fringes, all thosesuburban landscapes made ugly by a jumble ofcompeting billboards. For municipalities, it offersthe chance to promote tourist information andevents and communicate with citizens. Digitalscreens also mean no more wasted spend on out-of-date ads for last week's music festival or in-store promotion that ended two days ago.

“Planning a network of digital billboards takes time– locations need to be chosen not only from thepoint of view of footfall, but also consideringaccess to a power source and to the internet – thistakes capex. Now, capex on screens – economyof scale means that when you order 200

screens, the price will be getting lower. Advancesin tech also tend to push the price down. The bigexpense, rather, is the software, which puts themagic into the screens. This is getting cleverer,and this is where the competitive advantagebetween DOOH agencies will lie,” says MrNewens.

“Our software is written in this building. We have adifferent business model, and a different mindset –with 70% of the digital screens on Poland today.Our competitors in this sector are Clear Channel,Stroer, AMS and JC Decaux. We are essentially astart-up, with 50 million zlotys marketcapitalisation, we're fuelled by innovation whichcan't stop; it can't stand still – that's our edge. Ittakes a lot of work turn a good idea into a realproduct or a service multiplied by zlotys and hoursof time invested.” Mr Newens estimates thenumber of locations with DOOH advertising willincrease sevenfold over the three years.

Other than TV, online and DOOH – what else isthere?

“Virtual reality – we are witnessing something likethe dawn of pay-TV or even cinema. The massintroduction of VR will be driven by movies andsport. And gaming – already by 2015, the revenuesgenerated by computer games exceeded those ofHollywood and the music industry combined.”

“The challenge will be to bring VR into the home. Ibelieve that the first breakthrough VR movies willbe screened in cinemas, with hundreds of peoplesharing the experience together, thoughindividually. At first, they won't be long – around tenminutes,” he says. With VR you can direct yourattention anywhere by moving your head, not justat where the director points the camera. Sales ofVR and augmented reality (AR) goggles areforecast to rise by 50% year on year, thecompound growth leading to a global market ofsomewhere between 40 and 100 million sets by2021. “Now this is a beautiful opportunity foradvertisers! Retailers like Ikea are alreadycreating virtual shopping experience that

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allow you to shop in virtual reality, moving aroundthe store, clicking on things you like, seeing themin 3D in the relevant environment, and adding themto your trolley. Traditionalists will not become usersof this – or indeed any new technology – until theycan see the benefits. Over the next five to tenyears, the pace of change will accelerate. Open-source software will allow innovation-driven start-ups to develop new apps and interfaces that workin VR and AR. There's so much happening wherethey can make money,” says Mr Newens.

But there have to be checks and balances; dataprotection being key. “The EU's General DataProtection Regulation is great, it sets the standardaround which our industry can function. Data isbeing collected at an accelerating pace – and itneeds to be protected. GDPR means we all haveto rebuild our databases on the grounds thatconsumers have consciously opted in and knowtheir rights around their data.

“The 2002 Spielberg film Minority Report reallyinspired us – now the technology foretold in the filmhas become real. If I've given my permission formy retina to be scanned, I can be traced as I walkinto a mall and I can be given ads tailored to me. Itwill happen anyway – the good thing is, you willonly get such ads if you want them. If you want totake it – do so on purpose. Some online retailers can already dress me, show me a 3D model ofmyself wearing the shirt, while chatbots areavailable to advise about any questions I mayhave, and to deliver the clothes to me. Regulatingthe data used to be the hurdle. GDPR has levelledthe playing field.”

New technologies in the service ofHR

by Ewelina Piorun, exams manager Poland, BritishCouncil

Social media, websites, virtual job interviews,chatbots answering job candidates' questions– these are just some of the solutions thathuman resources specialists are using. Amongthe various types of computer-based tests,language ones are available.

Organisations are changing into 'digitised'workplaces where even employees, in a sense,are becoming digital. It is not only due totechnological progress but also to the nextgeneration that is just entering the labour market.Its representatives are often labelled as digitalnatives, a name that arouses much controversy.Whether it is justified or not, the fact is that theyuse new technologies and share information ably.They want to work independently and effectively.HR departments are now facing a challenge, whichis to create an organisation that meets the time andemployees' needs. Many tools may support thisprocess. They also include modern computerlanguage tests. They are particularly useful inseveral situations.

Faster, better, more efficient...

Most organisations require a good command ofEnglish from job candidates, who

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tend to define their competences differently in theirCVs. They name certificates and tests along withresults or provide short descriptions. Some ofthem even present these graphically, using icons.With such diversity and the tendency of some tooverestimate their achievements, it is still worthassessing candidates' skills. The most popularmethods are job interview (face to face ortelephone), quick assessment tests andpreparation of a short text. All these solutions aretime-consuming and burdened with considerablerisks. They usually check only one or two skills,and their result may be unreliable due to improperpreparation or non-meritocratic considerations. Theuse of a computer-based test minimises the risk ofincorrect evaluation of individual candidates andalso entire groups. All candidates approach thesame exam, have the same amount of time,similar conditions and are subject to the samecriteria. And it guarantees time saved for therecruiter and the candidate, as well as providingflexibility, especially appreciated by the youngergenerations of employees.

Excellent command of English?

Some employees have English commanddocumented with a certificate. Some of them havean annexe to the university diploma. Some of themdeclare practical knowledge at a good, very good,advanced, beginner level, B2 or some other level.In this situation, the assessing the quality of whichall employees of the company speak a foreignlanguage in professional situations is almostimpossible. An audit may deliver a reliable andbroad picture of the organisation's competences. Itcan be carried out as part of a one-off process,although more benefits are brought by repeating itregularly, at similar intervals – which then showsthe dynamics of the staff's language skillsdevelopment. Using a computer-based test, also inthis case, is a good solution. It allows you to checkthe skills of even a large number of employees atthe same time, which brings significant benefits.Unified individual and corporate reports will help inmaking further training and business decisions.

Employees' development tailored to company’sneeds.

Non-wage benefits, along with remuneration, acompany's prestige, and developmentopportunities, are becoming now one of thedecision-making conditions when choosing anemployer. The most popular are co-financinglanguage courses or foreign language classesconducted during business hours. They supportthe process of building the employer's image,strengthen staff engagement and enableimprovement of qualifications. A trainingprogramme addressed to employees' needs bringsthe best results. Guidelines for its preparation canbe taken from an audit. And after the process iscomplete, it will enable the effectiveness of furtheractivities to be assessed – forming the source ofrecommendations for their continuation. It isbeneficial to use tests developed by an institutionnot involved in the programme – this willguarantee independence and credibility. Choosinga solution based on new technologies will enableemployees to reconcile their professional dutieswith participation in the development programmeeasier. They will be able to take a test anywhereand anytime because it remains active on theonline platform.

Before you choose a test for your company

DO NOT…

rely on brief conversation in English – it evaluatesonly the conversational ability of the candidate,

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leaving their writing and reading skills untested,and it does so on a very basic and unreliable basis

use tests that are not backed by research – manycompanies use English tests designed locally orin-house. These tests haven’t been carefullytrialled and therefore risk producing biased,incomplete and unreliable results

test your employees with basic online tests as itcan produce only a snapshot of a candidate’sEnglish skills that is too broad and does not includespeaking or writing skills.

DO:

use reliable testing with specific benchmarks,backed by thorough trials and academic research

map your employees’ English skills to aninternational standard

choose tests that show precise language skillsgaps to best design and assess trainingprogrammes.

Order a language audit from the BritishCouncil. FREE TRIAL APTIS [email protected]

Leading in the digital age

By Liz Fisher

The modern age is a game changer forbusiness and promises to transform the role ofleaders and the qualities demanded of them.

One of the remarkable things about leadership ishow little the underlying theory of it has changed forcenturies. In around 580 BC, the Chinesephilosopher Lao Tse wrote: “A leader is best whenpeople barely know he exists. When his work isdone, his aim fulfilled, they will say: we did itourselves.” Just over two millennia

later, Napoleon Bonaparte said that “a leader is adealer in hope”. And just a few years ago this, fromleadership guru Warren Bennis: “Leadership is thecapacity to translate vision into reality”.

There have always been, of course, individualstyles of leadership. There have been (usually,mercifully brief) fashions – around the time of theFirst World War, for example, one definition ofleadership read that it was “the ability to impressthe will of the leader on those led and to induceobedience, respect, loyalty and cooperation”. Inspite of this, the ability of a leader to persuade andinfluence, rather than command and rule, hasalways been present and has become even moreprevalent over the past 50 years or so.

The modern age, though, is a game changer forbusinesses and their leaders. The combination ofglobalisation, rapid technological development andthe emergence of data and knowledge as theultimate currency is changing everything. Entirelynew business models are emerging andorganisations becoming less hierarchical.Innovation and ideas can be born anywhere – themost important point is that organisations have theability to encourage their development andrecognise the best of them.

Arguably, competent leadership is the mostimportant skill of all in the digital age. It is importantbecause this is a rapidly evolving, messy, risky,unpredictable time and none of us can be surewhere technological development will take us. Insuch an environment, outstanding leaders are themost important currency there is.

The vital importance of this role can already beseen in organisations on the front line of digitaldisruption. Australia Post, for example, has seenits business – revenues of A$6.8bn – ravaged bythe disruptive impact of the internet and set about anew vision to become an e-commerce company.Change of this magnitude requires atransformation of culture and behaviour in everyfunction, particularly critical functions such asfinance.

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mailto:[email protected]


Silvio Giorgio, appointed by the group’s CFO to anew role of general manager, data science andstrategy, was given the task of preparing AustraliaPost’s finance function. His fundamental view wasthat it was not possible for any finance function tosupport an organisation embarking on change ofthis scale if it did not embark on change itself. “Ifwe don’t prepare our people, our finance functionwill not be relevant to the business and our peoplewill not be relevant to the market,” he said.

Essential qualities

So what are the qualities that leaders need in thedigital age? Are they so different from the qualitieswe have seen in leaders until now?

The list of attributes that theorists believe areessential in a good leader inevitably shift over timebut a few core qualities are consistently at the top.A leader’s personality has always been and willalways be predominant; meta-analysis ofacademic studies (see Intelligence andLeadership: A Quantitative Review and Test ofTheoretical Propositions by Timothy Judge, AmyColbert and Remus Ilies) carried out over the past50 years has suggested that specific personalitytraits, including emotional stability and curiosity,are twice as important as IQ when it comes topredicting the effectiveness of a leader. Then thereare the behavioural traits that help leaders todeliver results: motivational skills, team buildingand emotional intelligence, as well as that elusiveand hard-to-define quality, charisma.

But in addition to these core requirements, newqualities are increasingly in demand. The GlobalLeadership Forecast 2018, jointly published byDDI, the Conference Board and EY, whichintegrates data from more than 28,000 leaders andHR professionals across the world, found thatdigital leadership skills are becoming critical;companies with the most digitally capable leadersfinancially outperform the average by 50%.

“No matter what business function you work in,” itstates, “leaders today need to understand the

impact of technology on their business. You don’thave to be a technical expert, but you do need tobe able to predict both opportunities and potentialnegative effects of technology”.

