Selecting a Conflict Minerals IT Vendor – Best Practices – Law Review Reprint

This article was adapted and published on the National Law Review ( ).

When sourcing a software vendor for Dodd Frank Conflict Mineral Compliance there are several important factors to note. In this article we will examine the methodology surrounding the approach several software firms have taken and examine implications and processes involved with each methodology. We will also look at salient factors that should be considered when choosing a software vendor.

Different Software Models:

Client Direct Vs Supplier Direct.

Client Direct: In the client direct model firms pay for a software platform either hosted or cloud based to manage their compliance processes. There can be a combination of licensing fees, set up costs and if purchasing a hosted solution, hardware costs. Typically these solutions will have multiple modules for different restricted substance lists, social regulations and compliance requirements. For supplier data procurement there are either supplier data exchanges put in place through a portal or a wizard which is free for suppliers to use.

Supplier Direct: Under this model firms would purchase a software platform which may be cheaper than the client direct model but would then require that their suppliers pay the vendor to submit data on the platform. This model is typically only practical for Fortune 50 sized firms who have immense leverage and control over their suppliers. Under this data exchange, supplier direct model the platform is usually only valid for one regulation.

Cloud Based Vs Hosted: There are currently vendors who offer solutions that are cloud hosted meaning there are no hardware installation costs.

Cloud Based: Usually offers a lower cost and unlimited seat licensing for a fixed monthly cost and a onetime set up cost. Traditionally cloud based solutions are the direction most firms are moving because of the ease to deploy and lower costs.

Hosted: Firms offering hosted solutions require the purchase of servers and each computer installs local software on individual machines. When upgrades to the software occur they must re-install on each computer where the solution is running.

Once the decision has been made on supplier direct Vs client direct and hosted Vs cloud then next decision should in terms of scalability in terms of regulation. You and your client should have a discussion about their currently regulatory and future regulatory landscape. Does your client sell into Europe? In which case they will have to comply with REACH. Are they in electronics? They might have to comply with RoHS. It is very important when selecting a software platform that it is both usable and affordable to use for other regulations. Purchasing a solution that is only useable for one restricted or compliance required substance list, is inefficient.

Once the decisions have been made around how broad reaching the software solution should resemble it’s time to source conflict mineral firms. The leading solution providers in each sphere are as follows:

Cloud Based / Client Direct: Assent Compliance (

Hosted / Client Direct: PTC 

Cloud Based / Supplier Direct: Ipoint 

Items to Note When Sourcing:

  • Does the client have experience in your vertical?
  • Is the solution usable for other regulations in the future?
  • How much to add modules in the future?
  • Can you outsource data analysis or supply chain work to the vendor if warranted?
  • Are there any law firms the vendor is currently working with?

What to Ask During an IT Presentation?

  • Show us a copy of an implementation plan for your solution
  • Will you come on site for a presentation
  • Show how your system handles conflict mineral compliance end to end
  • Please outline your process methodology and why its best for our client
  • Show us how you save on supplier touch time and data analysis
  • Can your solution integrate with ERP/PLM systems

Core Features That Are Needed:

  • Mechanism to gather data from suppliers
  • Data analytics and reporting on collected info
  • Detailed reports on supplier response rate / missing info
  • Ability to attach / map tier 2-3 suppliers to tier 1
  • Task assignment and CRM capabilities

Once the presentation portion of the selection process has been finalized and it comes time to select the vendor there are several other best practises to consider:

Involve IT Early: Include the IT department from the beginning to ensure that the set up process identified by the vendor is one that can work with current IT in place at the firm. Bringing IT to the table late in the game only to find major road blocks presents a major challenge.

Requirements Definitions: Make sure you outline all your requirements very clearly. The last thing anyone wants is “scope creep” which could cause more costs for your firm and more headaches for your vendor. Be very clear when outlining requirements.

End User Approval: Ensure that the power users of the system who will be doing the majority of the use time give their approval. In many cases management procures a system and the actual users disagree with the choice. Make sure selection is agreed on internally by the major users of the platform.

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