Reimagining the future of compliance and ethics with managed services

Managed services: a game changer for compliance and ethics

Many large companies are looking to centralize the compliance and ethics functions within their global capability centres (GCCs) to address global regulatory requirements. They are turning to managed services, a differentiated service delivery model that integrates specific organizational functions with an external specialist, that is a strategic partner. This is unlike a traditional third-party consulting model where business support is provided on a one-off or ad hoc basis. The aim here is to solidify the relationship between the organization and external specialists for improved synergies, uniformity and receptiveness. Longer-term relationships tend to bring greater value, economies and help the company retain focus on core revenue generating areas. The competencies gained through a managed services model can also help building a collaborative centre of excellence (CoE) within their own system.

Integrating compliance and ethics functions can enable organizations to meet regulatory expectations, optimize budgets and absorb any variabilities that may arise. Any cost savings or unspent funds can further get channelized to other areas or functions that may need attention. Through flexible pricing models and the ability to scale up or down based on business needs, managed services can help control costs without impacting risk management effectiveness. As a collaborative model, it can also enhance the quality of work, as compared to a traditional business model with a third-party arrangement. For example, onboarding a new consultant for different services can be a cumbersome task, and the time spent could be utilized better to engage with the current managed services partner in discussing sharper delivery through a broader set of value-added services. Other benefits include consistency in performance and improved coordination because of the familiarity with the business and history of compliance issues, closer follow-through on projects, and greater security of information and data being shared.

An external strategic partner can become a trusted advisor to help organizations forge ahead on a growth path, create value while overcoming various challenges. Domain knowledge is preserved with one strategic partner over a period of time in comparison to it being fragmented with several service providers. Knowledge transfer can also be facilitated better for continuous improvement in compliance issues, and technologically enabled solutions tailored to the inherent risks faced by the organization.

Understanding the varied facets of managed services

Through a managed services approach, the strategic partner can transform the company’s compliance and ethics functions along with procedural updates to improve long-term operational quality and effectiveness. This model can operate well for decoupled processes, individuals and areas that may be deemed costly and may not add value to become a competitive differentiator.

• Operating model: organizations can explore the following models to maximize value.
  • Asset based: the strategic partner would configure, operate and support the organization in their use of the workflows, processes and analytics delivered through a technology framework or a cloud-based platform
  • People based: the strategic partner would deploy a team to the organization’s operating environment, working as part of their team, to deliver specific process outcomes
  • People and asset based: the strategic partner would supply and manage the technology along with compliance personnel to operate the processes
• CoE enabled: managed services are supported with a CoE team that provide leadership, leading practices, support, training, and collaboration for specific areas for superior results in ethics and compliance process. CoE is a governance model for guiding and managing a program throughout the organization and allows visibility within the company practices and can transform with digital ideas. It can be an intrinsic building block for realizing the potential and deriving value from digital data transformation solutions.
• Scalability: managed services offers an easy to scale model and can help companies from uncertainties that may arise from several factors such as volume fluctuation, internal attrition or business expansions. Let us take an example of integrating processes and resources post an acquisition by a company. Managing third party onboarding for existing process along with integrating vendors from newly acquired business across the entities can become complex and unwieldy, as there would be a limited time period provided to complete the standard formalities. The existing team may not be equipped to handle the magnitude. The scalability challenges here can be addressed using managed services.
• Agile model: with an agile methodology at its core, the managed services model can be more flexible. The technical excellence, design and competitive edge brought by agile brings ease and efficiency to overhaul processes and reduce turnaround time.

This article first appeared in Ethisphere Institute’s Business Ethics Leadership Alliance (BELA) South Asia magazine.