Making a smooth transition to board portals

Walk each director through the digital board book page by page, explaining all functions.

A few years ago, it might have been a struggle for general counsel and corporate secretaries to get board members to consider using board portals. The idea of moving sensitive board books from their paper-based format to the digital realm raised questions about security and compliance, archiving, access and tech support.

Today, however, this is not the case. ‘The sentiment of boards toward technology has gone through a transformation,’ says BoardVantage CEO Joe Ruck. ‘Even two years ago it was a cool, skeptical relationship – but with the iPad, it has been transformative.’

Board portal technology has evolved to meet the needs of diverse and far-flung boards in a variety of arenas. Companies, too, haveevolved in terms of their willingness to embrace board portals not only because of the convenience they provide but also because they offer security, provide cost, labor and time savings, and are a ‘green’ alternative to paper-based books. Board portals let companies establish secure online environments in which members can access corporate documents, communicate, make notes and collaborate.

With roughly eight top providers to choose from, and the ability to customize software to meet the needs of their corporate boards, companies are finding that the challenge isn’t necessarily getting members to say yes, but selecting and implementing the right solution.

Laying the groundwork

For Gina Merritt-Epps, corporate counsel and secretary at South Jersey Industries (SJI), getting the foundations right is crucial. In 2008, when SJI, an energy services holding company with utility and non-utility operations, began the process, the first step was to lay the groundwork before going to the chairman. This meant researching the available options, narrowing down the selections, ‘anticipating all of the push-back we might get and putting things in place to push back against that,’ says Merritt-Epps, who was assistant general counsel and assistant secretary during the transition.

Of the five board portal solutions SJI evaluated, the company eventually chose Diligent Board Member Services’ Boardbooks. Significantly, SJI did not poll the board before making the decision, but involved ‘key directors’ – those who might be skeptical about using a web portal – in the process. Merritt-Epps says this made a world of difference.

‘Polling the board is a mistake,’ she explains. ‘We approached the process as a company would when making other decisions; we looked at it from the perspective of selecting the location of our annual meeting. It is within the purview of the chairman.’

Still, board members were not left to flounder. Merritt-Epps says the company provided them with options: each director could continue to carry the large (and heavy) bound volume, or they could opt for a digital board book on their high-speed (at the time) laptop. Those who still wanted the binders did not get a laptop or tablet but had access to technology such as large flat-screen monitors in the meeting room. In recent years, Merritt-Epps says SJI has invested in iPads and accessories (including wireless printers) for those members who have requested them; the cost was roughly $1,100 per director. And the company recently brought in two new directors who already had their own iPads, making the transition nearly seamless; SJI could simply install the application on their devices.

By making key decisions ahead of time and anticipating directors’ concerns, Merritt-Epps says companies can avoid many of the challenges that come with shifting the way board business is normally conducted. ‘It made the process less painful for directors,’ she recalls.

At engineering and technology firm ITT, Burt Fealing, senior vice president, general counsel and secretary, took a different tack when he decided to go with BoardVantage. Fealing involved the IT department from the outset. ‘The intent was to make sure our IT department was fully trained and could then train the directors,’ he says. Fealing arranged a series of sessions for the directors, though admittedly, ITT’s board members were already pretty tech-savvy: ‘Most of them showed up with their iPads,’ Fealing notes.

Still, Fealing says the key was spending several months preparing. ITT began working on the process in October 2011 and implemented BoardVantage in February 2012. ‘Part of what made the process so easy was that we spent so much time in advance rolling it out, learning it and getting our IT team involved,’ says Fealing, who had dedicated IT staff work with BoardVantage and then developed training sessions for directors. These sessions included general meetings as well as one-on-one sessions with IT staff who essentially walked each director through the digital board book page by page, comparing it with the paper-based version.

Fealing says ITT is in the process of assessing cost savings, but has seen a transformation in delivery and optimization of its directors’ work.

