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Boards & Governance
Yu-Kuan Lin Image
Yu-Kuan Lin
Vice President, Product Management

The hidden costs of free board management software

January 16, 2024
0 min read
Board discussing free board management software options.

The secret sauce behind any effective board? Modern board management software. With board portal technology, private and public companies of all sizes can send board books electronically. It enables board directors to receive board books on any device, anywhere. However, because managing a board is expensive in its own right, some organizations think free board management software is an ideal balance between budget and long-term value.

Yet, board portal software solutions are as much an investment in the quality of the board’s work as they are in software products. Whether free board management software is enough to boost board effectiveness depends on many factors. This article will help you choose the right software for your board by explaining:

  • What board management software is, and why boards need it
  • How to choose a board management solutions
  • Features of free board management software vs. premium
  • When to opt for a paid solution

What is board management software?

Board management software helps boards collaborate before, during and after board meetings. Many free and paid software solutions include tools to prepare and view agendas, edit documents and communicate securely. More premium software may also centralize organizational insights for the board’s review and facilitate timely board assessments and evaluations.

Why do boards need a board management system?

The board is ultimately responsible for achieving its strategic objectives, but it’s the board management software that will keep them on course. Though boards can succeed without software, boards that manage manually may be less productive, have difficulty following through on board meetings or struggle to collaborate.

The right board management software helps boards:

  1. Simplify meetings: Each board meeting requires hours of prep and countless reports and documents, not to mention the minutes themselves. Board management software files all this information in a single place, making accessing and discussing each item easier
  2. Keep lines of communication open: Boards without software support may communicate only during board meetings. The right software keeps conversations alive because board members can securely contribute from their phones.
  3. Improve board performance: Boards function better when they use board management software, increasing their ability to achieve their goals.

Costs to consider when choosing a board management software system

While the market offers a range of costs for board governance software, your board will need to know what costs they’re incurring now and compare them to a few of their best options, including free board management software.

  • Subscription fees: Generally speaking, boards can expect to pay an annual subscription cost for their board portal system.
  • Fees for extras: There may be extra costs for upgrades, add-ons and other valuable software solutions.
  • Operational overhead: The only other cost to consider is the resources you’ll need to administer the system.

While this may sound costly, it’s important to consider the cost of manual labor, materials, distribution and other expenses that creating and distributing physical board books requires.

The cost of managing board books

Even without software, you probably spend more on board books than you think. Here’s how the costs break down:

  1. Labor: The corporate secretary or another person spends many hours preparing the agenda and organizing, printing, collating, assembling and binding the board book. If you multiply that amount by your average hourly labor cost, you have the cost to prepare board books.
  2. Number of books: Then you have to multiply that number by the number of board books you need and the number of board meetings per year. The total figure may have already sent you into a state of shock, but there’s even more to consider.
  3. Material costs: Add the costs for paper, printer cartridges, binders and other necessary materials.
  4. Distribution costs: How does your board distribute board books? Do you mail them? Courier them? Do you use overnight carriers? Be sure to add in those costs.

These are the minimum costs, which could escalate if there is a mistake in the board book or if the board book needs a last-minute change. The total costs could net your board in the tens of thousands of dollars.

With such enormous costs for just one board process, it’s easy to see how a board portal can save your board time and money — and why you might be tempted by free board management software.

Is free board management software worth considering?

Cost-free board portal management may seem like it’s worth considering. Managing a board is costly, whether manually or using a software solution. Between the cost of labor for the employees who support the board and all the tools the board needs to do their jobs, expenses add up.

Before jumping into a free board portal, it’s worth considering the typical characteristics of free board management software:

  1. Features & functionality: Free board management software is only free if it costs nothing on the front or back end. The reality is that a cost-free board portal system will only offer you the basics. The provider may not have additional programs or products for you to consider, which limits how much the software can support your board.
  2. Add-Ons: If free board management software does offer additional solutions, the cost of one add-on after another may end up being more than going with one industry-leading, comprehensive board portal system. Free systems will most likely lack the functions and features you need most and thus will likely fail to offer you the efficiency and productivity you’re looking for.
  3. Security: With the multitude of media reports about hacking corporations and data breaches, board directors need every system they use for board business to be highly secure. Top security comes with a cost. You can be sure that free board management software comes with little or no security, which leaves your board vulnerable to breaches.

5 reasons free board management software could be costly

A board may decide to live with the limited features of free software, not-quite-right mechanisms for group editing or unsearchable records. But even if these inconveniences are manageable, free board software can have some seemingly minor drawbacks with potentially major costs:

1. Lack of training & support

Most free board portals lack both training and customer support. New board members may never get initial training on the software, and even experienced board members may be hunting and pecking without mastering the software’s capacities. This can inadvertently introduce vulnerabilities since a board member could easily leak data without knowing how to incorporate good governance.

