Building the Case for Compliance Management Software Many organizations are moving to software-based systems to help them manage their compliance management processes, but compliance managers and directors may struggle to get board agreement for such investments in the current economic climate. Adam Krug, Sales Director at CMO, explains the business benefits of compliance management software, and how to successfully argue for its introduction into your organization. Software can drive down the business costs of managing compliance. In the current economic climate, with budgets tightening and spending being curtailed, it is vitally important for people who are looking to invest in compliance management software to be able to fully articulate the business case for the system. They also need to be able to demonstrate the likely return on investment. There are tangible financial benefits of putting a compliance management software system in place and these need to be fully explained to budget holders in order for them to make informed decisions. Why use software systems? Within the heavily regulated and constantly changing business environment, more and more organizations are looking to technology to assist them with the measurement of their compliance performance and the effective implementation of their policies and procedures. Software systems can be used to improve collaboration across an organisation as they allow for information and best practice to be shared across an entire organisation. They also allow for standard processes and approaches to be implemented and improve the collation and reporting of information from numerous locations. Software can do much to assist managers in prioritising and delegating required actions and can help drive down the cost of operations in a number of other ways. Building the business case If you are looking to purchase a compliance management software system you will probably need to put together a business case to present to the budget holders or, if you are the budget holder, then to other stakeholders within your organisation. There are a number of key elements to creating a successful business case. The document should contain: a brief overview of the current situation detailing the issues and costs; the expected business benefits from implementing the software system; and details of the expected return on investment broken down and backed up with specific evidence and values. The return on investment is the area that most people struggle with. Software systems significantly improve the management of compliance within an organisation. However, there is a perspective that better compliance management does not have a financial benefit. This is not true. Some of the benefits may be difficult to quantify but others are easily identified and a value can be put on them. Quantifying the benefits When developing your business case you should consider the following areas of financial return Software provides significant operational efficiency. It can reduce duplication of effort by providing access to work already done by other people within the organisation. Software can also automate processes that are currently done manually – for example, collating data from spreadsheets or chasing up incomplete corrective actions. It also means that you can implement processes that are simply not possible with a manual system. For example, it allows you to automatically send an email at the start of each week to people who have not yet completed corrective actions without having to check or interrogate paper records – or even having to try to remember what needs to be done. This improvement in operational efficiency may mean that you are able to reduce headcount but it is more likely that it simply releases people from administrative work and allows them to focus on solving compliance issues. Operational efficiency will clearly help keep the cost of doing business low but there are other competitive advantages to being able to demonstrate that your company is pro-actively managing compliance. Compliance software can also reduce risk/incidents/occurrences and their associated claims and legal costs. In general, reduced risk & incident/occurrence rates within an organisation come from a number of different factors, including: proper monitoring of warning signs routine audits, assessments and inspections; ensuring that corrective actions are carried out quickly and completed satisfactorily; access to accurate and up-to-date information so that trends can be spotted; ensuring people are properly trained; and good transfer of best practice knowledge across the organisation. Compliance management software can play a key role in supporting all of these objectives, especially when it comes to bringing together information from disparate parts of an organisation and presenting it in a form that allows people to take action. For example, software can allow you to maintain a competency matrix making it easy to identify people who are not fully trained for their role. It can also be used to manage a schedule of audits and inspections and ensure that these are completed and the resulting actions are completed to a satisfactory standard. If you have had any compensation claims for incidents/occurrences in the last 12 months you should try and put an average value on each of the claims and estimate how using a software system might reduce both the number of these claims and the value of them. The reduction of claim value is just as important as the reduction in the number of claims. Software can ensure that you have all the information that you require to properly contest a claim and can lead to a considerable drop in average claim values. Having documented proof that an individual was properly trained and that an activity was properly assessed at the time of an incident can also go a long way to demonstrating that your organization took all practicable steps to prevent the accident. This is exactly what you should expect from a software system – an auditable set of up-to-date assessments and clear training records demonstrating that people are trained with the skills appropriate to their roles. In addition, software can result in a reduction in energy usage. Most organisations understand the need to reduce their energy usage and therefore their carbon emissions. The recent focus in this area also has some clear financial benefits – energy is expensive and reducing usage clearly reduces costs. In order to make these reductions, an organisation needs to have good visibility over all aspects of energy usage. Software systems are ideal for collating this information and allowing people to make smart decisions about where reductions are possible. If you could obtain a 10 per cent reduction in energy usage (an achievable target in most cases), that’s almost certainly a considerable cost saving. Organisations, especially larger ones and those in the public sector, are more likely to buy from you if your organisation has a good compliance record. They don’t want to be associated with companies that might damage their own reputation and a good record says something significant about a company’s ethos. For its part, software can help to provide the information required for tenders or supporting documentation when bidding for work. It can also provide an easy way for you to provide compliance related information to a client or for a tender. Being able to provide real-time compliance information to a client during a contract negotiation might give your organisation a competitive edge when bidding for business. The above points are examples of common business benefits that should be considered when drawing up your business case for compliance software. They are not an exhaustive list and each organisation will have its own specific requirements that should be considered and included. Remember, the objective is to present an argument that makes the buying decision an easy one for a budget holder to make. You may want to engage a specialist software company to help you to put together your business case. They will have experience of similar organisations and of successful implementations and will be able to work with you to identify benefits. What’s more, when you start implementing your system, both sides will have a clear view of your objectives. Conclusion Software systems can help organisations to achieve benefits that are simply not possible with paper-based or spreadsheet-type solutions. Whilst not all the benefits of a software system are easily quantifiable, many have a potentially significant financial impact. In order for the purchase of a compliance software system to be approved in the current economic environment, it is important that all the business benefits of the system are clearly identified and that the return on investment is apparent.