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NJ Tech Council

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Home /  News /  Tech News  NJ Tech Council

Spring 2018 Edition

We ended 2017 on a high note with a fantastic annual Awards Celebration. The evening celebrated the vibrant tech ecosystem that exists within New Jersey. A month later, the Tech Council hosted Tech Day at NJIT where we heard a keynote from Sean O’Sullivan, who leads the world’s largest accelerator followed by panels on supply chain and machine learning. We’ve had a great start to 2018 so far! Next up is our 21st annual Venture Conference featuring our keynote, Ben Lehnert from Wunderlist and Microsoft. It will be a packed day in Jersey City as we have over 40 pitchers and 50+ investors in attendance.

In May, we are introducing our inaugural Future Forum at Bell Works which will include HealthTech trends in the morning and our Innovation Forecast in the afternoon which will focus on voice interface technology. The concluding event of the day will be Winners’ Circle, a new event, that will celebrate STEM talent from throughout New Jersey, and recognize Bell Labs alumni entrepreneurs as well all the state’s distinguished honorees from 2017.

We continue in our mission to strengthen the technology and innovation ecosystems and look forward to partnering with the new administration and our elected officials to attract and retain growth companies, continuing the state’s brilliant legacy of invention and innovation. We look forward to seeing you at our events this year so we can collaborate and help you grow! – James C. Barrood, President and CEO, NJ Tech Council

Ben Lehnert, Director of Product Design for Outlook at Microsoft

Corner Office



Talk about your fascinating background and your entrepreneurial journeys.

That’s a question with a potentially very long answer, given that I’m 16 years into my career. I will try and make it short. Feel free to cut and edit :)

I’m a 34-year old German designer living with my wife, daughter and 2 dogs (Vizlas) in Princeton, NJ. I’m the Director of Product Design for Outlook at Microsoft.

Although for the past 7 years my work is really mostly leading product organizations and companies, I still see myself as a maker, and hope I can always keep that at the core of my entrepreneurial work. It’s something that was instilled in me at a very early age, when I was watching and learning from my grandfather who was a baker and pastry chef running his own little shop in a small German village.

Fast forwarding 15 years or so, I got into design and founded my first “studio” when I was 16 years old together with two friends of mine. One was a developer, the other one copywriter. I learned a lot during that time, mostly how to work hard to acquire good clients that would in the end pay you for doing good work. A lesson that’s invaluable for many reasons.

I then went into a vocational education to learn the craft of design and typography literally from scratch, getting into metal type setting, doing old-school layout work with film and learning to retouch photos without photoshop. Probably the most valuable 2 years spent professionally. Since I thought it was important as a designer to have a degree, I put in late hours a er work to get my portfolio ready and apply to the best art colleges in Germany. I got into the three I applied for and ended up studying for a few semesters.

The fascination with a degree didn’t last all too long. I wanted to do real work, for real client and have real impact in the world. So, I founded my second agency (SQUILD, pronounced “skilled”) with one of my former co-founders and another friend. We did lots of design strategy and branding work and were able to attract big clients from across Germany, and did some first international work too. We won some prices and by the time I decided to move on we had about 12 people working for us.

One thing I realized doing agency work for clients was that you can only go so deep if you’re not actually part of the companies you work for. We live in an age where the best experience wins in the market. So, for companies to win they have to go all-in and embed design thinking and doing into their organizations from day-1.

In 2007 one of my clients, a bio tech startup, offered me a position as CPO to do exactly that. I joined and was able to essentially design the entire customer and product experience down to the last detail, creating a culture that allowed us to transform world-changing technology for biobanks into products people loved to use. I was hooked and knew I could never go back to agency work ever again.  The company was thriving and was eventually acquired by a Japanese corporation.

So, in 2012 I joined an up-and-coming startup named Wunderlist, in Berlin, Germany. I joined as Chief Design Officer right after they had closed their series A funding and were bringing in more experienced leaders to grow the company. On our mission to help people get stuff done, Wunderlist made it easy and enjoyable to track and complete to-dos anywhere at anytime. Over 4 years the app became the category leader in the market, reaching more than 20 million users across the world, including being the top app in the US, Europe and China.

