Prediction No. 7: SOX Still Takes The Blame - InformationWeek

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Healthcare // Analytics
Commentary
12/15/2005
07:40 PM
Mitch Irsfeld
Mitch Irsfeld
Commentary
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Prediction No. 7: SOX Still Takes The Blame

The laws of physics still apply to compliance spending. In my second prediction in this series on the expected reduction in manpower costs associated with SOX compliance, I said that the funds spent in 2005 to automate SOX compliance processes would pay-off with a nice reduction in manpower costs. But for every action there is s separate but equal rea

The laws of physics still apply to compliance spending. In my second prediction in this series on the expected reduction in manpower costs associated with SOX compliance, I said that the funds spent in 2005 to automate SOX compliance processes would pay-off with a nice reduction in manpower costs.

But for every action there is s separate but equal reaction, unless you're Martha Stewart. Regardless of the benefit and return on the investment, the IT monies allocated to SOX will be extremely coveted for other areas of the business, and SOX will take the rap, once again for a lack of funding in business development.

A recent Gartner Group financial compliance management survey found that spending for compliance and corporate regulations are expected to account for 10 to 15 percent of enterprise IT spending in 2006. Moreover, Gartner expects the IT spending on compliance to rise five to 10 percent over last year's spending.Gartner fielded the study in October and November, surveying 326 audit, finance and IT professionals in North America and Western Europe. The respondents claim that SOX is still diverting a large amount of new IT project discretionary resources and the projects not aligned with compliance and corporate governance are being delayed or cancelled.

That has to be ticking off a lot of business leaders and you can bet that they are not going to be quiet about it. Can you say SEC hearing, again?

But they only have themselves to blame if the dollars are not going toward sustainable compliance processes, which should, in theory, bring compliance costs down over time. In addition, Gartner recommends implementing systems that function across multiple business units and support all regulations and corporate governance initiatives, rather than trying to support technology against individual initiatives. That makes sense, but it will probably stretch out the initial assessment and testing and verification phases.

So those looking for a quick fix will cry foul the loudest when their 2006 compliance spending goes up, again.

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