By Kristin Gribben
A technological transformation is occurring in the boardroom, thanks in part to the iPad.
Online board portals, or electronic board books, have been around for the better part of a decade, but they've accelerated their reach into boardrooms since Apple's iPad tablet computer was introduced. Directors say they're more willing to use a board portal with an iPad because it is easy to use, compact for traveling and less obtrusive in the boardroom than a laptop. Internet-based board materials have raised issues about data breaches. But despite the concerns, portal vendors say sales are up. "The iPad is very much driving the adoption of board portals," says Al Percival, director of operations for Diligent Boardbooks. The company added 59 new licenses during the fourth quarter of last year, compared with 41 for the third quarter. Recent signings included BBC Worldwide, DirectTV, AOL and Exxon Mobil.
"We're at a point where a little short of 100% of our deals are somehow influenced by the iPad," says Joe Ruck, CEO of BoardVantage, another board portal vendor.
In some boardrooms, the tablet has also bridged the gap between board members who were initially reluctant to give up their traditional paper board books and those who embraced online portals. Percival says he has heard from clients where half the board had still been receiving paper materials that all the directors are now willing to access the portal through iPads.
Larger companies issue iPads for the entire board, in order to maintain control of equipment for security reasons. Smaller companies tend to issue them on an ad hoc basis for directors who haven't already purchased them, Percival says.
Ann Reynolds, the former chancellor of the City University of New York who retired this spring from the boards of Life Technologies, Humana and Owens Corning, says the iPad improved her experience with boardportals. Before the Life Technologies board adopted an online portal, directors used a secure intranet to receive information. Reynolds says IT was always changing the password to keep it secure, and logging on was a headache. The board eventually signed up with BoardVantage. Along with board materials, the portal gives directors other information, including minutes from past meetings and travel information for future ones.
Some online portals also allow directors to vote on issues by written consent, fill out evaluations and questionnaires, and interact through programs similar to social media sites. For example, BoardVantage added new features around five months ago that let board members and the CEO post information on a "wall" similar to Facebook's, except that it's restricted to board members.
Security Concerns
Users have always asked about the security of online board portals, but the issue has gathered urgency since one vendor said its system was hacked.
In February, Nasdaq was forced to notify the clients of its board portal service, Directors Desk, that the system had been compromised by hackers following news reports that the FBI, Secret Service and U.S. Justice Department were investigating the incident. Suspicious files were found on servers during a security scan, Nasdaq said at the time.
Investigators speculated that the files were a "Trojan horse" software program. However, there was no evidence that customer information was accessed, the exchange said.
Kenneth Bertsch, president and CEO of the Society of Corporate Secretaries and Governance Professionals, says he is surprised that the Directors Desk hack doesn't appear to have affected the growth of board portals. "I think we are at an inflection point on use of technology in the boardroom, partly having to do with generational change… and partly with iPads and ease of use," Bertsch writes in an e-mail.
Ruck says some customers asked him about BoardVantage's security after the incident with Directors Desk, but the company's business hasn't slowed.
However, Jeff Carr, a cybersecurity expert who advises senior executives on security measures, says the risk of online board portals outweighs their convenience. "Anytime you collect information that is of value to someone else and load it in one central location that's easier to get to, that's a bad idea," he says. He cautions boards to sign up for a board portal only if the vendor agrees to accept liability for a security breach.
