Alan Pelz-Sharpe of Deep Analysis describes enterprise companies as “for-profit compan[ies] with huge revenue.” It’s safe to say that they’re not as huge as multinationals with subsidiaries on every continent, but they’re well beyond a national corporation. Enterprise companies are rapidly expanding concerns.
The biggest issues facing enterprise companies are caused by their very success. Enterprise companies can grow faster than their ability to regulate themselves. Regulatory compliance and international laws become powerful obstacles to forward momentum. Other challenges are internal:
- As the systems grow, custom software is needed. Plug&play software is less effective.
- Cybersecurity becomes an issue. More systems need higher levels of protection. Profitability draws ransomware thieves and Denial of Service (DoS) attacks.
- Multiple departments, offices, and locations require high-speed dependable communication. Interlocking departments need single-source document access.
- International regulatory requirements mean software solutions must meet GDPR and other standards.
These issues are the troubles facing any growing company. It is at this point that corporate governance becomes essential if the company is to survive its growing pains.
Corporate Governance: Not Just for Big Corporations Anymore
Corporate governance is the system of rules, practices, and processes that direct and control a company. Corporate governance balances the interests of the stakeholders and that of the community where the company operates.
Effective corporate governance requires a centralized system of document management and procedural transparency. Everyone within the governing structure must understand what is being done, and why it is being done that way.
Good governance includes corporate compliance with rules and regulations set by the board and by whatever states or countries the enterprise operates in. Good governance creates compliance by operating in accordance with internal principles. Companies set their own, of course, but basic principles include:
- Fairness towards shareholders, employees, vendors, and members of the community.
- Transparency about finances, conflicts of interest, and physical and financial risks.
- Responsibility for corporate management and enterprise compliance.
- Risk management for all factors of the enterprise.
- Accountability for all outcomes related to the enterprise.
Good corporate governance reflects the needs of its niche and location. Enterprise governance has to be flexible to grow with the enterprise and upgrade or expand where needed. A growing concern needs an effective entity management plan that can accommodate the forward momentum of an enterprise company.
Entity Management for Enterprise Companies
Entity management is the collection, sorting, collating, and redistribution of a business’s corporate record. Entity management gathers information detailing anything about the business structure and retains it in a central location so it is accessible to everyone who needs it.
As tax regulations, regulatory changes, and new legislation appears which affects the enterprise, it can easily be slotted into the existing company database via the central compilation of data.
Entity management involves many if not most of the corporate governance members and departments. The purpose of entity management software is creating a single source of truth within the company so that all departments are aware of changes in real time. Some of the departments affected by entity management include:
- Regulatory and legal compliance.
- Financial managers, auditing, and taxes.
The purpose of entity management is reduction of “reactive compliance.” In other words, rather than learning about a new regulation or law and then scrambling to adjust your organization afterward, your company will know about the upcoming passage of the regulation and be primed to comply as soon as the regulation becomes active.
This is essential as an enterprise company begins expanding overseas. Within the EU and Pacific Rim nations, regulations can change quickly, with little time for a business to prepare. Entity management gives you data in time to respond without panic.
How Entity Management Software Works
As the name implies, entity management software manages multiple businesses, departments, or entities. It collates data input from a range of sources, and ensures there is only one copy of each at any time. For instance, rather than five secretaries working on six versions of a memo (one on each of their office computers and one on a laptop at home), entity management software lets all of them work on the same memo in real time. The result is fewer versions, fewer mistakes, and a single memo when time comes to approve the copy.
Entity management software also:
- Reminds users of critical due dates and upcoming deadlines.
- Centralizes communications.
- Updates software and regulations in real time.
- Notifies users when compliance tasks are due, or completes them if the tasks can be automated.
- Interfaces with related software globally and updates users with international changes.
Organizational compliance with international regulations can be the difference between life and death for a rapidly expanding enterprise company. A robust entity management program saves time, avoids data loss, and ensures your staff has the most current information available when it is needed.
Clear as Concrete—The Lafarge Scandal
In 2022, the French cement company Lafarge (now Lafarge Holcim) pleaded guilty to complicity with the Islamic State of Iraq and the Levant (ISIL) and the al-Nusra Front in crimes against humanity. The company’s Syrian subsidiary had paid off numerous groups in the area, including the two terrorist organizations, to keep operating during the Syrian civil war. Although the company pleaded guilty and paid a staggering $777 million criminal fine, the parent company’s executives insist they knew nothing of the subsidiary’s actions.
Unfortunately, Lafarge’s parent company had no direct access to the subsidiary’s records. They had to trust what the subsidiary was telling them as far as the reasons for the payments, the amounts, and where they went. The French courts have found this is not sufficient to demonstrate lack of knowledge, and the top executives are facing many years in prison for crimes against humanity.
Most enterprises will not face this kind of horrific behavior on the part of their offices; nevertheless, a well-maintained entity management system would have caught this long before it advanced to this level.
How Athennian Can Help
Athennian has been developing data management systems for expanding companies and integrating them with existing systems for many years. When enterprises begin to grow beyond their management limits, we’re here to help. Contact us today to speak with a member of our team for a customized demo.