Collaboration among a company’s board of directors is arguably one of the most critical functions within a public organization. So it may come as a surprise that the technology enabling more effective and secure board collaboration continues to fly under the radar – in fact, when I got my start in board governance, the space was filled with niche players. Today, as regulations become more stringent and industry leaders start to prepare for the needs of tomorrow’s boards, they are building out more comprehensive product suites by acquiring smaller players. As consolidation continues, the space will continue to heat up and the technology will become a must-have for enterprises and board members around the world. It’s about to get larger and louder.
For example, industry incumbents like Boardvantage and Thomson Reuters’ Boardlink have been acquired by Nasdaq and our own company, Diligent, respectively. Underscoring industry momentum, these acquisitions have caught Insight Venture Partners‘ attention, with the recent announcement of acquisition and privatization of Diligent.
For a once behind-the-scenes industry, an increasingly mobile board, looming cybersecurity dangers and the immense pressure to follow regulations and remain compliant are bringing board governance tools to the forefront. Here’s a look at how the industry has developed and how we predict it will grow.
The Rise of Board Portals and SaaS Technology
Historically, and for those who haven’t adopted a technology-based solution yet, board collaboration has been defined by heavy, paper-filled binders. With these materials, any last-minute edits would result in extra days of administrative overtime and delays for board members. As secure, mobile collaboration and productivity technology started to permeate the enterprise, the boardroom also began to demand the convenience of tools customized to meet their needs.
In the beginning, it was the widespread adoption of the iPad that catalyzed growth in board collaboration. Board members, eager to use their new gadgets, were already using their iPads for personal activities like reading and surfing the web, so the transition to reading and reviewing hefty board materials on the same platform was natural.
Having the materials on a digital platform also provided other benefits – added security, compliance and convenience. No longer would board books be forgotten at a hotel or on a plane or require a paper shredder to be securely disposed of. Digital user authentication, remote wipes and superior customer service all guaranteed a secure, high-quality experience. This peace of mind provides a sigh of relief for companies, especially as regulations tighten.
From a compliance benefits perspective, board members are now able to use their new tools to administer voting, access resource centers and securely archive books that limit compliance and legal risk. In addition, they were also able to run D&O surveys and conduct other board-related functions all from one central location.
Industry Outlook and Investment Trends
Since the initial boom of the iPad, adoption of board collaboration tools has grown exponentially, with over 90 percent of the Fortune 1000 using such a solution. Industry estimates suggest that over 300,000 board members and executives are consistently using a board portal. That said, most companies are still in the early to intermediate stages, wherein the technology is used on a meeting-to-meeting basis or during quarterly board meetings. Within the next decade, we will see the industry start to change in three main ways:
- There will be more dynamic use of collaboration technology, including live analytics. As board members are asked to be more active and make quicker decisions, they will need more information cut and viewed in multiple ways in order to get a full picture. Real-time analytics on collaboration preferences and even the board materials themselves will enable companies to make the best decisions possible. The technology will also allow for more governance and compliance monitoring, spurred by the need for more transparency, stricter government regulations and the broader GRC rationale to maintain security.
- Service will become even more important than the product itself as the move toward advanced and dynamic use of board technology accelerates. Board SaaS in particular is geared toward a very unique set of executives who won’t settle for a DIY or low-touch service model. This means that innovations in service and reliability – in addition to product – will determine who leads the industry. And as these tools become more integral to how a board functions, board members, compliance teams and corporate secretaries will need to partner with providers for expertise and guidance.
- As board responsibilities evolve, the sector will continue to grow in revenue and breadth of offerings. A trend we are seeing is that “compliance” or “GRC” is the newest line of business (LOB) being revolutionized by SaaS offerings. In the same way that sales and marketing organizations were turned upside down by companies like Salesforce and Marketo, a new breed of GRC SaaS companies will be reinventing this space by streamlining the board function within enterprises. With more security breaches and regulatory concerns on the horizon, the need for these tools will undoubtedly continue to grow.
The way boards work and collaborate is evolving. Decision-making needs to be faster and more secure. Pair this with the fact that board members sit outside of company firewalls and it’s a perfect storm. New solutions and processes will continue to be created to suit this exclusive segment that is now held accountable for much more than overseeing profit.