Investing in board governance management software isn’t a simple decision. Board portal technology allows private and public companies of all sizes to send out their board books electronically so that board directors can receive them on any device, anywhere. Innovations in board portal technology have brought many new service providers to the industry, including many free board management software options. But not all board portal solutions are created equal.
Managing a board is already expensive. Getting the best value and the potential for long-term value relative to the investment are likely essential parameters for all boards. For that reason, free software may seem like an obvious choice. However, board portal software solutions are as much an investment in the quality of the board’s work as they are in software products.
In that context, free board management software often proves the adage: if it’s too good to be true, it probably is. When it comes to board portals, the most effective solutions are worth the expense.
What Costs Should Boards Consider When Choosing a Board Management Software System?
While the market offers a range of costs for board governance software, your board will need to know what costs they’re incurring now and compare them to a few of their best options, including free board management software.
Generally speaking, boards can expect to pay an annual subscription cost for their board portal system. There may be extra costs for upgrades, add-ons and other valuable software solutions. The only other cost to consider is the cost of resources you’ll need to administer the system.
While this may sound costly, it’s important to understand the actual expense of one of your primary board responsibilities, which is creating and distributing board books. Let’s consider the cost of manual labor, materials, distribution and other expenses.
The Cost of Managing Board Books
The corporate secretary or another person spends many hours preparing the agenda and organizing, printing, collating, assembling and binding the board book. If you multiply that amount by your average hourly labor cost, you have the cost to prepare board books. Then you have to multiply that number by the number of board books you need and the number of board meetings per year. The total figure may have already sent you into a state of shock, but there’s even more to consider.
Add in the costs for paper, printer cartridges, binders and other necessary materials. How does your board distribute board books? Do you mail them? Courier them? Do you use overnight carriers? Be sure to add in those costs. These are the minimum costs, which could escalate if there is a mistake in the board book or if the board book needs a last-minute change. The total costs could net your board in the tens of thousands of dollars.
With such enormous costs for just one board process, it’s easy to see how working with a provider of board governance management software programs can save your board time and money — and why you might be tempted by free board management software.
Is a Cost-Free Board Portal Worth Considering?
Cost-free board portal management may seem like it’s worth considering. Managing a board is costly, whether manually or using a software solution. Between the cost of labor for the employees that support the board and all the tools the board needs to do their jobs, expenses add up. Before jumping into a free board portal, it’s worth considering the typical characteristics of free board management software:
- Features & Functionality: Free board management software is only free if it doesn’t cost anything on the front or back end.The reality is that a cost-free board portal system will only offer you the basics. The provider may not have additional programs or products for you to consider, which limits how much the software can support your board.
- Add-Ons: If free board management software does offer additional solutions, the cost of one add-on after another may end up being more than going with one industry-leading, comprehensive board portal system. Free systems will most likely lack the functions and features you need most and thus will likely fail to offer you the efficiency and productivity you’re looking for.
- Security: With the multitude of media reports about hacking corporations and data breaches, board directors need every system they use for board business to be highly secure. Top security comes with a cost. You can be sure that free board portal systems come with little or no security, which leaves your board vulnerable to breaches.
5 Reasons Free Board Management Software Could Be Costly
A board may decide to live with the limited features of free software, not-quite-right mechanisms for group editing or unsearchable records. But even if these inconveniences are manageable, free board software can have some seemingly minor drawbacks with potentially major costs:
1. Lack of Training & Support
Most free board portals lack both training and customer support. New board members may never get initial training on the software, and even experienced board members may be hunting and pecking without mastering the software’s capacities. This can inadvertently introduce vulnerabilities since a board member could easily leak data without knowing how to incorporate good governance.
Free board management software does nothing to avert the crisis portended by this innocent ignorance. Training is not part of the package. The same goes for the low-cost option of out-of-the-box software installed on a hard drive.
2. Unsecured Cloud-Based Data
With free board management software, where is data actually stored? Almost always, the answer is ‘the cloud.’ Cloud storage is the norm if the software operates in tandem with popular file-sharing sites (also free!). The cloud does not provide the requisite security for boards, which handle highly sensitive information.
This introduces very real risk since 60% of major U.S. firms have been hacked in the cloud. Storing data off the cloud is the only way to be safe from phishing attacks and hacked servers.
3. Unencrypted Communications
Encryption creates complexity, making it more difficult and time-consuming to break into files. Hackers naturally strike first at unencrypted data. Full, robust 256-bit encryption is the gold standard for safety.
Free board management software seldom rises to that standard. More often, it offers no encryption or low (128-bit) encryption.
4. Reliance on Email
The best boards forbid members from communicating over email. But it’s usually the only option available with a free board management software. Hacking and phishing are risks, but so is the possibility that board directors get so many emails that they miss important messages about board meetings or board business in time for the meeting.
Boards that continue to use personal or business email accounts for board business expose themselves to a significant risk of being hacked, which could lead to charges that allege a lack of responsibility for duty of care. Board directors should be cautious about putting themselves in a position where they could be legally liable.
5. Vulnerable to Next-Gen Tactics
Free board management software stops ‘evolving’ upon downloading, but hackers refine their methods constantly. Free board management software has no developers protecting data from evolving attacks, which means it’s unable to evolve along with risks.
Even if your IT staff can write custom code for the board management software, that still poses a risk, as small teams with multiple priorities cannot constantly monitor complex international scams and generate defenses for all of them.
Free Board Management Software vs. Paid Options
Taking advantage of free board portal software may seem like an obvious choice. Yet it’s likely the product won’t meet all of your needs. But it’s not just tech-savvy companies with healthy budgets for IT initiatives that can benefit from paid options.
Companies that use free software risk not having the best efficiency and service availability.
Cybersecurity will only become more critical as time goes on. Providers of free board portals can’t provide the security measures that today’s boards need. When choosing a board portal service provider, boards should start with companies with a strong reputation and credibility within the industry.
While budgeting is always a concern, it’s prudent to make a wise decision about purchasing board management software. In selecting the most effective board portal, boards should consider the following:
- Their board’s digital needs
- Return on their investment
While it’s impressive to read down a long list of features, it’s vital that board portal software provides boards with efficiency, accuracy, collaboration and mobility and saves them money.
Ultimately, free board management software can’t provide the convenience, connectivity and security that paid options can. Boards that want to maintain their competitive edge need a board portal solution to keep up with the ever-evolving risk and business landscape. Only paid options can do that.
Discover the Value of Best In Class Board Management Software
The best board portals make boards better. They help boards keep pace with new technologies, threats, business developments and even emerging ESG and GRC frameworks. So while free board management software might seem like an easy choice, the reality is that it will only make your board's job more difficult.
Board management software is an investment in the organization’s future. While paid solutions might require more of your budget, their cost pays off by making boards more efficient, more secure and more effective — all characteristics that can cut costs in the long run. But even among paid solutions, not all board management software is the same.
Download Diligent’s Buyer’s Guide to Board Management Software to learn more about choosing software that can keep your board competitive now and in the future.