Get ready to start attending boardmeetings in pajamas. Using what havebeen dubbed “board portals,” eithercreated in-house or by outsideproviders, some directors are virtuallymoving the board process online.
With all of the necessary informationin one central location, portals can cutdown on travel, eliminate mailing anddelivery hassles, increase communicationamong members, and make boardmaterials easier to read. But like manytechnologies, the “always-on” aspect ofelectronic tools also makes it harder fordirectors to separate their board livesfrom their other jobs or “retirements.”And the need to remember passwordsand navigate complex security measurescan add frustration to the process.
For corporate secretaries and generalcounsels who traditionally compileboard books and other materials, portalsmake life a little easier. They notonly reduce the time it takes to organizematerials, they allow content to be uploadedand edited in a fraction of thetime it would take to sort, staple, and mail. (Portals can reduce thecost of office supplies, too.)
A cottage industry of portal providers has cropped up in recentyears to fill the need for virtual boardrooms. These providers not onlysupply software and/or websites for companies to move board meetingsonline, they also offer training to help directors adapt to the service.Most have staff on call around the clock, providing help for thosedirectors who aren’t as computer-savvy as they would like to be.
After a slow pace of implementation when portals first began tohit the market a few years ago, the rate of adoption for board technologyis now growing steadily. A survey conducted last year foundthe percentage of companies using portals or websites for communicationsgrew to 26 percent, from 12 percent in 2005, according tothe Society of Corporate Secretaries and Governance Professionals.
James Long, vice chairman of Wackenhut Services, says boardportals are a great way to avoid the abundance of paper materials thatcan weigh down directors at board meetings. “Directors like the ideathat they don’t have to lug hard copies to a meeting. Previously, theywould have a laptop and six pounds of paper.”
The rate of adoption for board technology is now growing rapidly. A survey conducted last year found that the percentage of companies using portals grew to 26 percent.
Not all board members are ready for the change. “I have beenpushing for the conversion to electronic delivery,” says James Pitts,who sits on the board of Wainwright Bank and is a member of theNew England chapter of the National Association of CorporateDirectors, which has been using Thomson BoardLink’s portal formore than two years. “But I have witnessed situations where anoccasional board member is not yet electronic-communicationsliterate and resists.” In those few instances, Pitts says, directors wereable to get up to speed in very little time with the help of IT supportand the director’s administrative assistant.
Portal packages, which range in price from an average of$25,000 to $40,000, include on-site training, 24/7 support, and abevy of security features.
Directors Desk by Nasdaq
Directors Desk, a portal company based in Spokane, Wash.,launched its first version in 2004 and last summer was acquired byNasdaq. It currently has some 75 clients; Nasdaq’s own board wentlive with the portal in September. When choosing the layout forthe portal, Adam Ross, Directors Desk associate vice president, saysthe company opted for a standard look, similar to that of otherportals, that would be easy for any director to use.
A discussion thread is one feature offered by Directors Desk thatother portals don’t have, according to Ross, who says this feature hasbeen popular among directors, as it allows customized groups todebate and discuss any number of topics inside the portal. What’smore, Directors Desk employs a unique security feature. Aside fromlogging on with a username and password, directors must enter apersonal-identification number (PIN) onto what looks like a telephone-dial pad. The numbers on the pad change position each timethe user logs on, to prevent hackers using spyware from detectingthe login pattern.
Other features offered by Directors Desk include profiles of directorsand users that feature photos, affiliations, and other contactinformation. A calendar function allows directors to look at scheduledmeetings for all committees, or just the ones they sit on. A hottopicsfeature displays daily news and gives directors a link to the fullstory. The portal also offers low-tech options for delivery of boardmaterials, which makes it compatible with multiple technologies,such as faxing and email. This feature is especially useful for boardmembers who aren’t as comfortable with online options. “I can’t tellyou how many times I have heard how useful our fax notificationsfeatures are for directors,” says Ross. “Boards do not necessarily needto go to an ‘all-or-nothing’ solution when deciding on a portal.”
