As corporates here continue to navigate the increasingly complex regulatory landscape, IT is emerging as the biggest challenge facing compliance professionals globally.
A study produced by the Economist Intelligence Unit (EIU) on behalf of Mercury Interactive has revealed that implementing compliance programs is the biggest IT issue for more than 80 per cent of corporates in Asia Pacific, 74 per cent in the US and 45 per cent in the largest European, Middle Eastern and African (EMEA) countries. EIU classified large companies as those with more than US$8 billion in revenues.
While Sarbanes-Oxley is the driving force for IT compliance issues in the US, international accounting standards and country specific compliance issues were top priorities in Asia Pacific and EMEA.
Australian corporates are currently facing an oversubscribed vendor market for compliance software, but have remained relatively immune to some of the snap purchasing decisions seen in the US. While Australian firms have taken their time selecting technology to aid compliance (due in part to less exacting deadlines on SOX), anecdotal evidence from the US suggests millions of dollars have been wasted on SOX point solutions.
US research firm Gartner said recently firms that choose one-off solutions for each regulatory challenge will spend 10 times more money on compliance projects than those that take a more proactive approach.
“Some people have dug themselves a big hole,”said Tim Bradfield, manager, risk and audit at Mayne Group. “We got our provider to put in the functionality we wanted and it meant we could drive the program. A lot of guys in the US dumped a lot of money on a package that if you didn’t do it the way it specified, it didn’t work.”
However, the EIU report found that IT executives and compliance professionals were expecting a number of benefits from current compliance investments.
Better financial reporting was considered to be the main benefit of company-wide compliance initiatives globally, with improved IT governance close behind. Executives believe better IT governance can become a key driver for business value.
“A flood of business regulations are forcing global IT managers to seek new strategies that minimise the burden and maximise the benefits of addressing regulatory compliance,” said Gareth Lofthouse, director of executive services at the EIU. “This report argues that long-term planning and strong IT governance will be key to this endeavour.”
Indeed, compliance professionals here have cautioned that the use of technology to aid compliance initiatives must been seen as a long-term project and as an effort to embed compliance within the business.
“The whole aim is to get compliance into the business with the business owner understanding compliance and owning it,” said Peter Whyntie, head of risk management and compliance at Zurich Financial Services Australia.