After meeting with thousands of organizations looking to buy subsidiary management and corporate governance software, we have observed that buyers tend to prioritize the availability of features over the usability of the solution (intuitiveness, design patterns, loading speeds, user support, etc.).
According to a recent study by Ernst & Young 96% of organizations have major challenges with their entity management software. In our experience, most of the challenges are due to very old archaic software built in the 1980s, 90s and early 2000s.
One of the core business objectives that organizations have when buying entity management software is to create a single source of truth and enable business stakeholders to self-serve access to entity data so they don’t have to email the legal or tax team to get basic entity information. If the entity management solution is outdated and hard to use, that will prevent user adoption and the behavior of emailing legal or tax for entity details will continue. 15% of software implementations fail due to low user adoption. Eliminating one-sixth of the failure risk in your subsidiary management software project is material.
At Athennian, we help customers everyday transition off of legacy entity management solutions such as Diligent Entities, GEMS by Computershare, hCue by CT, and others, for the exact reason described above. These solutions present well during demos and purchase evaluations because they have very broad sets of features. However, the features quickly become irrelevant with difficult onboarding and low adoption due to the complexity of the software.
In 2018, Diligent hired an expert user experience auditor - James Stantonian - to assess Diligent Entities to understand more clearly why their customers were so frustrated with the solution. The below are key quotes from his report:
“We also learned that the system [Diligent Entities] was so complex - a product of its meandering and ad-hoc development - that administrators were afraid of letting people add or edit data for fear it would compromise it, and thus became human bottlenecks.”
“In the end, we concluded that basic usability issues, when multiplied with localisation and performance issues, conspired to undermine the software’s key selling point - data integrity.”
“Even more fundamental functions, such as extracting information in the form of group structure charts and reports was a source of profound and ongoing frustration, the former being so broken that nobody we spoke to actually used it.”
When you look at the history of solutions like GEMs and Diligent Entities, it’s easy to understand why they are both so large, but also so complex and hard to use. They were both designed in the 1980s and 1990s when business software was in its infancy and there were not effective best practices established. Both solutions were originally designed as on-premise solutions where customers often perform their own customizations to the software. This results in diverging versions of the solution that make it difficult to make updates to. Both solutions were also acquired; the original owners who designed the systems are likely no longer involved.
When we spoke to a Corporate Paralegal at a leading Richmond, VA based security and protection company that uses Diligent Entities. She had the following words to describe their experience:
“We currently have Diligent Entities and we are not happy…the overall use of the tool I feel as though I have to be an app developer to even use Diligent. There is nothing simple about the program. It doesn’t seem very user friendly. Everytime we try to use a new feature, it’s either not turned on or the functionality there is a disconnect. Training only gets us to a certain point. We put a ticket in, and it takes 3-4 months to get something fixed.”
The Legal Operations Manager at a large Dallas, TX based private equity fund described her General Counsel’s patience expiring with GEMS and wanting to find a more modern solution:
“We currently use GEMS and we’ve had it for 10 years. It hasn't changed much in 10 years. And my GC has been quite patient and then the other day she was less patient and she said Jennifer go find something to replace GEMS.
The user experience is very outdated. There’s a lot of clicking around and for lawyers who are just looking up information, they just give up and ask a paralegal to get the information for them.”
A recent report by Ernst & Young surveyed companies with legacy entity management solutions installed yielded shocking results. 96% of respondents reported significant issues with their systems. 72% find it difficult to keep their systems up to date. 62% find it challenging to track governance activity status of their entities.
"Inefficiencies in older legal entity management systems are causing many organizations to create and maintain parallel processes and datasets around compliance deadlines, organizational charts and other governance activities,. This is inefficient and creates risk due to a lack of visibility and coherence," says Mike Fry, EY Global Entity Compliance & Governance Leader.
The issues with old entity management solutions is not at the product level, it is a generational issue with software built in the 1990s and early 2000s before modern design and build standards for business software had been established. Page 5 "The opportunity of new technology" - is third party EY validation of our claim to them. Diligent will be the exact same as GEMS. This is a generational issue, not a product issue. They are all very very old.
Athennian is a modern business entity and subsidiary governance platform that powers teams to be transaction, audit, and compliance ready. Legal, finance, and tax professionals use Athennian to automate workflows for ownership, governance, tax, and corporate compliance.