Back in 2016, I recall a riveting article written by Montserratian author, Nerissa Golden, entitled “Open Innovation – Can we do this in the Caribbean?” The writer keenly described a fascinating study tour at an Incubator located in the High Tech Campus at Eindhoven in Holland, Netherlands, where every single presenter used the term Open Innovation. She marvelled at how business was conducted, where competing companies shared ideas and knowledge fluidly in the spirit of collaboration which resulted in improved and more useful technology and products.

What is Open Innovation?

Open Innovation can be in the form of informal collaborations or formal partnerships. The popularity of open innovation has been driven by its effectiveness in expanding the innovation potential of an organisation. Open innovation gives businesses and organisations the ability to access new (and sometimes left-field) ideas for new products and services and in solving problems. By casting the net wider, companies can end up with solutions they’d never have thought of otherwise. 

However, in comparison to the present reality of the Caribbean, where brilliant minds have the potential to change the development and growth trajectory of the region by harnessing their capabilities of solving local and regional problems, Open Innovation has been subject to political lip service as the culture of lack of trust lingers heavily in a region struggling to re-design and transform itself. The execution of strategic alliances are few and far between, as independent entities struggle against the notion of losing their Ideas. However, the reality is that ideas are a dime a dozen, with no rightful owner. Even as ideas are developed into early concepts, ideas alone do not trigger innovation. It is the business model and the team that triggers execution.  

Innovation procurement

According to the World Economic Forum, innovation offers the potential to improve everyday life, grow regional economies and solve societal challenges. Governments, industry and communities around the world are delivering programmes that seek to encourage innovation and achieve a better future. So whether it’s at the firm level or macro level, collaboration is the key to unlock innovation and drive change. It is no wonder that the writer in her piece observed that the main ingredient of Eindhoven’s success was its ability to foster open innovation amongst multiple stakeholders. where the trifecta of government, knowledge and business collaborate as public-private-partnerships to ensure the ecosystem thrives. 

So, how can one foster an environment where content creators and consumers can discover each other to develop solutions that solve problems? While there are many methods for fostering the development of an open innovation ecosystem, one clear opportunity lies in leveraging innovation procurement. 

In accordance with Nesta, the “power of the public purse” to drive innovation was identified as a key opportunity. Around the world, procurement processes are being redesigned and redeployed to create new demand for innovation and accelerate the emergence of inclusive innovation ecosystems by engaging and providing opportunities to underrepresented communities and people

According to Startup Genome in 2018, globally, procurement remains an area in which governments have taken the least action. However companies have been flocking to open innovation challenge platforms to crowdsource ideas and solutions. 

With no such thing like a magic bullet, fast forward to 2020, it comes as no surprise that the Caribbean has finally moved beyond hackathons and have started adopting co-creation and open innovation competitions leveraging  innovation procurement as a new mechanism to foster regional innovation. 

In a landscape devoid of proper frameworks to guide strategic alliances and public private partnerships, innovation procurement offers a number of benefits to leapfrog our development, however, it does not come without its associated challenges. 

So far there are two main methods used in innovation procurement.  These are Public Procurement of Innovative solutions (PPI), and Pre-Commercial Procurement (PCP).  The former, is used when challenges can be addressed using innovative solutions that are already in small quantities in the market, while the latter, is used when there are no near-to-the-market solutions yet and new R&D is needed. In some cases, the solution might be very early at the concept or proof of concept stages, but in many cases, solutions can be deployed as a pilot before they are scaled. 

The phases of innovation procurement (Source: European Commission)

The Good

On the one hand, innovation procurement has demonstrated its ability to deliver solutions to challenges of both public and private interest as their methods serve a key purpose in de-risking the most promising innovations step-by-step through solution design, prototyping, development and first product testing. 

Therefore, unpacking the benefits of innovation procurement can speed up product development significantly, boost product visibility, which lends a lot of credibility to a growing company, and can be a great way to attract new business interest from investors. 

On the public sector side, it enables the public sector to modernise public services faster while creating opportunities for companies in the Caribbean to gain leadership in new markets as it moves the region on a trajectory towards outcome based problem solving in a flexible manner, as suppliers are selected and rewarded based on their capability to deliver against defined outcomes. 

The Bad

As with any solution, how open is open? There are some serious risks and unintended consequences if open innovation is done incorrectly without clear rules. 

While sharing information and expertise with others outside the business, you can boost the profile of your company. But consider what happens if you submit a solution which is way beyond the proof of concept (idea) stage and is a minimum viable product (MVP) with associated execution know-how, i.e product and business models fully developed, and ready for commercialisation? In other words, the idea has crossed over into the execution phase? What are the consequences of sharing too much and how can that put your business at risk?

There are some legal challenges that can be easily overlooked, which can cause unnecessary hurdles if not thought through already in the beginning of an open innovation project. If they aren’t considered and handled in a professional manner from the start, the risks and possible negative impacts will not only affect your open innovation project, but can harm your brand image as well.

As an open innovation strategy, while it aims at decreasing the risk inherent to the innovation process, it may at the same time increase the risk inherent to collaboration with different partners.

For example, Compete Caribbean, a regional multi-donor driven programme, recently launched a unique Blockchain Open Innovation Challenge for the Caribbean, which focuses on open innovation calls for both problem owners (public/private) and problem solvers (innovators). The call for problem owners, is targeted at solving a need by leveraging blockchain innovation, while the calls for problem solvers are focused on matching them to specific crowdsourced challenges and financing those innovators solving existing problems. 

In a specific Call for the Digital Transactions and Money challenge, one of the pre-selected Problem Owners, a regional non-profit association comprised of public and private financial institutions and regulators, namely, the Caribbean Settlement Network (CSN) submitted and was pre-selected for this challenge to address the need for solutions for cross-border settlement. However, two members of the non-profit association, are actually Fintech solution providers, namely BITT, a Barbados based Fintech wallet provider firm already working on a Central Bank Digital Currency (CBDC) with the Eastern Caribbean Central Bank (ECCB) and Massy Group, owner of subsidiary Massey Technologies and SurePay with a massive bill-pay retail network providing solutions in some markets across the region. 