And while many portals tend to give the “administrator” role tocorporate secretaries or general counsel, Directors Desk allowsmultiple administrators, called “masters,” to upload content andfacilitate votes, surveys, and discussions.
BoardBooks by Diligent
Diligent’s Boardbooks officially rolled out to the board-portal marketin 2001. Designed for ease-of-use and to ensure its clients areable to adhere to compliance and legal mandates down the road,Boardbooks currently serves more than 100 boards. Like mostboard portals, Boardbooks uses an Application Services Provider(ASP) model so there is no software, just a secure online website,and updates can be accessed from any computer. The portal hashosting centers from New Jersey to Toronto, and offices in NewYork, Australia, and the United Kingdom that provide customersupport when a director is traveling.
Unlike other portals that tend to have a traditional website layout,Boardbooks strives to make the transition from paper to the flatscreen almost seamless for clients. In keeping with the spirit of thetraditional board book, the design for Boardbooks is just that—avirtual book. “It has to be intuitive and easy to use, and since we’veall learned to read from paper books, everybody’s comfortable,” saysMarc Daniels, COO of Diligent’s board-member services. “Havinga book-like interface really drives acceptance and ease-of-use.”
Boardbooks also allows directors to download the entire portal asan encrypted database to a laptop so they can read while on the road.This allows the portal to be viewed without connecting to the Internet,but with the same security features as if they were connected.
To ensure security—an important factor for all vendors—Diligentoffers the use of what are called RSA SecurID tokens, which are likevirtual ATM cards. Tokens carry PIN codes that directors need to logon to their portals in addition to their usernames and passwords. Thetokens aren’t mandatory for directors to use, as they’re tangibledevices that could be lost as easily as a set of keys, but the feature providesan extra layer of security. “Everything is encrypted, so there’snever a chance that anybody could be snooping on the lines, ”Daniels says.
But clients reassured about security aspects may not be as comfortableabout completely abolishing traditional hard copies. JamesLong says Wackenhut’s board, which has used the Boardbooks portalfor the past two years, continues to use paper as well. Other clientssuch as Mechanics Bank are on their way to going completely paperless,giving them environmentally friendly bragging rights.
BoardLink by Thomson
Thomson, a major provider of financial information, was a latecomerto the board-portals scene, launching BoardLink in January2006. It has already attracted some 75 client boards and more than2,000 end users. Like Boardbooks, BoardLink’s security featuresinclude the use of RSA SecurID tokens, but unlike the Diligentportal, BoardLink has made the tokens a mandatory requirement.
BoardLink allows directors to access data from Thomson Financial,including reports, transcripts of conference calls, and otherthird-party information. BoardLink also did its homework toinform the design and layout of its portal, which features calendars,news alerts, and a research center. The layout features tabnavigation and sections for different committees, and a referencelibrary for researching archival information.
With BoardLink, Thomson was aiming for secure, easy-to-use features.“We did a ton of research before we go into this, and we built aprototype based on that. Then we actually brought 30 directors into aresearch lab and let them play around with it, videotaped them, andlet them complete the tasks,” explains Greg Radner, senior vice presidentof corporate communications at Thomson.
What sets the portal apart from others, Radner says, is itssecurity feature and service model. “We spent a lot of time getting[directors] trained and comfortable using the system,” he says. “Wemake it easy to use, and that shows up in the results. Ninetypercent log in every month.”
“I would say ‘ease-of-delivery’ is the most obvious advantage,” saysPitts of Wainwright, a Thomson Boardlink customer. “No printing,copying, no FedEx, and electronic delivery is totally secure.”
Continues Pitts: “By far, the most precious commodity for directorsis their time. Electronic delivery allows all the relevant informationneeded for routine decision-making to be deliveredquickly, timely, and economically, in many cases freeing up timethat can be used for having a dialogue on strategy and policy.”
