Clonect, with backing from former Infosys honchos V Balakrishnan and TV Mohandas Pai, aims to build a unique software for regulatory compliance management. Their secret weapon: the founding team’s years of experience in several CFO and CIO related processes
Clonect, started in January 2014, stands for ‘Cloud Connect’, which describes the core focus of the company’s operations. According to Shailesh Agrawal, founder of this Bengaluru-based company, “We believe in cloud as a group of systems, people and organisations, not just limited to cloud computing. We exhibit key attributes of abstraction and democratization and believe in technology being a global village. Connecting such clouds would unleash the collective value,” he explains the philosophy behind his venture.
Under this broad umbrella of cloud, Clonect is building a technology platform for compliance management and governance. Risk of non-compliance is a key concern for organisations and is a global phenomenon. In this era of social networks and ‘always connected’ mobile devices, reputational risk due to non-compliance could have more impact on business than the penalties the organisation might have to pay for non-compliance of regulation, he points out. “Compliance and related risk being major focus, we are leveraging technology which will help organisations,” he adds.
Therefore, the company is creating Compliance ERP which can IT enable other stakeholders like senior management, board, shareholders, regulators etc. unlike other ERPs which primarily focus on serving the customer, vendor and employees.
‘ricago’ Compliance Management System, Clonect’s first product in the ricago product suite, is built based on real world experience of the core team members. Being part of various initiatives to leverage latest technology for solving business problems at Infosys Technologies, the team understood both strengths and weaknesses of technology. “So, when we reached out to a few pilot customers, we were confident of articulating the value. Still, when we signed the formal contract and got the payment, it was indeed exhilarating,” shares Agrawal.
Despite being an early stage start-up, competition does not deter this venture. “Our belief is that if we focus on creating value for the customer, competition becomes secondary. We have also realised that whatever space you enter, direct or indirect competition is always present,” he points out. Legal firms, consulting firms and a few product players are all in this space, but Agrawal feels that the addressable market has not yet reached its full potential, presenting a huge opportunity. The sheer number of compliances and complexities involved can be overwhelming because of which many organisations tend to attend to compliance and regulations last, even though the penalties for non-compliance is high. Some of the penalties include payment of Rs 25 crore or three times of the profit accrued and imprisonment up to 10 yrs in case of insider trading; for failure to pay TDS / TCS to Government, tax evasion or failure to furnish tax details in due time – penalty of equivalent amount and imprisonment up to seven years.
“Increased media attention has definitely helped improving awareness about compliance,” he adds.
Clonect’s USP is adopting and adapting to the latest technology to address the risk in non-compliance. The company plans to address the end-to-end compliance needs in an integrated way and take a life cycle approach in building various modules.
Traditionally, spreadsheets, emails and calendaring have been used to manage compliances but come with inherent limitations such as being scattered, having multiple versions of information, absence of structured workflow or timely alerts and notifications and limited report generation capabilities. “This is the reason why an intelligent solution to get single view of compliance across the organisation becomes necessary,” opines Agrawal.
ricago CMS uses workflow-based web application providing flexibility of defining and maintaining a central repository of applicable compliances for an organisation. It is capable of effectively tracking and managing compliance items, notices and critical action items related to regulatory, contractual and internal compliance requirements of an organisation.
On-premise and on-cloud versions of ricago CMS version 1.0 has already been implemented and is running successfully, and upgrades are being developed. Since compliance management is applicable to all industries, with varying levels of compliance requirements, Clonect is initially focusing on companies in India. “Within a few months of operations, we have been able to sign up a few customers where our product is up and running and we have healthy pipeline,” Agrawal adds. ricago CMS as technology platform is usable by all the industries. There is built in flexibility in the compliance library such that it could be extended to accommodate any specific customer or industry requirements.
Experience and Expertise
“GRC (Governance, Risk & Compliance) is a complex area and needs right mix of domain and technology expertise to build effective solutions,” elaborates Agrawal. Clonect’s core team consists of members with finance and IT background, providing the mix needed to bring insights from both CFO and CIO worlds.
Agrawal himself is all India 3rd rank holder both in Chartered Accountancy and Company Secretary exams, has almost 20 years of industry experience, out of which 15 years were in Infosys, handling varied responsibilities including finance, accounting, tax, operations, treasury and information technology. He has more than seven years of experience in managing SAP implementation and large IT projects for Infosys and later on moved as Head-corporate accounts and responsible for all tax, payroll and labour compliances, thus bringing in a blend of technology and domain skills.
Co-founder Balaji G.S. Rao is an engineer with Executive MBA from IIMB with more than 21 years of IT industry experience. He also has experience in technology adoption and complex migration projects in his 14 years stint with Infosys. The rest of the team too is drawn from Infosys and other IT giants.
From a seed capital standpoint, Clonect has raised a round of funding from former Infosys CFOs and board members V Balakrishnan and TV Mohandas Pai. “We are using this towards sales/marketing and product enhancements and we are not looking for further funding as of now,” Agrawal said, when we interviewed him in November 2014.
Getting the right people with relevant skills as well as passion and attitude is critical. “Not everybody would be ready to take the risk and work for a startup. We are trying to reach out to people with that “itch” to join the startup ecosystem and get them onboard,” Agrawal details his recruitment challenges. Indian customers are very demanding and expect value for money, which is another challenge.
GRC is an emerging market and still fragmented. Awareness on compliance management is increasing. With increased thrust on compliance in the new laws and regulations such as the new Companies Act getting enacted, organisations want to avoid the risk of attracting notices/penalties from regulatory authorities, legal action and the consequences on their brand and reputation.
Clonect will capitalise on this demand and quickly add more products in the ‘ricago’ suite. “We want to leverage latest technology and make the products user friendly,” explains he. Cloud computing has become mainstream and big data and natural language processing will help in predictive analytics. So, increasing its product footprint is the key focus.
In addition to enhancing the already released ricago CMS, Clonect is also releasing a product for Insider Trading Management System shortly. Plans are also afoot to build a Contract Management System and a Litigation management system. Many more modules in CMS are in pipeline and currently getting conceptualised. “In three years, we aim to become a niche technology company with a global presence,” asserts Agrawal.
Started by: Shailesh Agrawal, Balaji GS Rao
Focus: Enterprise Governance, Risk Management and Compliance Management (GRC) and software services
Founded in: 2014Clonect Infosys Regulatory compliance management TV Mohandas Pai V Balakrishnan