While I do not believe it was the intention of the donor to create a scenario of inequality, they inadvertently opened up the real risk of involuntary knowledge spillover (Cassiman and Veugelers, 2002) – leakage of critical internal resources; and disclosure of core competencies of a company submitting a solution to the challenge – to these potential cooperation partners that could be competitors. This risk is so great that if not mitigated, it can impact the ability to compete fairly, due to the lack of transparency of the roles and capabilities of all the stakeholders involved. 

Now, there is absolutely nothing wrong for companies doing open innovation to seek external ideas with an outside-in approach. It is however, good governance practice for companies to not hide behind the corporate veil of non-profit associations and enter these challenges based on their own merits and objectives. 

The Ugly

In another highly publicised case study, in 2018, the Government of Montserrat (GoM), took a tech startup, Rovika, which was founded by Dennison Daley and Manish Valechha in 2013, to court to contest ownership of an eCabinet Executive Document Management software called ExcoTrack. 

Prior to the establishment of Rovika, In 2005, Mr. Daley, a programmer and former government employee, was approached by the then Cabinet Secretary to develop an access database system to track Cabinet decisions. Later in 2012, the system was scrapped in favour of a newer web-based version of the Cabinet documentation monitoring/tracking process in an effort to provide efficient ways to monitor/track the GoM’s decisions and policies. 

The first version of ExcoTrack was launched in mid-July 2013, although it was still in its developmental stages. The initial cost for the development and design of, and training for, ExcoTrack was XCD 22,000.00 (around USD 8,100.00).

The entrepreneurs said that over the past seven years, the government’s contribution to include the initial grant, feature request charges, hosting, maintenance and fees amount to approximately $31,000.00 USD with 24/7 service. Part of accessing the grant required Daley to set up a company in order to access the grant, to which he invited Valechha to be a partner. Hence Rovika was born. In 2015, Rovika also successfully was awarded another grant to develop a new web-based vehicle and drivers licensing system with the ICT grant. However, the Government has not implemented its use, as it is awaiting legislative changes.

“The initial grant funding enabled by a verbal agreement with the Government ensured that ExcoTrack would not be given at a per-user rate and no limits would have been placed on the number of users on the system. Additionally, a minimum standard charge which at the time covered hosting and training with basic maintenance was set out. This at the time was in excess of $6000.00 XCD per year. It was also agreed that any future changes required would be charged to the Government, once it was outside of the original development or scheduled updates,” explained the entrepreneur.

(Source: Discover Montserrat)

However in 2018, Rovika Inc. moved to a Software as a Service (SaaS) licence structure which requires clients to purchase a licence as per industry practices. Rovika submitted a new agreement to the GoM, and the GoM refused to pay for the licensing claiming that with the amounts previously paid and the grants provided to the company, they should rightfully own the software. This disagreement led to the limitation of access to the software which subsequently led to a legal battle for access and ownership,  whilst the company continues to provide service. 

In the Rovika case, The legal and contractual issues were as follows: 

Contractual arrangements were verbal. The then Cabinet Secretary procured the services of the Programmer, Mr. Daley as an Independent contractor without a written agreement. As an independent contractor, Mr. Daley developed a very secure, robust, application software that is user-friendly and accessible from any electronic device that has access to the Internet, and/or from any data-enabled device. 

Lack of IT Policy. The Office of the Premier, did not make any IT policy provisions to ensure continuance of service if the person(s) and/or entity maintaining the application software should leave, fold, or have their services terminated; or in the event of security breaches or other mishaps.

Lack of  Service Level Agreement (SLA). To date, the Office of the Premier does not have an established Service Level Agreement (SLA) with Rovika Inc.

Absence of proper procurement practices. The Cabinet and now the Office of the Premier did not put in place any procurement process whatsoever. 

Lack of clarity on Total Cost of Ownership (TCO). Total Cost of Ownership (TCO) is an estimate of the total costs of solutions (equipment, goods, and/or services) over the whole of their life. It includes the purchase price or initial fees and all of the other costs an organisation or business might incur, less any benefits received. Many times, organisations never think about ongoing costs of maintaining a service or license fees. This lack of clarity and understanding of the scope of ongoing service fees, have sent a lot of great innovations to the graveyard. Especially in the Public Sector, the tension between annual budgeting cycles makes it difficult for them to participate in Software as a Service solutions with fluctuating annual budgets. 

These two case studies provide some critical insights on the flawed and procurement processes in the region which could thwart real efforts for young startups to launch and thrive. 

Is intellectual property adequate protection?

Without appropriate protection, a firm’s innovation effort can be diluted if there is a serious threat of imitation. Especially in the open innovation context, knowledge is transmitted in a way that even tacit knowledge can spill over to the open innovation partner – as open innovation aims at sharing tacit knowledge and IP which are inherent to the partners themselves. Consequently, appropriating the rents from IP and knowledge put into the open innovation partnership may be difficult as imitation may occur. 

In the case of the first case study, in promoting a technology such as “blockchain” that fosters greater transparency, it is quite ironic that corporate governance standards are currently not being applied to assess potential competitive risks.  Secondly, in a global space where the number of patent applications filed for blockchain and adjacent technologies has also grown, the IP framework and support in the region is weak and uncoordinated at best, and on top of that, there are additional hurdles in obtaining patents specifically for blockchain innovations. Perhaps this too can be a decentralised challenge. On the one hand, from an operational standpoint, it’s left to be seen the tensions between decentralised and centralised systems and the effectiveness of a patent. Lastly, blockchain innovations may not be truly patented given that algorithms or computer coding on their own are often considered non-patentable abstract ideas, unless it has unique and associated hardware components, and/or unique processes that enable the technology to function. 

Therefore, the very mechanism for protection and unfair advantage in this context lies in the execution and business model innovation of the startup. In a region that already has access to finance challenges,  it is important that ecosystem enablers provide a level playing field to foster trust through implementing proper governance processes. 