Free board management software does nothing to avert the crisis portended by this innocent ignorance. Training is not part of the package. The same goes for the low-cost option of out-of-the-box software installed on a hard drive.

2. Unsecured cloud-based data

With free board management software, where is data actually stored? Almost always, the answer is ‘the cloud.’ Cloud storage is the norm if the software operates in tandem with popular file-sharing sites (also free!). The cloud does not provide the requisite security for boards that handle highly sensitive information.

This introduces very real risk since 45% of breaches are cloud-based. Storing data off the cloud is the only way to be safe from phishing attacks and hacked servers.

3. Unencrypted communications

Encryption creates complexity, making it more difficult and time-consuming to break into files. Hackers naturally strike first at unencrypted data. Full, robust 256-bit encryption is the gold standard for safety.

Free board management software seldom rises to that standard. More often, it offers no encryption or low (128-bit) encryption.

4. Reliance on email

Have you ever wondered why the best boards steer clear of email for their crucial communications? Hacking. Phishing. Missed communications. These are all valid reasons! But have you considered legal privilege?

The WeWork v. SoftBank case is a fantastic example (you can read the full story here).

It highlighted the risks of using external company email addresses for communications between outside directors and counsel, jeopardizing attorney-client privilege. The case involved 89 contested emails where SoftBank employees — affiliated with Sprint — used Sprint email accounts for legal advice on WeWork matters. The Delaware Chancery Court ruled against SoftBank, emphasizing that employees had no reasonable expectation of privacy, leading to implications for board communications.

The decision emphasizes the need for companies to review their communication practices. This includes offering company email addresses for board-related matters. Additionally, it involves using confidential mechanisms and relying on secure board portals. These measures are crucial for safeguarding legal privilege and effectively mitigating potential risks.

The challenge? Email is often the only option available with free board management software.

5. Vulnerability to next-gen tactics

Free board management software stops ‘evolving’ upon downloading, but hackers refine their methods constantly. Free board management software has no developers protecting data from evolving attacks, which means it’s unable to evolve along with risks.

Even if your IT staff can write custom code for the board management software, that still poses a risk, as small teams with multiple priorities cannot constantly monitor complex international scams and generate defenses for all of them.

Free board management software vs. paid options

Taking advantage of free board portal software may seem like an obvious choice. Yet it’s likely the product won’t meet all of your needs. But it’s not just tech-savvy companies with healthy budgets for IT initiatives that can benefit from paid options.

Paid options generally offer more:

  1. Efficiency: Companies that use free software risk not having the best efficiency and service availability.
  2. Security: Cybersecurity will only become more critical as time goes on. Providers of free board portals can’t provide the security measures that today’s boards need. When choosing a board portal service provider, boards should start with companies with a strong reputation and credibility within the industry.
  3. Evolution: Free board management software won’t grow with the board. Paid options can evolve to meet the board's new and growing needs, which is key to long-term consistency.

When to use paid board management software

While budgeting is always a concern, it’s prudent to make a wise decision about purchasing board management software. In selecting the most effective board portal, boards should consider the following:

  • Their board’s digital needs: The more responsibilities your board has, the less likely it is that a free solution can support all of them. Less tech-savvy boards will also need the simplicity and customer service paid software offers.
  • Efficiency: Since boards can’t get more time in their day, software is the best way to get more done. Overburdened boards will greatly benefit from a paid solution.
  • Cost-effectiveness: Free board management software is more affordable in the long term, but premium options can pay for themselves by making the board more effective over time.
  • Features: A paid solution will almost always have more features. If you want more than just a communication portal, free board management software won’t cut it.
  • Return on their investment: Opting for a paid option is an investment in your board’s success. Paid software is more likely to yield a return than free, despite the differences in upfront costs.

While it’s impressive to read down a long list of features, it’s vital that board portal software provides boards with efficiency, accuracy, collaboration and mobility and saves them money.

Ultimately, free board management software can’t provide the convenience, connectivity and security that paid options can. Boards that want to maintain their competitive edge need a board portal solution to keep up with the ever-evolving risk and business landscape. Only paid options can do that.

Discover the value of best-in-class board management software

The best board portals make boards better. They help boards keep pace with new technologies, threats, business developments and even emerging ESG and GRC frameworks. So, while free board management software might seem like an easy choice, the reality is that it will only make your board's job more difficult.

Board management software is an investment in the organization’s future. While paid solutions might require more of your budget, their cost pays off by making boards more efficient, secure and effective — all characteristics that can cut costs in the long run. But even among paid solutions, not all board management software is the same.

Download Diligent’s Buyer’s Guide to Board Management Software to learn more about choosing software that can keep your board competitive now and in the future.

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