Corporate Boards Get Busy Online

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Adoption Can Be Slow

The road to online board portals isn't always smooth. Noridian began using a board portal from BoardVantage in 2001 and has since issued laptops to each board member, becoming nearly paperless. But during a years-long transition period, the insurer used both the portal and paper board books. "Some directors have been looking at board books for 40 years of their lives," says Hamerlik, adding that while some directors began using the portal right away, it took others longer. "There were others that carried their board book to the last day," he says, referring to when the company finally stopped sending the books out.

"A lot of board members I know are the smartest people you'll meet, but they are not technologically savvy," says Joshua Greenbaum, principal of Enterprise Applications Consulting, a corporate technology consulting firm.

More than three years after implementing board portal software from 80-20 Software, the California State Automobile Assn. is still sending out board books to its 15 directors. "The antiquated ways of communicating with the board are inefficient and costly, and I was exploring ways that our directors could access data virtually," says Robert Flax, the assistant secretary for the association's board. So far, only one director who travels frequently has asked to stop receiving the board books, so Flax's costs haven't really been reduced. He spent about $1,000 for each software license, a one-time outlay of about $30,000, plus an additional $20,000 to configure the software.

Flax said he found that setting up software internally was less expensive than using a hosted services provider, which typically charges a yearly fee. BoardVantage, for example, bases its subscriptions on the number of users and the features companies need. The entry level is typically about $25,000; for larger, multiboard customers it can go up to $100,000.

Still, Flax says the portal serves as a good repository for past board documents and other reference material that can now be easily searched. The company even posts articles about its company and employees there. Board portals are also one way to give external directors better access to company data.

Room for Improvement

Internal board members are more satisfied with the board's access to financial, strategic, and operational information than external board members, according to an April, 2007 McKinsey Quarterly corporate governance survey. For instance, while 56% of 824 respondents said they were "extremely" or "very" satisfied with their board's access to operational information, only 44% of external board members agreed, which would suggest there's plenty of room for improvement in making information available to external board members.

While Radian Group no longer sends out board books ahead of meetings, the company still prints out piles of paper for the actual meeting. One advantage of using Thomson BoardLink is that directors also get access to Thomson First Call data on the company and its competitors. Altman, who spent time as a consultant, believes in taking a realistic approach to change. "Step one is to automate the process, and then we can go paperless from there," says Altman, adding, "Good things will come in time."

Rachael King is a writer for BusinessWeek.com in San Francisco.