Enterprises that purchase Sarbanes-Oxley targeted solutions in 2004 will retire or replace those systems by the end of 2005, according to Gartner, Inc.

"Enterprises that choose one-off solutions for each regulatory challenge that they face will spend 10 times more on compliance projects than their counterparts that take a proactive approach," said French Caldwell, research vice president at Gartner. "Although there are times when adopting a "quick and dirty" solution may be necessary to meet deadlines, enterprises should avoid committing too much time, effort or data to such systems."

Gartner analysts recommend that 50 percent of a company's Sarbanes-Oxley budget be allocated for implementation and remediation issues, including directors' and officers' insurance and increased consulting fees. Thirty percent of the budget should be spent for internal analysis, including redundant audits for the next three quarters. The remaining 20 percent of the budget should be spent on software upgrades and new purchases.

"While many large companies see Sarbanes-Oxley compliance as a way to improve risk management and to rationalize IT management, midsize enterprises are less likely to see the opportunity and return on investment (ROI) in Sarbanes-Oxley. That's a mistake," Caldwell said. "Focusing just on compliance misses the big picture of improving corporate governance and transparency that will lead to better business decisions and real ROI."

Gartner defines the traditional midsize enterprise market as companies with 100 to 999 employees or revenue between $50 million and $500 million, and larger midsize enterprises as companies with revenue of $500 million to $1 billion.

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