It is already clear that some of the must-haveattributes for leaders are being amplified by thedigital age. The driving force is the impact ofautomation, artificial intelligence (AI) and machinelearning in the workplace – partly becausemachines are already taking over the task-basedelements of leadership. In an article in HarvardBusiness Review, Tomas Chamorro-Premuzic,professor of business psychology at UniversityCollege London and Columbia University, MichaelWade, professor of innovation and strategy at theInternational Institute for ManagementDevelopment (IMD), and Jennifer Jordan,professor of leadership and organisationalbehaviour at IMD, argue that AI “will supplant manyaspects of the ‘hard’ elements of leadership – thatis, the parts responsible for the raw cognitiveprocessing of facts and information”.

At the same time, they add, AI will put a greateremphasis on the soft elements of leadership: “thepersonality traits, attitudes and behaviours thatallow individuals to help others achieve a commongoal or shared purpose”. The authors conclude that“in an AI age characterised by intense disruptionand rapid, ambiguous change, we need to rethinkthe essence of effective leadership. Certainqualities, such as deep domain expertise,decisiveness, authority and short-term task focus,are losing their cachet, while others… are likely toplay a key role in more agile types of leadership.”

This view was confirmed by a recent joint reportfrom CA ANZ and PwC, The Future of Talent:Opportunities Unlimited. “The report highlights anincreasing need for soft skills rather than technicalskills,” explains Lee Whitney, chief transformationofficer at CA ANZ. “Business leaders identifiedcommunication and problem-solving skills,collaboration, adaptability and agility, creativity andresilience as crucial to success in the comingdecade.

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“Leaders have realised that emerging technologywill increasingly take over complex technical tasksand, as a result, the capacity of leaders toinnovate, inspire and engage is coming to the fore.Preparing for the future is not just about learningnew technologies but about adopting an attitude tochange and innovation that allows for rollingtechnology and process changes.”

The critical leadership skills identified as vital forthe future include:

Adaptability. On an individual level, adaptabilitymeans having an openness to new ideas and awillingness to change your mind even when doingso might threaten the ego of a leader. “In an AI age,changing one’s mind, which can often be regardedas a sign of weakness or lack of conviction, shouldbe perceived as a strength when it comes toimproved decision-making,” say Chamorro-Premuzic, Wade and Jordan. “Adaptable leadersare not afraid to commit to a new course of actionwhen the situation warrants.”

Vision. A clear vision for the organisation becomeseven more important in the digital world whenbusiness models are constantly disrupted andshort-term uncertainty is high. The huge digitalmultinationals of the age all have vision (ormission) statements that are reasonably specific,while leaving wiggle room for future initiatives. ElonMusk’s mission statement for Tesla, for example,is “to accelerate the world’s transition tosustainable energy”, while the company’s vision is“to create the most compelling car company of the21st century by driving the world’s transition toelectric vehicles’. Google’s mission statement is ‘toorganise the world’s information and make ituniversally accessible and useful”, although itschief executive Larry Page said in 2014, reportedin the Guardian, that the company was beginningto outgrow its original vision and could be due for achange.

Humility. Recognising what you don’t know as aleader is as valuable as knowing

what you do in a time of rapid change. Humility isan evolution of a leader’s need to keep learning; inthe digital age, knowledge can come fromanywhere – and often from someone 20 yearsyounger than the leader or three levels down theorganisational hierarchy – and so leaders need tobe humble about the contributions of others andopen to seeking input from everyone andeverywhere, inside and outside the organisation.

Importance of trust

The automation of the workplace is having widerimplications for leadership as employees – andwider society in general – are increasingly lookingto business leaders for guidance and reassuranceabout the future of the workplace and of their jobs.According to research by PwC, 30% of jobs couldbe lost to automation by 2030 – so who ownsresponsibility for the people who will be displaced?PwC’s latest survey of the 21st Annual CEOSurvey: The Anxious Optimist in the Corner Office,opinions of CEOs worldwide, found that 67%agreed that they have a responsibility to retrainemployees whose jobs are automated out ofexistence.

Trust between company and customer hasreached new levels of importance. According tothe Edelman Trust Barometer, 69% of respondentsbelieve that the most important role of a CEO is tobuild trust in their company. “The employer is thesafe house in global governance, with 72% ofrespondents saying that they trust their employerto do what is right,” says Richard Edelman in hisintroduction to this year’s barometer report. “Bynearly a two-to-one margin, a company is trustedto take specific actions that both increase profitsand improve economic and social conditions.Nearly two-thirds say they want CEOs to take thelead on policy change instead of waiting forgovernment, which now ranks significantly belowbusiness in trust in most markets.”

But trust in leaders can be damaged easily. At thisyear’s World Economic Forum in Davos, theinternet entrepreneur Marc Benioff,

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CEO of the cloud company Salesforce, criticisedthe autocratic style displayed by the leaders ofsome new technology companies. Benioff namedUber as one company that, under its previousCEO, had forgotten to value trust among itscustomers. “What is the most important to you?’Benioff asked. ‘Is it trust or is it growth? Because ifanything trumps trust, then you are in trouble.”

Leadership in finance

So what does all this mean for finance leaders?Certainly the demands placed on finance leadersboth in business and the public sector are alreadyon a pathway to change – and this begins with theway in which the role of accountants generally isshifting. ACCA’s Drivers of Change and FutureSkills report – part of its series ProfessionalAccountants: The Future – points out that ‘allprofessional accountants will be expected to lookbeyond the numbers’ in the future. ‘They will needto collaborate and partner with people in other partsof the business and outside the business; interpretand explain the numbers; provide insight andinformation; help organisations to achieve short-term goals and longer-term objectives; think andbehave more strategically and become moreinvolved in decision-making than before.’

The need for more collaboration, communication,insight and strategic thinking is equally true ofpublic sector accountants. ‘Although the corporatesector is more focused on improving customerexperience and improving efficiency in order togain competitive advantage, the result is thesame,’ says CA ANZ’s Whitney. ‘Business andaccounting leaders need the skills to apply rapidlyemerging technologies to their challenges in waysthat simultaneously improve experience andproductivity. There is also pressure on governmentdepartments and agencies to streamlineprocesses while improving customer experience.’The importance of applying rapidly new technologyis underscored in a recent ACCA report, The racefor relevance: technology opportunities for thefinance function. Finance leaders have anunprecedented opportunity as core contributors

to the adoption of new technologies to drivebusiness growth. If they don’t embrace thisopportunity, says the report, they risk losingcompetitiveness and relevance.

“In this corporate race for future relevance,recognising the opportunity is essential,” saysMaggie McGhee, ACCA’s director of professionalinsights. “The revolution has started and adaptationis critical.”

The fundamental finance skills required of CFOswill not change, which is why qualifications such asACCA’s will always be relevant. What is changing– and rapidly – is the context in which these skillsare being applied. Changes to the ACCAQualification – notably the Strategic BusinessLeader case study (see panel) – are designed torecognise the new demands

CA ANZ recently undertook a review of itsorganisational strategy in order to identify what itneeds to do to provide its members with the skills,connections and insight they need to carry theirorganisations into the future. ‘As a result, we areconducting a transformation process, which willresult in a reform of our CA Programme to attractthe best talent and to support the needs ofemployers,’ says Whitney. ‘We’ll also bedeveloping and enhancing our online learningsupport for members and building an onlinecommunity hub to connect members and supportcollaboration, and we will engage more activelywith the start-up community.’

In other words, the leadership handbook forprofessional accountants across the world is beingupdated, but not entirely rewritten, to make surefinance professionals have the leadership skills toguide their organisations forward in the digital age.

ACCA students to be tested on leadership

A new Strategic Business Leader case study ispart of a range of innovations to the ACCAQualification designed to make it more relevantthan ever to employers.

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The new paper will test students on challengingreal-world scenarios, requiring them to blendtechnical, professional and ethical skills in theevaluation and presentation of their responses.

ACCA director of professional qualifications JudithBennett says: ‘Our changes integrate deep, broadand relevant technical expertise with ethics andprofessional skills, giving students the forward-thinking strategic abilities and advanced skillsetthat modern professional accountants need toshape the future of global business.’

The paper will be available from September;registration is already open.

Other changes include the introduction of anenhanced corporate reporting exam that providesACCA students with a holistic view of reporting,and a new Ethics and Professional Skills moduleintroduced into the ACCA Qualification last year.There is also an increased focus on technology-based testing.

Find out more.

Reproduced from Accountancy Futures, an ACCApublication.

Automation and digitisation vscommercial real estate

By Anna Oberc, associate, chief operating officer,Retail Department, Cushman & Wakefield, JoannaSinkiewicz, partner, head of Industrial andLogistics Department at Cushman & Wakefield

Key trends impacting on the retail andwarehouse market growth in 2018.

Automation and digitisation is penetrating allspheres of life and is having a material impact onthe economy. The real estate sector is noexception. Cushman & Wakefield has identifiedfive key factors shaping growth in the

retail and warehouse market.

Both the retail and warehouse real estate marketswill be influenced by the same factors, each havinga sector-specific impact. Key market drivers willinclude: expansion of the direct-to consumer (D2Cmodel), adoption of modern technologies,demographic and legal environment changes, andtransport and mobility solutions for goods andpeople.

D2C model

New technologies are making it easier to reach outto potential customers, significantly facilitatingmarket entry and enabling consumers to ordergoods directly from manufacturers without havingto visit stores. As the ‘smart’ concept evolves,living becomes easier – daily shopping can bedone for instance by a ‘smart’ fridge. And with therise of process automation and renewablesubscriptions/orders, the direct-to-consumer(D2C) model is increasing in popularity. Traditionalretailing is likely to lose out unless it turns this trendto its own advantage. Warehouse propertymanagers could face a similar challenge. In aworld where ordering various goods directly fromproducers is becoming increasingly common,demand for warehouse space will definitely evolveand so will warehouse requirements andexpectations.

New technologies

E-commerce has long been recognised as a threatto traditional retailing, but it is also likely boostoffline profits if appropriately incorporated into aretailer’s strategy through multi-/omnichannelplatforms. Reaching out to potential consumershas become much easier with the onset of moderntechnologies. Today’s consumers are demandinga better experience from shopping centremanagers and owners, including retail-parkrestyling and offer expansion, Bluetooth solutionsand Wi-Fi for marketing.

“With the changing consumer

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https://main-professionalinsights-acca.content.pugpig.com/2018/05/04/16af_sl_cover_leadership/pugpig_index.html


lifestyle, e-commerce has seen its sales grow forlong. Shopping centres are increasingly turningfrom retail-only schemes into alternative leisuredestinations where to enjoy free time and meet upwith friends, particularly in winter time. This createsnew challenges for shopping centre owners whoneed to gradually expand leisure and food andbeverage offers, and to invest heavily to improvefootfall. The Sunday shopping ban which recentlytook effect in Poland will undoubtedly drive onlinesales and customers will be seeking new leisureopportunities, focusing on sports andentertainment. That’s why I believe that theentertainment sector at shopping centres has agreat potential going forward,” says Anna Oberc,associate, head of operations, retail agency atCushman & Wakefield.

In the logistics and warehouse sector, newtechnologies will transform how properties aremanaged, impacting on the quality and efficiency ofproperty management. They will also lead tochanges on the labour market amid a growingdemand for high-skilled workforce, including ITspecialists and engineers.

Demography

Ongoing demographic changes are expected tohave a material impact on the retail propertymarket. With progressively discerning consumers,growing affluence and healthy longevity as well aslifestyle changes, demand for retail space will alsorise. And as the demographic structure continuesto evolve, retail stores will have to adapt theirofferings to needs and tastes of multiplegenerations. Maintaining customer loyalty will beincreasingly difficult given growing socialawareness and rising consumer demands. Theongoing migration to cities and expansion of e-commerce will be particularly relevant to thelogistics sector. The traditional delivery chain(warehouse to store/firm) will also evolve, growingmore diverse and flexible (stores, delivery points,homes, etc.).

