FCPA Compliance and Ethics Blog

April 28, 2014

Interview with Michael Kleef on the Use of Technology in Compliance Programs

Filed under: Convercent,GRC,Michael Kleef — tfoxlaw @ 6:09 am
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Micheal KleefED. Note-today we continue the series on compliance thought leadership. Today is Michael Kleef, EVP of Convercent, who has some interesting observations on understanding the uses of technology in the compliance arena.

Where did you grow up?

I’m a native Australian, born in Melbourne, Victoria and spent most of my life and technology career in Perth, Western Australia. Since the Malaysia Airlines crash everyone seems to know where Perth is now! Moved to the USA about 6 years ago along with my wife and kids. It’s a scary moment as a parent dropping off your daughter, not only to a new school, but a new school in a completely different country and wondering if she will be ok!

You are relatively new to the compliance space, what was your prior professional life?

Prior to Convercent, aside from a stint at another startup, I worked at Microsoft for 11 years.

Microsoft is what brought us to the USA – did a variety of roles there with the last one in technical marketing. So my prior life is not actually compliance, it’s enterprise IT software. The move to Convercent has been like drinking from a fire hose, learning all about compliance challenges. That said, Microsoft has a very robust compliance program so I had a good idea what I was getting into, but from the employee end, doing yearly compliance training and completing policies.

What are some of the biggest surprises you have seen since moving over into the compliance space?

The biggest surprise I’ve had since moving into the compliance world is that in most cases companies do not leverage purpose built technology to manage their processes and reduce compliance risk. Most companies still utilize paper trails, Excel, SharePoint, and non-integrated software to administer their compliance programs. Having witnessed so many other departments move past these simple tools and manual processes toward applications fit for purpose, I know it’s only a matter of time before the majority of Compliance teams do the same—the risk is simply becoming too great not to.

From your prior positions, did what similar transitions did you see take place in other disciplines?

This isn’t a new problem – the transition to purpose built technology. In the past, finance teams struggled with the challenge of transitioning from spreadsheets and word documents to finance solutions such as SAP and Oracle Financial. They struggled to build the business case for replacing manual processes that were cumbersome but appeared to work. What eventually tipped the scales toward technology was the increasing pressure on CFOs to cut organizational costs. With Enterprise finance software, finance teams were able to manage budgets more effectively and enforce areas such as purchasing and expense processes. Despite the fact that financial software is often the most expensive technology companies will buy, the overall business benefits provided have proven to make this spend nearly universal for companies of all sizes. No-one even asks to justify it. It’s a must have.

Sales teams also made the shift from using basic tools like the rolodex (yep remember those?!) to purchasing Customer Relationship Management (CRM) systems like SalesForce.com and Microsoft Dynamics CRM. By entering customer, prospect and deal data into these applications, sales managers could more effectively manage a sales team’s pipeline. By understanding average time to close, while aggregating large amounts of deal oriented data, sales executives could better predict quarterly revenue, allowing teams to plan and pivot quicker and better. By connecting this data to the previously mentioned finance systems, CFO’s could now more effectively predict overall P&L on a monthly, quarterly and annual basis.

Slightly later, marketing teams began the shift from agency based advertising and uncoordinated email spam to using technology driven techniques delivered in Marketing Automation Programs (MAP). Search engine optimization (SEO), and extremely targeted personalized advertising allowed marketing teams to target buyers with personalized, relevant and engaging content, all while leveraging data for advanced analytics to help sales teams understand how to message to high probability buyers.

Across most departments at any given company, it’s easy to see how technology now underpins how people work. Software drives increased business agility through rapid access to data, helping companies make decisions promptly, while moving into new markets to better take advantage of new business opportunities. Today though, it’s not enough to just collect data. The true value of cutting edge software is in giving teams the ability to draw conclusions from the patterns in the data—or the ability to become truly predictive. Becoming predictive also allows teams to mitigate risk a whole lot more effectively.

Departments that embrace predictive analytics and intelligent workflow software no longer ask questions about the return on investment (ROI) of respective technologies because they plainly understand the value of what these systems enable. Tech savvy executive teams see how integrated data flows from marketing to sales to finance systems, relying on the positive impact of modelling this information in real time, at a single glance.

Can you draw any parallels from these experiences to the compliance discipline?

Absolutely! Many compliance, audit, risk, and legal professionals struggle daily with spreadsheets, paper and Word documents. Those lucky enough to have a GRC technology point solution, (like an independent ethics hotline and policy management system,) often struggle to connect data sets together. This inability to connect data sets and draw meaningful conclusions in real-time hampers the likelihood companies will figure it out when “Morgan Stanleyesque” FCPA issues occur. Can your compliance program isolate a rogue employee that has been trained, signed off on policies, and still chooses to bribe officials? And even if this employee is caught is it possible to drill down into how long this went on before you knew about it and could resolve and communicate the issue?

Unfortunately most compliance management solutions can’t do this because related data is not really connected. Without the ability to link related data and functions like policy, learning, and case management, you will never get to the point of being truly predictive. But the good news is that software vendors are rapidly innovating already. Companies like Convercent (among others) have already developed integrated next generation solutions that deliver real-time reporting to support increased oversight. We believe this is just the beginning towards predictive analytics that will supercharge how you manage your compliance program.

You see, it’s all about the workflow and how you manage the data – is it working for you or against you? The moment you have to spend hours or days struggling to get information or being able to understand your true picture of risk at a glance – you have a problem begging for a solution. And I’m hearing that regulators take a dim view when you can’t clearly prove that your compliance program is measurable and that you’ve taken adequate steps to implement it consistently.

From these prior experiences, I believe purpose built technology will shortly change the way you work. Technology will be the enabler that so many of you are looking for, helping you build and scale out an effective compliance program.

How do I know this? Because it’s already happened in nearly every business unit at the company you’re working for! The patterns are the same…generic, non-specialized software supporting critical decision making, manual and disconnected processes delivering non-integrated data sets, the inability to make data-driven real time judgments, increasing risk from burgeoning regulations demanding immediate action…

I hope you’re excited at how technology will enable GRC. I’m excited to see the difference it will make for you!

Micheal Keef can be reached at michael.kleef@convercent.com

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2014

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