Paul Murphy calls foul on the practices conducted by some Wikipedia editors, claiming that in respect of certain topic areas:

What

Much has been made of the tie up between Google and Salesforce.com. At first blush the deal has much merit, especially given that Salesforce.com has done a credible job of providing solid integration with Google Apps, and specifically with Gmail, GTalk, GoogleDocs and Spreadsheets. I wonder about the compliance angle.

During yesterday’s dog and pony show in San Francisco, executives from Google were keen to talk up the work Postini has done as providing a solid, secure, data solution for large scale business. Salesforce.com is already seen as a trusted provider for business applications running in the cloud. Where’s the problem?

My analyst colleague Josh Greenbaum has questioned the extent to which Google owns your content, noting that the Terms of Service (ToS) say:

If it wasn’t so serious, it would be comical. Yesterday, Pakistan’s government decided that YouTube was no longer welcome in

The last few days I’ve been engaged in a fire storm with NetSuite. I asserted that its customer numbers don’t add up, or at the very least don’t make sense. Almost immediately I incurred the wrath of the corporate PR department. Instead of answering the questions raised, they chose to go in the offensive, making the classic knee jerk reaction mistake of not reading my disclosure page as carefully as they could have and ascribing affiliations to me that do not exist. It was a fiery few hours to say the least. In the cold light of day however it’s interesting to dissect what’s happening.

NetSuite has provided customer figures over the years. 6,000 in 2003, 5,300 in its pre-IPO S1 statement quoting figures at March 2007, 5,400 at a presentation in December, 2007 and 5,600 in its most recent earnings statement. During the most recent analyst call, CEO Zach Nelson said they had added 432 customers in the last quarter and expected to continue adding at a rate of 300-500 per quarter in successive quarters. The impression created therefore is that customer additions are proceeding at a consistent and steady clip. But even a cursory examination suggests the numbers are not quite as suggested. To its credit, NetSuite’s PR pointed out that the most recently quoted numbers are ‘active customers.’ But then I have heard from one NetSuite implementer that it takes 30-60 days to get a customer up and running.

During one call, Craig Sullivan, VP International said to me there was bound to be a certain level of dropout from 2003 because at that time the company was serving a different type of customer, one that might not need everything the company offers. He also conceded that prices had increased. By implication, that might deter some customers from renewing their contracts. Net-net, I still can’t make sense of the figures and as I said elsewhere, at the time of writing, the company has not furnished an explanation of what I see as a disconnect between fiscal growth and the absolute number of customers it is serving.

What does this have to do with transparency? Netsuite is not obliged to give out customer numbers but has chosen to do so. That’s very much to its credit. But, it opens the door to further questions when apparent inconsistencies arise. That’s even more germaine for this company because the CEO likes to take public pops at the competition, implying that competitors are losing business to its offering. Anyone familiar with the software industry knows this is par for the course and such remarks are often rendered in jocular tones. Nevertheless, they are an integral part of the overall ‘character’ of a company as perceived by outsiders.

James Farrar, who runs CSR for SAP recently wrote about the value of transparency. Quoting Frank Buytendijk of Oracle (and previously Hyperion), he said:

Transparency is a competitive weapon to differentiate from the competition in attracting capital, informing customers about the value proposition (not only price) and in cost efficiencies by driving down the transaction costs in the value chain.

James then goes on to point out concerns about this kind of behavior, noting Nick Carr’s lament that:

You have to wonder whether, as what was once opaque is made transparent, the bolder among us will lose the incentive to strike out for undiscovered territory. What

I recently listened to Lisa Nolan talk about doing business in China. Lisa runs Lizal Inc, a US based full service merchandise manufacturer for brands like Coach and Wal-Mart. The company has manufacturing offices in Guandong and Taiwan. The business employees between 4,000 to 8,000 people depending on the season. Lizal can take anything from a napkin drawing to a fully specified drawing and turn it into goods that span everything from event promotional items to high end retail goods.

China’s economy is booming, helped in part by $27 billion worth of exports to Wal-Mart stores. But doing business in China is not simply a matter of setting up shop, hiring cheap labour and supplying goods. According to Lisa, there are many compliance issues that American companies have to overcome: “US companies take compliance very seriously. If a light over an exit sign at your factory isn’t working you can get written up as being in breach of compliance requirements. A lot of times it is the little things that catch you out.”

The compliance rules of some companies are so strict that making it over the barriers is not only onerous but costly: “In some cases, compliance can eat up 30 per cent of your first year’s revenue. That’s tough but the long term rewards are worthwhile - if you’re prepared to do what customers require.” Asked why companies are so stringent, Lisa says that in recent years, brands have become aware of the potential reputational risk to which they expose themselves. Last June, the New York Times asserted that:

Over all, the number of products made in China that are being recalled in the United States by the federal Consumer Product Safety Commission has doubled in the last five years, driving the total number of recalls in the country to 467 last year, an annual record.

These are emotive issues that capture the public’s attention so for Lisa, staying in line is one of her most important agenda items.

During our conversation, Lisa said that her business is subject to third party audits as a way of ensuring her facilities are in line with what is agreed. “Sometimes these involve outside accountants who check our payroll records to ensure we’re paying a proper wage to our staff.” This led me to speculate whether auditors might be getting two dips at the same pot. I asked Lisa if she knows whether the information gathered for customer audit was available to financial auditors for her own company accounts. She thought they were separate issues - which they are - but it strikes me that auditors could save their clients money if those kinds of record were passed across as part of the annual financial audit review process.

The biggest problem faced by manufacturers is that each brand has its own compliance rule book. This means there is a separate set of procedures to overcome for each company supplying brands which drives up compliance cost. Some companies are looking towards SA8000 as a way of providing a single international compliance standard for social accountability. Of her own company, Lisa says “We’re still researching to see if that certification is something that would benefit us.”

Given the hurdles, is it all worth it? “Our customers are very protective of their supplier facilities. Many companies take one look and say they won’t bother. We on the other hand have benefited greatly from doing as we’re asked. It’s all about the rewards that go with a good reputation for doing the right thing.”

Governance, risk and compliance which conveniently contracts down to a Gartner compliant TLA - GRC - is one of the hottest topics in the enterprise world today. If the Enron, Tyco and other financial scandals were not enough, the popularity of all things ‘green’ has put GRC close to the top of agenda in many CXO offices. But as always with a new acronym, people want to know what it means. Read more