According to a PricewaterhouseCoopers report, organizations across sectors and regions feel the tightening grip of economic uncertainties: The vast majority (75%) of global CEOs expect declining growth over the next year. Roughly a third say they’re “highly exposed” to inflation and macroeconomic volatility. In response, more than half say they’re already cutting costs.
As executives and directors are increasingly tasked with reducing costs, your board may face difficult decisions on cutting expenses without losing value. In particular, technology with many companies are looking for opportunities to cut costs by discontinuing SaaS services.
Your board portal software may likely be involved in this budget rationalization.
Other companies have gone down this path before. Still, as you make this careful consideration, it’s critical to understand the unexpected costs and risks that can emerge when board management software is removed.
Risks result in unexpected costs.
1. Data breaches and reputational risk
Cybersecurity is a top risk in the enterprise world today, and it’s only growing. Stakeholders want to know that your organization is taking the necessary steps to keep data safe. But today, cybersecurity threatens not just data. Breaches and hacks break operational systems and completely disrupt core business service delivery.
Firms must demonstrate that cybersecurity, data security and digital resilience are top priorities. Moving your board data out of a single secure, encrypted portal opens up significant security risks. Exposing board and audit reporting data can reveal sensitive business information that can compromise critical competitive advantage. Moreover, a breach causes reputational damage that’s hard to repair. As Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it.”
From a response and resiliency standpoint, a modern board management platform centralizes and coordinates your cyberattack response plan. Board members and business leaders can quickly and easily access these plans in a single source of truth. Everyone knows who is responsible for what, including how to communicate the incident and reassure your stakeholders.
2. Costs of ransomware attacks
The growing ransomware epidemic presents perhaps the most significant cybersecurity concern in the enterprise world. The most recent data shows ransomware surged in 2022, accounting for 1 in 4 of all data breaches. Another 2022 report suggested that two-thirds of all organizations were impacted by ransomware last year.
The most significant misunderstanding of ransomware is that the ransom itself is just the tip of the iceberg regarding business costs and disruptions. There’s the cost of downtime, lost productivity and revenue, costs to recover data and/or restore systems, increased insurance costs, and even potential fines from regulatory bodies for failing to follow data protection requirements. Finally, there’s the insidious damage to your reputation, a cost that can be hard to quantify and difficult to overcome.
Generic file-sharing platforms and ad hoc information exchange practices (i.e., email) cannot provide complete protection against ransomware. However, a board management portal is purpose-built with advanced data protection features embedded in every technology aspect.
3. Insecure internal communication
The last point alluded to this risk: Discontinuing a board management platform typically means board members will begin using non-secure communication tools such as email or messenger apps. These are easy to hack and also common sources of “user error” data leaks (hitting “Reply All,” simply sending information to the wrong address, etc.).
Likewise, inadvertently allowing board members access to information they should not have access to is an additional risk that could also impact your organisation’s reputation.
A secure board portal provides high-assurance security features to protect internal communications. It makes it intuitive and reliable to enforce permission-based access to keep board documents and communication confidential.
4. Non-compliance
Every board member has an individual and collective responsibility to ensure that the organisation they govern complies with all applicable laws and regulations.
A board management system is a valuable tool for addressing every area of compliance and also makes compliance training straightforward to facilitate. It enables easy onboarding of new board members, with access to crucial documents they need to understand to support and maintain compliance.
5. Board members not meeting fiduciary duties
Corporate board members must be aware of their fiduciary duties and what constitutes a breach of responsibility. Ignorance and misunderstanding are no excuses, and falling short of these duties will be judged as poor board governance by stakeholders and may result in liabilities for the organisation.
A board management platform provides purpose-built resources and workflows that make it easy to institute governance training. Additionally, it makes information continuously available to help directors stay abreast of and avoid inadvertently violating their obligations.
6. Risk of conflicts of interest
Duty of loyalty means that board directors must always place the interests of the organisation ahead of their own interests. Board members are required to publicly disclose any conflicts of interest and not use board service as a means for personal or commercial gain.
Nevertheless, conflicts of interest sometimes arise within organizations. The problem is not that these conflicts of interest occur but that they are not managed appropriately. Suppose your organization has inadequate processes to identify, disclose and manage potential conflicts of interest. In that case, this has significant potential to negatively impact the organization in terms of governance and associated reputational risk.
