Growth Strategy: Regulatory and Compliance Software Solutions

We assessed the market opportunity of compliance software solutions in Supply Chain and Vendor Management, Quality Assurance, Food Safety and Data Privacy, in North America, Europe and Asia

Client and project overview

Supported a publicly-listed global information services company in its three-year strategy formulation. The client, with presence in the Governance, Risk and Compliance (GRC) sector, was evaluating the opportunity to expand into adjacent compliance segments.

Key questions

• What is the market opportunity of the compliance segments across geographies?
• What are users’ compliance and risk needs?
• What are the drivers of adoption of compliance solutions? How are these solutions utilized in different sectors and by size of firm?
• What are the routes to market? Are there attractive acquisition targets?

Methodology highlights

• We assessed the regulatory environment across industries and identified drivers impacting adoption of compliance solutions
• We provided a detailed view of current adoption rates by firm size in each industry segment; and developed a market opportunity estimate and a 5-year growth forecast in each geography
• The effort was supported by the team conducting an in-depth interview program with senior compliance and risk officers at large corporates, in the prioritized industries

Key findings

• Customers are typically ‘sticky’ due to high switching costs; the natural route to market in this case was through acquisition
• The next wave of growth will come from increased digitization of operations and SaaS-based offerings targeting the mid-market
• Globally, the compliance software market (across the four segments investigated) is expected to grow at low double-digit figures per annum through to 2022; data privacy software solutions are expected to see the highest growth due to the recent data privacy regulations introduced by the major economy regulators (eg EU introduction of GDPR)
• Increased service and geographic-led consolidation will, in the main, be led by private equity
• We identified a prioritized set of industries for the client to target, for each of the four compliance segments
• We also provided a clear view on the maturity of vendors in the four compliance segments; this was a key consideration when prioritizing segments in terms of the opportunity for our client

Results

We delivered clear recommendations to the client, including prioritized segments, geography and industry. We also identified acquisition targets in shortlisted markets.