The need for clear rules for open innovation

In spite of the potential risks, as with any new process, open innovation and innovation procurement requires a different management approach, and involves insights from actors that fall outside of traditional supply chains, or in the context of organisations, outside the traditional networks, such as innovators.  It requires clear rules and expectations to guide the process. These rules aren’t just useful for the problem owners and problem solvers participating, but they also help establish a more predictable expectation of the process, not to mention, build trust. 

Outside of articulating the problem or question at hand, incentives, and logistics of the challenge, these rules should set out very clearly the following:

Establish clear objectives and goals:  Recognising that there are many models of open innovation expression, from Innovation challenges, startup-corporate partnerships, startup incubator / accelerator, tech studios, business acquisition, co-creation labs, co-working and co-living spaces, Intrapreneurship and hackathons, it is extremely important to set out the objectives and goals of the proposed alliance and select an appropriate model that fits the criteria.   

Intellectual property expectations:  You need to set out who will own the intellectual property if your company decides to adopt an innovation as the result of open innovation. This is crucial to give participants confidence in the process. 

Risk management and compliance:  As value seeking companies adopt open innovation as a competitive strategy, it is also clear that this strategy is also accompanied by risk and rent-seeking behaviour. However, risk management seems to have been overlooked by many open innovation networks. It is important for organisations, public, private or international, to consider risk management as part of their process to safeguard innovators. In an era where the region has suffered significantly from reputational risks due to OECD/FATF (Organisation for Economic Co-operation and Development/Financial Action Task Force) recommendations for weak regulatory compliance and anti money laundering regime, it’s important that even donors should adhere to basic corporate governance due diligence practices to avoid unintended consequences, not to mention the negative impacts of their brand. 

Data protection:  While the region might not necessarily have a regional harmonised framework for data protection, it should be best practice for open innovation networks to safeguard innovators data. Proper data protection policies and cyber security disclosures are necessary.  

Access to Catalytic First-Loss Capital

While we recognise some risks, beyond innovation opportunities: digital transformation, learning by doing, etc.… the benefits of open innovation challenges are countless and far outweigh the risks to open innovation. 

For startups especially, this is definitely a go-to mechanism to access first-loss catalytic capital. Let’s face it, unless you have sufficiently de-risked your business and proven the market, investors would not come running because it’s a high risk game – but you do need resources to prove them otherwise. 

Just understand this principle, as a company, you may have less control over your projects and ideas once it’s picked up by other companies, or can even find their way to new markets via other parties. Therefore, if you’re developing a sensitive or commercially valuable product, requiring a patent for an unreleased product – then open innovation might not be appropriate for you, as it could result in a loss of intellectual property.

As an ecosystem enabler, just be mindful that open innovation takes a lot of time and effort to get right. Not only do you need to set clear rules for the process, but you also need to dedicate the time and resources necessary to oversee the process and manage public interactions. This can be tricky. 

The landscape is changing. It is clear that innovation procurement promises to shape the future of the Caribbean, helping the region fast forward its trajectory towards an inclusive Digital, Green, Blue, and Orange Economy. 

Telly Valerie Onu is the Managing Director, Quintessence Consulting, DBA QGlobal, and the Co-CEO, and Chief of Governance of Beyond Capital Markets.

Telly is an experienced Digital Economist, Global Strategist, Management and Development Specialist, with a passion in industry and enterprise transformation. Telly is also an International Speaker, Blockchain advocate, Impact and Fintech Innovator, venture ecosystem builder, and a member of the working group on the Eastern Caribbean Currency Union (ECCU) Payment System and Financial Innovation.

Image credits:  Tumisu (Pixabay);  European Commission 

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That is no longer always the case. Kazakhstan and Guyana launch rockets into space carrying satellites from Mexico and Colombia. As nontraditional markets and developing economies continue to grow, the demand for services has shifted from the traditional paradigm of southern countries like India providing services to northern countries in Europe and North America, into a more complex, peer to peer structure. Globalization means that services can now be delivered from anywhere, and offered to anyone.

The Caribbean is illustrative of this. Islands in the Greater Antilles traditionally had mining and tourism based industries, but are now are top call center destinations. The twin-island country of Trinidad and Tobago is a great example of the next wave of human talent primed for the knowledge economy. Trinidad and Tobago has historically built its extremely successful economy on petroleum and natural gas, but unbeknownst to many, is now a world class source of financial, accounting, and technology talent.

Trinidad and Tobago has long had one of the most developed economies and highest living standards in the region, thanks to its success and wealth in the oil business. Also contributing is their globally known tourism featuring their world-class Carnival, Soca Music, and Indian influenced cuisine. What many people still are not aware of is that due to a consensus among all political sectors, and in general society, Trinidad and Tobago made a strategic decision some time ago to diversify its economy and move up the value chain to best be prepared for the globalized future. The country has gained accolades for its success in this area. A World Bank Group flagship report, “Doing Business 2015: Going Beyond Efficiency” cited Trinidad and Tobago as “one of the ten economies improving the most across three or more areas” compared to 2013 & 2014.

So, what did they do? They started with, as a base, their success in petroleum, and duplicated the model that the government used to develop that industry. In petroleum, Trinidad and Tobago educated its citizens so that they were not just the laborers on the oil and gas rigs, but the engineers, pilots, geologists, and scientists who ran the business. For IT, finance, and accounting, Trinidad and Tobago has done the same: Trinidad and Tobago has invested in ensuring that the quality of its primary and university education is world class. This has resulted in the highest Human Development rating of any Caribbean country, a literacy rate of 98.6 percent, and an astounding almost 60 percent university participation rate.

• Population: 1.3 million
• GDP Per Capita, in US Dollars: $20,611 (2013)
• Total GDP $27.7 Billion

How did Trinidad and Tobago achieve this? They started early by providing each secondary school student with a laptop, software, and support for use in education through their “eConnect and Learn Programme.” They invested in ensuring that the quality of the education in Trinidad and Tobago’s 48 universities is at a world class level. Evidence of this is the large number of educational opportunities that are recognized by the Association of Chartered Certified Accountants (ACCA), which has made Trinidad and Tobago a country with one of the largest quantities of Chartered Accountants in the world, relative to its population. A key point of consideration is that ACCA recognized accountants are already competent in International Financial Reporting Standards (IFRS) and don’t require additional training to function in global finance.

