This week on NVTC’s blog, Marlise Streitmatter, an LMI Human Capital senior consultant, suggests looking beyond cost cutting to make sure that virtual collaboration is being utilized correctly.


lmiOrganizations are increasingly deploying virtual collaboration tools, but are they doing it effectively? To gain the most from these investments, it’s essential to look beyond cost cutting and develop strategies that maximize virtual collaboration’s many benefits.

Efficiency

As people across the organization gain instant access to each other, regardless of geography or job title, collaborating virtually reduces the amount of time and effort needed to perform tasks and answer questions. Research shows that when Alcoa made compliance oversight virtual, it reduced time spent on that function by 61 percent.

In another example, a Ford executive developing a new social media tool used an internal collaborative platform to seek input. His request reached the entire company, and an ambitious employee at a remote site developed a solution over the weekend. No time or money was wasted with procurement, contracting, or longer-paced development.

Accelerated Learning

Virtual collaboration reduces barriers to learning, allowing organizations to become self-teaching. Often, organizational learning is top down. Virtual collaboration facilitates a democratization of learning as employees share knowledge and information across silos. At Ford, employees on the production line use virtual collaboration to share processes and best practices, allowing employees at other plants to learn new skills on the spot without having to travel.

Productivity

Research reveals connected employees are engaged employees. Collaborating virtually facilitates relationship building by overcoming geographic and organizational boundaries, ultimately driving engagement and productivity. The National Aeronautics and Space Administration (NASA) engages more than 500 senior executives across the country on agency-wide initiatives through virtual executive summits. Leaders connect, pose questions, share ideas, and interact with senior leadership, saving the agency $750,000 in travel costs.

Reduced Costs

Probably the best understood benefit of working virtually is cost reduction. Well-executed virtual collaboration correlates with reduced travel and facilities costs, as noted in the NASA example above. Research shows organizations lower costs by an average of 15 to 20 percent as collaboration matures.

But it’s not only organizations that benefit, employees save money too. Commuting costs, lunch expenses, clothing, and cleaning expenditures all lower for employees working in virtual environments. There’s also a reduction in social costs—the chance of accident and illness are lower. Employee health improves, stress levels drop, and the workforce is happier.

Many organizations use virtual collaboration simply to cut costs. Before choosing specific virtual solutions, it is wise to explore not only how virtual collaboration will help you slim down your budget, but also how working virtually increases your organization’s efficiency, learning, and productivity.


Marlise Streitmatter works in the Organizational and Human Capital Solutions Group at LMI. Previously, Streitmatter was the deputy chief of staff at the U.S Department of Transportation. She has a bachelors in international policy and administration from the University of Illinois Springfield.

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This week on NVTC’s blog, John Calanog of member company CohnReznick LLP  offers an overview of Bitcoin in the first of two blog posts on the subject.


Despite the fact that there are nearly 14 million Bitcoins in circulation, most people are not using this newest form of currency. In fact, the vast majority of the population has never even heard of Bitcoin. But that is changing – and changing quickly.

This article – the first of two on this subject – offers an overview of Bitcoin. The second article will analyze a number of U.S. tax implications related to the usage of Bitcoin.

Bitcoin: A Virtual Currency

Bitcoin is, quite simply, a virtual currency. It is a digital representation of money that can be used to purchase goods and services like cash. But Bitcoin differs from cash in that it is not backed by any bank or nation, is unregulated, and has no formal organizational structure behind it. Instead, Bitcoin is supported entirely by a peer-to-peer (“P2P”) network of individuals who manage balances and transactions on their own. Bitcoin functions as an online payment platform with reduced fees when compared to other online payment forms.

In the past few years, Bitcoin values have fluctuated $247 per Bitcoin to over $1,000. As of publication of this article, the 14 million Bitcoins in circulation are worth nearly $3.5 billion.

How Does Bitcoin Work?

To create a digital currency with no centralized organization backing the transactions, Bitcoin was designed so that its users verify and complete transactions. This is done through Bitcoin’s “blockchain,” which is essentially a chronological log of every confirmed transaction that occurs between Bitcoin addresses. Using cryptography, Bitcoin creates mathematical proofs and records to secure the blockchain and safeguard a user’s transaction. These proofs are verified by users who have software that processes (“mines”) the blocks that are part of the blockchain.

The Bitcoin system transmits transactions to the network almost immediately and verifies them within the hour. The mining process helps to create the ledger of payments with Bitcoins. This also helps to ensure that double spending, or a user’s attempt to send the same Bitcoins to two people simultaneously, is prevented.  In this way, users contribute directly to Bitcoin, supporting the currency’s well-being.

Bitcoin in the Marketplace

Because Bitcoin technology is extremely complex, use of Bitcoin was originally limited to those with software expertise and a unique interest in alternative currencies. As the currency has become more widely accepted, an ecosystem of service providers has developed to facilitate transactions. Now, just about anyone can participate, even those without a technical understanding of the currency.  The ecosystem is still evolving and now includes retailers, payment processors, banks, e-wallet companies, trading solutions, and currency exchanges.

Some very well-known companies are among those that support Bitcoins. They include Microsoft, Dell, Overstock.com, Virgin Galactic, Sacramento Kings of the NBA, Amazon.com, Reddit, Expedia.com, PayPal, eBay, Tesla, Etsy Vendors, and Time, Inc. Even some professional services firms, including law firms and accounting firms, now accept Bitcoin.

How Does a Business Do Business Using Bitcoins?

To accept Bitcoins as payment, a business sets up a merchant account with a Bitcoin exchange.  From there, the business can issue invoices and receive payments in Bitcoins, convert them to dollars (or local currency), and then transfer them to its bank account.

If the business is not interested in converting Bitcoins to local currency, it can hold on to its Bitcoins and trade them. The business can register for a free online e-wallet, such as Blockchain.info. It can then give anyone its Bitcoin e-wallet address, and customers can remit Bitcoins as payment. The business has the ability to send its Bitcoins to any other e-wallets across the globe.

Bitcoin Exchanges

There are numerous Bitcoin exchanges on the web. They enable customers to convert physical currency into Bitcoins and vice versa. Increasingly, exchanges are offering a greater number of services including a range of both fiat (i.e., face value currency) and crypto-currencies, as well as various trading tools.

Bitcoin exchanges have fallen under scrutiny as one of the world’s first Bitcoin exchanges, Mt. Gox, mysteriously lost 850,000 Bitcoins. This left the exchange insolvent and many customers out-of-pocket. Many Bitcoin traders have since become wary of these exchanges, yet the exchanges continue to thrive. Four of today’s major Bitcoin exchanges include Coinbase, Bitstamp, BTC-e and Cryptsy. In January of this year, Coinbase launched the first regulated Bitcoin Exchange in the U.S in an effort to add stability to the Bitcoin ecosystem.

Looking Ahead

It appears that Bitcoin is a real and lasting game-changer. It has globalized currency with capabilities beyond our current monetary system. CohnReznick looks forward to monitoring the future impact of Bitcoin, and other virtual currencies, on businesses and the financial markets.

_________________________________________________________________________________

The content of this article is intended to provide a general commentary on the subject.  Specialist advice should be sought about your specific circumstances.

John Calanog, CPA, is a Tax Manager with CohnReznick LLP and is a member of the Firm’s Technology Industry Practice.  John’s experiences over the last fifteen years include U.S. tax compliance and consulting for C Corporations, S Corporations, Partnerships, and high net worth individuals who operate businesses in a wide variety of industries and taxing jurisdictions.  Contact John at john.calanog@cohnreznick.com. Follow CohnReznick’s Technology Practice on Twitter via @CR_TechInd

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