How will IR35 impact your data project – and what can you do about it?

There are many things to consider when running a major data project. Weighing up the long term benefits over sometimes considerable short term expenditure can cause project managers sleepless nights. But come April 2020, many businesses will be asking themselves whether they can even afford to keep their project going. 

The latest factor to consider is IR35, which might sound like a secret branch of the security services, but is in fact a piece of HMRC legislation that will affect many thousands of companies and 230,000 freelance contractors. It aims to deal with the problem of ‘deemed employment’, the practice of using workers on a self-employed basis, often through an intermediary company when permanent employment would be more appropriate. Using these ‘disguised employees’ can save companies considerable sums in tax and National Insurance contributions, and deny workers of employment rights. Under the new arrangements it is up to the employer to assess whether anyone working for them falls within the bracket of IR35. 

On paper this sounds like a fair way of tackling tax dodging and unscrupulous employment practices. But in the public sector where IR35 has already been rolled out many IT projects have been put on hold due to fears over rising costs and investigation by HMRC. Understandably the legislation has caused considerable trepidation across the business world. A survey by Be Digital UK found that four out of ten businesses are considering phasing out contractors altogether. The result of this could see many IT projects grind to a halt.  

What can you do to lessen the impact on your data project? 

The rules surrounding who does and doesn’t fall inside IR35 are rather opaque. There is no one definitive rule, rather a number of questions that you need to answer to assess a contractor’s status. Many employers remain concerned they may still fall foul of the legislation. The most foolproof way of ensuring you avoid the IR35 trap is to make everybody employees. Of course this is a significant long term investment, and could leave you with the additional problem of what to do with them once a project has come to an end. 

Terms of employment 

A key thing to consider is whether the role a contractor fulfils falls firmly within the parameters of the project they have been employed to do. It is often common practice for people to shift around as projects change. Contractors can find themselves on the organisation chart next to regular staff and being moved to different parts of the business. This is definitely not OK under the new rules. 

Milestones 

Project based work, particularly in IT is commonly based on milestones, rather than days worked. Projects billed on milestones are great for ensuring that contractors are clearly delineated as contract workers, rather than slipping into the area of ‘deemed employment’. 

Think big 

Peace of mind can come from working with a large consultancy who can guarantee they only use their own people; this circumvents the IR35 headache for the client. This has been the go to solution for many public sector organisations, but it’s one that comes with a considerable price tag. 

Think small 

You could reach out to smaller IT consultancies, as under the new legislation businesses employing fewer than 50 people and turning over less than £10.2 million annually will be exempt. If they need to hire contractors the rules won’t apply to them. Furthermore, they are likely to offer significantly lower costs than the big consultancy firms and can still deliver great value, especially for specialised pieces of work. 

Undoubtedly the introduction of IR35 will cause anxiety, particularly in the short term, about the viability of certain projects. There is no single best way to deal with the new IR35 legislation and ultimately the right choice for your data project will depend on a variety of different factors, however if you would like to speak to Snap Analytics to see how we can help then please get in touch: 

[email protected]

5 things to do before starting a data project

You’re about to start a big data project. Fantastic! We’re big believers in the fact that every business can gain a real competitive advantage through analysing their data. It’s why we do what we do. 

But just before you go running off all excited, stop for a moment. If you really want your data project to be a success, you need to think about five key things before you even start. 

Understand the problem that you are trying to solve 

Chances are you’re looking to data analytics to fix a specific need, something which is causing inefficiencies and costing you money. Don’t assume though that by shaking the data tree enough times a solution will magically fall into your lap. First you need to look at your existing systems to see what exactly needs fixing. It’s only once you have a clearly defined vision and end point in mind, that we can see exactly how we can help. 

Define what success will look like  

Having identified what you want, it is time to think about what a successful outcome might look like. It helps nobody to embark on a data project without setting any specific goals or measurable outcomes. So make a plan, draw up a list of milestones, devise ways of measuring what’s happening and then track the results against that. One useful approach we’ve found is to run a user survey six months down the line and find out how people are using, or benefitting from the findings.  

