In each annual report, I spend a little time talking about not only our business but where we see the market going in the next 12 to 24 months. This year has probably been one of significant change and warrants a little more time than previous years to gauge the focus of the industry as it moves forward. There is much happening in our space and we are excited to be leading it.
This year we adjusted our tag line to Making Compliance a Competitive Advantage® by Accelerating Performance through Managing Risk. Our focus is simple: we think businesses can make more money if they see compliance as a business objective not as a legal objective. Our focus is to help clients grow a business (whether profit-making or NFP) through managing risk effectively. Obviously, compliance dovetails well with business as it is often the business that is responsible for compliance. In every single one of our products, we focus on helping our customers make better business decisions and to do so by avoiding risks. For example, avoiding the risk of breaching a regulation, avoiding the risk of fines, or avoiding the risk of losing a license to operate. We also fully support clients taking on more risk– in fact, we encourage them to do so. If clients know what they are getting into and they understand and manage the risk of failure, then clients should feel comfortable to take on more risk. The analogy is that you can drive much faster if you know how to drive, have a great car, have driver education and training, have a bunch of safety devices installed and know how to drive in bad conditions. Our aim is to support you going faster.
There is a trend for compliance to be embedded into the fabric of the business. We embrace this concept and have adjusted all our solutions and products to be geared towards the business users as well as the true compliance user. This is as simple as using different ‘business focused’ language in our work but also making sure that our products are ‘business ready’ always. Our client base is expanding as we start to market and sell our products to a greater group of buyers within companies. While much of this is focused on the compliance person, it is equally as focused on other key ‘C-level’ people as well. We plan on pushing more use cases for our products to a broader set of stakeholders in our existing client base.
Years ago, the largest proportion of our business was delivering FCPA due diligence for clients. Now, our IntegraCheck® | Due Diligence provides advice on resellers, distributors, business partners, employees and suppliers. We conduct research globally and provide guidance, intelligence and advice to our clients about who they should engage and how they should engage. Our research is not just a bunch of data points, it is analysis into the business risks (not just compliance risks) of engaging an organisation in a particular market to provide particular goods or services. The days of giving compliance-focused advice are gone. We research and write advice on companies and people engaged in business across 194 countries.
Our focus of expanding ratings, comparisons and benchmarking is now standard in the latest version of our IntegraCheck® | Integrity Due Diligence reports. We believe that there is enormous value in providing ratings on integrity and benchmarks across the other companies on which we have conducted similar exercises. This new edition to our reports is rolling out in 2018 and will be a game changer in providing additional value to clients.
There is now a wealth of competitors in our space and we welcome that addition. The more people that are developing the compliance industry and talking about compliance is a good thing. We will continue to fight and compete to win more customers and to maintain our existing customers. We are not interested in competing by being the cheapest. We will compete through having excellent products, a strong sales team that are consultants and an unsurpassed delivery expertise that creates a value proposition for the client. That is unbeatable. While many of our competitors have come into our market and left already, we continue developing our products and brand and position ourselves as a consistently strong player that has the financial and product depth for the long term. Twelve years of continued profit and positive cash flow prove that. We are a long-term investor into the market and plan to be around for a long time.
Distributed vs centralised buying
We are seeing trends that suggest that compliance buying decisions are being made around the world, not just in the compliance HQ. This bodes well for our business as we have a global sales team working to capture clients around the world in the local markets. This changing approach to the buying of compliance means that there is a need to have relationships at all levels of the customer’s business, not just at a HQ function. We have started to manage several large clients in multiple locations and have a contracting model that supports local buying but with global pricing and oversight. We expect this trend will continue in the foreseeable future. Our investments in our local expertise in our local offices validates our approach to supporting clients in the fields where they need it the most.
Technology must drive compliance
We continue to invest in our technology solutions to make them more valuable to clients, more scalable, and more robust. We believe that technology will be at the heart of a compliance programme (of whatever kind) going forward supported by data and people. We believe that the innovation in technology can drive the compliance industry forward and we will continue to develop technology through our in-house team in Manila. Our key compliance platforms of ComplianceDesktop®, Supplier Integrity® and IntegraCall® will all be developed further in 2018 along with some new products being released (which for competitive purposes we are not discussing here). It will be a big year for our technology team and our plans for developing the Firm towards being a world-leading technology player.
Mid-tier and SME market
There is definitely a compliance need opening up in all sizes of business. While previously it was focused on the higher end of the Fortune 500, it is clear now that compliance is a part of all tiers of business, especially sub- Fortune 2000 and below. We are seeing renewed interest in smaller companies for compliance services and the Firm is well positioned in this space, especially with our new product set that is more useful to more companies. There is always a risk that these smaller companies will adopt a ‘check the box’ compliance programme, but we do see some substantive elements in this new market segment for the Firm. We plan to develop a second-tier sales team to focus on this emerging trend in 2018. We will also be focusing on our channel business in 2018 to establish more channel partners to drive more ‘feet on the street’ to sell our solutions.
Researched and refined data
While it has been said many times, ‘data is the new oil’ and we believe strongly that compliance needs to create and use data more effectively. Our Firm continues to build its own data sets and will continue to push forward with developing, enriching and using data. There is minimal value in oil as a commodity, but there is value in oil when it has been refined and created into something new. Our approach is exactly that. We use the data to build intelligence, never to resell the data itself. We believe that the raw commodity (i.e. data) needs to be validly and legally obtained and then enriched to create something of value. We will never give away our data or devalue it by discounting it to the price of commoditised data. The IntegraWatch® | Compliance Screening database is our primary location for the licensing of our data to clients. Another data asset that we have that will come online in 2018 is our database of all the research we have done over the last 12 years, in the form of a new database that will be subscription only.
Caution always has to be around the creation and use of that data. We will never simply scrape data from others and use it for our own benefit. It would be unconscionable for an oil company to just start drilling in the middle of an ocean and claim rights to the oil, as it would be for a data company to just scrape data from public-record databases, thinking that it is somehow free and they can use it. There are many companies in our industry that are breaching privacy and intellectual property rights and licensing terms of the places from which they steal data. We are not one of them and never will be.
Our training product development
Our development into the training business was customer-driven. Customers continued to request us to move into this space and provide broader solutions to them as part of a more holistic stack of products and services. The development of both our training products is shown elsewhere in this annual report. We are totally committed to building out more content in our training products and to expand this business beyond traditional compliance training into broader skills-based training. The adaptive element of course creation combined with micro learning initiatives means that with the right content we can easily develop solutions into more areas very easily. In short, we think that we are well positioned to grow this business into a learning centre of excellence. We plan to grow this business exponentially in 2018 and 2019. Our competitors are under-performing in this space and we plan to be totally disruptive in this market.
Our supplier management solutions
We believe that suppliers’ integrity is one of the least-invested parts of the compliance and business community. Our leading-edge products change all that by building an intelligent supplier risk identification and monitoring solution that is essential for any company that has significant numbers of suppliers. Businesses are judged by the quality and integrity of their suppliers. Most companies simply fail to manage their suppliers effectively from a risk perspective beyond credit and product quality risks. We believe there is substantial value in this part of our business and will continue to invest to help procurement teams manage their risks in engaging suppliers.
Our hotline solutions
We developed our hotline products this year on the basis that we needed an innovative product that used the latest AI technology to provide a better alternative to a traditional call-centre-based hotline product. We are excited to launch our new product this year and to start gaining market share. Our competitors have had a near monopoly for too long and we plan on disrupting this industry. The client base deserves more and we tend to give it to them.