“Consumer behaviour has

changed radically in recent years, leading totransformation of the retail landscape and thegrowth of online shopping. As urbanisationcontinues and societies age, new shoppingpatterns will become more firmly established withonline retailing playing an increasingly importantrole. In addition, pressure will mount on marketplayers to improve the quality and speed ofdeliveries. Online retailers are already trying tooutdo one another in this respect as reliable andquick deliveries help them to stand out againstcompetition, impacting directly on customeropinions and numbers of returning customers.

Appropriate warehouse infrastructure will berequired to meet rising customers’ expectations.The next few years will see an increase in bothlarge distribution centres for e-commerce andurban logistics schemes tailored to e-commercetenants, as well as cross-dock and post-saleservice facilities,” said Joanna Sinkiewicz, partner,head of the industrial agency, Cushman &Wakefield.

Transport

Public mobility is critical to retail and logistics. Fullydriverless autonomous vehicles are likely to bedeployed within the next 10-15 years during whichtime other radical mobility solutions could also bedeveloped. This will influence how distance andconnectivity are perceived. Location of a shoppingcentre or warehouse may cease to be a key factor,potentially leading to more market changes,including readjustment of rental rates. In addition,the public transport revolution could lead to areduction in car-parking spaces required and largecar parks redeveloped.

Legal regulations

It remains to be seen how national governmentswill address current and future challenges facingboth retail and logistics. Key areas to be monitoredinclude the following: consumer rights, tax law,labour law, environmental law, including potentialroad transport restrictions, as well as regulations

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regarding data protection and the use of cookies.

Please see the interactive report [click here].

How technology has transformedthe travel industry?

by Paweł Rek, regional manager CEE & GMPoland, Amadeus

Most impactful technological advancesaccording to Amadeus.

The travel industry is growing and changing at arapid pace. According to the forecasts of the WorldTravel & Tourism Council, this sector is expectedto grow by an average of 4% per year over thenext ten years. According to IATA estimates, by2035, the number of passengers travelling by airwill almost double to 7.2 billion. In addition, theexponential growth of new technologies makes itdifficult to imagine how our travels will look like in15 years. Which of the emerging technologicalsolutions will remain relevant? And, on the otherhand, which of the currently widely used tools willbecome obsolete?

Amadeus is at the largest global technologyprovider for the travel industry — serving airlines,airports, hotels, and travel agencies. Last year, itcelebrated its 30th anniversary. The firm's missionis to shape the future of the travel, which is why

it places great store on analysis of a rapidlychanging reality, trying to shape it on the one hand,and — on the other — striving to adapt to globaltrends in technology.

Looking ahead to the near future, Amadeus'experts identify four innovative technologicaladvances that have the greatest impact on thetourism industry.

1. Artificial Intelligence and Machine Learning

Widely used in the industry, allowing for thepersonalisation of customer experiences whenbuying services, AI algorithms are used by allmajor players who sell their products online —from airlines to online travel agencies.

A relatively new application of AI in the industry —and one that is expected to rise significantly in thefuture — is the use of AI in combination with thematerial world. An example can be a solution buildby CrowdVision, a start-up which Amadeus haspartnered with. It uses video recordings‘ analysisand artificial intelligence to help airports managethe passengers’ flow in real time, minimize queuesand use the resources more efficiently.

Artificial Intelligence also has the potential to beused as a personal travel assistant helping us toplan every aspect of our journey — from planning,through the trip to return. By analyzing the data ofspecific travellers’ behaviour, it will be able topresent offers best suited to their expectations.Furthermore, it will recommend when it is best totravel to avoid crowds or enjoy good weather. Inaddition, the personal travel assistant equippedwith artificial intelligence will act as a personalguide, that would suggest sightseeing tours takinginto account our personal interests. This meansthat in the near future, travellers will experiencepersonalised journeys every step of the way.

2. Big Data

Both travel sellers and travel providers are lookingfor ways to offer more than just core products.

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To achieve this, they propose ancillary servicesduring the trip as well as at the destination.However, providing a comprehensive offer can bechallenging as it requires access to a multitude ofadditional content be it types of groundtransportation, accommodation offer orrestaurants. Big Data analysis enables easypersonalisation of all these services to theindividual traveller. For example, if a couple isbooking a romantic trip to Paris to celebrateValentine's Day, they can also be offered additionalservices like a romantic dinner at a Champs-Élysées restaurant or an airport transfer in a luxurylimousine with a glass of Prosecco on board.

3. Blockchain

A blockchain is a secure distributed public digitalledger which records information. This technologyhas many potentially important applications for thetourism industry. For example, it can unify pointsaccrued in member and loyalty programs, it canhelp you track luggage, or facilitate internationalpayments. Blockchain can also be helpful inimproving traveller identification, which will make iteasier to navigate through the airport.

Blockchain's decentralised nature allows for thecooperation between different partners in the travelindustry, which may be key to its success.Amadeus sees blockchain as a technology thatcan change the functioning of the tourism industry.However, transaction processing is a key factor inservice distribution; at the moment for on-line travelagencies blockchain’s processing speeds are fartoo low.

4. Chatbots and other communicationplatforms

Currently, there are more than 3 billion active usersof instant messengers, such as WhatsApp andMessenger; 70% of smartphone users regularlyuse chat applications. Amadeus uses this channelto help customers improve communication withtravellers and use chats as a new sales channel.

The three most important chatbot applications inthe industry are:

Customer support: the opportunity to engage indialogue with travellers and automate requests andcomplaints

E-commerce: assisting with the purchase ofproducts, as well as implementation and facilitatingof one-click payments directly from the chat

Content delivery: providing users with directcommunication (such as advertising) personalisedwith the use of AI algorithms

It's all about communication and efficiency

Clear, consistent and easily availablecommunication channels are very important for themodern traveller. New types of communicationplatforms can enhance communication withtravellers throughout their trips. For businesstravellers, this means improved care andefficiency, but also peace of mind — both for themand their companies.

These four technologies are just the tip of theiceberg. There are many solutions in the marketthat are already irreversibly changing the travelindustry by providing travellers with intenseexperiences like never before. Worth mentioningare at least the augmented reality, Beacontechnology, or biometric face recognition.Amadeus invests in these solutions on an ongoingbasis, and then validates their capabilitiescooperating with customers, business partnersand start-ups.

Amadeus was founded in 1987 as a Europeanalternative to Sabre, the American computerisedreservation system that link travel agents tocarriers' booking systems. Today, the two playershave the bulk of the global market in this business.

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The role of leadership in buildingcommitment in a company

by Jolanta Jackowiak, Grant Thornton

Why do we buy so little when millions are spenton building employee commitment?

The subject of building employee commitment isbecoming increasingly important. It's become farmore than a management fad; it is now a keydeterminant of the company's efficiency.Organisations allocate millions to projects aimed atbuilding employee engagement, yet the return onsuch investment is disproportionately low.Especially in Poland, where for the past two years,the level of employee involvement has beenshowing declining trends1.

So why is employee commitment diminishing ifboth general awareness and the spectrum ofideas, activities and expenditure related toengagement building programmes are on the rise?

Declining engagement is a clear sign thatfundamental changes are needed within theorganisation. However, most initiatives focus onthe here and now shock action. Various benefits,benefit schemes and solutions are available, whichwork in the short-term, boosting resultstemporarily, yet providing little by way of lastingeffects.

Meanwhile, various research and analyses alert usthat employee requirements are changing, andamong commitment-building factors, focus isshifted from individual benefits to themultidimensional potential of the company.

This means that you should concentrate oncreating a solid foundation for the growth ofthe company's development potential, whichwill always defend itself in the long term.

What contributes to greater

effectiveness in building commitment?

A spirited vision, strategy and perspectives ofthe organisation – a clear vision and a well-communicated strategy, as well as promisingdevelopment trends, provide a solid basis forincreasing motivation to act. By includingemployees in the process of defining goals, weincrease their level of identification withimplementing such goals even more, and thus,their acceptance of responsibility for the company.Identifying with the company's strategy gives astrong sense of being a valuable asset of theorganisation, and is a clear sign of the actualemployee engagement.

A new leadership model – only those leaderswho are truly committed are able to involve thewhole team. And their role, in the face oftechnological transformation, is undergoing acritical change. 'Management excellence',expressed through such imperatives as trust,providing direction, release of potential and systemalignment2, is no longer sufficient. In order to becredible, leaders must face challenges arising fromthe generational, technological and social-mediarevolutions. Bringing a new quality to business, thenew leadership model has a key impact on teamperformance and commitment.

Timeless values and a coherent organisationalculture – only a system of standards and values,strictly correlated with the strategy of theorganisation and actually observed within theorganisation, is the real foundation for creatingdesired employee attitudes, and thus increasingtheir work commitment.

Team diversity – by focusing on creating adiverse and integrated work environment, wesupport identification with the company. Westrengthen the position and uniqueness of theteam, recognising, distinguishing and using suchfeatures as gender, age, education, experience,knowledge, skills, talents, personality, nationalityand culture. Although conscious diversitymanagement is not a common phenomenon

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yet, it will be increasingly important for theeffectiveness of employee motivation andengagement processes.

System improvement – management(governance) systems and organisational solutionsshould fully support employees as they getinvolved in implementing the company's objectivesand tasks. System improvement and focus onefficiency in the area of project management andproject portfolios, process management, changemanagement, information systems andcommunication, determines positive employeeengagement.

There is something more ... – "Feeling and faithtells stronger to me than sage’s glass and eye,indeed"3 ... Apart from professional models andsystems, there's also an emotional side of workdominated by feelings, creativity, joy, contentmentand happiness. These are the true determinants ofthe uniqueness of the organisation, the ability tocreate innovations and new solutions.

An effective organisation is able to combine thegoals of all stakeholders: owners, employees andcustomers. It is an absolute condition for buildingcommitment. People need an environment inwhich they can succeed, and vice versa, highefficiency and great results are simply attributableto committed and happy employees.

1. According to figures provided by HRstandard.pl, in 2017,

the level of employee engagement in Poland was only 48%.

In 2016, there were 51% of such involved employees in

Polish companies, and in 2015 - 52%. In Europe, the

indicator was 63%, 63% and 65% respectively.

2. According to FranklinCovey's research

3. Adam Mickiewicz „Romantyczność”

How to humanise technologywithout dehumanising society?

By Iwona Dryś, data solutions business manager,Future Processing

Artificial Intelligence (AI) is driving thedevelopment of a knowledge-based and data-driven economy.

If we add human creativity on top of AI’scapabilities, we can tap into this opportunity forgrowth in ways that we've not yet dreamt of.Humanising AI algorithms with a set of featuresthat give the impression of human thoughtrepresents the Holy Grail of tech revolution.However, bearing in mind the exponential growth oftechnology – every 12 to 18 months computersdouble their power – the effects that a humanisedAI will bring about on society cannot be anticipatedtoday, causing dilemmas and doubts of a moral,ethical and legal nature.

In this piece we will try to draw your attention tothose issues that businesses should focus on asthe AI revolution unfolds in front of our eyes.

In search of answers

In the future, we’d all love to be surrounded bytechnology that changes the world for the better.But how can we teach AI to act in an ethical way?How do we design a moral algorithm, if we can’tagree on what constitutes a moral human being?How can we introduce feelings to AI, if AI is notcapable of doing so? How can we define suchcritical issues like morality or ethics in a way thatthe computer can process? Answers to thesequestions are yet to be found.