Not content to stop there, Trinidad and Tobago has made university education through the undergraduate university level free, and graduate degrees such as Masters and Doctorates are subsidized by the government at 50%, as they work towards their goal to create a knowledge centered economy. This has presented the island nation with a very interesting challenge, and a “good problem” to have. The workforce is so educated and talented that their capabilities exceed the availability of professional career opportunities. This has led to the challenge of “underemployment” as the economy moves to diversify from relying overwhelmingly on the petroleum sector. While some companies, like Scotiabank, The Royal Bank of Canada, and Citibank have recognized this and moved to take advantage of Trinidad and Tobago’s under-tapped talent, it still remains a “best kept secret” in many sectors. This despite the fact that Trinidad does not face the tight professional labor market and rising energy and business costs of Costa Rica, or the lack of postgraduate level talent in places like Jamaica or the Dominican Republic.

Table1: Country Comparison of Higher Education Institutions per 100,000 (Sources: UNESCO, World Bank, Accreditation Council of Trinidad and Tobago, Tholons)

This workforce, in a country of almost 2 million, is highly educated, but just as importantly, highly motivated, and with graduates eager to take an opportunity in their chosen field. This makes Trinidad and Tobago an obvious venue for those enterprises looking for the ideal location for back-office operations, shared services, and even contact centers. In addition to chartered accountants, and other finance professionals that make Trinidad and Tobago a prime location for Finance and Accounting Outsourcing (FAO) and shared services work, Trinidad and Tobago is also an excellent location for the rapidly growing Legal Services Outsourcing (LSO) field. Trinidad and Tobago is a country that governs using the English Common Law System, so training is compatible with the United States, Caribbean, and British Commonwealth Countries’ needs. The high number of law school graduates far outstrips the local demand for lawyers, meaning that a ready and willing corps of young lawyers and paralegals are available to do the heavy lifting for offshore law firms and corporations.

Trinidad and Tobago’s budgetary commitment to educating its students when compared with select countries across Latin America and the Caribbean is shown in Table 2.

Table 2: Total public educational expenditure per pupil as a percentage of GDP per capita (Source: UNESCO Statistical Institute)

Energy costs are low, due to the country’s abundant natural resources, and the infrastructure is modern. Electricity is 3 cents (US) per kilowatt hour, compared to 35 cents per hour in Barbados, 38 cents per hour in Antigua/Barbuda, and the World Bank’s 2012 Doing Business Report places Trinidad and Tobago in the top 25 out of 183 countries for ease of access to electrical power. There is a competitive telecommunications environment, and a $40 million (USD) Tier 3, carrier neutral data center is underway.

Trinidad and Tobago is a country with a stable government, social harmony, and an attractive lifestyle for both “Trinis” – as citizens call themselves, and expats. English is the primary language spoken, with a considerable population fluent in Spanish as a second language, due to the country being in many ways, a bridge between Spanish-speaking South America, and the mostly English-speaking Caribbean. A founding member of CARICOM, the Caribbean Community supranational organization, the country has strong and friendly relationships with its neighbors.

Besides the abundance of talent and human capital, Trinidad and Tobago offers the nearshore advantage for outsourcing and shared services with multiple direct flights in and out of European, North American, Latin American, and Caribbean transportation hubs. Unlike offshore outsourcing or shared services options, site visits take a matter of a few hours instead of a few days.

Direct flights (Not including the numerous direct flights to the Caribbean and South America):

• JetBlue                  –    New York
• British Airways     –    London
• Copa                     –     Panamá
• United                   –     Houston, Newark
• WestJet                –     Toronto

As a Caribbean nation, the time zones are aligned with the United States and Canada, fostering easy communication between American and European colleagues, headquarters, and peer offices. No longer must teams take late night or pre-dawn calls, or stay in the office after-hours to collaborate.

One of the best reasons to consider Trinidad and Tobago as a financial shared services or outsourcing option is the business friendly government, and value added services offered by the country’s investment agency, Trinidad and Tobago IFC, and their FINESS (Financial Institutions Support Services) offering to encourage investment in the finance and accounting sector. These initiatives have enjoyed consistent and long term backing from the parliament, irrespective of government administration, offering investors and operators the assurance of stability, consistency, and a pro-business atmosphere.

Trinidad and Tobago’s International Financial Centre provides a myriad of services to operations wishing to expand into the country, from help with site selection and business case justification, to working with the national responsive parliament when necessary to consider legislation that might be necessary to accommodate new business realities. The TTIFC also works to help enterprises avail themselves of the tax incentives and investment benefits that have been established to encourage foreign investment in the services and high-tech sector.

What does all this mean? While there are much bigger neighbors, Trinidad and Tobago is an often-overlooked contender that deserves more attention. The World Economic Forum has classified Trinidad and Tobago as an “Innovation Driven Economy,” The only country in Latin America or The Caribbean to achieve this designation. That places them ahead of Brazil, Mexico and Chile, and puts them in the same class as Germany, Canada, Norway, and Singapore.

Based on the definition of the World Economic Forum, this means that Trinidad and Tobago:

1. Leverages its natural resources with the exploration of new technologies and methods of generating and exploiting energy
2. Diversifies its economy to take advantage of niche markets where it is especially competitive
3. Attracts and then leverages strong anchor players in global market sectors to develop clusters (as has happened in Silicon Valley, or Hong Kong, for example)
4. Has developed strong and stable government and regulatory institutions that allow institutions to make long term investments and strategic decisions
5. Has created a supportive environment, socially, institutionally, educationally, and economically, for the nurturing and growth of entrepreneurs, enterprises, and civil society

In summary, Trinidad and Tobago is a country that is large enough to provide an ample, capable professional services workforce, while being small enough to be responsive and adaptive to the needs of companies looking to expand. The talent is unmatched, with an ample supply of chartered accountants, and a worthy corps of legal and IT professionals to support high tech banking and finance work.

