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Investing in innovation

Bringing technological know-how in-house to enhance our full range of services
One way or another, technology will have a big impact on our services in the years ahead and will be a key driver of our business. Strengthening our (big) data analytics services, including new ones such as innovation management and customer journey design, is an important goal for EY and therefore an integral part of our digital agenda. Our Vision 2020 explicitly names digital as one of the key differentiators for EY – this means not only bringing digital solutions to the market but also transforming and improving the quality of our existing services through digital means.

We acquire organizations in order to bring technological knowhow in-house so that we can serve our clients even better with a broader range of services. The aforementioned acquisitions are good examples of this strategy. In all our service lines, harnessing new technology and innovating new solutions gives us a deeper understanding of our clients’ businesses, enabling us to identify risks and issues more quickly, and to deliver solutions tailored to their needs.

Innovation in measuring value creation: EY Total Value – impact evaluation to support decision-making
EY Total Value is designed to enhance decision-making. Total Value aims to measure and value the most material aspects of value creation, which are usually hidden or go unmeasured. By showing how decisions affect outcomes for stakeholders and society at large, Total Value enables companies and external stakeholders to make better decisions, thus helping organizations improve their overall value creation and fulfill their societal purpose. Total Value consists of seven pragmatic steps that comply with various standards currently under development, such as the social capital protocol of the World Business Council for Sustainable Development (WBCSD) and the natural capital protocol of the Natural Capital Coalition (NCC). Our approach focuses on the technical aspects of measurement and valuation but also correctly interprets the results, and answers the ’so what’ question.
At Assurance, data and predictive analytics are widening the audit field. New digital instruments allow continuous audit instead of an expost annual review. Data analysis will change the way we carry out our audits. Last year we launched our audit analytic suite of tools, EY Helix. It enables us to audit large tranches of client data more efficiently and thoroughly and thus identify higher-risk areas more quickly, and to further improve audit quality. In our vision, the auditor of the future will no longer be solely a specialist in auditing financial data.

There are many forms of data that auditors currently do not examine but that may be of interest to stakeholders, such as data on cyber security, the image social media form of a business, governance and ’soft’ controls such as the culture and behavior within an organization. Another field of development is robotics, in which we will continue to invest in the coming years. Thanks to data analysis we can give society assurance and confidence across a wide range of issues.

Last year EY undertook a pilot study with limited scope focusing on our human and natural capital value creation. EY’s human capital value creation in 2015/2016 equaled €462 million in total and consisted of three main elements:
  • value created for employees through learning, education and training on the job.
  • value created for future employers as people leave EY and take experience and knowledge to a future employer.
  • value created for society at large, through the payment of income taxes by EY personnel.

EY’s impact on natural capital in 2015/2016 amounted to €1.4 million negative owing to greenhouse gas emissions arising chiefly from the commuting and mobility of our employees and emissions related to the use of offices. We have taken measurable actions to further reduce our greenhouse gas emissions.

In 2016/2017 we aim to extend the analysis. A critical impact area that was not part of last year’s pilot, was the value that we created for our clients through the delivery of our services. The inclusion of more impacts will provide a more complete understanding of the value that EY creates for the various stakeholder groups.

Tax in the Boardroom
Corporate tax policy is increasingly becoming a public and a boardroom topic. Politicians, media, non-governmental organizations and other stakeholders are taking a more critical stance on the tax contribution companies make to society (paying a fair share). Companies are being pushed to make their tax payments more transparent and to be held accountable for their tax policies. As part of EYInnovate, a team of EY specialists developed an IT assessment tool to visualize individual corporate tax policies based on a number of clearly-defined KPIs. The model is funded on the pillars of the organization's own tax policy on the one hand and communication and governance on the other. As more information on corporate tax policies is included in the model, peer group comparisons can be made. The model should become operational later this year following extensive testing.

EY tax advisers will use the tool to enter into dialogue with clients and help them answer questions from stakeholders and other parties about their tax policies and arrangements. It will supplement our tax reputational risk management service to analyze a company’s tax footprint and help our clients further improve their governance and controls around tax matters. It is becoming increasingly important that companies think about how they plan their tax arrangements with a view to a broad stakeholder group.
At Tax, data analytics generates more complete information, greater understanding, transparency and ultimately more efficient compliance processes. Data analysis can compare a range of scenarios to reveal the impact of tax decisions. The detailed focus that it allows helps reduce complicated situations to the core issues so that more tactical and strategic decisions can be made.

Our VAT Analytics tool, for example, can give an organization a clear picture of where it can improve its VAT position. Data analytics and, in particular, predictive analytics can be used to optimize the fiscal valuation of inventories in the retail sector. Another example is VPB Analytics, which we developed last year. This tool box analyzes the data available from the accounts so that we can quickly and efficiently provide comprehensive insight into a company’s tax position. We are working hard on the development of more data tools for Tax, including one that can prepare statutory accounts that comply with various accounting standards. With these developments the tax function’s focus is expanding from technical reporting, compliance and tax planning to technology and digital tax and taxrelated risk management and business-enabled tax planning.