In 2015, Wunderlist was acquired by Microsoft . After spending the  first 6 months ensuring our team would transition successfully into Microsoft , we started integrating Wunderlist’s real-time sync technology into MS services and transform Wunderlist into Microsoft To-Do.

In summer 2016 I was asked to take on as position of Director of Product Design for Outlook Mobile and Mac, which expanded January 2017 to include all Outlook products and design research. I moved to the East Coast and am since leading a team of 50 product designers, engineers and researchers in New York, San Francisco and Seattle.

On the side, I have been successfully doing some angel investments together with my wife Cat Noone, who’s also a designer and founder of a health tech company called Iris Health. We invest very early in diverse teams and design-led companies, because we believe they turn out to be the best businesses. In summer we’re planning to take this to the next level and start a small early-stage fund called Hue Capital together with our business partner and friend Tyrone Ross.w

How did you get involved in Wunderlist? What did you learn from that experience?

I met Christian, the founder and CEO, through Twitter and was inspired and intrigued by his energy and the team he had build. We met for coffee a couple times and chatted about products and design for hours. A few weeks later Christian made me an o er to join the team. A few months later, I was on board. Building and growing a startup is an intense journey of ups and downs unlike anything I had ever experienced before. If you’re open it will teach you a lot about yourself, because you’re constantly on the edge dealing with all sorts of uncertainties and fears. Leading a startup team means managing your own psychology so the team stays on track.

Tell us about the tech ecosystem in Berlin.

When I joined Wunderlist in 2012 there was barely any tech ecosystem. There were a few startups around (eg Soundcloud, Wunderlist, EyeEm, etc), they all had their offices in very close proximity and meet ups where really just hanging out at each other’s offices. Today the ecosystem is much more mature, has gone through some ups and downs and has seen some significant exits, so that we start to see founders becoming angels investors which is a vital part for an ecosystem to sustain and  flourish. It helps that Europe is becoming more and more a tech hub, with significant money from VCs  owing into companies in Germany, England or Sweden to name a few. When we raised our last  financing round from Sequoia Capital Wunderlist became the first German company they ever invested in. Tech companies in Europe have the competitive advantage that they have to internationalize their products early on to succeed. Valuations and attitude are more sane and there’s a focus on building sustainable success.

Berlin specifically is a vibrant and unique city. It’s history mixed with the punk-attitude and counterculture makes it a great place for artists, designers and creative makers of all sorts to be. Cost of living is still relatively low compared to other international cities which is very attractive for startups who have limited resources. At the same time there’s a rich pool of talent to tab into, and Berlin has become a place many people from around the world want to live in which makes it a selling point when hiring top talent.

In your new role at Microsoft what have been your biggest challenges and opportunities?

I would say they’re both the same.  The company is going through a huge positive transformation, one that you can read about in Satya’s book “Hit Refresh”. Coming to Microsoft from a startup and as a design leader is both incredibly exciting and challenging. We have the chance to reinvent the company from the inside out and drive the cultural change to make the company last for decades to come.  There’s an incredible value in the brand and heritage of Microsoft, transforming such a big company takes everyone’s effort. Putting design and user experience at the center of everything we do, reasoning from user value instead as from technology, is a major cultural shift . There’s big ambition and immense clarity from our senior leadership that this is only path forward, and that’s really exciting. So, every day I’m trying to influence and energize my team and partners to build that company that we envision using what I’ve learned building a widely successful startup, bringing processes and philosophies to a big corporate company. The company that reinvents productivity and empowers people across the world to do more, through hardware and so ware products they love to use.  That’s a very different Microsoft than the one I grew up with. Tell us what you’re most excited about going forward? How will MS continue its resurgence as an innovator?

What are some of the biggest trends you’re watching?