According to the Inter-American Development Bank (IDB) Tholons Report “Exploring Opportunities in the Global IT Services Market,” Trinidad and Tobago has one of the highest concentrations of tertiary level graduates in the Latin American & Caribbean (LAC) region, annually churning out about 531 higher education institutes (HEI’s) graduates per 100,000 people.

(Source:  invesTT)

Free education through the undergraduate university level and universities open to cooperation with the business sector to tailor education to employer needs means that employers need not worry about the talent well running dry. A business-friendly government that is actively seeking foreign direct investment in its employment sector, is willing to do anything reasonable that is necessary to win deals, and the top-tier quality of life makes Trinidad and Tobago an attractive destination, where expat managers and visiting colleagues won’t be clamoring to leave.

Any company that does not consider Trinidad and Tobago for BPO (Business Process Outsourcing) or Shared Services—especially in the financial services sector, simply has not conducted thorough due diligence.

Image credit:  This is Trinidad

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Loren Moss is an Analyst & Editor focused on The Americas, IoT, BPO, Customer Experience, Finance, & Shared Services. To learn more, or contact him, please visit lorenmoss.com

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Ministers, Permanent Secretaries, CEOs, CIOs and the public at large, including our children, need to know what threats we will face in 2015 and how to defend against them. Arming ourselves with this information: on how to protect ourselves, will be critical from a personal safety, national security /law enforcement and economic development perspective. This article focuses on the top threat areas we in the Caribbean must be aware of in order to defend against them. We will explore the dangers that lurk within organisations, mobile malware threats, the sophistication of attacks, cyber terrorism and cyber espionage. With that said, the CCSC 2015 predictions are as follow:

Sophisticated attacks

The level of sophistication of attacks will continue to increase, which will make identification, detection and remediation harder for systems administrators who are using yesterday’s training and methodologies to address the new targeted threats. Organisations that continue to run Windows XP software, which cannot adequately detect and protect their information assets, and obsolete software will make their systems easy targets for hackers and cyber criminals as the level of vulnerabilities and exploits are high and easily available. Mail and Web servers fitting this profile will add to an already forecasted increase in website defacements. In these environments several variants of crimeware like cryptolocker will be rampant and many will be left with money missing from their bank accounts and unplanned downtime.

We strongly recommend security testing be included in the software development life cycle for new software, upgrades to legacy software and web applications development. Nobody builds from scratch anymore; most developers use interface modules to create the full solution. This methodology, while delivers new services and functionality quickly, unfortunately, security is still not built into most development cycles. Every application, every integration is another opportunity for risk. Flaws in the old code, including legacy proprietary code and open-source code will open up major data breaches in divergent applications because the code was never properly vetted by third parties before or after integration. Security testing before roll out will save many organisation the downtime, cost and embarrassment associated with a security breach due to a lack of security testing of all interfaces and applications.

Retail cyber attacks

With millions of dollars just there for the taking, retail cyber-attacks seeking credit card data are likely to continue in 2015. However, we predict a decline in the growth on a global scale but an increase in the Caribbean as security measures such as Chip and PIN technology are mandated internationally. As a result, the cyber criminals will shift their focus to the Caribbean. In a region with a low level of security and the length of time commercial banks take to migrate to international security measures, it will be the perfect opportunity for digital pirates to wreak havoc on our bank accounts and credit cards. ATM scams, phishing scams and the like, which target bank accounts and credit card data will rise and finally force Caribbean financial organisations to raise their security policies.

Online scams

There will be an increase in the number of bank customer being exploited in online scams promising new jobs, commission for distributorship of a new product, and payment for assistance in accounting and wire transfer transactions. The unsuspecting victim will be forced to repay large sums of monies they have wired or transferred to parties overseas which were first stolen from compromised bank accounts. The illusion of receiving an additional salary for what is seen as little or no work will be too compelling to resist. Many have fallen victim already and more are predicted as the state of the economy, plus the basic need for persons to attain additional income, will drive many down the wrong path.

Mobile malware

Mobile malware will complicate the threat landscape by reaching an all-time high as hackers and fraudsters continue to develop ways to gain access to our confidential data. While the data on the devices might be of little value on the black market, mobile devices will be targeted for credential-stealing to be used at a later date. In other words the mobile devices will be used as the conduits to the cloud and private networks. As more organisations use various kinds of mobile devices to access their data, we will see cyber criminals going after the mobile device.

Other ICT-facilitated crimes

Crimes associated with exploitation of our children, human trafficking, illegal drugs, gun smuggling and pornography will continue to use information and communication technology to execute these crimes. Therefore an integral part of all investigations will highlight the need for appropriate legislation, trained investigators and prosecutors. Criminals will continue to uses social media and professional networks to perpetrate these crimes making it more difficult for law enforcement to keep these criminals at bay.

Cyber terrorism and warfare is rampant on the global level and Caribbean governments need to ensure that there is an appropriate plan to address nation-state hacking and adversaries wielding computers as weapons in the future. Remember it does not require nation-state funding to take advantage of current tools to create destructive malware for targeted attacks. Be wary of Trojan gifts as we embark on the one laptop per child initiatives in the region. In addition, cyber espionage tends to be from countries with forecasted high economic growth to protect and advance their growing position.

Our 2015 predictions for the Caribbean is a litmus indicator of where we are now, and what we need to do proactively to defend and protect our personal safety, national security and economic development throughout the year. Ready or NOT!!! This is not a storm that is hovering in the Atlantic Ocean that we can wait and hope it moves to the north or south or even downgrades. The reality is that some organisations are already compromised and will feel the effects of this evolving digital threat in the coming weeks and months. The lack of preparedness for this threat will lead to Caribbean governments and private sector organisations being battered by an increasing range, type and frequency of attacks which demand an appropriately sophisticated response by those charged with cyber defense.

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Mr. Deon Olton, a UWI graduate and Certified Ethical Hacker has worked with LIME, FLOW and Barbados Shipping and Trading (now Neal and Massy). He is also the co-Founder, of the Caribbean Cyber Security Center, and as CTO, he is responsible for developing proactive plans to address the growing cybersecurity threats to the Caribbean region’s economies.