Advisory concentrates on helping clients develop and implement innovation and digitization strategies. In a fast-paced world, doing this efficiently and comprehensively is a major challenge for many organizations. EY has invested in developing automated solutions to facilitate this process, and support organizations in an agile and fast-paced way. We advise clients on how to use data analysis tools to interpret big data and teach them how to use the findings strategically. The accompanying challenges demand a comprehensive digital strategy and a reconsideration of business and operational models.

Distinctive integrated service through multidisciplinary digital approach
’Digital’ is a continuous form of disruption to existing (or new) business models, products, services or experiences, enabled by industry-wide data and technological advances. Digital trends are affecting industries in ever more fundamental ways, as technologies are increasingly impactful, abundant and mutually reinforcing. In the early stages, companies primarily focused on creating stand-alone solutions – e.g., pilots, apps, websites, digital processes – but we are now entering the second stage of connectivity and integration. Organizations are reviewing their existing business models, and digitization serves as a catalyst to review optimization.

EY stands out for its global multidisciplinary approach, which provides its clients with overall insight into such themes as risk and cybersecurity, finance, legal and tax, and people and organization, linking them to a digital strategy and helping to make companies more future-proof.
We help our clients through the transformation process by developing innovative digital business models that can achieve substantial cost savings. For EY, leading the way toward business optimization through data analytics means working closely with our clients to develop new business propositions by sharing, perfecting and applying new approaches, tools and services.

We are also increasingly putting major established companies into contact with startups. Many successful startups have a digital background and use digital platforms for the management and acceleration of innovation. Another important intellectual property acquisition was a revenue assurance analytical tool that enables clients to make fast analyses of the potential to bill unbilled work.

Transaction Advisory Services for example, gathers and analyzes significant volumes of data and applies predictive analytics and forecasting techniques to quantify a transaction’s risks and opportunities, understand key business cycles and employ a decisionmaking framework based on data science to reach an objective view of a strategic portfolio. Data analytics can also be used to identify potential synergies and dissynergies by utilizing larger data sets.

Strength of a global organization: investing together
As EY, we have the advantage of being a highly integrated, global organization that can draw on a rich, international vein of expertise. Together we can make the necessary investments to implement a powerful digital strategy. Our global strength underpins our ability to participate in the latest developments, to innovate and to deliver new services to meet our clients’ changing demands.

New partners in data analytics
Cooperation with other businesses by merging their specific technologies into our services is becoming a more important aspect of our growth strategy. As the pace of change accelerates, alliances with the world’s top organizations give clients access to new, innovative capabilities – quickly and when they are needed most. Alliances to fill competency gaps provide new approaches to address emerging business issues and allow us to bring diverse teams of leading professionals to the table. These alliances foster innovation through exposure to new people, tools and processes. Moreover, by aligning with powerful organizations we can leverage our respective relationships and deliver the benefits to even more organizations.

With Proctor & Gamble, for example, we have combined our knowledge and skills with their expertise in supply chains. Together we are developing software to optimize production processes that we will bring to market as a joint offering. We have also formed a new strategic alliance with GE Digital to develop and provide Industrial Internet of Things (IIoT) services to help industrial companies achieve increased productivity from capital assets and processes linked in the cloud. EY and GE Digital will develop and deliver industry-specific services based on GE’s Predix® cloud-based operating system. These can help companies reduce operating expenses and increase revenue through improved machine uptime and streamlined industrial workflows.

FSO is working with the insurance technology company Guidewire and at global level we are working with market leaders in data analytics.

Our global alliance network also includes Oracle, Pega, Adobe, EMC2, Hortonworks, IBM, LinkedIn, Microsoft, SAP, SAS, and Yourencore.

Read the interview with entrepreneurs and EY professionals.
EYnovation™ is our roadmap to a sustainable startup and scaleup support system. Access to our high-quality services, know-how and worldwide network smooths the way for fast-growing startups and scale-ups. Our comprehensive selection of subscription-based services give ambitious, innovative entrepreneurs first-line financial, fiscal and legal support and advisory services. EYnovation™ brings benefits all round: businesses enjoy easy access to our services and EY’s international network, while our staff’s entrepreneurial skills are refined and their professional development accelerated. We expanded our teams further during the year, and about 100 EY specialists are now directly involved in fast-tracking startups and scale-ups.

Engaging our network to accelerate entrepreneurship
We support startup ecosystems in a variety of disciplines and in all major regions of the Netherlands: Amsterdam (ACE Venturelab, StartupAmsterdam, FinTech), Delft (Yes!Delft, high tech), Eindhoven (HighTechXL, high tech), Maastricht (Brightland, smart materials) and Rotterdam (PortXL, maritime and logistics).

Creating a platform for startups and corporates is beneficial to both parties: startups gain access to people at the right level in the corporates, using our workshops and network events to approach the right investors and potential customers, while corporates see how they can profit from innovative ideas and concepts.