In design:  There has been a new generation of design tools brewing over the past 3 years or so, blending the worlds of traditional design tools and code. Reducing friction in the design process and making product ideas real in code without major work involved will have a transformative effect for tech products and the disciplines themselves. In tech:  There’s a lot of interesting stuff happening across the entire tech industry.  Three things I’m really excited about because I believe they’ll have the most transformative effect on the world are voice and artificial intelligence as the new interface to the computational platform.  There’s a chance to make computing incredible intuitive and natural enhancing human potential. Naturally this comes with a lot of unanswered questions around the dangers and ethics, which is what I try to watch equally as thoroughly. Data Security is the third area I’m interested in. Everything from personal individual consent to decentralized and encrypted data storage / transfer will be a foundation for a digital future.

In startups: It’s interesting to see tech startups going into markets like  finance, health and education to disrupt markets that haven’t seen innovation in decades. In some of these markets, there are hurdles like regulations that make it a bigger challenge to win, but if they are successful there’s going to be a huge economic and social upside.

What can we expect from MS 5 or 10 years from now?

A lot :) As I said before, Microsoft is transforming itself and with our product and technology line-up as well as our global footprint we’re in a fantastic position to win the important platform plays of the future, whether that’s voice, AI, blockchain or any other product we have. What’s more, and that’s the important piece, Satya and his leadership team together with everyone at Microsoft is creating a modern product culture that is here to stay. A culture that is, unlike before, grounded in designing products people love to use every day. Products that bring real value to their users and help them do things they can’t do without them, empowering people to do more.  e reason why we’re so excited about reinventing productivity is because we help people make a real impact in the world. And that mission goes beyond the next decade.  That’s really exciting!

Stuart McGuigan, Chief Information Officer, Johnson & Johnson

Corner Office





How did you come to be the CIO of J&J? What is the most interesting aspect of this job? 

I’ve always been fascinated by technology. During my studies at Yale and in my early career, I worked on problems in natural language processing, artificial intelligence (AI), machine learning and statistical modeling. Throughout my career I’ve focused on using the incredible potential of technology to solve the most pressing issues in business and healthcare.

It’s an exciting time to be in this role at the world’s largest and most diverse healthcare company. During my six years at J&J, we’ve led a technology transformation that has enabled the business to become more agile and deliver meaningful innovations based on cutting-edge science and technology. In 2012, we made the (then) bold decision to move from legacy technology to hybrid cloud, where we now have over 85 percent of our workloads. We’ve also built a significant data science capability. Machine learning, predictive analytics and advanced modeling now inform critical decisions in supply chain, R&D and many commercial areas of our business.

When you look at the landscape of technology and innovation in the healthcare space, what do you see? 

We’ve all been hearing about the coming revolution in healthcare for more than a decade. It’s now here, and it’s being powered by advances in technology—like mobility, cloud computing and AI—and the unprecedented availability of data across the continuum of care.

Digitization across the industry—from the proliferation of wearables to greater adoption of electronic medical records—is creating massive amounts of health data.

Through machine learning and AI we can pull together the pieces that once were previously fragmented—payor, provider and patient—to glean insights that can empower people to take control of their health, help healthcare providers achieve better outcomes for their patients, and drive cost-effective improvements in the overall design and delivery of care.

What are the biggest challenges and opportunities in healthcare? 

The challenges facing healthcare today are enormous. The demographics are shifting globally and traditional health systems are unprepared for an aging, growing population that is now battling chronic disease at a rate never seen before. At the same time, basic health needs are costly and out of reach for the world’s most vulnerable people.

While the problems may seem daunting, we have an extraordinary opportunity to leverage technology to transform health and wellbeing around the world. Emerging technologies are allowing us to reimagine the way healthcare is designed and delivered. But what differentiates us at Johnson & Johnson is that we put people at the center of all that we do, and work to understand their needs first. Then, we apply cutting-edge technology to develop innovative solutions that have the strongest potential to change people’s lives for the better.

Tell us what you’re most excited about going forward? How will J&J continue to change and grow in this rapidly changing environment? 