Image credit:  www.perspecsys.com; Deon Olton

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Day 2 of the Regional Youth ICT Innovations Training Workshop saw a large turnout, despite the fact that the same day was a recently reinstated national holiday, VC Bird Day. That level of interest should have been as expected, as the preceding day had a high degree of youth participation and enthusiasm.

In his introductory remarks, the Honourable Melford Nicholas, Minister for Information, Broadcasting, Telecommunication and Information Technology, described an affinity to the Singapore model of using ICT to make transformations in the civil services, and then towards developing professionals and innovators. In the same vein, he outlined partnerships with certain ICT vendors, which should bring the Antigua and Barbuda Civil Service, and their abilities to satisfy demands from their customers, into the 21^st century within the next 18 months.

Echoing the importance of ICT as it related to youth development, Sylvester Cadette, of the International Telecommunications Union (ITU), and Jimmy Rodriguez of the Caribbean Association of National Telecommunications Organisations (CANTO), both outlined how their respective organisations were committed to same. The various arms of the ITU’s Youth Programme was highlighted by Mr. Cadette, whilst Mr. Rodriguez mentioned CANTO’s recent Memorandum of Understanding with the Caribbean Industrial Research Institute to support mobile app development and commercialisation, as well as their existing iCreate programme.

Kafrah Murray, a former winner of CANTO’s iCreate award for 2011, laid out his journey to the audience: from a novice non-programmer, who taught himself to code, to having successfully completed several revenue generating apps and websites that have become very popular in Trinidad & Tobago, including Triniberry.com, “Eat A Doubles” directory app, and “Inter-Island Ferry Schedule” app.

Kern Elliot related to the audience his experience thus far with his app “Chune”, which has been designed to give more exposure to up and coming artists who struggle to get radio airplay. It did not take long for the participants to start repeating “chune boi chune” every time his app or name was mentioned! In the discussions following his talk, we spoke of how Ken faces a monumental task of swimming against the tide of Caribbean sentiment that consumers do not have to pay for music, and change the mindset of consumers giving artists their just due. Along the vein of giving the artists there due, the issues surrounding piracy was raised, following my Ethics, Privacy and Security presentation.

Participants engaging in the Q&A following a presentation

The presentation that captivated participants was one from Rene Holder, CEO of Lab206 Studio, who wowed the audience with his studio’s 2014 show reel. He then explained the process of creating an animation and illustrated the entire process via a piece his studio produced for a Turkish customer. While Rene is now seeing success in his venture, like the other presenters, this did not come easy. In speaking with him privately, we discussed his hopes of having better support from official programmes seeking to push animation as a key sector for investment and growth.

Common themes kept popping up between presenters and they were used this to link the various presentations together as a single cohesive message. Such themes included:

• defining a venture’s key value proposition
• creative means to fund your venture via savings and siphoning off from day job earnings, and
• according to Rene, “finding your tribe” or that appropriate mix of persons of similar mindset who can help you on your arduous journey.

The event organizers ought to be commended for building capacity in both directions: by not only developing the youths on their journey towards ICT innovation and entrepreneurship, but also giving regional entrepreneurs and experts an opportunity to share their experience and wisdom. Some of the ideas thrown out by the youths in conversation and questions were centred on better payment facilities, improving methods to deliver information to tourists, improving neighbourhood security, and developing animation as an industry in their own territories. These are all good ideas which are engaging the attention of experienced ICT practitioners regionally. As one of the organizers pointed out; the next big idea from the Caribbean in terms of ICT could come from participants of this workshop.

Image credit:  Ashton Fearon

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Shiva Bissessar, B.Sc.(Hons.) MBA, M.Sc. assists organizations with their ICT and Information Security strategy and governance via his consultancy Pinaka Technology Solutions. His last article “Of Critical Infrastructure and Cyber Security Risks” was republished by international industry website Automation.com. He is currently doing a study with UN ECLAC on the risks and opportunities of digital currencies in the Caribbean. See also his personal account as a first time Airbnb user on this trip.

In Part I, published on 26 August, we looked at a defined problem facing small Caribbean content creators who are attempting to monetise opportunities on the global stage, but are left with the headache of resorting to tradition payment infrastructure to actually receive payment.   We also looked at some of the pitfalls of the traditional payment and remittance systems which they are forced to rely upon and the opportunity created by these inadequate systems for new digital currency based services.

In this article, we explore the response of authorities to the phenomenon of digital currencies in the context of Caribbean entrepreneurs willing create products and services in the space and the global context of nations willing to evaluate risks and opportunities in the space.

Encouraging Growth Of Caribbean Digital Currency Service

My own efforts to stimulate discussion on the topic with financial authorities in Trinidad and Tobago have been unremarkable and in the meetings I have had, I sense more unwarranted fear of this financial disruptive innovation than a willingness to objectively evaluate risk and opportunities. The Koblitz Group describes itself as offering Caribbean based crypto currency digital exchange services, wholesale mining facilities and digital currency ATM services. However after several months their digital currency exchange website still indicates formal launch as being imminent. Generally speaking, to launch such services there may be various obstacles to overcome such as; seeking clarity on how operations may be perceived and classified under the Financial Institution Act, 2008 (as in the case of Trinidad and Tobago), obtaining necessary bank accounts to facilitate operations and currency trading and obtaining facilities to allow for the mining of digital currencies. I am yet to see any clear statement or even signs from any Caribbean Government which can be deemed as supportive of digital currency entrepreneurs.

Koblitz Group co-founder, Oliver Gale, offered the following quote as a summation of the roadblocks they have faced in trying to get established in certain Caribbean nations:

“Regulators are very slow to respond and educate themselves on digital currency technology. Whilst other small economies around the world respond proactively to this emerging technology (See Isle of Man) to establish themselves as forerunners in a new age of finance we have found Caribbean government bodies resistant to change. This is a shame because not only do our economies need stimulation, but our people need help in entering the age of e-commerce and m-commerce.”

