The passage of the Sarbanes-Oxley Act dramatically increased the volume of materials corporate executives and boards have to review, and staying on top of this mountain of paperwork can be overwhelming.
Board materials in the financial services industry can easily be thousands of pages long, said Marc Daniels, chief operations officer for Diligent Board Member Services. Printing all that material for every board member amounts to hours standing by the copy machine and hours of collating pages by hand - often with two or three assistants covering every surface of the boardroom table and floor with piles of paper, he said.
Putting everything online seems like a simple solution, but "boards are very diverse when it comes to their technical skill set," Daniels said, and many board members are not so comfortable surfing the Internet. They are comfortable with books, he said, which is why Diligent has created Boardbooks, an online portal for board materials that resembles a book.
"It has to be intuitive and easy to use, and since we've all learned to read from paper books, everybody's comfortable," Daniels said. "Having a book-like interface really drives acceptance and ease-of-use."
Having all that information available online eliminates the need for directors and trustees to lug around heavy board books and it lets them view and comment on the materials from anywhere in the world. All they need is a computer.
"As you might imagine, there is lots of paper involved and a lot of coordination required to produce these packets," said Anthony Ghoston, president of Unified Fund Services, which recently started using Boardbooks. "The Diligent product allows us to internally collect information, pull in electronic documents and upload reports to the database as we prepare the agenda."
Board members can view the updated information immediately, without having to wait for a packet to be mailed to them, he said.
"By the time we get to a board meeting, everybody has already been briefed," Ghoston said.
United Fund Services provides umbrella services for small fund clients, he said. While UFS is "still kicking the tires" before its August launch to its board, it has seen a lot of positive feedback, especially in the area of efficiency.
"You would probably see a product like this in a larger fund, but small funds can also benefit from such a service," Ghoston said.
Paper or Digital?
"Boardbooks is easy, particularly for a generation of directors who don't like to log in," said Robert Pacini, director of business development for Diligent.
Several years ago, a board director told Daniels he insisted on having his board information printed. Not a problem, he said, as all of the materials can be printed. A year later, the same director told Daniels he didn't need the printed version any more because his wife taught him how to use the Internet.
Pacini said an administrator can create a book template that resembles an empty binder with blank tabs, load the documents into the template, convert to html and encrypt the file. Once a file is started, many people can begin working on the same document at the same time.
Revisions to the paper version of a board packet are difficult once it has been mailed to directors, but under Boardbooks, the change is immediate and easy. Corporate secretaries can update the board packets via the portal in real time, eliminating the need to mail updated materials to directors and ask them to insert materials manually.
The system can also be set up to allow different users varying levels of access and control.
On June 21, Diligent is unveiling a third generation version of the Boardbooks that will be more accessible via handheld devices such as BlackBerrys. The devices will allow users to get updates on changes to the portal and let users read documents on their handheld devices, Daniels said. Future updates will include the ability to download the calendar and director contacts to a handheld device.
Archiving the Past
After the meeting is finished, the information is stored in the portal's document archive section on a secure website, Daniels said.
"You can't download files onto your personal hard drive, which means when you log off, you don't have to worry about anything sitting on a computer's hard drive somewhere," he said. Since the document hasn't been printed, the old material doesn't have to be stored or shredded.
With a secure password, the portal can be accessed from anywhere in the world, allowing trustees more freedom and flexibility, Pacini said. This ability is especially helpful for Diligent, which has offices in New York, New Zealand and the United Kingdom.
With the vast amount of information contained in these meeting packets, Boardbook's search function is quickly becoming a document reference library.
A quick online demonstration revealed how the search function allows users to look for data from current and past meetings, including minutes and how members voted. Board members can also conference and vote electronically.
"We are finding a number of our clients are going back 30 to 40 years and archiving their past books in our portal system," Pacini said.
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