We’re committed to transforming health for humanity – and technology will help us achieve that. What’s special about Johnson & Johnson is that we touch people’s lives at all stages, and so we are uniquely positioned to inspire a shift in mindset from caring for the sick to helping people stay well. Technology can enable this change, from wearables, mobile applications and machine learning capabilities that help people take charge of their health, to equipping healthcare professionals with groundbreaking new tools.

We know we can’t solve the world’s healthcare challenges alone, and we have exciting partnerships with technology companies, payors, health systems, retailers and many others to deliver solutions that will improve outcomes, reduce costs and reach more people.

What trends will define health care in the next decade? As someone who worked in ecommerce in the past, how do you think Amazon's entrance will affect the ecosystem/industry?

The pace of change in healthcare will increase dramatically over the next decade. Advanced data and analytics will usher in an era of personalized medicine and drive individualized treatment and outcomes. Technology will make it possible to provide greater access to care in non-traditional settings—beyond brick-and-mortar hospitals—around the globe.

We’ve seen technology completely transform industries, like retail, and raise the bar for the type of experiences and services consumers want and expect. However, healthcare is immeasurably more complex than any other industry. Health can be a matter of life and death. I think the companies that will fundamentally change the way healthcare is designed and delivered will be those who combine scientific expertise, a deep understanding of patients and consumers, and the best technology has to offer.

Q&A with Monica C. Smith, Founder & CEO of Marketsmith Inc.

Spotlight



Tell us about how the industry has changed in the last five years.

In a word—accountability.  Clients have been demanding more accountability, more proof of attribution, more flexibility and more transparency for years.  But they are now holding their agencies and the media to a higher standard of delivery.  They want to see what is happening in the marketplace and the impact they are having in real time and they want the ability to react in real time.  We spent millions of dollars to learn how we could better assimilate and visualize massive amounts of data to provide greater insights for marketers. And it’s worked. Our data visualization capabilities are best in class. The ROI we generate for clients continues to grow to unprecedented heights. We are all about accountability—always have been and always will be.  We’re not stopping.

How has technology impacted the industry?

The marketing industry is catching up to where we as a company were five years ago, in that it has embraced technology on a wider scale than ever before and will continue to do so. Technology infuses everything we do. For us, Martech and MarComm are now joined at the hip.  It’s not enough anymore to have a great creative idea or a killer media plan, they need to be guided and optimized by marketing technology.  They need data to drive home the insights and touch our consumers with the right message at the right time in the right channel.  Platforms like our proprietary i.Predictus Media Mix Model deliver that and actually help guide future marketing decisions through data ingestion and sales prediction. Creative and media are still key, but marketing technology has grown exponentially and shows no sign of slowing down. With the ever-increasing stress on our client’s budgets, we owe them the complete package.  Anything short of that is doing them a disservice.

We hear about the rise in digital spending? How is that working for companies?

That depends on whom you’re talking to.  P&G, Diageo and many other major advertisers are demanding more accountability and complete transparency in the digital marketplace. They suspended some of their digital activity entirely.  They want to know how their marketing is performing and if what they are paying for is what they are getting…and how it fulfills their KPI’s.  More than one gauntlet has been thrown down over the last 12 months.  But for others, such as many of direct clients, the increase in digital has contributed greatly to their ROAS.  That’s because with our marketing technology we know how to deliver the right message and offer to the right segment at the right time and we measure it. But that technology is also backed up with humanity---dedicated teams of marketers and analysts who utilize our own process, I.P.Q., which stands for Intelligent.  Proprietary.  Quantified to make sure we are delivering the best of both worlds. Digital requires discipline and pre-set KPI’s—it can still be the wild west out there, so technology and human rigor are critical.

 What sectors within digital are working for your clients?