The human-tech relationship is a strange one. Is itpersonal, or is it just instrumental? Is it a usership,or a partnership? Is it individual, or rather commonand shared? Some voices argue, that it is arelationship based on power, but it's becoming

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harder to establish who is really in charge ofwhom. Especially, when on the one hand,technology is constantly redefining itself due to therapid growth in its capabilities, and on the other –moral and ethical challenges related to humanisingtechnology are fuelled by dystopian visions of aMatrix-like future where mankind is no longer incharge.

This results in some business leaders backingaway from the tech race, as they find it hard tofollow or even feel scared of the possibleconsequences. At the same time, it looks like ourlegislators and regulators are not even trying totake part in the race, which exacerbates the feelingamong many people that “we’re not ready for this”.

The new reality

The fact that AI will soon be able to outstripmankind has been said for a long time. Experts stillargue on the exact moment of singularity (when arunaway reaction of self-improvement cycles,each one happening ever faster, leads to anintelligence explosion resulting in asuperintelligence surpassing all humanintelligence) – this point could be just a fewdecades away, according to some. Theconsequences for civilization are existential.

There are many visions of the future, and most ofthem share some vital parts. Many agree thatmany jobs will remain in human hands, althoughthe way they are performed will change. Thosewhose jobs are first in line to be taken over by AIare telemarketers, truck drivers, loans officers,cashiers, legal assistants, taxi drivers or fast-foodchefs. Translators will no longer be needed by themiddle of the next decade, and by the middle of thecentury, robots will be capable of writing novelsand will cooperate with doctors better than themost experienced surgeons.

AI is the workforce of the future; there's no doubtabout this. Employees should consider this as anopportunity, rather than a threat. For them, itmeans the end of dull, repetitive mundane work

that they don't like. Yet this shift creates a need offor serious social debate that must not be pushedaside. Re-skilling and adapting to a new workreality can be the only way to ensure successivefunctioning in the new, technological ecosystem inwhich the relationship between employee andemployer is radically altered.

Our point of view will evolve over time. Right now,the first generation of humans who don't rememberthe world before the internet are starting to enterthe labour market. These digital natives, exposedto technology from infancy, see the futuredifferently to those whose careers were disruptedby earlier waves of technology. The generation ofhumans being born right now won't know a worldwithout AI. They will surely be more likely tounderstand and accept the risks and opportunitiesrelated to the broad invitation of algorithms into oureveryday life. A possible polarisation of society(digital natives vs digital immigrants) only pourssalt on the wounds of those who stand against thetech change. How to overcome this gap?

The way to go

According to Dr Vyacheslav Polonski of OxfordUniversity, there are some adequate remedies wecan prescribe to streamline the process ofestablishing human relationship with thoughtful AI.

Firstly, we shall focus on defining what is ethical –and this definition should be put in parameterscomputers can understand. But this won’t happenuntil societies can agree among themselves onwhat ethics actually is. Explicitly.

Secondly, we must teach AI algorithms morality bycollecting enough data to appropriately train them.Adequate data quality and quantity is key for the AIto pick up the idea behind each conception, andmorality is not an exception here.

Finally, we should put emphasis on making AIsystems as transparent as possible. The challengeis that neural networks are too complex for us tounderstand the science beneath them. So instead

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of focusing on the technical side, we should ratherput a spotlight on what rules the algorithms aretrained with, and on the outcomes AI achieves inconsequence. This will help the unconvinced tounderstand the way AI goes, bringing them closerto the new reality.

As you can see, there is much homework to bedone, and the responsibility for the future lies solelyupon our shoulders. The cost of inaction can be toohigh to bear, especially with AI only gainingmomentum.

The price of innovation

Some business leaders use technology todifferentiate their companies, so that they riseabove the mediocrity of their competitors. Othersfear technology, wishing to retain the human touchas a competitive feature. And consumers – someembrace the novelty, while others fear becomingdigital slaves, addicted to tech gadgets they simplyneither need nor want.

The future we will face is certainly with technology,not without technology. And it will happen anyhow,whether we like it or not. But will it also be a futurewith humanity? The tech revolution should bestirring our human emotions, but as long as theseemotions are constructive, there is no need to beconcerned. Provided that human-tech relationshipis based on interdependency, we should be lookingforward to the opportunities the AI revolutioncreates. Moreover, we shall seek how to benefitfrom the changes that are inevitably coming.

Warren Buffett said: “Price is what you pay. Valueis what you get.” Sometimes the price of innovationcan be hard to understand, but the values itprovides can be very promising. AI can and shouldbe used to harness positive results and overcomebiases in the fields of healthcare, safety or smartcities. As a technology company we aim to make apositive impact and contribution to our humanlives. Give us a shout, we'll happily prove it!

You can contact me on

[email protected] or call +48 32 43844 34

Future Processing

Technology trends change retailtrade

By Olgierd Cygan - Deloitte Digital Leader inCentral Europe

In the era of e-commerce the message thatbrick-and-mortar stores will be extinguishedsoon keeps returning.

At the same time, 90 percent of retail sales takeplace right there. In order to successfully competewith the convenience of on-line stores, availabilityof goods and the unique digital experience, brick-and-mortar stores must provide their clients withvaluable experience through a variety of channelsto build a permanent relationship with their brand.Technology is the right tool to do so. Below wehighlight the trends that mark the future of retailtrade.

Internet vastly changed the world of trade. Clientsare able to buy goods in a variety of digitalchannels at any time. Manufacturers are offeredbroad opportunities, previously out of reach, andtools developed not only to allow more efficientsales, but to learn more about client experience apreferences. Fast growth of Internet sales wasaccompanied with the recurring message that theera of brick-and-mortar (B&M) stores is gone. But,as often happens to such prophecies, this oneseems to be false. Why?

First, clients want to see, touch, and testproducts before purchase.

Second, they favor direct contact withsalespeople who can provide additionalinformation, help and offer an advice.

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mailto:[email protected]

http://www.future-processing.com/


What changed, then? Most of all, theconsumers’ self-awareness. Now everything isclient-centered. Clients expects the brands theyare in touch with to provide an interestingnarrative, offer tailored to their preferences,consistent and engaging communication andexceptional customer experience at POS. Thisis why brands perceive their B&M stores as aplace of building client relations that latertranslate into growing sales. Moderntechnologies may make the experience trulyunique, and enhance their relation with a givenbrand. Below we discuss trends that changethe retail sales.

Recent retail landscape

Many changes, innovative solutions and directionswere observed in the retail landscape in recentyears. In 2012, when e-commerce was growingrapidly, many specialists prophesied the end ofB&M stores. Salespeople, on the other hand,treated e-commerce as an experiment andthoroughly divided it from traditional sales forms. Two years later nobody believed that Internet salescould replace traditional shopping, but clients weremore interested in using new digital brandtouchpoints expecting knowledge and consistentcommunication. This originated the concept ofefficient interchannel information flow, today knownas omnichannel operation.

Subsequent years brought more focus onpersonalization and unique customer experience.Demanding clients expected more of brands anddid shopping where their experience satisfied theirneeds. The year 2017 was a breakthrough for theretail sector, as it marked the big comeback ofB&M points of sales. Although they had neverdisappeared, the comeback regarded mostlyopportunities offered by modern technology.Amazon and Alibaba opened B&M stores offeringboth off-line and on-line customer experience, withtechnology allowing prompt collection of customerdata.

Amazon and Alibaba: the trendsetters

They compete with each other. Both made theirfirst steps as e-commerce startups, so-called pureplayers. Today they are globally recognized, multi-billion-trade businesses, selling both on- and off-line and setting trends. The success of bothconsists in investing in entirely new ideas andsolutions that work both for e-commerce and retailsales. The growth of Amazon and Alibaba provesthat the originators of both have an insatiableappetite for innovation, but also serves as a goodexample of successful combination of e-commerce with B&M sales for other brands.Retailers face a great challenge of adjusting theirPOS to the requirements of contemporary clients.The monitoring of trends pays off in this respect;B&M shops must become a vital touchpoint forconsumers, providing them with uniqueexperience, adjusted to their needs andpreferences.

Brick-and-mortar stores in the digital era

Digital means client-centered, with client data beingthe commodity most wanted by providers of goodsand services. Clients use intelligent technologies,appreciate their time, are better informed and knowwhere to find important information. This makesthem more demanding and less tolerant for errorsin the purchasing process. Further, they expectefficient interchannel brand communication, brick-and-mortar stores being perceived as one of thesechannels. If a brand fails to meet theirexpectations, they do not hesitate to turn tocompetitors. How, then, can we build client loyaltyin the new conditions? Retailers make the classicmistake trying to build loyalty of their clients byoffering large promotions or rebates.Contemporary clients, though, stick to brandswhose narration corresponds to their life stories.

Future trends provoke current changes

How to build strong relations with consumers andprovide them with unique experience in brick-and-mortar stores? Big data and newest technologies

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can help. The four strongest technology trendsthat can turn upside down consumer experience inB&M stores and help manufacturers collectingvaluable client data include:

Biometric technology

Using biometrics is seen in all places wherefingerprints or faces are read. In everyday life itallows fast and effective user identification oraccess to mobile devices. In shops it issuccessfully used to authorize all sorts of actions,e.g. completing transactions and payments. Manyglobal retailers, such as Alibaba, experiment withthe biometric technology. The company carriedout the “Pay with a selfie” project using the facerecognition function in purchase transactions.Under the project, clients could do shopping payingwith their selfie. The trend of using biometrics inretail grows in popularity. In the near future, thetransaction process in stores may completelychange, which will result in increased clientsatisfaction and reduced salespeople’s burden. Automated POS systems and new touchpointscan work very well in B&M shops.

AI & self-learning machines

Today artificial intelligence and machine learningcan be used in any aspect of everyday life. Thesemodern technologies work very well in medicine,banking, comprehensive data management,marketing, advertisement and... retail trade.Specialists use AI and machine learning toimprove process efficiency in stores andconsumer experience in POS. Macy’s uses AI inits in-store application that allows clients tonavigate around the store, and North Face uses itto accompany clients on its website. Theinteractive support during shopping, responding tovoice commands, means big convenience andinteresting experience for the brand’s clients. Infuture, AI and machine learning may successfullysupport salespeople. Using these technologies,systems will provide detailed information andrecommendations regarding products in real time,which will further improve the quality

of service offered by salespeople.

Computer vision

Computer vision is a technology which allows areal-time feedback based in photos and video. Itallows automation of salespeople’s roles thatrequire visual knowledge, such as checkinginventory or observing preferences and profiles ofclients who visit their store. Such companies asMonolith20 build algorithms that allow constructionof client profiles and analysing their behavior orpreferences at POS. Based on this knowledgespecialists obtain recommendations regardingprocess optimization, product displays, orsalespeople’s tasks. Computer vision allowsretailers to better understand their clients and toobtain valuable insight. Combining computervision with other technologies, such as RFID(radio-frequency identification) in the store spacehelps to analyze client/product interactions indetails, allows collecting comprehensive data andanalyzing them for various client touchpoints TheBelgrade Connected Store Experiment, carried outfor Legend World Wide, provides a good example.In its course specialists want to learn more aboutproducts: which are popular among clients, mostfrequently tried on, and which do not raise anyinterest. A special platform shall collect andanalyze data to provide comprehensive informationon both clients and their interactions with products.