Digital technology is fundamentally transforming the financial services industry. Client expectations are changing faster than financial institutions are used to. Digitization is a major focus for the institutions and the sector as a whole, with a particular emphasis on such areas as customer experience, digital privacy, cybersecurity and financial technology (FinTech). An end-to-end digital transformation is required to fully adapt to this new and fast-moving world. The FSO market is concerned chiefly with cyber and digital issues, while FinTech is often linked with financial inclusion and client-centric finance.

EY plays an active role advising clients on FinTech and bringing parties together. We see FinTech as fundamental to the future of the financial services industry, and it is driving many of the innovations we are witnessing. It can increase financial inclusion, improve productivity and mobilize dormant capital for the benefit of the wider economy. In May 2016 EY organized the FinTech Summit 2016 and put 24 international FinTech companies into contact with decision-makers in banking, insurance, pensions and asset management. The summit is a great opportunity for organizations to gain insights into innovative developments and make valuable contacts. FinTech organizations and financial service firms learn from each other during the event, laying the foundations for a bright working future.
One such platform is the Launchpad Meetups we co-organize with TheNextWeb and StartupAmsterdam, connecting corporates to innovative startups. We have also formed an alliance with the Get In The Ring Foundation, a global nonprofit organization that puts startups in touch with capital, talent and expertise by means of worldwide challenges and events.

At Startup Fest Europe we organized several events to introduce disruptive startups to leading Amsterdam companies and support them in their growth to market leadership. We are also taking part in the Eindhoven Startup Alliance formed in May 2016. Its goal is to help the HighTechXL startup accelerator achieve its mission of creating at least 20 rapidly expanding hardware companies by the end of the decade.

Innovate EY
Working with high-potential startups nourishes our own capacity for innovation, enhances our internal processes and stimulates new product development. Drawing on what we have learned in working with startups, scale-ups and accelerators, in 2016 we designed and launched a program to promote innovation and entrepreneurship within our own organization: Innovate EY. Seventy-five of our people took part in this pilot project, testing the feasibility of their ideas and discovering how they could select the right teams to realize the ideas. Experience shows that innovation projects stand or fall on the composition of the team. Six teams, three internal and three external, were selected to become our very own startups. The internal teams worked out their ideas and demonstrated that they could make a real contribution to innovation within EY.

Generating a social return with the social impact bond
One of the first large-scale social impact bonds in the Netherlands was launched in 2016: Buzinezzclub Utrecht. The Buzinezzclub lifts young people out of income support and guides them to education, work or their own business. Together with investors, it offers a pay-for-success package: when the municipality makes a saving on income support payments, it passes on some of the saving to cover the cost of investments incurred by the partners and the young people themselves. EY has been selected to evaluate this social impact bond in the coming years.
The external teams were admitted to business accelerator HighTechXL and are developing several projects relating to EY’s core activities:
  • A validation and management information tool for banks and insurance companies to ensure compliance and provide insights into their regulatory reporting to supervisory bodies.
  • An integrated reporting solution for the record-to-report process to eliminate the duplication of work when preparing tax, statutory and group financial reports.
  • An online platform that supports startups and scale-ups in planning how to raise funding and then manage it: the online CFO for startups.

Going through the entire cycle from idea to startup puts us in a better position to help our own clients. We bring the innovative concepts developed in collaboration with HighTechXL to market for the benefit of our clients.

Social entrepreneurship
Social enterprises are financially self-sustaining vehicles that deliver innovative solutions to social, ecological and economic challenges. Collaboration is a catalyst for innovation and increases the likelihood of optimum results. EY works closely with Impact Hub Amsterdam and Social Impact Factory to bring financially driven and impact driven entrepreneurs together. Through EYnovation, our Climate Change and Sustainability Services directly support social entrepreneurs in their endeavors – from business case development to financial management and impact measurement advisory services. We have advised over 25 social enterprises and the number is still growing.

Rewarding entrepreneurship
The EY Entrepreneur Of The Year program places legacy builders in the spotlight every year. It rewards entrepreneurs who break with tradition and prove, with their passion, leadership and personality, that innovation is the new standard. The EY Entrepreneur Of The Year award is an international program that celebrates the important contribution that entrepreneurs make to their communities, their countries and the global economy. It features three categories for businesses in different phases of their life cycle:
  • Emerging EY Entrepreneur Of The Year (entrepreneurs who have been active for less than ten years)
  • Accelerating EY Entrepreneur Of The Year (growth accelerators)
  • Master EY Entrepreneur Of The Year (established companies). The winner of the Master category goes on to compete for the EY World Entrepreneur Of The Year title.

In FY 2015/2016 the winners in the Netherlands were:
  • Emerging category: Henk Jan Beltman of Tony Chocoloney
  • Accelerating category: Jordy Kool of Infotheek
  • Master category: Marco van Zijverden of Dutch Flower Group