CRO POV: Compliance Goes on the Offensive

Talking the benefits of brand-building compliance with Midi President Tom Parry.

By Jay Whitehead

Here’s a career-climbing tip: if you want to meet movers and shakers, go hang out at Newark Liberty Airport. Last week, I spent an hour there with Tom Parry, President of Midi, which is now part of publicly traded SAI Global. We could have jabbered about sports or the huge flight delays. But instead, we talked compliance. Specifically, how we have both observed that companies have recently switched from using compliance strictly for defense. Now, we both noticed, compliance and risk are being used as brand-building tools to sell products, raise capital and recruit talent.

It’s something Tom knows a bit about. As president, he led Midi through its acquisition by SAI Global, the fast-growing multinational publishing and training company. The deal, which concluded this January, puts even more competitive gas on the fire in America’s compliance-systems market, the world’s largest. Of the $32 billion spent in 2006 in the North American corporate responsibility industry, nearly one-third of it was spent on regulatory compliance.

Tom, an American whose slight British accent gives away his birthplace, cops to being “a training guy from way back.” Yet this training guy has been focused on teaching corporate employees ethics, compliance, risk management, measurement and assessment. Midi built a substantial business, and with it SAI Global saw the opportunity to extend its global, technical publishing and training franchise into the compliance segment. “SAI did this for one reason,” Parry says. “It’s a growth market that’s fits the company’s core focus on training and publishing.” Parry points out, for example, that SAI Global also owns Easyi, the global information security training company. And he notes that now being a part of a publicly traded company whose financials are available 24/7 online makes his sales job easier and raises the stakes for competitors.

In years past, Parry notes, companies would buy training packages reluctantly, or as a remedial remedy. When a firm found itself under siege from an ethical lapse, for example, it would stock up on compliance programs.

That same behavior still happens today. But that’s not necessarily the rule. More often today, companies are getting out ahead of risks. They are finding ways to use their reputation for transparency and high degrees of compliance as competitive advantages. Companies are marrying this newfound affection for compliance to their marketing brands.

Parry thinks that this shift from defense to offense has a lot to do with the positive impact of the compliance efforts of the past. “Corporate leaders have discovered that this stuff works,” he says. “Often it takes a while to see the positive effect. And sometimes, a training program you delivered years ago resulted in avoidance of a problem that would have otherwise occurred. But the bottom line is that it is working, and companies are starting to participate in larger numbers.”

I asked Parry what he thinks the inflow of new money into compliance means for the market. After all, SAI’s acquisition is just one of many new investments in the space, alongside significant private equity infusions in competitors such as Integrity Interactive. “It can’t help but build the market,” he says. “Sarbanes-Oxley forced people to pay attention. But more strong providers will continue to grow the market beyond mere compliance. As a result, companies are setting the ethical and transparency bar much higher.”