Make it easy

Fealing’s goal was to make the process easy for the IT department, which would be supporting the directors, while also making it easy for the directors’ administrative assistants. ‘We had to make sure that the directors’ own admins knew how to use BoardVantage as well, since they were the ones who received the materials,’ he says. And it was important to make sure that the process was not burdensome to the company’s internal processes.

Merritt-Epps also says it is important to partner with IT when implementing any new technology. ‘Most of the time, when directors have questions, it’s not usually about the portal – it’s about the equipment,’ she says. ‘We have a dedicated IT person to handle any issue that arises.’ Still, she also went through the Boardbooks process with Diligent to ensure that she had a firm grasp on the service. Having IT professionals who understand the board portal application but can also communicate information to technology-challenged colleagues has been key to the process, she notes.

‘Include your board members from the start,’ states Alex Sodi, Diligent CEO and president, who says one of the challenges he currently sees in implementation is that some companies will simply hand off the process to the IT department. This is a mistake.

‘Ultimately, when you’re picking software, whoever the users are, you want them giving you feedback,’ he notes.
Sodi says general counsel and corporate secretaries need to look at the following: Who are the board members? How will they be using the application? What is their workflow? How do the documents come together and how will they be used at the meetings? Is this a board that travels a lot? Are meetings in the same location?

At the end of the day, says Sodi, a company might invest heavily in technology that the board does not use because these issues are not taken into consideration. ‘If they don’t use it, you’re back to more work,’ he notes.

Questions of security

One of the key concerns that general counsel face when implementing board portals is whether the books will be secure, but this question has been resolved by improvements in security as well as a rethinking of the security of paper-based board books.

‘If you think about it, how secure was the information in a binder, sending it via FedEx, or having it sit on your doorstep, maybe at your summer house?’ asks Merritt-Epps. ‘What if a director loses a binder or leaves it on the plane?’ With technology, she notes, if a director misplaces their tablet or laptop, SJI can quickly wipe the device remotely. She also notes that SJI does not use certain features for security reasons. ‘Some people are big on the download feature, but that’s not something I would recommend; we have disabled that function.’

Ruck notes that as companies make the move from paper to digital, directors are also requesting features that they normally use in their everyday lives, which raises further security issues. ‘They’re asking for that two-way communication that did not exist in the portal market; they’re asking for secure email, e-signatures, discussion walls and workspaces.’

This is why it’s even more important to have security protocols that give directors the interaction they want while providing a high level of security for the company, says Fealing. And importantly, it’s essential that internal policies and procedures are updated. For the purposes of security and compliance, ‘The policies that you have in place for the physical documents should also exist for the electronic documents,’ Fealing notes.

One of the major (and most visible) benefits of switching to a board portal is the reduced paper usage. The reduction in photocopying, mailing and paper means that companies are now being much more ‘green’ in terms of delivery of materials. But there’s another huge benefit: it also saves on labor, as employees no longer have to copy, bind and mail, which means companies can make better, more efficient use of employees’ time. ‘It’s also allowed us to view ourselves as migrating into the 21st century and being adaptive to what’s happening – and that carries through to the employee base,’ notes Fealing.

How to choose the right portal

While corporate secretaries and general counsel have a good array of board portals from which to choose, it’s important to know how to identify the right portal for your company. Here’s what you need to look for:

• High levels of security, ease of use for directors, and ease of administration for the company. ‘Security has to be bulletproof,’ says Diligent’s Alex Sodi.

• Select a web portal that ‘looks like a book’, says SJI’s Gina Merritt-Epps. This is important in ensuring that directors have a seamless experience.

• Two-way communications features such as e-signing, approvals and workspaces.

• A company with a proven track record of delivering best-in class software and 24-hour support.

• Software that is customizable to the company’s needs, regardless of the industry.

• The ability to readily access archival information – secure email, or even the ability to securely add temporary counsel.

• Flexibility in terms of platform use – desktop, laptop, tablet, etc.


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