BoardVantage
BoardVantage, which provides its portal service to about 160 customers—nearly half in the Fortune 500—has been around for fiveyears. BoardVantage CEO Joe Ruck says he’s worked with directorsfrom both ends of the technology spectrum: some are moreprogressive, while others would rather only deal with email andnothing more in terms of electronic communication. “That’s areality in this business that you’re going to have to deal with,” hesays. And that’s why ease-of-use is such a high priority for BoardVantage. On the security side, BoardVantage offers its own twofactoridentification. In addition to a personal password, directorsuse a private key encryption or answer a challenge question. Directors,as a result, can access the portal from any location.
For Bruce Crockett, director of ACE Limited, which has beenusing BoardVantage for about two years, the attraction was howquickly he became used to it. “I was able to get the hang of it inabout 15 minutes on the phone,” he says, stressing that no oneactually had to help him in person. “I think it’s sensational.”
Crockett said he would enjoy seeing his board go paperless, andin using a portal, it may just happen. “The way the board flows,you don’t even really need paper,” he says. “The resolutions gethanded out in hard copy, but in general, the presentation is flowedthrough [Microsoft] PowerPoint and slide decks. Save the trees.”
Leaders4 Board Information Management by 80-20
More than 50 large companies are using 80-20’s Leaders4 BIM portal.The provider has been a player in the software market since 1997,developing solutions designed to streamline governance, risk, andcompliance management. Leaders4 creates a local and encryptedversion of selected material that allows authorized directors and otherexecutives to access material from the portal anywhere at any time.
Leaders4 offers two principal methodologies. The first is alicensed model, meaning that users purchase a perpetual licenseto the software, which includes training, installation, and support,but only runs on a particular company’s data server. Second, thereis the option of an ASP model, “which means that we will give youaccess to the software that runs on a server in a data center that wemanage,” says Nelson French, executive vice president of NorthAmerican sales for 80-20. “So, nothing runs in your shop, everythingis through your browser.”
Some directors enjoy having both options. “It was the only optionavailable that let us control our data and didn’t put it in the hands andcontrol of a third party,” says Robert Flax, senior counsel for theCalifornia State Automobile Association (CSAA), which has beenusing Leaders4 since 2004. Flax says CSAA directors, while open tothe idea of migrating to a portal, were varied in their opinions aboutcompletely abolishing hard-copy board books. “They all love the ideathat [the portal] is there, but I would say there is a large spectrum ofdirectors who say, ‘That’s nice, but send me the books anyway’.”
The portal also offers several features, such as a “ReadingRoom” facility where users can monitor daily company and marketactivities. A governance and compliance framework facilitateseffective communication of governance demands and visibility ofcompliance status—such as with sections 404 and 302 ofSarbanes-Oxley—at the board level.
Before adopting Leaders4, Flax says it would take nearly fourmonths for him to manually collect and certify data, but havingportal access has shortened the time for those tasks to just twoweeks. “Basically, what we have is an electronic way of gatheringinformation and having it reposed in one place where we cancustomize the data, ” he notes.
Other Players in the Portal Game
While the board-portal market has been limited to a small number ofproviders, more vendors have begun to emerge. Some, such asBoardWorks, are targeting non-profit boards, as well as the boards ofsmaller or younger organization with price points to match. Meanwhile,other providers, such as BoardEffect, IntraLinks, and Info-Street, compete directly with BoardLink and BoardVantage. Endexxhas gone a step further, offering solutions not just for corporateboards, but for more vertical markets such as school boards. Its portalallows school districts throughout the country to better adhere to staterules, and also help organize and report on school-related materials.
No matter what the industry or size of the company, board portalsare offering efficient ways of facilitating the board process. Asthe potential market continues to expand with new solutions, functionality,and features, more boards are exploring how to best movetheir activities online.