We are able to leverage all of the digital marketplace for our clients because of the unique lens we have on how each sector will deliver based on our MarTech, specifically our i.Predictus platform and what our clients are trying to achieve, and whether they are B2c or B2B—CTR, awareness, ecomm, orders, etc.  But no matter what the sector, we know the importance of making sure there is a CTA in every form in which we communicate—display, search, social, native, content, it’s important to make sure that your message is eliciting a specific response and desired action.  And we measure those KPI’s and monitor the effectiveness of our content on a constant basis and we match the right content to the right deliverable.

And where do you see Marketsmith in the next five years?

We plan to dominate and disrupt the marketing and creative landscape not just in New Jersey but regionally as well. We plan to compete with the largest players on the East Coast and win. We’ll do that by constantly pushing ourselves and ensuring that what we offer never becomes a commodity like other players in our industry.  Our goal is for all of our clients – present and future – to have the optimal combination of MarTech and MarComm to deliver the best ROI possible. That’s what we’re honed in on every day. That’s what we must do to win.

Q&A with Felisa Palagi, COO Internet Creations

Spotlight



Gender diverse companies are 15% more likely to outperform their respective national industry medians. Statistics like this have gained a lot of visibility in the last few years, and the value of diversity and inclusion has become recognized and a prime focus for businesses. However, there is still a long way to go. Knowing this, it’s incredible to see women who are shattering glass ceilings.

How does a woman break the glass ceiling?

Women account for an average of just 16 percent of the members of executive teams in the United States. While we leverage the success of women who have done it - like Sheryl Sandberg and Ellen Degeneres, Internet Creations’ new COO Felisa Palagi shared her insight on what helped her gain respect as a leader in a male dominated tech industry and what ultimately led her to Internet Creations, a high growth, New Jersey-based Salesforce Consulting company.

As the company’s first COO, and now making up half of the executive team, Palagi comments on the rarity of such a high level of female representation. “Regardless of company size, it’s very rare to have 50% female representation at the executive level,” Palagi says, “To recruit a woman from the outside for your second officer position, it speaks volumes to Internet Creations’ inclusive nature.”

This company of 40 is actively focused on increasing diverse representation in all teams, and Palagi says inclusion is a core value. Flex work time, a highly collaborative environment, and decisions that are rooted in purpose built values, internally known as The IC Way, are just a few examples. In addition, last year Internet Creations kicked off a women’s affinity group, WomenSurge at IC (named after the Salesforce group of the same name). Its mission: to provide an encouraging and supportive environment for women to collaborate, network, and provide professional development opportunities. Recently, WomenSurge at IC nominated Liz Beggs, Internet Creation’s HR Business Partner, for NJBiz’s Top 50 Women in Business and she won.

Palagi says that while promoting an inclusive culture internally drives low employee turnover, sharing this with the outside world also has its benefits. Recruiting gets the “at bats” they are looking for, which is critical in an industry where diversity is low and demand for talent is high. She says that having a more diverse company makes Internet Creations stronger. “We each have a way of viewing the world, which is great, but it can also limit us. We must find ways to collaborate with those that are different from us. I mean the broad definition of diversity, including the opposite sex, people who come from different backgrounds, or personality types that think and process information differently. If we do, it gives us a much better perspective,” she continued, “We can build better customer solutions that consider the different ways people work. We can’t understand that about our customers unless we have that for ourselves.” The success of this model shows; Internet Creations’ all-time customer satisfaction score is an impressive 9.6 out of 10.

Breaking the Glass Ceiling

So how was Palagi able to break through the noise and stand out as a leader when women are often overlooked the higher up the ladder they go? She says that in her early days it was about learning to be more like those around her. Working at male-dominated companies, she found herself lending her style and personality to their traits. That sometimes meant being more aggressive, even having to cut someone off mid-sentence to make your voice heard. Similarly, she led with IQ over EQ, influencing her peers with the quantitative data over qualitative information, which helped her earn acceptance and trust from her male peers. As she gained credibility, she began outwardly swinging back the direction to who she was.

