4. How do you assess the ROI and how does it compare to initial expectations?
While soft cost considerations are important, I have noted a higher focus on third-party direct costs which ultimately misses much of the broader value proposition.
- Initial cost—license fee, set-up, XBRL conversion, hardware and related IT costs
- Recurring costs—maintenance, subscription fee, XBRL services, etc.
- Discontinued direct costs—document/ change management, rush fees, EDGARizing, filing, XBRL services, etc.
In many cases, the discontinued third-party costs more than offset the fees and costs related to the disclosure management solution
Note that some of these costs hit legal or other budgets and may not be easily visible to the reporting team.
- If the disclosure management solution expenditures exceeded discontinued or replaced costs, was this deemed to be a good investment from a financial perspective?
- What were the soft cost implications? Some examples are reporting and IT investment in implementation, re-deployment of team resources to other projects due to shorter reporting cycles, improved morale, lower turnover, increased competency and self-sufficiency, reduced reliance on third parties, reduced risk profile, deemed value of accelerated reporting calendar, etc.
- What was the structure, length and flexibility of the commitment?
- Does the pricing vary depending on the number or type of filings or activities or is it time-based or dependent on the number of users?
Other common uses include the earnings release, earnings call script, board reports and statutory reporting.
- SaaS solutions are available for as little as three-month rolling contracts with the ability to output all of the data on demand. Some solutions require multi-year commitments or imply a multi-year commitment due to the up-front cost.
- How flexible is the pricing to expand or reduce the number of users and were subsequent price changes, if any, in line with expectations?
5. Has your company expanded the use of the disclosure management solution?
Most companies start with the 10-Q and 10-K but quickly expand to 8-Ks, proxies and other ’33 and ’34 Act filings the earnings release, earnings call script and statutory reporting. Expanded use cases may include internal reporting, roll-ups for aggregating external reporting data or analyst communications, contracts, IR, legal, marketing collaboration, etc.
There has historically been a high level of consistency among registrants in the process for compiling reports for the SEC. Comprehensive discussions with peer companies can provide valuable insight into the solution attributes that contribute the most to real process improvements. Even companies that compete with each other are generally willing to collaborate on regulatory issues. It is too late to make any major process changes for the June quarter, however registrants are encouraged to observe which solutions are used by companies that have an easier and faster filing process and which are used by companies that have an easier and faster filing process and which are used by companies with more challenging filing processes. The December 10-Ks are around the corner and it’s not too late to plan for them.