From the time Sarbanes-Oxley legislation became law, businesses have coped with uncertainty about deadline enforcement and what it would take to meet the scope of requirements. Attendant uncertainty followed with promises of greater visibility and operational value enterprises could gain from their compliance efforts. Though compliance is a requirement, in fairness most of the "greater gain" theory was pushed by a wide variety of consultants and vendors who saw where the money was going, a total of $6.1 billion in 2005 SOX compliance spending, according to AMR Research. Then again, with better controls and visibility to processes, it's natural to assume that organizations could eventually put compliance gains to work elsewhere in the organization. The question becomes, when will this happen or is it happening already?
Analyst John Hagerty of AMR Research covers BI and has also closely followed the compliance wave of recent years. He says that while specialty vendors and consultants (e.g. OpenPages, Paisley Consulting) have been busy with documentation and controls, BI companies in particular haven't seen a significant bounce out of compliance spending because it's so far been focused on initial requirements for transparency and disclosure. Where they have benefited is in partnerships with documentation specialists for dashboards and reporting tools.
This is not the only hurdle. Before BI can draw heavily from compliance investment, a second step will involve automation. "The way people have put compliance in place is very manual," Hagerty says. "If you want to reduce the cost of compliance over time you have to get people out of the process, so now there is a different set of software vendors coming in to automate some of those processes." Hagerty cites Approva and Virsa Systems among a "cottage industry" of such vendors.
This is absolutely not to say that BI is not a higher spending priority at enterprises. Hagerty pegs 2005 performance management-related spending at $22.2 billion, nearly four times the amount dedicated to SOX. "People are doing analytics and performance management in BI for loads of reasons, but compliance is not the huge driver." This jibes overwhelmingly with a 2005 BI Review/Gantry Group survey in which respondents ranked revenue/profit, competitive advantage, customer loyalty and cost well ahead of compliance as the goals of their BI investment. (See April 2005 BI Review.)
As companies address compliance in different timeframes, Hagerty expects the "hoped-for" organizational benefits of compliance to become more apparent. As it stands, those that have succeeded in documenting the status quo are now looking to streamline. As an example, an organization might go from many instances of SAP to one, which takes variability out of a process to reduce complexity, the analyst says. "That might have been driven by a compliance requirement, though a lot of people see this as a greater benefit."
It is a case of now and later though. "By definition this is a long-term event. A lot of people say this is the ultimate goal but they don't get it out of the box."
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