That direction? While many leaders led with a revenue and margin focus, Palagi saw the importance of first taking care of her team. “I had mentors throughout my career that listened to me and encouraged me to speak up about looking out for my team. I realized that when you do, the business benefits,” she said. Palagi says that it wasn’t until very recently that she was able to openly promote that type of leadership style at the executive level. Call it a “women’s style” of working - using intuition, empathy, and collaboration allows her to empower those around her, and in turn, the company can innovate and provide for their customers’ needs more effectively and rapidly.

As a mentor, she says that having female mentees helped to breakdown issues that weren’t openly discussed. For example, promoting yourself as a women. Studies show that women aren’t as comfortable with self-promotion as men. She describes a time where she encouraged her mentee to pitch to her boss why she was ready for a promotion. “You know the men are doing it, so why wouldn’t you?” She laughs, “And she did it! She laid out the reasons and got that promotion.”

On Challenges and the #MeToo Movement

When asked what challenges she faced throughout her career, she reflected on her early days of being hit on by men. “I traveled extensively and worked late into the night a lot. For safety, colleagues looked out for me and walked me to my car or hotel. Unfortunately, a few thought it was okay to try to take advantage of the situation. One even forced his way into my hotel room. Later my reaction was, ‘I shouldn’t say anything to HR because the person is an executive and it will damage my career.’” She says she wished she knew how to handle those situations so early in her career and how to confidently stand up to these people.

In reference to the #MeToo movement, Palagi applauds all the women speaking up but finds herself hesitant to personally comment “#metoo” on Facebook or Twitter. “I’m in a position now where I know that my career won’t suffer, and I have my stories, yet I still can’t hit that button to share, ‘me too’. It makes me wonder if we really grasp the magnitude of the issue; so many #metoo’s on social media, plus how many more women were affected, but can’t bring themselves to post?”

However, Palagi stands committed in all other respects. She continues to encourage her mentees to stand in their truth. “One reason I came to Internet Creations is because our values are so strongly aligned. I can confidently show women that high integrity companies do exist. I know #metoo behavior would never be tolerated here.” She also applauds companies like Salesforce who are changing the conversation about equality and encouraging others to think differently when it comes to diversity and inclusivity.

As a champion for diversity and inclusion, Palagi encourages her team at Internet Creations to challenge the status quo and she won’t stop there. Felisa is setting her sights on helping New Jersey be the leader in diversity and inclusion. She believes New Jersey can be be the antithesis to Silicon Valley’s “bro-culture”, or the, “ultimate face off between Wonder Woman and Ares.” This passion will no doubt have a ripple effect in the industry, from customers to competitors alike.

Time for tech to step up on the issue of screen time

Pluggedin

Every day, I’m proud to help the technology industry and its ecosystem come together, succeed and change the world. But Spider-Man’s Uncle Ben and Winston Churchill had it right: With great power comes great responsibility. We in tech now have great power. To use it well — and not have it stripped away from us — we need to focus on the enlightened long-term interests of our industry and the people we serve. That starts with understanding our role and responsibility — and engaging with those we affect.

We have plenty of historical examples of industries that failed to do this. Most of us can recall companies that obfuscated or denied their impact on health or the environment, even as that evidence grew to the contrary. Most of us have seen companies blame customers for negative impacts of their products, even as those companies invested immense resources in promoting dependence or even physical addiction.

We in tech can do better. And we can draw on our own cultural roots to do so.

Most people I know in technology joined the business not only to build wealth — or because we love to compete (although we certainly do) — but also to make a difference in the world. Most of us have been attracted by tech’s foundations in logic, science and meritocracy: a device or app works well if it’s been designed and built well, not because somebody powerful and important says it does. We need to apply the same principles to our societal impacts.

As an example, let’s consider one issue that’s gotten an awful lot of publicity lately: screen time, which is ​​time spent using a device such as a smartphone, tablet, computer, television or game console. This has gotten an awful lot of publicity lately. Perhaps most notably, Dr. Jean Twenge has published findings correlating the rapid growth of smartphones and social media with abrupt deterioration in the rising generation’s attention spans, mental health and ability to form intimate connections.

