The evolution of Business Management Systems follows a similar trajectory across different industries. Looking at what happened elsewhere in the past can inform our understanding of what will unfold into the future.
To understand where GRC software systems are heading, it is useful to look at the complementary domain of Enterprise Resource Planning (ERP). The bureaus that ran systems for businesses in the 70’s, provided batch-based reporting, with final numbers only presented several weeks after the end of the month. In the 80’s and early 90’s there was a multitude of different vendors, many with a very specific vertical focus. It was not uncommon for a company to run multiple, non-integrated solutions: a general ledger from Company A; a bolted-on Cashbook from Company B; a stock control and manufacturing module from Company C; an in-house system for Sales Orders; and a spreadsheet-based system for Purchasing.
In order to address the obvious inefficiencies and reporting difficulties inherent in a non-integrated approach, the successful ERP software vendors began providing integrated solutions that offered real-time reporting. Those who did this best, like SAP and Oracle, were able to dominate the market, with many smaller vendors falling by the wayside.
The same challenges now face GRC systems. As a relatively new science, sustainability management is evolving quickly and is fast becoming a key focus area in the board room.
The Global Reporting Initiative, formed in 1997, released the initial version of its sustainability reporting guidelines in 1999.Over these past two decades, as awareness has grown not only of the consequences of the impact business has on the environment, but also of the fact that running a business sustainably is simply good business, and leads to greater long-term profitability, systems have developed to enable reporting in a coherent and standardised way.
Sustainability is the outcome of well managed Governance Risk and Compliance. But to manage something well requires knowing where you are and where you need to improve. And GRC systems are in a similar position to ERP systems thirty years ago: multiple non-integrated systems producing islands of information that need to be manually consolidated at specific intervals, a resource-intensive and highly inefficient process.
What we will see in the years to come is the emergence of solutions that offer tightly integrated modules for the different disciplines within Governance Risk and Compliance: including Risk, Audit, Compliance, Health, Safety, Environmental, Quality and Social Management. These systems will be able to produce, in real-time, key reports such as sustainability reports (GRI or similar), content for the Integrated Report, statutory reports such as Mining Charter or Social and Labour Plan, as well as be used day to day for the construction and revision of strategy, and the operational management of risks associated with strategic objectives.
Visibility will be in the form of integrated dashboards that empower managers to analyse trends, identify outliers, and to a large extent manage by exception. Rather than waiting until after the year end to see how the business performed, management will be able to see in real-time the governance health of the business in areas beyond just the financial.
Evolution favours those entities with a competitive advantage. Companies that have better systems to manage sustainability and governance will be better positioned to prosper into the future. This drive for efficiency will ensure that GRC systems become as competitive and integrated as their ERP cousins.