How is this different from what is taking place globally? The UK Treasury will soon be embarking towards understand the risks and opportunities posed by digital currencies while in the state of New York in the US has extended the period of comment on their proposed controversial regulatory framework for the virtual currency industry.   Closer to home in Latin America, some see Argentina’s debt default and Venezuela’s high inflation and foreign currency controls, as making these nations more likely to adopt Bitcoin. It is encouraging that mobile money solutions have been developed in some Caribbean nations including Guyana, Jamaica, Dominica Republic and Haiti. In an article where Mr. Kosta Peric, Deputy Director for the Financial Services for the Poor at the Bill & Melinda Gates Foundation, espouses the virtues of “financial inclusion” and outlines his mission to reach the “un-bankable”, we get a possible glimpse of the future role of digital currencies (e.g. Bitcoin), payment protocols (e.g. Ripple) and the role of new actors (e.g telcos) in achieving such a mission. Do we have the courage to consider digital currencies as possibly augmenting mobile money solutions?

Disruptive Future of Financial Services (Source: Kosta Peric)

Getting back to the initial problem highlighted by Ms. Golden; post CIGF meeting, I asked her for further comments on the problem and her thoughts on how new payment infrastructure can assist small Caribbean content creators:

“There is a great need for more education on what payment options are available for entrepreneurs to make use of in the region. While Paypal is an option many would like it is not available for receiving payments in quite a few Caribbean jurisdictions. The high costs of opening merchant credit card accounts is also a further barrier.  It would be necessary to see more promotion on the potential of Bitcoins and other virtual currencies as an alternative that entrepreneurs can use.  Banks should also be encouraged to find new ways of facilitating the needs of businesses who function primarily online”

So if we are serious about encouraging participation in the Internet Economy, there is a necessary first step of clear direction from respective Caribbean governments to have authorities objectively analyze the potential benefits of digital currencies and then place necessary policies and measures in place to deal with the risks whilst ensuring that innovation to create the payment systems which small Caribbean content creators need and other services are not stifled.

Image credit:  antanacoins (flickr)

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Shiva Bissessar, B.Sc.(Hons.) MBA, M.Sc.  With over 17 years of industry experience, Shiva Bissessar currently offers corporate entities and public institutions consultancy on strategic matters of ICT and Information Security.  Of late he has been focusing on bringing awareness to cutting edge issues within the Information Security domain including areas digital currencies, cyber security and cloud (security and privacy).

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I recently participated in the Caribbean Telecommunications Union (CTU) hosted 10th Caribbean Internet Governance Forum (CIGF) over the period 6– 8 August, 2014, which featured several distinguished speakers on various topics of Internet Governance ranging from the administration of Country Code Top Level Domain (ccTLD)  to Cyber Security to increasing Caribbean participation in the Internet Economy.  I myself presented on the topic Achieving Caribbean Cyber Security and the relaxed atmosphere of the room was very conducive to lively audience participation throughout the forum.  The audience was made up of senior stakeholders in ICT from various Caribbean/CARICOM member states, international organisations and private institutions.  This included participants from ICANN (Internet Corporation for Assigned Names and Numbers), ARIN (American Registry for Internet Numbers), ISOC (Internet Society), LACNIC (Latin America and Caribbean Network Information Centre), CARICOM, ECLAC (United Nations Economic Commission for Latin America and the Caribbean), CARCIP (Caribbean Regional Communications Infrastructure Program), TATT (Telecommunications Authority of Trinidad and Tobago), iGovTT (National Information and Communication Technology Company Limited), Digicel, Flow and various ccTLD administrators.

How Do Caribbean Content Creators Receive Payment?

The exploration of increasing Caribbean participation in the Internet Economy took the form of presentations which sought to make the case for utilising gains in broadband penetration rates and intra-regional pathways (via increased IXP deployment) to increase the level of Caribbean digital content for local, regional and international consumption. Ms. Nerissa Golden of www.goldenmedia.co, named one of TechLink’s 2013 Caribbean Innovators for her work in technology public awareness, gave a very insightful presentation (available on the CTU’s event page)  on this very topic which touched on the perspective of entrepreneurs actively participating in the space.  She spoke of the need for digital content creators to continuously develop and output material to stay relevant and of being knowledgeable of Caribbean digital video content creators who missed out on opportunities for monetisation due to lack of adherence to technical standards in production as expected by big media houses. She then spoke of something which really struck a chord with me.  She questioned the availability and quality of traditional payment systems, like PayPal and MoneyGram, to meet the needs of small digital content creators.

“What is critical and many are failing at is the monetization of their cultural goods.  A major challenge is that many islands are not in the PayPal system for receiving payments. This has restricted more artists to be able to accept purchases direct from their websites.”

Now, it’s difficult enough for Caribbean content creators to find opportunities to monetise their work, but when you add onto that the burden of unresponsive methods for them to actually receive payment, are we really encouraging growth in this area?

Problem With Existing Payment Systems

At the end of her presentation the moderator, Mr Nigel Cassimere of the CTU, asked an intriguing question as to what can be done at the government policy level to assist Caribbean content creators. It was at this point I interjected; empathising with the small content creators mentioned by Ms. Golden and suggested that exploration should take place outside of traditional payment systems to seek out digital currency systems which offer greater geographical reach, higher availability, lower transactional costs and faster transmission rates.   I went further to offer that if Caribbean governments were serious about encouraging participation in the Internet Economy they need to examine the risks and opportunities of digital currencies and encourage systems which can facilitate payments to small Caribbean content creators. Mr. Bevil Wooding of Packet Clearing House also chimed in; suggesting that reliance on traditional payments systems in such circumstances removes wealth from the Caribbean economies.

Figure 1: SWOT analysis of Digital Currencies in Trinidad & Tobago (Source: S Bissessar)

I developed the above graphic for a presentation delivered at the 6^th South School of Internet Governance (SSIG) 2014 which attempted to show the potential benefits of digital currencies to Trinidad and Tobago, and by extension the Caribbean, in the context of expensive traditional remittance systems imposed on African nations and other discussed factors. Given Ms Golden’s initial stated desire for better traditional payment systems, it is instructive to note that in November 2012, WordPress began utilising Bitcoin to pay their bloggers in certain countries where PayPal did not operate due to political or other reasons.