While some may find Twenge’s results questionable, worrisome evidence links excessive screen time to obesity and sleep disturbance.  Furthermore, as the American Academy of Pediatrics notes, heavy parental use of mobile devices tends to reduce the interactions with children that create emotional connection, improve child health outcomes and development of language, cognition, social skills and self-regulation of emotion.

As a parent, I for one am still limiting my 7- and 10-year-old daughters’ screen time disproportionately, compared to their friends. My girls are close to disowning me — but I personally doubt I’ll regret my strict stand in the years to come. As for us in the tech industry, what do we do with the admittedly imperfect knowledge we have about screen time? To begin with, we ought to help promote objective research in the field and resist the temptation to reflexively minimize it. Then, perhaps, we ought to consider how such findings affect the way we invest in (and build) our products and services.

Some of us might conceivably adjust business models found to be overly dependent on generating dopamine hits. Finally, when a preponderance of evidence does arise, we shouldn’t use the excuse of imperfect knowledge to avoid action.

Screen time is, of course, just one example. But it points to a wider lesson: Some disruptions are improvements. But some aren’t. And disrupters share responsibility for trying to tell the difference.  -  By James C. Barrood, President and CEO, NJ Tech Council

A Taste of SALT for Software and Data Providers and Users

Pluggedin

Businesses that purchase or sell software, cloud computing resources or digital information services face a host of challenges when it comes to sales/use tax compliance.  The potential for unforeseen tax liability will only increase over time as software products and services become even more intricate and prevalent in the business world.

Vendors and providers of consumer products and services know the basic rules for sales tax but in the case of software and related services, the rules can be trickier.

Let’s start with the basics: most jurisdictions impose sales tax on the purchase of canned computer software, while customized software, on the other hand, is generally considered to be a nontaxable service.  However, if customized software is sold to another customer who did not request the customization or if customized software is combined with other software, then the purchase may in fact be taxable.

The method of delivery of the software also adds a complication to determining taxability.  In New Jersey, electronically-delivered software used in a business is not taxable provided no tangible media is received.  New York and Pennsylvania do not have a similar exemption; those states impose tax on all purchases of canned software regardless of the method of delivery -- whether in tangible form, a license, or even a software-as-a-service platform (SAAS).

SAAS presents another tricky situation because providers sell access to their software which is stored in the cloud or on the provider’s servers.  New York and Pennsylvania treat SAAS as having the actual software or its source code on a user’s hardware.  New Jersey, however, has issued guidance that accessing software is not treated as a sale of software.  Similarly, accessing or streaming digital files or images is not taxable in New Jersey.

Because software is considered tangible personal property, many services provided in conjunction with the software are taxable as well, but this does not generally include remote help-desk support or training.  Upgrades and updates of software generally receive the same treatment as the sale of the original software.

Another complex area that frequently comes up in the software context is the sale of information services.  New Jersey and New York explicitly treat information services as being taxable, but not when the service involves data or information that is confidential or proprietary in nature.  It is often difficult to distinguish between a taxable information service and a non-taxable specialized or particular report.  Pennsylvania, on the other hand, does not explicitly tax information services, but will tax information retrieval services that use software or a SAAS platform to access the requested information.

As you can see, sales and use tax rules for software and digital services can be quite complex, even when considering only three states.  The rules for sourcing these sales to specific taxing jurisdictions are even trickier.  As such, it is imperative for your sales/use tax compliance staff or tax advisors to understand these concepts in the event a sales/use tax compliance issue or dispute arises—or better yet, before any more sales are rung up. - By Jaime Reichardt

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Sills Cummis & Gross P.C. 

Jaime Reichardt is chair of the State Tax Practice and Of Counsel with the law firm of Sills, Cummis & Gross P.C. where he focuses on multistate tax issues on the consulting side as well as in controversies with a focus in New Jersey, New York and Pennsylvania.     

Rowan first N.J. university to send satellite into space as part of NASA program

Education Highlight

“We’re basically sending a Kleenex box into space.”

