The company let’s call it A was the posterchild of the
industry; they had grown faster than the market, had better margins, and a
product portfolio that gave them higher traction with customers. The war chest
thus created was used to acquire business interests and market expansion
globally; the stock market rewarded them with benchmark beating valuations with
a rare possibility of anyone catching up. The promoters kept tight control over
the business and expenses with close trusted advisors – part of the inner
circle.
Investments in manufacturing excellence fueled the growth,
quality was a way of life which enamored them to their customers. Practicing
frugality in other areas, they perceived COTS to be uneconomical in comparison
to home grown solutions. Thus they built a reasonably large team to recreate
the wheel for every process, automation with custom built solutions for all
areas of the business. While the industry adopted globally accepted best
practices and solutions, company A justified its decision to stay different.
Industry faced regulation in growing degrees making it
mandatory for everyone to adopt technology based solutions for compliance.
Auditors expected electronic trails and information as tamperproof evidence of
process adherence. Major part of the industry prepared for and over a period of
time gained compliance; the cost of deviation was adverse impact to business,
and customer dissatisfaction. Industry norms demand compliance, so do adherence
to country specific laws which is treated as a part of doing business.
While major part of the industry simply bought solutions
from existing providers and got done with it, company A tasked the IT team to
build the necessary systems. Step by step the solution was built to specifications
signed off by the business teams based on downloaded information from
regulatory websites and second hand experience. Since they were building the
basic minimum functionality, where technology was lacking compensating manual
controls were put in place, deemed adequate for audit purposes.
Faced with an audit during the phase of construction,
company A demonstrated the scope of work and the fact that they were building
everything required to make the process compliant. The auditors cognizant of the
effort, accepted the input as work in progress and signed off on the timeline,
to be reviewed during the next audit. Step by step functionality was put in
place albeit slower than anticipated with parts of the business used to freedom
and flexibility finding it too complex to adapt to the new way of working.
Increased regulatory activity and deadlines with harsher
penalties for non-compliance put the industry on alert specifically in some of
the large markets. Cost of non-compliance was denied access to consumers until
remediation fixed the gaps and there was enough evidence to demonstrate
end-to-end process non-repudiation. The increased complexity of the new laws
put the laggards in a precarious situation, especially ones who had custom
built solutions which required longer time to validate.
Vendors and consultants offered help to anyone willing to
accept the problem and assist in putting together a compliant solution. Many global
solution providers who had not explored niche markets by virtue of their size
and cost of doing business, sensed a tactical opportunity to gain market share
and grow the business. Leadership teams swooped down on the big targets
including company A. Having survived the economic ups and downs with their own
solutions, company A reluctantly agreed to the meeting.
The CIO who was brought on board post the last large
acquisition to drive technology led efficiency and transformation; coming from
one of the leaders in technology adoption, he was seen as a good catch. The CIO
with long industry background was aware of the problem and informed that they
were on the way to solve the problem in the next 12 months – the deadline to be
compliant. He did not believe that there was a need to press the panic button;
deadlines do shift when it comes to regulatory requirements.
After a couple of attempts at elevating the issue, vendors decided
not to waste any more time in their quest to gain the business of company A. The
CIO guarded the rest of the company executives to the upcoming challenge who were
known to throw around their weight to get things done eventually, attempting to
second guess the inner circle. The sycophant environment and the belief that we
are too big to fail made them vulnerable to the upcoming date, their size made
it almost impossible to breast the tape in time.
Company A scrambled to the finish line partially ready, the
business impact was significantly larger to the investment, attitude and inertia
cost them a few notches in market standing. The CIO was fired for not elevating
the issue and preparing the business; he had not taken the initiative nor
involved other CXOs. Dip in profits and dividend crashed market capitalization,
they had to fight hard to stave off an unfriendly takeover bid. Elephants can
dance was a turnaround story, repeating history is not easy.
