Compliance Management Systems

What is Compliance Management software?

Compliance management software is a program used to continually track, monitor, and audit whether business processes are aligned with applicable laws, organizational policies, and the standards of consumers and business partners.

Of course, a corporate compliance program goes far beyond software, and businesses in certain industries may not even need software to manage compliance requirements. However, large businesses and organizations in sensitive industries (pharmaceutical manufacturing, financial services etc.) generally benefit from an approach to compliance issues that’s partially automated by software.

Compliance management functionality can be found in various types of software. We’ll help you understand your options, so you can make the right choice for your specific business model and industry.

Here’s what we’ll cover:

Which Types of Software Help With Compliance Management?
What Is the Core Functionality of Compliance Software?
Key Considerations for Buyers

Which Types of Software Help With Compliance Management?

There are essentially three kinds of compliance management software (also known as corporate compliance and oversight tools) on the market:

• All-purpose compliance management platforms
• Industry-specific compliance management tools
• Governance, risk and compliance (GRC) software

All-purpose compliance management platforms offer generic capabilities for compliance management across industries. Sample vendors include CMO Compliance and Navex.

Industry-specific tools help businesses in heavily regulated industries (health care, industrial manufacturing, financial services etc.) meet specific legislative and commercial requirements.

GRC platforms include generic compliance management features alongside a broader set of capabilities for risk management and corporate governance (for instance, IT risk management, business continuity planning, and legal management). Sample vendors include Enablon.

 

Compliance reporting in Enablon

 

In this buyer’s guide, we’ll focus on all-purpose compliance management platforms as well as GRC platforms. Industry-specific tools are so niche in functionality that your specific business model will significantly whittle down your shortlist of vendors.

What Is the Core Functionality of Compliance Software?

Compliance software covers a huge range of business processes, regulations and industry needs. It’s no surprise that platforms are highly diverse in their functionality.

Compliance doesn’t stop at industry regulations and standards (OSHA, ISO etc.). Corporate ethics policies, acceptable use policies, and even business partner policies can all pose compliance issues. For instance, Wal-Mart suppliers have to meet a number of stringent standards that suppliers of many other major retailers don’t have to bother with.

Let’s therefore zoom in on the most important components of a compliance management system:

Policy management and compliance registry	Policy authoring and approval workflows, version control, etc. Policies are documented in a global registry that maps applicable regulations to policies.
Controls monitoring	Workflow engine enables business units to attest compliance with policies and regulations. Controls are documented in a centralized catalog, and standardized workflows allow for a controlled incident escalation process.
Compliance reporting	Enables visibility into violations and noncompliant facilities at various levels of aggregation via dashboards and scheduled reports. Some solutions also support continuous monitoring of KPIs related to sensitive business processes for compliance issues.
Audit management	Systematic workflows, case management and reporting features for investigating and resolving compliance issues. Some solutions also support real-time field reporting for audits.
Regulatory intelligence and change management	Tracks RSS and XML feeds of regulatory information and alerts published by standards bodies and government organizations. Feeds can then be mapped to existing policies. Some providers also have legal teams that compile knowledge bases of international regulations.
E-learning for compliance training	Generic and customizable online courses for training employees on how to comply with policies.
Survey tools	Survey modules allow organizations to distribute self-assessments to employees.
Conflicts management	Tools for monitoring potential conflicts of interest (employee gifts, employee trading etc.)
Fraud management	Risk management features allow for detection of patterns indicating fraudulent activity in financial statements, vendor payments etc. Controls can also be tested for efficacy in preventing fraud, and “whistleblower” hotlines and web forms allow employees to act as a front line of defense.
Multilingual interfaces	Interfaces are available for employees who don’t speak English.

Aside from these specific features, the advisory firm Gartner notes in their “Market Guide for Corporate Compliance and Oversight Solutions” that one of the most important functions of compliance software is aggregation: “The huge number of global legal, regulatory and administrative requirements and the variety of standards, guidelines and frameworks require compliance managers to merge and normalize mapping of requirements to controls and other compliance activities.” (The full report is available to Gartner clients.)

This is obviously a daunting policy management challenge that compliance software partially addresses through automation.

Which Compliance Areas Do All-Purpose Solutions Cover?
In addition to basic requirements, such as employee codes of conduct, GRC platforms and all-purpose compliance management, software solutions typically cover the following compliance areas:

Financial/accounting regulations

• Dodd-Frank
• Sarbanes-Oxley
• Model Audit Rule
• Foreign Corrupt Practices Act
• Bank Secrecy Act
• Gramm–Leach–Bliley Act

Industry-specific standards bodies and regulatory agencies

• ISO
• Committee of Sponsoring Organizations of the Treadway Commission (COSO)
• FERC
• OSHA
• FDA
• HIPAA

Regulatory feeds

• SEC
• FINRA
• FDA

Many providers offer out-of-the-box support for dozens of other standards, but if your organization operates in a heavily regulated industry, the first step in your search should be evaluating industry-specific solutions.

 

Mobile interface in CMO Compliance

Key Considerations for Buyers

We’ve seen that the landscape of compliance management vendors remains highly fragmented due to the diverse nature of compliance requirements. Keeping the following considerations in mind will help you evaluate vendors to build an effective shortlist:

• How much risk management functionality do you need? Risk management and compliance management frequently go hand-in-hand, and many providers offer integrated solutions that can identify compliance risks.
 
• Does your business operate in an industry where continuity planning is necessary? Typically, vendors that handle compliance management also offer business continuity management. Manufacturers, large retailers and other organizations with complex supply chains, as well as organizations that operate in politically and economically unstable regions, can benefit from consolidating these requirements in a single platform.
 
• To what extent does the IT department factor into compliance requirements? IT compliance is, to some extent, its own beast. Not all vendors offer equal coverage when it comes to IT compliance—look for vendors offering out-of-the-box support for frameworks like Control Objectives for Information and Related Technologies (COBIT).