Diligent Board Member Services, Inc

Diligent Inc's Boardbooks provides board management services to the boards of some of the world's most prestigious companies. Companies of this stature have stringent corporate governance requirements and demand exceptional product quality and service. It is a testament to the security, ease-of-use and reputation of the Boardbooks product that these companies rely on Diligent Boardbooks as their corporate governance solution.

THE BOARDBOOKS PRODUCT
Over recent years, the information required to be examined by directors has grown both in quantity and scope partly as a result of pressures for stronger corporate governance. Within the US, the Sarbanes-Oxley Act requires near realtime reporting and thus almost continual evaluation by directors of listed companies' financial positions.

With these requirements in mind, the process of compiling and disseminating board material to directors can often become an error-ridden last minute scramble by the corporate secretarial team. The Wall Street Journal1 notes that board materials within the financial services industry can range up to 9,000 pages or so. Further compounding the problem, revisions become difficult as printed material already distributed to the board is not easily updated. Board members are left with little time to prepare for meetings, and often left comparing different versions of board papers.

Diligent Boardbooks has alleviated many of the problems associated with the traditional method of compiling board materials. It provides a web-based portal that directors and administrative staff can access to update and examine board materials prior to and during board meetings. Board materials can be uploaded as soon as they are compiled by the corporate secretary and updated when necessary. This allows directors greater time to review board materials and make informed decisions prior to board meetings. Boardbooks also retains the functionality to compile and print board papers, offering corporate secretaries an alternative, easier method of compilation, updating and printing of board materials. The Boardbooks portal also offers an archiving system and a search system for directors to review past board meetings.

THE BOARDBOOKS ADVANTAGE
Diligent Boardbooks competes against several competitors within the board portal industry. Notably however, Diligent Boardbooks has been under development since 2001 while many of its competitors remain at a much earlier stage of development, from a product quality, user interface and brand reputation standpoint.

Boardbooks is designed to accommodate all directors with a simple interface that "looks like a book" and "works like a book." The software is easy to use and all that is required is an internet browser and access to the internet. Boardbooks is a simple "point and click" system, one or two clicks will navigate directors throughout the entire book. Since documents are displayed in single web-viewable pages, directors and executives do not have to wait for large files to download.

Directors view all material from a completely secure central database, so that they are all viewing only the most current information. They can also view partial books prior to completion, should they wish to participate in the creation of the materials.

THE SOFTWARE AS A SERVICE BUSINESS MODEL
Boardbooks uses the Software-as-a-Service (Web 2.0) model to distribute its software to the market and maintain the security and integrity of its clients data. Under this model, Diligent Inc licences customer access to its Boardbook product which is hosted on Diligent Inc's secure servers, and offers a complete suite of related services including training, support, data migration and data security/backup. The SaaS model is characterised by a company providing ondemand access to its complex software through a web-based interface in return for subscription-based revenue. The most widely-recognised on-demand solution is Google, as its users access its complex search algorithm (located on Google servers) from any internet-connected computer in the world.

The SaaS industry has undergone significant growth over the past five years, spurred on by several factors:

• SaaS providers can cost-effectively share one application across hundreds or thousands of companies;


• Clients can accelerate the deployment process and eliminate additional infrastructure costs;


• A continuing decline in the cost of bandwidth has meant web-based solutions have become more viable;


• Low cost of implementation. Clients do not pay exorbitant sums for a product with a long development and implementation timeframe with no guarantee of success. Instead, clients pay an almost nominal installation fee, a recurring subscription fee, can begin to use the fully developed product immediately and retain the ability to cancel at any time;


• The success of on-demand services in the consumer market. For instance Google, iTunes and YouTube have made accessing content and services commonplace in professionals' personal lives. Professionals are now demanding similar features in business software; and


• The success of early leaders such as WebEx and salesforce.com has demonstrated the viability and value proposition of the SaaS model.

THE NEW ZEALAND LISTING
Listing on the NZSX provides tangible benefits to both Diligent Inc and New Zealand investors. It enables New Zealand investors to share in the success of a US-based company that is listed solely in New Zealand while providing Diligent Inc with access to a capital market well suited to its current size.This opportunity is a first for New Zealand. Listing on the NZX rather than in the USA involves considerably less cost for Diligent Inc.

Attention is drawn to the restrictions on transfers of Diligent Inc shares to US Persons which are described under the heading "OVERSEAS INVESTORS" on page 2 of the Share Offer Document.

Diligent Inc also has a strong New Zealand connection. Founder Brian Henry is a New Zealander who, while formally residing in New York, still spends considerable time in the New Zealand operation.

The Christchurch division of Diligent Inc has been in existence for the past six years. It provides software and help desk support for a number of large corporations around the world, as well as providing the software development that has enabled Diligent Inc to build a market-leading position.