With May 2014 deadlines for Dodd Frank Conflict Mineral compliance fast approaching, law firms and companies seeking compliance  are actively working to meet their compliance requirements. Because of the amount of data that needs to be collected under this new regulation, a software solution is the only option for most firms as companies typically have hundreds if not tens of thousands of suppliers who all must submit a large amount of compliance data. After the data is collected it needs to be analysed which is virtually impossible without a management platform. The right software system will effectively draw reports, analytics and stats on the vast amount of data collected. When law firms and companies seek to source a software vendor for Dodd Frank Conflict Mineral Law, there are several important factors to note.

Different Conflict Mineral  Software Models:

1. Client Direct Vs Supplier Direct

• Client Direct: In the client direct model companies that need to comply pay for a software platform either hosted or cloud based to manage their compliance processes. There can be a combination of licensing fees, set up costs and if purchasing a hosted solution, hardware costs. Typically these solutions will have multiple modules for different restricted substance lists, social regulations and compliance requirements. For supplier data procurement there are either supplier data exchanges put in place through a portal or a wizard which is free for suppliers to use.

• Supplier Direct: Under this model companies that need to comply with the law  would purchase a software platform which may be cheaper than the client direct model but would then require that their suppliers pay the vendor to submit data on the platform. This model is typically only practical for Fortune 50 sized (typically Market Cap of 10 billion +) firms who have immense leverage and control over their suppliers. Under this data exchange, supplier direct model the platform is usually only valid for one regulation.

2. Cloud Based Vs Hosted:

There are currently vendors who offer solutions that are cloud hosted meaning there are no hardware installation costs.

• Cloud Based: Usually offers a lower cost and unlimited seat licensing for a fixed monthly cost and a onetime set up cost. Traditionally cloud based solutions are the direction most firms are moving because of the ease to deploy and lower costs.

• Hosted: Firms offering hosted solutions require the purchase of servers and each computer installs local software on individual machines. When upgrades to the software occur they must re-install on each computer where the solution is running.

Once the decision has been made on supplier direct Vs client direct and hosted Vs cloud then next decision should in terms of scalability in terms of regulation. Law firms and companies seeking compliance should have internal discussions about their currently regulatory and future regulatory landscape. Does you or does your client sell into Europe? In which case they will have to comply with Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), the EU regulation around the production and use of chemical substances.  Are they in electronics? They might have to comply with Restriction of Hazardous Substances Directive (RoHS) the EU regulation of electronics. It is very important when selecting a software platform that it is both usable and affordable to use for other regulations. Purchasing a solution that is only useable for one restricted or compliance required substance list may not be an efficient means selection.  

Items to Note When Sourcing:

• Does the software vendor have experience in your vertical?

• Is the solution usable for other regulations in the future?

• How much does it cost to add modules in the future?

• Can you outsource data analysis or supply chain work to the vendor if warranted?

• Are there any law firms the software vendor is currently working with?

• Can the software vendor provide references for similar projects?

What to Ask During an Conflict Mineral Software Presentation?

• Show us a copy of an implementation plan for your solution?

• Will you come on site for a presentation?

• Show how your system handles conflict mineral compliance end to end

• Please outline your process methodology and why its best for our law firms’ clients

• Show us how you save on supplier touch time and data analysis

• Can your solution integrate with ERP (Enterprise Resource Planning) /PLM (Product Lifecycle Management) systems?

Core Features That Are Needed:

• Mechanism to gather data from suppliers

• Data analytics and reporting on collected info

• Detailed reports on supplier response rate / missing info

• Ability to attach / map tier 2-3 suppliers to tier 1 suppliers 

• Task assignment and CRM capabilities

Once the presentation portion of the selection process has been finalized and it comes time to select the vendor there are several other best practises to consider:

1. Involve IT Early:

Include the IT department from the beginning to ensure that the set up process identified by the vendor is one that can work with current IT in place at the firm. Bringing IT to the table late in the game only to find major road blocks presents a major challenge.

2. Requirements Definitions:

Make sure you outline all your requirements very clearly. The last thing anyone wants is “scope creep” which could cause more costs for your firm and more headaches for your vendor. Be very clear when outlining requirements.

3. End User Approval:

Ensure that the power users of the system who will be doing the majority of the use time give their approval. In many cases management procures a system and the actual users disagree with the choice. Make sure selection is agreed on internally by the major users of the platform.

With compliance requirements approaching procuring the infrastructure needed to be able to affordability gather all the required info is a fundamental requirement for companies and firms.