Effectiveness and efficiency costs
Along with risks, discontinuing board management software presents several likely sources of increased costs and inefficiencies in your board operations:
7. Time costs
Good board portals deliver measurable, meaningful time savings, not only for board admin time but also for board members’ time. The efficiency savings from having one central portal for information and the latest versions of board packets are enormous — and that is just the simplest form of savings.
Moving away from tech-enabled board operations means returning to the dark ages of manual data gathering and report generation that will drive staff and board time way up. On top of that, you’ll once again take on the burden of significant printing and mailing costs. This choice can hardly be reconciled with the rising prioritisation of ESG within corporate strategy.
8. Limiting board effectiveness
There’s no gentle way to put this: Ditching your board portal software will significantly limit your board’s effectiveness, making it more difficult to get things done and more challenging to access the information and insights for confident decision-making. Your board members will have to find documents and information in different places and won’t have access to the correct information at the right time.
You know that the better the information your board has access to, the more effective it can be in making smart decisions at the speed of the market. A board portal gives board members the documents and insights they need when needed, allowing them to better prepare for meetings and make informed, timely decisions.
9. Cost of making the wrong decision
Closely related to the above, if your board makes a wrong decision because board members didn’t have the right information, the cost implications can be enormous.
A board portal maximizes the likelihood that your board will have all the up-to-date, accurate and relevant information to make the best decisions for your business.
10. Onboarding new board members
Your board is not a static team. Today, more than ever, companies are adjusting their board rosters to fill experience gaps and bring new areas of expertise to board leadership.
When you don’t have documents in one place for onboarding new board members, that means time and extra cost. Someone must manually send new board members the documents they need to access to set them up for success. Additionally, it will take a new board member longer to get up to speed, as they don’t have access to all the key policies and procedures documents they need for onboarding.
Investment risks and costs
11. Risk of losing investors
Your company is always looking to add new investors and increase investor funding. With current economic volatility and the rising-rate environment creating alternatives to corporate investing, investors are naturally going to be picky about where they park their capital. Your organization doesn’t want to risk losing investors — or turning off potential investors — because the board isn’t being transparent, accountable and efficient.
ESG Costs
12. Sustainability costs
95% of business leaders say ESG is a central tenet of board discussions. If your organization has committed to — or is building — an ESG strategy, consider the cost of giving up your board portal software in sustainability terms. Instead of accessing all corporate documentation and board reporting information in one location via their devices, board members will store that information across emails, file-sharing services and hardware — all at a respective environmental cost.
For example, storing one terabyte of information on the cloud using data storage creates a carbon footprint equivalent to two tons annually. Imagine the carbon footprint of an organization that is storing numerous versions of large board packet files and sending them multiple times via emails as agendas and board documents change and get updated.
However, attempting to avoid technology entirely may have even greater sustainability costs. Returning to printing board packets brings the costs of printing, paper and ink costs, along with the environmental costs of deforestation, paper production, etc.
13. Not meeting diversity or accessibility requirements
Diversity, equity and inclusion (DEI) form vital pillars of a modern corporate ESG program. And when a company’s board does not address and reflect diversity, it’s difficult for stakeholders to take ESG commitments seriously. Moreover, diverse board representation has been proven to help avert group-think and conformity bias, enabling directors to effectively develop and consider new ideas and strategies and encouraging more objective and sound decision-making.
A modern board management portal is essential in supporting board diversity. It provides critical accessibility features that ensure current or prospective board members can access the information they need to be knowledgeable, prepared, and engaged participants in board activities. Your board management solution can also help facilitate diversity and accessibility policies to ensure your board meets its requirements.
Recognising the full value of your board management software
Technology rationalization and consolidation can provide a practical path to cost reduction. But not every technology is a good target for this approach. Your board management software plays a vital and broad role in mitigating risk and supporting effective board operations. Moreover, your board portal directly delivers significant, measurable cost efficiencies into your board management activities — savings which would be counterproductively lost by discontinuing the portal. With Board & Leadership Collaboration from Diligent, you empower your organization to digitize meeting materials, collaborate through a secure platform and get trusted data intelligence for better decisions. According to a Forrester Total Economic Impact report, our solution can deliver a nearly $190,000 three-year benefit value and save 1600 hours on materials creation and distribution. Don’t miss out on the ongoing financial advantages of using our solution — explore the benefits today.