Internet of Things

Less than 20 years passed since Internet startedto change the retail landscape. The newtechnology continues to bring a completely newreality, which is Internet of Things (IoT). Specialsensors placed around a store allow detailedanalysis of collected data. IoT opens up entirelynew opportunities for salespeople. It hints when toreplenish goods on shelves and when to go out tomeet a client. Advanced IoT platforms provide newopportunities, collect and analyze complex datafrom shops and thus allow making more informeddecisions. PTC ThingWorx21, one of suchplatforms, is used by Legend World

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Wide in Belgrade. The platform manages data,produces recommendations and providescomprehensive analyses.

Will robots replace salespeople?

For several decades employees of B&M storeswere charged with quite many duties, to includeclients service, assistance and advice, safety ofthe store, opening and closing it, andcomprehensive stock management. Will robotstake over their roles? Certainly not as far as thekey issue of contacts with clients is concerned.And although clients are interested in technologyinnovations in stores, they prefer contact withhuman sellers. Involvement and interactions vastlyinfluence general impression of a store visit andclient satisfaction, and advanced technologies willnot change this.

Advanced technologies are unlikely to change thepicture. Businesses of today are aware of vastpotential of salespeople, who may become keyplayers building top quality customer experience. They are the ones who turn happy visitors intoloyal clients and brand ambassadors. How aboutrobots? Let them take over certain duties to allowsalespeople to spend more time with clients.

Summary

The above trends work today in the retail sectorand may successfully develop in future. The retaillandscape is changing rapidly, supplied with newtechnologies and opportunities. Professionalsshould monitor changes to know what may work inPOS. Traditionally, B&M sales were not place fortechnologies to play a leading role, but theadvanced opportunities at hand changeeverything. It is important to understand how thetechnology supports the work of traditional POSand affects their performance, salespeople’s workand, most importantly, client experience, which isthe key.

At the cutting edge of industrialtechnology

By Tomasz Rżysko, general manager, Renishawsp. z o.o.

Renishaw is a world-leading metrologycompany operating in two key business areas,metrology and healthcare. Its machines can befound in advanced manufacturing operationsaround the world.

Given Poland's strength as a manufacturingeconomy, in particular the automotive andaerospace sector, it is natural for Renishaw tohave been present in this market for over 16 years.

As a FTSE 250 company, Renishaw is flying theflag for British prowess in technology andinnovation. The company supplies products andservices in applications from jet enginemanufacture to brain surgery. It is a leadingcompany in additive manufacturing (or 3D metalprinting), where machines print parts from metalpowder. This relatively new technology hasallowed the firm to move into the healthcare sector,where it is delivering exciting new solutions thatbring vastly life-enhancing improvements topatients.

The firm develops innovative products intended tosignificantly advance its clients' operationalperformance – from improving

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manufacturing efficiencies and raising productsquality, to maximising research capabilities andimproving the efficacy of medical procedures.

On the metrology side, Renishaw's products helpmanufacturers maximise production output,significantly reduce the time taken to produce andinspect components, and keep their machinesrunning reliably. In the fields of industrialautomation and motion systems, Renishawposition measurement and calibration systemsallow machine builders to manufacture highlyaccurate and reliable products. With its roots in theaerospace industry going back 45 years,Renishaw is well-known among manufactures whoneed the highest degree of precision to measurecritical components.

In the healthcare sector the firm's technologies arehelping within applications such ascraniomaxillofacial surgery (essentially rebuildinghuman skulls and faces), dentistry, neurosurgery,chemical analysis and nanotechnology research.These include engineering solutions forstereotactic neurosurgery, diagnosis of infectiousdiseases, analytical tools that identify andcharacterise the chemistry and structure ofmaterials, the supply of implants to hospitals andspecialist design centres for craniomaxillofacialsurgery, and products and services that allowdental labs to manufacture high-quality dentalrestorations.

Renishaw's experienced team is driving the firm'sfuture growth through innovative and patentedproducts, and processes, efficient high-qualitymanufacturing and the ability to provide localsupport in a growing number of geographies andmarkets. In Poland, the firm has an office inWarsaw, from which it services its many clients,most of whom represent the cutting-edge ofmanufacturing industry.

Throughout the life-cycle of all its product ranges,Renishaw is focused on providing innovativeservices to support ever-changing customerexpectations and market requirements whichbecome increasingly demanding. This means thefirm needs to be flexible with its approach,supporting customer needs from initial purchaseright through to product obsolescence, anywhere inthe world.

Renishaw's strategy of investing heavily in R&Dand engineering skills give its management team alonger-term view of the viability of newtechnologies.

The Renishaw business model is to identifycustomer needs, and then apply innovativeengineering to deliver successful solution.

Continuing investment in new productsdevelopment, plant and equipment, and

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facilities is the key to the Group's long-termstrategy and prospects.

With over 4,000 skilled and motivated peopleemployed around the world, Renishaw will continueto be at the leading edge of technologicalinnovation.

Smart contracts and efficientcontracting

by Michał Markowski, attorney at law andKrzysztof Wiśniewski, attorney trainee,Wierzbowski Eversheds Sutherland

The idea of shifting transactions into the digitalspace dates back to the beginnings ofcomputer science.

The development of blockchain technology hasuncovered new possibilities for regulatingcontractual relationships. Parties to a contract nowhave at their disposal a new digital environmentwhere contracts may be concluded, performed andenforced in a more efficient and smarter manner,and where middlemen become redundant. Whatare smart contracts? What benefits will they bring?What challenges do they raise and whatconstraints would they impose on the parties?

Smart contracts: what are they?

The term 'smart contract' was allegedly coined inthe 1990s by Nick Szabo, an American computerscientist and cryptographer (suspected by some tobe the creator of Bitcoin), who described smartcontract as “a set of promises, specified in digitalform, including protocols within which the partiesperform on these promises.” This definition stillseems to be accurate. Smart contracts operateelectronically and contain algorithms for automatedperformance of the contract (and are thereforeirrevocable). In this manner, smart contractscombine the conclusion of the contract with itsenforcement. Recourse to the courts

is no longer needed as the contract is “self-executing”. This increases the equality of theparties and mitigates the risk that the strongerparty will attempt to take advantage of the weakerparty.

In short, we can say that smart contracts aredecentralised agreements built in computer codeand hosted by blockchain technology — adistributed digital ledger (a database spread overmultiple computers). In the blockchain, the recordsof concluded transactions are enclosed in blocksof code and appended to the ledger of transactions(using sophisticated cryptography). The security ofthe blockchain is increased, in that the cost ofbreaking the rules is far greater than the benefitssuch a breach could bring. To reverse anytransaction concluded in blockchain, the userneeds to control more than 51% of the computerpower (or “hashing power”) in the network.Blockchain allows users — by default — not tohave to rely on trust in other parties, and thereforeconstitutes a “trustless” environment. This in turnenables the parties to dispense with participation ofa centralised authority or trusted third party to actas an intermediary in the transaction, which makesthe entire process more efficient and cost-effective.

Areas of use

Smart contracts seem to be the obvious solutionwherever mass transactions are carried out, asthey effectively allow transfer of an asset orcurrency into a computer program, which oncelaunched, validates the conditions (by applying'if/then' logic) for automatic transfer of the asset orfunds to another person, or refund if the condition isnot met. The simplest example for use of a smartcontract could be a purchase of real estate. Uponpayment of the purchase price, the new ownerwould be entered automatically in the land register(stored in blockchain), and the access code to theproperty would be delivered directly to the newowner. The seller will also have certainty that whenthe access code is released to the new owner, andthe entry is made in the land register, the purchase

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price will be credited to the seller’s account.

Smart contracts could also be applied in manyways in the financial sector, in almost any areawhere a process or transaction may be automated.They could be used for securities, facilitatingpayment of dividends and voting while eliminatingcounter-party and operational risks (by cutting outintermediaries). They could also be used for exportfinancing; one could easily imagine smartcontracts facilitating streamlined internationaltransfers of goods through faster credit and tradepayment initiation. In this area, the benefits ofsmart contracts could include increased efficiencyin creating and validating trade, title and transport-related contract agreements.

Another example could be the use of smartcontracts by financial institutions for accurate andtransparent recording of financial data andverification of customers’ identity; counter-partieswill no longer need to collect and store data toauthenticate transactions, which will significantlyspeed up know-your-customer (KYC) procedures.

Some insurers have recently announced theirplans to offer delayed flight insurance on suchbasis, where the disbursement of proceeds underthe insurance occurs automatically without anyformalities. This could be one of the areas wherethe first smart contracts are applied on a largerscale.

Challenges and limitations

Smart contracts could simplify how transactionsare conducted, but there are also some seriouschallenges and limitations that need to beconsidered. The first limitation of smart contracts isthat they are deterministic. They leave no spacefor elements to be assessed or for using generalclauses (such as 'fairness', 'good faith' orstandards of 'reasonableness'), or, simply, roomfor mistakes by both parties (which in traditionalcontracts can be rectified by the court). In smartcontracts, the parties gain the certainty

of executing the assumed algorithm, but lose theopportunity to introduce intentional ambiguity. Thisis largely due to the limitations of the language thatcan be used to create a smart contract. Traditional(or 'semantic') contracts are more flexible and canbe enforceable without requiring completeknowledge of what might happen in the future — inthis sense ambiguity is a semantic feature, not abug. The need for the parties to a smart contract toenvisage every aspect of the transaction andevery contingency can also increase the costs ofcontracting.

Contractual relationships are often too complex tobe governed by smart contracts. In such cases theparties need to assess the effects of the givensituation and provide for appropriate remediesunder a semantic contract, while smart contractscould only be used to implement selectedelements of such a semantic (traditional)agreement.

Smart contracts only work in blockchain space.Accordingly, due to the technological limitations ofthe blockchain technology itself, a smart contractcan prove very inflexible and incapable of adaptingto changing circumstances. One of the keyfeatures of smart contracts is that they areirreversible (written in 'blockchain stone') andcannot be modified by the parties throughout theperformance of the contract, other than byconclusion of a brand-new smart contract. So evena small change like deferral of payment by acouple of days may require conclusion of a newcontract. This, in turn, contributes to an increase incontracting costs. By contrast, traditional contractscan usually be freely amended by the parties, andsome rights under such contracts may be easilywaived (for example by a waiver letter) during theterm of the contract.

Since humans are flawed by nature, in somecircumstances the use of smart contracts may notbe suitable, and intervention of state institutionsmay be required. An example would be delivery ofa defective product under a smart contract, whichwould then give rise to a dispute between

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the parties, or a situation where the blockchainprivate key is lost.

Smart contracts also fail to accommodate thesocial context of contracting. The negotiationprocess between the parties helps to strengthentheir business relationship and allows each party toachieve a better understanding of the other party’sbusiness. This process is also invaluable inpreserving certain social norms, which cannot beachieved by smart contracts. Also, for somereason, despite the advent of new technologies,people still prefer to meet one another and interact,and such interaction is also more valuable andrewarding in a business context.

There are many other issues connected with smartcontracts and blockchain that remain unsolved,such as restricting minors and other personswithout legal capacity from concluding contracts.And with the development of the technology andpopularity of smart contracts, more such problemsand questions can be expected to come up in thenear future.

