Businesses far and wide have undergone significant change over the last decade, focusing primarily on digitization and innovation in order to keep up with both shifting behaviors and expectations. While transformation has been easy for some, many long-established industries have held fast to processes and systems they believe have simply always worked.
But when it comes to royalty compliance, a deeper look into so-called business as usual shows that efficiency has been slipping for quite some time. Gaps have quickly bubbled up to the surface in 2020, as dramatic and unexpected circumstances have forced adaptation that has, in fact, been a long time coming. In other words, the status quo is finally evolving.
Global Resource Quality is Critical
Until now, compliance firms have gotten away with centralizing their top talent in the U.S., spending exorbitant amounts of money to fly out an assortment of employees from their centralized hub to perform audits on location.
In-person interactions make sense: face-to-face conversations have always been and will always be the most efficient method for making accurate observations and assessments. Constant travel, on the other hand, doesn’t. Aside from being increasingly tough on budgets, travel takes time away from auditors and their loved ones, leaves very little room for logistical changes, and cultural or language differences make it an impersonal experience for the client.
Since COVID-19 hit, we’ve seen an even deeper level of inefficiency come out of the centralized talent approach. Without the option to travel, firms have turned to remote-only audits, resulting in a host of new challenges, errors, and miscommunications.
This is why employing fully-capable teams in key regions is a must. As T&E budgets fluctuate with these volatile times and expectations around the customer experience continue to evolve, interactions across industries and geographies will need to be increasingly personalized and localized to keep pace.
Data Quality is More than Critical—it’s Essential
It’s been said that data is the life force of any organization. In fact, The Economist called it the world’s most valuable resource—yes, even over oil. But what does it mean to do data right?
Data quality is the most critical element in ensuring output is leverageable, but too many firms are missing the mark. Often, the culprit is the use of multiple systems, each feeding in data in different formats. Basic things like company name or parent entity structure flow in with no common ID across them. The situation becomes even more complicated when you consider third-party data from licensees, resulting in a lake of messy information that’s not suitable for business intelligence.
Currently, most organizations in our space allow data to flow in as is, with no insight into what’s important and what can be safely ignored. But if normalizing isn’t considered, the analytics that result from these unregulated inputs can be full of false positives. Inaccuracies such as these can lead to reporting mistakes, financial discrepancies, strain on licensor/licensee partnerships, and negatively impact LTV.
In order to make sense of data, companies should be implementing a real-time scoring system. Assigning a grade to data as soon as it comes in allows organizations to determine what’s important and what’s not, which is critical when you consider today’s data volumes. It’s simply not possible to cost-effectively normalize all data. This is where a pragmatic approach of leveraging scoring and ML can help prioritize and score. Not all data carries the same value, but by sifting out the key information and keeping it normalized and clean, organizations can get to roughly 85% accuracy and actually deliver analytics that are impactful, rather than depending on broad assumptions.
Remote-Hybrid Engagement and Data-Driven Business Decisions
At Connor, we’re reimagining the state of affairs in royalty compliance with a number of structural and technological innovations. First, our remote-hybrid model leverages top, local consulting talent across all of our key geographic locations, enabling a highly personal and comprehensive experience for all of our clients. Regardless of location, they have constant access to local resources and experts who can provide effective compliance services with just enough oversight from the U.S. to keep costs low and trainings short.
This one-team approach means we’re not cobbling together a group of interchangeable experts from a third-party network; we’re curating the ideal team for our client from day one. It’s an entirely different mindset than what the royalty compliance space is used to, and it means we’re the only global firm that doesn’t deal with resource competition, or translation issues. More importantly, our approach makes the entire process more comfortable for the client, which makes it easier for us to get the data we need.
Best of all, in the midst of COVID-19, we’ve been able to keep our calendars flexible, and haven’t needed to consider the risks or expense of travel. While followers of the old ways (centralized talent) have struggled with challenges associated with remote audits, we haven’t felt a single repercussion.
Second, we make it a point to invest in technology that supports data unification, agility and flexibility across our entire global team. The platforms we’ve chosen automate repetitive, manual tasks, reducing the time needed to run analyses, surface trends, and pinpoint royalty reporting inconsistencies.
We’re never going to be able to truly predict the future, but that doesn’t mean we can’t prepare for it. Today, preparation means more than just a temporary fix. This year has forever changed the way all major businesses operate. Those who take the time to develop strategies centered around accuracy, agility and flexibility will be the leaders of the new status quo.