Align with company strategy 

It’s all very well you dreaming up fantastic, innovative data driven projects that will change the very fabric of your business and the world generally. But it might be best, first of all, to check that your goals are something that fall in line the wider strategic direction of the business. Is this a problem you should even be solving? Is it a business priority? Will it help tick some important boxes when the annual report comes round? If the answer is yes to all the above, fantastic – you’re on your way to getting managerial buy-in and tapping up a healthy budget for an important piece of work. 

Data for the people 

You’ve addressed the needs of the bigger cheeses but don’t forget about the little guys, the people on the front line who are working hard to produce this data in the first place. Think about how this is going to benefit them in the long term, how will it make their day-to-work work easier, more efficient, or more effective? This is particularly pertinent if your business is going through a restructuring process. We’re great believers in the power of data analysis, but if you’re losing half your team it might not be perceived as the best use of company resources. 

Build the right team 

One commonly held assumption we come across is the idea that data is purely a tech led process: you identify a problem or need and the nerds crunch the numbers. It’s not that simple of course. To produce an effective outcome, you need quality input from people on the business side, members of the team who can provide insights into how the company works and what its goals and strategies are. You should bring together people who use the data in different ways and can provide the broadest possible range of experience. That way the insights we produce will be deeper, richer and ultimately more valuable. 

How to get buy-in for your data project

Despite the talk of a data driven revolution, the reality for many companies often lags someway behind the ideal of a business built on reliable detailed information analysed using AI. According to a Mckinsey Digital report on leadership and analytics, CEOs cite their biggest challenges to investing in data are “uncertainty over which actions should be taken” and “lack of financial resources.” Fundamentally, it appears that some business leaders still don’t believe that analytics have a high enough ROI.  

If you know that a data project could deliver huge value for your business but you’re struggling to get anyone else to appreciate the importance of all that expensive tech and numbers nonsense, here are a few ways to help change their mind. 

Speak their language 

There’s no point trying to convert anyone into data evangelists at this stage, instead work within the parameters of your organisation. Align your project to existing business priorities and show that you understand the CEO’s strategies. The best way to do this is to create a link between the results of your project and the financial benefits. Get those graphs at the ready! 

Remember that this is a business transaction and not a technical pitch. You’re wasting your time if you can’t convincingly demonstrate that you are addressing a particular business need, so resist using too many technical terms. Instead, explain using visuals which demonstrate that the outcomes from your data project align with the strategic objectives of the business and will bring tangible benefit to the company and the individuals who work there. 

You may need to convince people that you are addressing a demand that they didn’t even know they had. By the end you want not just buy in, but for them to believe that it was their idea all along! 

Recruit key players 

It’s not enough to expect the techies to wave a magic wand and sprinkle stardust over the business. Successful data projects are a partnership between the project team and key business users who work with the numbers on a daily basis. Don’t expect that a diktat from the 17th floor is going to be enough to drive them into making this thing a success, it’s your job to involve as many key players as possible, make them feel they’re being listened to and that they have some control over the direction of the project. 

Throughout the course of any data project, key business users should have frequent and regular opportunities to provide feedback. This agile approach will help to ensure that the solution is actually what the business wants – unless they are able to see the solution in action it’s impossible for them to really know what they want! An added bonus is that they will feel that they have shaped the project and will have a vested interest in the outcome. 

Recoup your investment 

From the C-Suite down to the office floor, what everybody wants is something that makes their work easier and the business more successful. If you can demonstrate that what you are doing is going to achieve tangible results they will sit up and listen. For example, a report which currently takes 5 hours will take 1 hour as a result of this project. And if that report is created by 100 people at a cost of £50 per hour, the bill drops from £25,000 to £5,000. 

To hammer that point home, McKinsey carried out analysis over a five year period which showed that companies who put data at the heart of their operation enjoyed marked improvements across all departments, with sales and marketing ROI increasing by 15%-20%. Investing in creating a data driven culture is vital for the growth of any business determined to stay ahead of the pack.