Summary

Smart contracts are an area with great growthpotential. They can provide simplicity, speed ofexecution, and real-time updating in areas wheretraditional 'dumb' contracts simply can’t. They alsoreduce drafting time and accounting costs, and thecryptographic technology underlying blockchainprovides a cheap and effective way to ensure theintegrity of data. Smart contracts based onblockchain technology could make contractualrelationships more efficient, with potentially feweropportunities for error, misunderstanding, delay ordispute.

However, there are many areas where smartcontracts will not be suitable; in such casestraditional semantic contracts have significantadvantages over smart contracts. Therefore, it isunlikely that smart contracts could ever fullyreplace semantic contracts, but in the long run theymay be a useful device that can make life easier.

Growing internationally throughsmart coding

Urszula Kwaśniewska, director of the BPCC'sKraków office, looks at a Przemyśl-based ITcompany with its sights set on global clients.

Passion, determination, client satisfaction – thesethree attitudes reflect the nature of the Order ofCode in the best way. Although today the companyemploys only 22 specialists and its headquartersare located thousands of miles from Silicon Valley,it has the power to go international from the city ofPrzemyśl in south-eastern Poland. While workingon numerous demanding projects, the companycurrently relies only on internal resources and itsknowledge.

The success of the company is based on itspeople. All specialists working for Order of Code –programmers, testers and project managers, arepeople who constantly raise their qualifications andtheir knowledge of the IT impact, but they alsohave a real impact on designing the products andservices at the same time.

Passion

It all started with the passion that drives Wit Więch,the founder of the company. Having gainedprofessional experience in Poland and abroad(including a time working for Microsoft), he decidedto open his own business in his hometown

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of Przemyśl. He'd been in touch with Edinburgh-based travel-fare aggregator Skyscanner, which atthat time was in its very early stages ofdevelopment. As Mr Więch was an active travellerand user of flight search engines himself, he haddeveloped such a search engine on his own.Skyscanner accepted the offer from Mr Więch andtogether opened the first foreign branch of thecompany, based in Przemyśl.

Ever since 2005 the team has been working onimproving the service of the engine and promotingit on-line. It also created new solutions thatfacilitated the process of translating the service intomany languages. As the number of tasksincreased, the Przemyśl branch had grown to 20people. By that time Skyscanner had offered thempositions in Scotland. Part of the team hadaccepted the offer. The other part, including MrWięch, decided to stay in Przemyśl and set up inbusiness themselves as Order of Code.

Determination

For the next few years, the new independent firmcontinued cooperating with Skyscanner. Order ofCode was involved in implementing R&D projectsfor the British company.

Today Order of Code offers a broader scope ofservices, cooperating with clients from all aroundthe world – mainly Europe and North America. It isalso focused on regional development, mainlywithin the IT cluster that operates in the east ofPoland.

The scope of services of the Przemyśl-basedcompany has increased significantly. Thecompany offers prototyping and R&D, extreme-problem solutions, big data, analysis andoptimisation, advanced testing, applicationdevelopment, SEO and consulting. The bigadvantage of the company is being able to offerbespoke services in IT solutions. The employees,the real artists in their profession, create their ownsolutions, only rarely getting inspired by ready-to-use elements designed by other

creators. It is a pledge of adopting a project that isbeing created to the needs of a client. It is anongoing learning and creation process.

Among many projects currently being undertakenby the specialists from Order of Code, there's onethat deserves special recognition and that iscomputer analysis of natural language. The aim isto teach the device (be it smartphone, tablet, laptopor PC) to understand the context of words spokenby the user, not only from a script. Undertakingdifficult challenges at the company's headquartersis on the agenda every day, and every one of them– even the smallest success – becomes a sourceof satisfaction.

Client satisfaction

Client satisfaction is built on a solid feedback fromthe clients. They appreciate the professionalapproach of all employees with whom they havecontact during the projects, and the fact that theythemselves take the initiative.

Eric Percival – project manager at British companyCalnex Solutions, the world leader in test andmeasurement solutions for monitoring theperformance Ethernet synchronisation, says:“Order of Code proposed and implemented a newdesign to complement our new web-based userinterface. The requirements for this product havebeen far more demanding than before, since it nowneeds to work within a real instrument as a corepart of the product as well as supporting all thelegacy capabilities. They worked closely with usduring the design and development, leading to asuccessful implementation”.

The task given to the programmers from Order ofCode was not easy. The preparation of softwareanalysing data from a so-called 'paragon' – adevice used for testing electronic equipment – wasnecessary. Engineers from Calnex developed theirown software, but it did not meet the necessaryrequirements, it worked slowly and it was difficultto make any modifications in it.

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After many years of cooperation, the Polishcompany's developers managed to write newalgorithms for calculating statistics, thanks towhich the calculation of statistics turned out to be50 to even 100 times faster than before. In thisway, analysis of measurement data taken fromtested telecoms devices was taking 15 minutesinstead of 24 hours as before. This gave the Orderof Code's client a considerable advantage amongcompetitors and significantly contributed to asignificant increase in sales, including to suchgiants as Huawei, Cisco or Samsung.

Among the testimonials for Order of Code is onewritten by Gareth Williams (an originator ofSkyscanner), which highlights the additionaladvantages of cooperation: “A professionalapproach, detailed analysis and an effectivesolution provided by Order of Code helped ussignificantly reduce unwanted traffic andconsequently saved us a lot of money”.

This testimonial refers to the project implementedafter disconnecting the Polish team fromSkyscanner. Przemyśl-based specialistsattempted to solve the problem of unauthorised'web scraping', the theft of data from Skyscanner'swebsite. In this case, Order of Code used solutionswith elements of artificial intelligence to detectsuspicious movements on the site generated byautomatically acting bots, and managed toeffectively block them. Skyscanner could then usefewer servers to handle actual traffic by users. Itbrought savings estimated at nearly a quarter of amillion dollars a year.

Recently Order of Code has also carried outprojects in the field of big data. An exemplary taskwas the lossless processing of data generated byup to 500,000 measuring devices. The solutionprovided for aggregation of data, monitoring ofvarious types of remotely control devices, hasbeen implemented in one of the largest energycompanies in Poland

All of this would not have been possible withouthaving the job satisfaction

of a harmonious and creative team. Mr Więch wasrecognised by Lewiatan – Confederation of PolishEmployers, which presented him the "Business.Good Choice" award for promoting partnerrelationships in the workplace.

The future of Order of Code looks bright. Thegrowing interest in the company's servicesrequires the recruitment of more specialists. Tofind the best talents, the company organisescompetitions for young programmers and fundsprizes for the most talented IT specialists.

Innovation in civil engineering dueto TriAx geogrids stabilizing theground under our infrastructure

Tensar TriAx geogrid was a huge leap forwardfor the geosynthetics industry when it waslaunched in Europe in 2008.

Since then, it has become an accepted alternativeto traditional subgrade stabilisation and flexiblepavement solutions, benefiting thousands ofprojects around the world.

“From its first project, the A66 Scotch Corner toCarkins Moor improvement scheme – where itenabled a road junction to built over an old landfill,to the present day, TriAx has proved to be apopular choice for geotechnical engineers andpavement designers,” says Tim Oliver, Tensar'svice president for global applications technology.“So much so, that our customers, have installedmore than 250 million square metres of TriAxglobally in the last ten years – the equivalent ofover 35,000 football pitches!” TriAx was introduced following five years ofdevelopment by Tensar and performance testingby the UK Transport Research Laboratory andsubsequent accelerated pavement testing (APT)by the US Corps of Engineers. This work, plusmany other research studies, has demonstratedthe effectiveness of TriAx to mechanically stabilisegranular materials. By doing so, it reduces

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the thickness of road aggregate layers, mitigatesdifferential settlement and enables infrastructure tobe built over weak and unstable ground.

TriAx was awarded European Technical Approvalcertification for ‘the stabilisation of unbound layersby way of interlock with the aggregate’ in 2012.Since 2014, all of Tensar’s flexible road pavementdesigns have used TriAx, as part of the TensarSpectra Pavement Optimisation system.

“Research, development and testing hascontinued, as we have sought to refine andimprove TriAx and to provide further,independently-verified, evidence of its benefits,”says Mr Oliver. “For example, results of the USCorps of Engineers’ latest full-scale APT testing,published earlier this year, demonstrated theeffectiveness of TriAx to reduce pavement surfacedeformation and greatly increase traffic life.”

TriAx has won numerous industry accolades,including the New Civil Engineer's InnovationAward in 2007, the Gold Medal IBF Brno in 2008,the Medal at the XIV International Fair ofInfrastructure in Kielce and two InternationalGeosynthetics Society awards, in 2009 and 2010.Most recently, Tensar's Spectra PavementOptimisation was named Highways IndustryProduct of the Year at the 2017 Highways Awards.

“We would like to thank all the infrastructureowners, designers, contractors and specialists wehave worked with over the past decade,” says MrOliver. “They have played an invaluable role inexpanding the use of TriAx on projects to savemoney, speed up construction and extend theoperating life of infrastructure around the world.”

TriAx gives improved aggregate confinement andinteraction, leading to improved structuralperformance of the mechanically stabilised layer.

Particle interlock and the effect of confinementenhances compaction over weak ground andincreases the stiffness of the aggregate layer.

About Tensar International

Tensar International is a world-leadingmanufacturer and provider of subgradestabilisation and soil reinforcement solutions toovercome common ground engineering problemsin construction and civil engineering. Tensar’sinnovative and high-performance geogrid andgeotextile products offer alternative approaches totraditional methods and have benefitted thousandsof roads, railways and other infrastructure projectsaround the world.

With an expert technical services team and aninternational network of distribution partners,Tensar also provides professional

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support and impartial advice to projects, fromproduct selection and engineering design, to on-site constructionguidance.www.tensarinternational.com

Future technology in the globalautomotive sector

by Nicolas Klukowski, consultant, Mazars

Sustainable mobility is putting the pedal to themedal, transcending the automotive industry.

From fossil energy to electricity; from ownership-based model to a shared-economy driven model;from a licensed-driver-only model to driverlessvehicles. Changes are happening to the vehicleitself and to the way we use them.

Vehicle ownership trends

There are a number of trends currently impactingplayers in the automotive industry. From a carownership model to an ownership-sharing or evena pure usage-based model, cost is an importantfactor in how this shift will eventually play out. Butmarket innovation and disrupters from outside theindustry are also playing their part in offeringattractive mobility solutions as we move to asharing economy. The signs are it is not a questionof if this will happen, but when. Remaining agile toopportunities and adapting business models totake advantage of the new mobility landscape willbe increasingly important.

Vehicles on request

The way vehicles are used is changing asinnovative solutions for urban mobility becomemore and more commonplace – ride-hailingservices, car-sharing, free-floating – which offerinstant and on-request use of the vehicle. Thesenew ways to use cars would not exist withoutvehicles adapted to modern habits of users;fortunately the car of the future will be connected.

The innovative solutions allow consumers toaccess to the vehicle whenever they want. Fuelcost, insurance, maintenance and parking all meanthat owning a car are costly. To reduce theseexpenses, consumers are abandoning thetraditional vehicle-ownership model and findingsolutions adapted their needs. These can be moreconvenient than public transportation. Access to avehicle with all costs related to its normal use areincluded into the service offer – purchase,registration and maintenance; insurance; fuel. It'ssimpler than ever and ecologically responsible;car-use is cut and the car driven usually serves toreplace old vehicles.

