THE STATE OF
COMPLIANCE
2020

In the 2020 State of Compliance survey, researchers collected data to define how the regulatory compliance landscape is shifting and identify emerging trends. The resulting report helps companies understand today’s compliance environment, and equips them with industry and revenue-specific insights they can use to make informed decisions and develop effective compliance programs. Download The State of Compliance 2020 report today for a comprehensive view of the landscape, how companies are responding to regulatory changes, trends in team and program structures, and the true costs of compliance.

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The Compliance
Landscape

Through survey responses, researchers mapped the evolving compliance landscape. While consistency in year-over-year responses remained, this year showed a wider array of regulations impacting businesses. In particular, enterprise-level companies signalled they were in-scope of emerging legislation such as the European Union (EU) Waste Framework Directive and EU Conflict Minerals Regulation in greater numbers than smaller companies. This could indicate suppliers to these companies are unaware of quickly upcoming regulatory requirements.

66%

REACH Regulation

67%

RoHS Directive

65%

Proposition 65

72%

REACH Regulation

72%

RoHS Directive

63%

Proposition 65

71%

REACH Regulation

70%

RoHS Directive

63%

Conflict Minerals


Digital Transformation

The adoption of technology to meet compliance requirements has been uneven across companies, with varying buy-in from companies of different sizes and in different industries. A large majority (85 percent) of companies reported a moderate effort toward general digital transformation, however, technology was slightly less likely to be used in compliance programs compared to other areas. Overall, the use of manual emails to collect supply chain data dropped by 12 percentage points as more companies adopt digital solutions.

Companies That Eliminated
Manual Email Data Collection

25%

in 2020

13%

in 2019

Digital Transformation

The adoption of technology to meet compliance requirements has been uneven across companies, with varying buy-in from companies of different sizes and in different industries. A large majority (85 percent) of companies reported a moderate effort toward general digital transformation, however, technology was slightly less likely to be used in compliance programs compared to other areas. Overall, the use of manual emails to collect supply chain data dropped by 12 percentage points as more companies adopt digital solutions.


Increasing Demand

The vast majority of companies indicated they not only spend more time on compliance efforts than in past years, but they expect that trend to continue. Over 88 percent of companies predicted they will need to dedicate more time to compliance over the next three years. This demonstrates companies will require a steady increase in resources to manage compliance programs.

25%

Expect time spent on compliance to increase by more than ¼ over the next three years.

32%

Companies spend over 25% more time on compliance now than they did in 2017.

88%

Companies expect to spend more time on compliance this year than last.


Confidence Is Dropping

While forecasted demand increases remain consistent, companies are increasingly losing confidence in their ability to meet growing regulatory burdens. Larger companies signalled they are more likely to invest in digital solutions in order to meet increasing requirements.

Ranked confidence to meet increasing demands, out of 10

5.4

2020

6.1

2019

6.2

2018


Departmental
Impacts

The compliance process is rarely limited to one team within a company, with findings showing most companies have a minimum of five departments involved at some level. Not only does this indicate which areas of an organization would be most impacted by increased compliance demands, but the prevalence of quality assurance teams involved in compliance indicates it is now being considered a core metric.

Top Departments Involved
in Compliance 2020

Departmental
Impacts

The compliance process is rarely limited to one team within a company, with findings showing most companies have a minimum of five departments involved at some level. Not only does this indicate which areas of an organization would be most impacted by increased compliance demands, but the prevalence of quality assurance teams involved in compliance indicates it is now being considered a core metric.





Increase in Costs Forecasted

The average cost of compliance is significantly higher than the salary costs estimated by respondents. Costs also accrue in processes related to design, governance, compliance tolls, supplier engagement and data governance. Future cost increases can be calculated using the average cost of compliance and predicted increases in time spent on compliance. As the regulatory landscape continues to grow, companies with a greater regulatory burden will need to invest to meet their increasing demands.

MID-SIZED

$24564

LARGE

$81584

ENTERPRISE

$1360559

Increase in Costs Forecasted

The average cost of compliance is significantly higher than the salary costs estimated by respondents. Costs also accrue in processes related to design, governance, compliance tolls, supplier engagement and data governance. Future cost increases can be calculated using the average cost of compliance and predicted increases in time spent on compliance. As the regulatory landscape continues to grow, companies with a greater regulatory burden will need to invest to meet their increasing demands.




Natalie-Picot-state-of-compliance-author

About the Author

Natalie Picot is an independent researcher and strategy consultant who earned her Master of Business Administration from the Stanford Graduate School of Business in 2015. Natalie has researched and consulted for companies across a wide range of industries. Her work includes market research, competitive analysis and strategic positioning. Prior to her time at Stanford, Natalie spent four years in the compliance and research groups at Soros Fund Management. She earned her bachelor’s degree from the University of Pennsylvania in 2009.

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With Contributions from Partners

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© 2020 Assent Compliance Inc.