That’s how Russell Trafford described a project that three professors and more than 100 undergraduate and graduate students in the Henry M. Rowan College of Engineering have been working on for more than 2 ½ years.

Size-wise, that was a pretty good take by Trafford, who with fellow Ph.D. candidate Adam Fifth serves as project manager. The heart of the project is a 4x4x4-inch cube.

But content wise, the work that has absorbed teams in and out of Engineering Clinics is a far cry from the little boxes that hold pastel-colored tissues.

First from a New Jersey university

They have been developing a CubeSat research nanosatellite, weighing less than three pounds, as part of NASA’s seventh round of its CubeSat Launch Initiative. Rowan is the only college or university in New Jersey ever selected for the program.

The Rowan CubeSat, called MemSat, will evaluate a newer type of memory technology to determine whether it is better than the most common technology used today, comparing the behavior of memristor memory devices against standard, silicon-based memory technologies to determine potential advantages and/or disadvantages of memristors for space and other applications. Among other things, the team will measure the effects of heat and radiation on the memristor.

Memristors are electronic devices in which information is stored in the resistance state of the device and can be retained during power-off modes, allowing for energy-efficient power shutoff as well as system resiliency during power failures.

Electrical and computer engineering doctoral student Trafford, 25, from Cape May, said a memristor could enable someone to store the contents of the entire Library of Congress on a flash drive.

Astronauts to deploy

The Rowan team, led by Drs. Sangho Shin, John Schmalzel and Robert Krchnavek, expects to deliver its auxiliary payload to NASA’s mission integration company, NanoRacks, by the end of February. The firm will in turn deliver it to NASA, which will launch it on an Orbiotal A-T-K Cygnus rocket from the Wallops Flight Facility south of the Maryland-Virginia border, sending it on a resupply mission to the International Space Station tentatively in the early spring.

“When the astronauts have a chance, they will deploy the CubeSat,” said Schmalzel, founding chair of the Department of Electrical & Computer Engineering. “That entails a robotic arm dispensing it into space. Hopefully it will still be there for about 12 months before it burns up.”

Once in space, MemSat will obtain data as it orbits the Earth, referring that data back to Engineering Hall to an 18-foot antenna on the roof of the building. The antenna will transmit data to a radio/computer setup in Room 309 of Engineering Hall.

NASA chose Rowan for the program in 2016, along with 19 other projects from 12 states. These projects comprise work done by universities, non-profit organizations and NASA field centers, including California Polytechnic University; the Jet Propulsion Laboratory in Pasadena, California; NASA's Langley Research Center in Hampton, Virginia; and the United States Naval Academy. Benefitting students and science “We were given a fascinating opportunity to deploy something we build in house into orbit. Besides contributing to the assessment of emerging technology, our CubeSat project will make it possible for our engineering program to include future nanosatellite spacecraft systems,” said Shin.

Rowan electrical and computer engineering, mechanical engineering, chemical engineering and chemistry students, some working on hardware, some on software, have focused on the project during Tuesday and Thursday Engineering Clinics and also as part of independent projects.

Tanner Smith, 20, of Cherry Hill, is a junior electrical and computer engineering major who sees value in the present work for his future career.

“At Rowan, we have the clinic system, which really helps because it gives you practical experience.” Like his classmates, he had from about 150 clinic projects to select, and he looked for one that would be a good fit for his software experience. “I saw an interesting opportunity where I could be a part of a project where I would send a satellite into space,” he said.

Brian Dixon, 25, of South Brunswick, who is pursuing a master’s in electrical and computer engineering, is one of about 10 students working on MemSat this semester.

He appreciates the chance to conduct hands-on work on the project, which he said would not be an opportunity at every university.

“There is a pile of parts over there that’s going to be put together and put in a rocket and thrown out of an airlock,” he said. “It’s crazy.”

He’s excited about this project in particular, he said, “One, because space is cool. And two, I’m never going to get into space, but something I’m building is going into space.”

For additional information on NASA's CubeSat Launch Initiative, visit: http://go.nasa.gov/CubeSat_initiative