Feature Article:Compliance - Threat or Opportunity?

Within the corridors of power of public companies the debate about compliance is now well and truly established. Compliance is therefore a topic that offers sales people an opportunity to demonstrate that they are in tune with precisely those issues which are the immediate concern of their customers and prospects. In solution selling terms, the compliance issue clearly qualifies as a compelling event - an external pressure that requires a suitable corporate response from the company's board of directors. So compliance is a topic that your sales team should be able to harness in order to establish a dialogue with C-Level Executives - where the penalties for non-compliance are likely to be most keenly felt. So far, so good.

The first thing to recognise is that compliance, like all umbrella terms, can be applied to a wide range of issues in the business. It means different things to different people. Importantly, corporate responses to the challenges of compliance vary widely.

For those who like things to be simple, compliance may be synonymous with the Sarbanes Oxley Act. Not only is this not true - it is misleading. Compliance, as a topic for serious discussion, predates the Sarbanes Oxley act which was, in the view of some observers, rushed onto the statute book with indecent haste and insufficient attention to the drafting - a knee-jerk response to a spate of high profile corporate scandals such as Enron.

The genesis of the compliance issue was an international push to make public companies more transparent and protect shareholders from improper or even fraudulent practices. This renewed focus on corporate governance led to changes in perceived best practice in a wide variety of areas such as the division of the roles of chairman and CEO, guidelines on the selection and appointment of non-executive directors, director's remuneration and many other areas.

The biggest change is a higher expectation that directors take positive action to identify and monitor risk. They must take responsibility for reviewing and maintaining a company's internal processes.

At the topmost level, it has been compliance with the financial regulations that has been grabbing the headlines. But compliance issues can be found in all areas of the business. Health and safety at work legislation defines standards and procedures for the safe handling of foodstuffs or hazardous materials. Employment regulations cover many different issues from equal opportunities to working conditions. Environmental legislation defines proper procedures for the prevention of environmental damage. These are all compliance issues and non-compliance in any of them may carry high penalties - directors can be sent to jail, heavy fines may be imposed and business operations may be suspended while problems are corrected. But the real risk is the damage that can be done to the standing and reputation of the business in the market place. A serious incident in any of these areas could lead to a loss of reputation, driving customers to competitors and losing business. Good governance requires that these risks be recognised and evaluated.

Companies are only now coming to terms with the scope and implications of these compliance challenges. Clearly an holistic, rather than an ad hoc response is called for if only to ensure that compliance issues are prioritised. Yet many companies do not yet know how to manage the compliance issue - even in such simple terms as determining which director should be responsible. Candidates might include the CIO or the CFO - but maybe it needs a portfolio to itself - the CCO, or Chief Compliance Officer. Until the picture becomes clear, the potential for wasted sales effort is considerable.

Some IT vendors may be tempted to re-package some existing product or service to produce a "silver bullet" application. The point solutions that result may offer some value to customers but at the risk of missing the "big picture".

For IT vendors willing to engage in a serious debate with clients there is enormous long-term potential. The approach requires that vendors establish a dialogue with their customers to explore and evaluate the compliance challenges they face. The sales and marketing challenge is to use this dialogue to create sales opportunities that are often services led. The objective of engagement is to show that the supplier can be a trusted partner, with something to contribute. Vendors don't need to demonstrate that they know the answers - they need to demonstrate they can listen and debate a real business issue.

Then, when the prospect identifies a business initiative they want to run with, the IT supplier can put his hand up and say "we could help with that" and be believed!

Bob Brown

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