Of late, PayPal’s ‘politics’ has been an increasing source of concern, hence why should we leave our entrepreneurs no alternative other than traditional payment and remittance systems?  If Caribbean content creators were to receive payments in Bitcoin or other digital currency they would then require the services of a digital currency exchange to convert said digital currency into the fiat currency of their choice?  Are we currently encouraging the establishment of such digital currency exchange services?  What has been the response from Caribbean Governments and Central Banks to the digital currency phenomenon?

Image credits:  William Warby (flickr);  S. Bissessar

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Shiva Bissessar, B.Sc.(Hons.) MBA, M.Sc.  With over 17 years of industry experience, Shiva Bissessar currently offers corporate entities and public institutions consultancy on strategic matters of ICT and Information Security.  Of late he has been focusing on bringing awareness to cutting edge issues within the Information Security domain including areas digital currencies, cyber security and cloud (security and privacy).

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Cybersecurity predictions for the Caribbean for 2014 paint a dismal picture for the private and public sectors in the region. We expect to see a spike in the number of security breaches, ranging from website defacement and invasion of privacy on smartphones, to full-scale attacks on systems still running Microsoft Windows XP. These breaches will have an impact on the confidentiality, integrity and availability of data, as well as the systems organisations need to stay online and in business. Some may think that these predictions are merely a scare tactic, but I am sure those who are foolhardy and not take them seriously will end-up on the front page of the leading publications in the region.

Despite the gloom and doom there is hope. There are three cybersecurity resolutions that governments and organisations ought to consider in order to avoid much of the dangers that lie ahead. A new approach to cybersecurity in 2014 is needed because all of the headline news of 2013 suggests that we are under attack.

Raising the cybersecurity profile of an organisation or government in 2014 will not get any easier. The threat landscape is ever evolving, as there are vulnerabilities in software, PCs, smartphones, servers, routers, firewalls, security policies, and the list goes on. The recommended resolutions are critical to ensure that we, in the Caribbean, reduce the possibility of a breach, or the downtime as a result, and will assist organisations in moving to a better cybersecurity state.

Resolution 1:  Recognize the threat

There ought to be a clear understanding of what impact a network breach will have on your organisation. Questions to be answered include:

• How much money will you lose for each hour or day the systems is offline?
• What is the cost associated with restoration of service?
• What is the public relations cost to manage the effects of the breach?
• Further, should data be lost, how will it affect your organisation from an operational, financial and customer retention perspective?

Cyber threats must be seen as a business continuity issue and not an IT problem. It requires direction from upper management since the effects can bring the entire business to a halt. The days when installing an antivirus programme on all PCs was the answer to all our problems are long gone. There is need for awareness at all levels of an organisation to foster a security-minded culture.

Our predictions show that the level of sophistication of attacks will continue to increase and will make identification, detection and remediation harder for systems administrators. However, ensuring that every employee understands how he or she contributes to the overall organisational defences is critical.

Resolution 2.  Invest in your organisation’s cybersecurity defences

Investing in your organisation’s defences is critical and can make a big difference in securing its data, and its financial and infrastructural assets, as an outage or breach will have high cost implications. Buying a firewall and antivirus is a good starting point, but it is not enough. There is rarely a good time to argue for investment dollars for IT, especially during times of budget cuts and job lay-offs. However, investments in security now will be far cheaper than fixing breaches after the fact.

Greater efficiencies are now needed to offset reduced staffing and services that are a result of budgetary curtailing. Nevertheless they can be accomplished, provided the IT and security teams plan and invest in technical, management and employee awareness solutions that address the most pertinent threats.

The past pattern of cyber intrusions in the region, plus the predictions for more aggressive activity on critical infrastructure clearly shows the need for proactive cybersecurity. Losing valuable data, in and of itself, is bad enough. However agencies cannot put an accurate price tag on the loss of public trust and company image that accompany highly publicized data breaches. A smaller investment up front can go a long way towards avoiding such a dire scenario.

3.  Choose a cybersecurity partner

With all of the uncertainty of whether your organisation has an adequate defence system, or which phase of the attack progression it is in, it is critical to leverage the resources of a cybersecurity partner who can help. No matter who handles your network security, you need to have an independent assessment of where you are.

Do you get reports on the number of attempted intrusions? Do you know who has access to your data, where it is and if it is secure? Have you ever had a penetration test and or network vulnerability assessment as part of the overall IT Risk Assessment? If you answered NO to any of these questions, your organisation needs to determine the state of the attack progression it is in.

Getting an independent third party assessment is mandatory at this stage of the region’s maturity.  Your cybersecurity partner must have the ability to take a 360-degree look at your organisation, classify the threats and quantify the losses as a result of a data breach. In essence, a good cybersecurity partner will have key knowledge and experience that your internal IT staff may not possess and should be vender agnostic. These qualities are essential to ensure that your chosen partner has the skills and capabilities to help you find and remediate weaknesses in your organisation that investments in technical solutions and tools alone cannot identify.

In summary these three resolutions are essential for any organisation that is serious about not being hacked or exposed to data losses, and should be used as a roadmap to navigate this ever-evolving threat referred to as cybersecurity.

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Mr. Deon Olton, a UWI graduate and Certified Ethical Hacker has worked with LIME, FLOW and Barbados Shipping and Trading (now Neal and Massy) and in his outstanding career, and has made a noteworthy contribution to ICT and Cyber Security across the Caribbean.

Mr. Olton’s experience in telecoms, ICT and Cyber Security has allowed him to perform roles in Business Process Re-engineering, IT Risk Assessment, Security Awareness Training and long-term strategic IT planning. With this depth of experience and passion he has founded Enterprise Solutions to provide Telecoms Cost Management consulting services. As co-Founder, of the Caribbean Cyber Security Center, as CTO he is responsible for developing proactive plans to address the growing Cyber Security threats to the Caribbean region’s economies.

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Image credit:  Free Press Pics (flickr)

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