Connected vehicles

The vehicle-on-demand model is driven bytechnological advance, making it simple to use andecological; it is connected with its users andenvironment. The connected vehicle has an on-board computer linked to internet and offers similarservices as those of smartphones or tablets.These features allow informing the driver about thetraffic, location of the vehicle, places that arenearby, the location of places available and ifneeded, the location of electric vehicle chargingstation. This new type of vehicle also offers,beyond comfort, more security and predictabilityon the road. The driver is alerted in case of danger– obstacle detection; crossing white lines;automatic braking, GPS navigation; parkingassistance; autopilot in traffic jams. With all theseoptions currently available, constructors areworking on fully autonomous

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vehicles able to sense the environment and drivewithout any human input.

Car of the future will be more ecological. To protectthe environment and fight against greenhouseeffect, car makers are abandoning purely fossil-fuelled cars. Hybrid vehicles, with additionalelectric motor whose energy is drawn frombraking; electric cars which do not consume a dropof fuel, reloading themselves directly from theelectricity grid. If for the moment their range is stilllimited, the future of this technology promisesfurther technological advances. And there is the hydrogen vehicle – an electric car that useshydrogen to produce motive power. All those newways of use and the adapt the vehicle to theenvironment have an impact on sales andinvestments in the sector.

Impact on vehicle sales and investment plans

While we are seeing contradictory trends emergingsuch as strong global vehicle sales forecasts upuntil 2030, a decrease in overall car sales isexpected as the vehicle share and usage-basedmarket grows. The emergence of newopportunities, particularly in the aftermarket sector,could increase to help counteract the drop in sales.At the same time, the higher importance beingplaced on technological development is set toincrease R&D investment budgets. The lack ofreliable key performance indicators as we step intonew mobility territory could hinder the investmentdecision process and make it increasingly difficultto strategise.

Decrease of sales? The aftermarket sector asopportunity

If the risk of decreased new car sales exists, theaftermarket will remain a significant source ofprofit. The digitisation and technological progress inthe sector offers a wide range of opportunities.Connectivity is the vector to retain customers, whofaced with increasingly sophisticated vehicles willhave no choice but to come back to theirconstructor-distributors in case of needs. New

digital maintenance tools and aftermarket services,enhancements and upgrades occursimultaneously to connected vehicles; for thatreason the aftermarket will supports customers’adhesion to the brand, offering in the same timepositive sales perspectives.

The race for innovation: the growth ofinvestment in R&D

New challenges for automotive industry arefocused around research of ecological andtechnological solutions, protecting the environment,improving comfort and security on the road. Thisdepends on research and innovation work, whichrequires investments and patents. For that reason,car makers focus their investments on R&D.Technological innovation – connectivity, drivingassistance, performance, new materials – is acompetitive criterion, affecting consumers'choices.

Even so, this challenge requires cooperationbetween sectors, not only between automotiveconstructors. For that reason, we recently see analliance between largest car makers and globalcentres for tech and innovation, such as thesefrom Silicon Valley. For instance the partnershipsbetween Ford and Google or General Motors andLyft.

Regulatory influences

Some countries have taken a more liberal positionthan others regulating the sharing economy,particularly in the deployment of self-drivesolutions. From a regulatory point of view, there’s abalance to strike in terms of encouragingsustainable and sharing economy solutions andregulating safe use. While the automotive sector isalready used to being heavily regulated, howcountries deal with new mobility challenges is likelyto change the regulatory environment which inturns is likely to shape now business modelsevolve.

Bridging the skills gap

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IT and software skills are vital to mobility services,demand for such skills will increase as the marketevolves. How quickly and efficiently the automotivesector can incorporate the required IT skills into apredominantly engineering- and production-ledsector will be decisive. As well as demand andsupply, investment in education, the ability totransfer existing skills, and recruitment from non-automotive sectors – will these all be enough toensure that the industry meets the sheer numbersand level of skills required? However, pressure onemployment costs and the push for furthercollaboration and partnerships to up-skill theexisting and new workforce will prove challenging.

If for the moment the UK automotive industry isfacing doubts related to Brexit – with householdslimiting big expenses such as buying new vehicles,and car makers strongly reduce their investments– the consumers’ appetite for environmentallyfriendly cars is growing. The main barrier hereremains the lack of charging stations for electricvehicles.

In Poland, the automotive market is marked by theimportant presence of firms in the Tier 1 and Tier 2supply chain, as well as several R&D centres.Foreign investors are still attracted by the Polishmarket despite the ecological challenges. Thiscontext is favourable for the development of newinvestment opportunities in sustainable mobilitysolutions.

In each country the expansion of sustainablemobility models in the automotive sector relies onthe relation that public policy, centres of R&D andqualified workforce will maintain. The collaborationis the basis for growth of sustainable mobility.

The car industry has to deal with four mainchallenges: the autonomous car; the connectedcar; the electric car; and car-sharing.

How these will evolve in future depends on fromnew consumer trends and sales and investmentsforecasts; others factors are the influence of publicauthorities and the convergence

between car-makers and IT firms. To meet them,the automotive industry is undergoing a realtransformation, for the convenience of drivers andthe greater good of the planet.

This article is based on the Mazars GlobalAutomotive Study 2018. For the full report, pleaseclick here.

Travelling into an era ofinnovation

We live in a world where connectivity isconstantly evolving and improving our day-to-day lives.

The significance and potential of technology – andonline platforms – as a means of facilitatingbusiness and enhancing the consumer experienceare endless, especially in the travel sector. Carrental companies are constantly looking at ways tohelp make the overall journey for the customer aseasy and reliable as possible.

Today, the road is shifting beneath our feet, aspeople increasingly look to on-demand services toget from point A to point B. Avis believes mobilitywill be completely connected, integrated and bedelivered on demand to consumers andbusinesses as a service. Car ownership will shifttowards mobility solutions. As a result, car rentalfirms must ensure today that they are evolvingtheir business models to meet the present andfuture needs of their customers. As a mobilitycompany, Avis is completely engaged in this shift,

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and it is taking many steps to ensure that it isahead of the changes that face the industry.

Car rental through the use of mobileapplications

More and more people are using mobileapplications to rent a car, and car rental companieshave been quick to offer this technology to theircustomers. Almost one in five Poles who rented acar during their holidays used a mobile app to hireit1. The Avis app, which is available in Poland,allows travellers to manage their rental processfrom start to end. Users can filter their searches forthe perfect vehicle and add any necessary extras,including equipping with ski racks, child seats,satellite navigation (sat-nav) as well as opting forWi-Fi access.

More transparency and convenience

Rental companies are exploring ways to offer moresecurity and increased transparency for theircustomers to help put their minds at ease whenhiring a vehicle. A solution offered by Avis CarRental in Poland is Flight Arrival Number (FAN)technology, making car rental even easier forthose who are picking up a rental vehicle atselected European airports after landing from aflight. For added convenience Avis Car Rental staffwaits for customers to collect their vehicle,updating bookings if a flight is delayed, even if thedelay goes outside normal working hours.Customers simply provide their flight number whenbooking their car rental so that their journey andlanding time can be monitored. They will also havethe added benefit of receiving a text message uponarrival, detailing the best route for them to take tothe rental location to pick up their car.

Additionally, a 360-degree photograph of thevehicle is taken before and after each rental. Thisis done using Avis's Maintenance and DamageManagement System (MDMS). MDMS is a toolused by Avis Car Rental agents in Poland and atselect locations across the globe which providescustomers with immediate transparency

on any damage charges when returning theirvehicle. By using the MDMS tool, Avis Car Rentalagents are able to complete a customer’s livecheck in process, while providing them withimmediate reassurance. The MDMS tool is anindustry first and is another example of how AvisCar Rental is using innovative technology to putcustomers first and continually improve the rentalexperience.

1. SW Research survey How do Poles rent a car on

holidays? for Avis Budget Group Polska, May 2018.

Industry 4.0 – why manufacturingindustry has to digitize

By Dr Jerzy Kalinowski, advisor to the KPMGboard in Poland

The digital revolution is everywhere. Digitaldisruption is radically changing manufacturingindustries.

The concept of Industry 4.0 was created in 2011as a result of the German Government initiativeaimed at digitisation that will integrate value-addedbusiness processes in the value chain ofmanufacturing. The idea is to exploitfunctionalities of the Internet of Things thatarise from the intelligent connection of people,process, data and 'smart' things (devices equippedwith sensors, smart controllers, andcommunication tools). To safeguard the operationof IoT devices in the industrial environment, aspecial non-profit organisation, Industrial InternetConsortium (IIC) was formed in 2014. Its goal is toprovide resources, ideas, pilot projects andactivities about industrial IoT (IIoT) technologies,as well as the security of those technologies (seeFig. 1).

The key drivers for the rapid development ofIndustry 4.0 is the dynamic growth in the numberof mobile connected devices combined with wideavailability of low-cost sensors. Fig.

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2 shows that in 2020 globally there will be nearlyfour IoT units per one per person. However,Industry 4.0 is also fuelled by the increasingabilities to process in real time and to costeffectively very big data, combined with thedevelopment of artificial intelligence systems,robots, the adoption of cloud technologies,augmented reality, as well as by the increasingamount of affordable embedded digital systemsthat can be used to manage the businessprocesses of a manufacturer in an effective way.

Digitisation, automation, and networking cansupport all business processes and stakeholdersin manufacturing business (see Fig. 3). It coversthe digitisation of the supply-chain processes inmanufacturing; it enables the effectivemanagement of logistics, complete relationshipwith suppliers and customers, as well as with otherstakeholders like governments. In this dynamicallychanging environment, innovation is becoming thecore competency that lets manufacturers adapt tothe digital world. This is why many manufacturingcompanies are creating special functions,dedicated to the analysis of newest technologiesand solutions, scouting, acquisition, and smartdeployment of innovative solutions. Recently, moreand more large European groups have formeddedicated corporate venture capital funds investinginto digital start-ups that can support the digitisationof their value chains.

Manufacturers have very strong motivation toimplement Industry 4.0 solutions:

Efficiency – due to automation, networkedmanagement and data analytics they can developproducts, manufacture and make decisions fasterusing less resources

Quality – they can eliminate human errors andimplement proactive fault prevention using artificialintelligence

Cost – despite initial costs associated with theimplementation of digital solutions,

manufacturers will soon benefit from the higherefficiency and reduced number of faults andproduction downtime

Customer experience – in an increasinglycompetitive business environment, experiencewith brand and its products becomes the keybuying criteria for customers. A digital relationshipwith clients will significantly improve the perceivedcustomer experience

Revenues – the manufacturers that respond fasterto market needs, provide the best quality productsand customer experience will win the race forcustomers.

Employees – digital manufacturers will be themost attractive employers for the best peopleavailable on the market

There is no Industry 4.0-in-a-box complete digitalsystem for majority of industries available on themarket yet. We are still at the early stage of thedevelopment of Industry 4.0 standards andimmaturity of available embedded systems is achallenge when developing the strategy for theirdigital transformation. There is also one additional,very important risk that from the outset must bewell mitigated when converting into smartmanufacturing – cyber security. Terrorist attacks,industrial espionage, data theft, or even sabotageby competitors are potential serious threats forfactories of the future. Therefore, special attentionmust be given to the design and implementation ofspecial solutions that will actively identify andhandle cyber attacks.

Industry 4.0 creates the real challenge forcountries like Poland where manufacturing industrysignificantly contributes to GDP and export. Thewinners on the globalising market will be thosemanufacturers and suppliers who will be able tohave all advantages from the quick adoption to thesmart, connected manufacturing model. On theother hand, the losers will be those who won't beable to cooperate effectively in a digitally integratedvalue chain with suppliers

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or customers. Therefore, the development ofIndustry 4.0 should be a real priority for both Polishmanufacturing industry as well as for otherstakeholders like the Polish government,universities and R&D centres, international groupsthat have Polish suppliers, etc.

The strength of Poland is resulting from very goodengineering and software development skills. Highpriority given to innovations in the Governmentstrategy for responsible development should alsosupport faster digital transformation of the Polishmanufacturing industry. On the other hand, verylow level of cloud computing services adoption(only Bulgaria and Romania are behind Polandamong EU countries) must be recognised as keybarriers for the rapid development of digitalfactories.

We need to put much more attention to thepromotion of digital technologies and Industry 4.0concept and solutions among Polishmanufacturers, development of sector specificsolutions. There is a need to develop, test, andimplement dedicated solutions focusing on sectorsthat drive Polish industry. Closer cooperationbetween all stakeholders is the prerequisite ifPoland wants to join the club of countries that leadin the development of digital industry.

How can we do better today thatwhich we did yesterday and theday before?

The concept of continuous improvement inproduction is not new, but the ways in whichmanufacturers implement it are evolving.

The BPCC and Klöckner Pentaplast LinpacPackaging Production organised a manufacturingpolicy group meeting focused on savings projects(Business Improvement Programs), on 11 May2018 at the KP plant in Bukowice near BrzegDolny. The meeting was attended byrepresentatives of several manufacturers

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located across Lower Silesia to share insights andbest practice to improve quality, reduce waste andenergy consumption and increase employeeinvolvement. Opening the event, the KlöcknerPentaplast Linpac Packaging Productionrepresentatives presented their businessimprovement program, a proprietary projectimplemented locally to move forward from theoperational to the business managementapproach. Next, experts from Exence discussed arange of IT solutions that support the developmentand optimisation of factory operation. The finalpresentation was from PwC experts, whoexplained how big data and data analytics can beused to improve the productivity and accuracy ofsales and production planning, as well as ways toidentify significant savings in energy costs. Afterthe workshop came the factory visit, whichparticipants always value.

The modern office and Polishhealth and safety regs: How tosquare the realities of today'sactivity-based workplace with thelegal requirements?

Poland's health and safety at work regulationsdate back to 1998 and offices full of old-stylecomputers with boxy cathode-ray monitors.

Today's employers, competing for skilled staff, areredesigning their workspaces to suit today'stechnologies and the demands of a new generationof employees. The traditional office is beingreplaced by activity-based workplaces, with hot-desking, shared spaces, team desks, conferencespaces, phone areas, quiet rooms, brainstormingareas and a cafe/lounge. There can be seated orstanding workspaces. Today's office, with spacesfor collaboration, socialising, focusing or learning,is far removed from what the regulator had in mindtwo decades ago.

On May 17th, in a modern Kinnarps showroom atthe picturesque Maltański lake in Poznań, a jointmeeting of of the Real Estate & Construction andHR policy groups was held, the aim of which wasto consider how employers can fit out their newoffices in accordance with the law, while alsoconsidering how regulations should be changed toreflect the realities of today's work placeenvironment.

At the beginning Sylwia Pędzińska, Senior Partnerat Colliers International, presented modern officespaces and how they are used, discussed flexiblework methods and answered the question whetherand how the provisions of labor law and OHSrespond to contemporary trends in office and workdesign. Then Maciej Zdrodowski, the ChiefSpecialist for Ergonomics at Medicover, spokeabout ergonomics and health and how job designaffects the well-being of employees, while AdaLatańska from Hays Polska presented trends inthe workplace that affect the recruitment andretention of employees. The meeting was closedby Aleksandra Krawsz from Kinnarps Polska, whoshowed projects and visualizations of offices of thefuture and how to equip the office so that today'semployees would like to work there.

Networking coffee meeting with atrade mission of manufacturingcompanies from Sheffield andSouth Yorkshire

On 5 June 2018 in the Poznań City Hall, theBritish Polish Chamber of Commerceorganized a coffee networking meeting forBPCC member companies and the trademission of manufacturing companies fromSheffield.

The meeting started with an informative part duringwhich guests learnt in three short presentations

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the economic profile and investment potential ofPoznań and the metropolis, the formal and legalrequirements of expansion onto the Poznańmarket, and the support offered to Britishcompanies in Poland by the British Embassy. Thispart was followed by networking, one-to-oneconversations and exchanging of contacts. Thefollowing British companies took part in themeeting: International Trade Forum Ltd, TheCompany of Cutlers in Hallamshire, DurhamDuplex, Evenort Ltd, Irwin Mitchell LLP, LidsterParagon Tool Co. Ltd, Macalloy, Pryor MarkingTechnology, Service Engineering CNC Ltd,Sheffield City Regional Local EnterprisePartnership, Torres Engineering and Pumps,YBROS Drills (Sheffield) Ltd, and the Barnsley &Rotherham Chamber of Commerce.

Business Ferryboat Cruise & Party

On 19 June 2018, yet another BPCC & EY jointcruise along the Odra took place, this yearaboard the riverboat Nereida.

This time, the ship exceptionally set off half an hourlater than usual so that the guests and crew couldsupport the Polish team in the match againstSenegal during the 2018 World Cup. Sadly theresult did not promise a happy mood, but with greatmusic under the stars, grilled food, cold beer fromNamysłów, Meli Melum cider and drinks served byprofessionals from Sofitel quickly improved theatmosphere. In addition to the attractions of theevening, guests had an opportunity of the tasting oforiginal Scottish whisky in the form of a Tour ofScotland with native Scot and whisky expertMartyn O'Reilly, who talked knowledgeably aboutthe secrets and curiosities of producing the worldfamous Scottish spirit. Martyn explained thecorrect ways of savouring whisky, to draw all thedepth of tastes and aromas from it, and the secretsof selecting the right whisky with the appropriatedishes. At 11pm the guests left the deck in innotably better cheer than when they boarded,thereby closing the 18th year of joint cruises on theOdra River.

Real Estate Market Forum

On Tuesday, 12 June 2018, another meeting ofthe Real Estate Market Forum was held inWrocław, where over 140 representatives ofdevelopers, managers and tenants operatingon the Lower Silesia market gathered.

The office market in regional cities is developingrapidly. However, while until recently Krakówremained the undisputed leader in almost everyrespect, at the end of September the first place interms of leased space and supply underconstruction was taken by Wrocław. Thewarehouse market, which is strongly influenced bye-commerce and generates high dynamics on thedemand side and an impulse for furtherinvestments, is growing equally fast. The meetingopened a discussion on the development of thedevelopment sector in the context of uncertainty inthe legal and tax environment.

A panel discussion with Edward Laufer, presidentof Vantage Development, Piotr Baran, president ofPCG, and Sylwester Roszewski, member of theboard, Angel Poland Management, was led byTomasz Wołczek and Grzegorz Proksa, partnersof WPW Wołczek, Proksa & Partners. Then PawełBoczar, associate director – Advisory &Transaction Services, Office, CBRE, summed upthe prospects for the Wrocław office market in2018-2021, and Sebastian Osuch, businessservices senior manager, Nowy Styl Group,described best practices in the arrangement ofoffices of modern companies, which is becomingan increasingly important factor in the era ofcompetition between companies for employees.

Dominik Łoś, associate

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director, Advisory & Transaction Services –Industrial, CBRE, talked about how global trends indigitisation, innovation and robotisation of work willaffect the Polish warehouse market. Then PawełHrehorow, regional senior manager, HillInternational, talked about the importance ofconstruction management in today's marketrealities.

Finally, Paweł Boczar, CBRE, led a paneldiscussion with Marcin Siewierski, associate in theoffice space department of Cushman & Wakefield,Katarzyna Kubicka, regional director, office & hotelprojects department, Echo Investment, PawełHrehorow from Hill International, Sebastian Osuchfrom Nowy Styl Group, Marta Dorosz, projectcoordinator, Prime Project, Tomasz Tylec fromReesco, and Tomasz Wołczek, partner at WPWWołczek, Proxa & Partners. Participants answeredquestions about tenants' 'hard type' requirements –the technical ones about office space, additionalfunctions in office buildings and what will happen toadditional functions in office commercial buildingsin the next four years; the fate of B-class buildingsin Wrocław, and whether making them moreattractive with additional functions is sufficient, orwhether it will be necessary to completely renovatethem changing their functions, or maybe evendemolish them to make way for new buildings.

Chairman and CEO's note – fromAntoni F. Reczek, OBE, Chairman,and Paweł Siwecki, CEO

Two years after the Brexit referendum there’sstill a lack of clarity as to how the process ofthe UK’s departure from the EU will look.

From the business perspective, the ‘dripping tap’ ofuncertainty represents a big problem when itcomes to strategic planning. Uncertainty alsoimpacts trade in goods. Automotive and food –Poland’s largest categories of exports to the UK –depend totally on just-in-time delivery. Any delayscaused by new border controls after Britain leavesthe Customs Union (as Theresa May

has said it would) will be challenging for Poland’sexports. Last year Poland had a record €8.2 billiontrade surplus with the UK, which contributed toPoland’s overall balance of trade being (just about)in surplus. Should Poland’s trade surplus with theUK shrink, its overall balance of trade will tip intodeficit.

The BPCC is busy telling Polish businesses howthey can get prepared for Brexit in whatever form iteventually takes. If they are prepared for thevarious scenarios that could occur, they will beable to continue trading with what is now Poland’sthird-largest export market. Issues such ascountry-of-origin certification, VAT, tariffs, logistics,labour force mobility and certification of standardsall need explaining (this is a good chance to talkabout BSI’s Kitemark – 115 years old this year,and a standard that could come to replace the CEmark in the UK after Brexit). We have been activein the automotive and aviation sectors with chiefadvisor Michael Dembinski speaking at the annualconferences of representatives of those sectors.Regional Polish airports are concerned that post-Brexit the number of passengers flying to and fromthe UK will fall; the question they face is how tomake up the lost revenues. For the automotivesector, where many Polish manufacturers are anintrinsic part of a cross-channel supply chain,maintaining free-flowing logistics (and avoidingtariffs) are key concerns. In doing our bit to helpkeep Trade flows moving post -Brexit we havebeen holding Brexit briefing meetings for Polishexporters in Warsaw and Kraków.

Here in Poland, the economy is flourishing, withmost economists forecasting growth in the order of4.5% this year. Everyone is busy. A good time forBritish businesses to set foot in Poland althoughEurostat has just confirmed that the Aprilunemployment rate for Poland at 3.8% was lowerthan the UK’s 4.2%. This indicator uses economicinactivity rather than registered jobless as themeasure. This is a historic moment and showsjust how strong growth is here in Poland. Indeed,many fear that labour shortages will be the be themain factor that will slow the economy.

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With the first half-year behind us we alreadyworking on activities for the second half, with a fullprogramme of Policy Group meetings, high-qualitynetworking events focused on businessdevelopment opportunities. Back-to-work mixerswill be held in September as business returns fromholidays; Wrocław’s International Oktoberfest willhappen for the 14th time on 14th September (seethe newly launched website for registration anddetails).

The CEO Breakfast on labour force automationtakes place on 21st September and our bigevening event in Warsaw will be on 18th October.Keep watching the BPCC website, the BPCC appand your inbox for more details!

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Issue No. 35 - British Polish Chamber of Commercebpcc.org.pl/contact-magazine/issues/24.pdfContact...

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