With a little more than six months to go before companies are required to begin meeting a U.S. government imposed deadline to comply with Section 404 of the Sarbanes-Oxley Act (regarding internal audit procedures), a joint research study by Ziff Davis' CIO Insight magazine and Gartner Executive Programs (EXP), finds 36 percent of companies have a long way to go to comply with Section 404. Despite the fact that more remains to be done, 86 percent of respondents believe their company will be fully compliant in time to meet their deadline.

But there will be a price to pay in meeting these regulations. Close to a third of CIOs (30 percent) say the cost of compliance will have a significant negative impact on their companies' profitability during the next two years.

Based on a survey of almost 200 large, medium and small business CIOs and senior-level IT decision-makers (all of whose organizations must comply with the act), companies are cognizant of the timetable and impact of the Sarbanes-Oxley Act. The survey is published in a special May issue of CIO Insight devoted to the topic of complying with Sarbanes-Oxley.

"There's no doubt that compliance with Sarbanes-Oxley will place a burden on corporations, especially smaller ones, in the short-term," said Ellen Pearlman, Vice President and Editor-in-Chief, CIO Insight. "However, some companies recognize this is an opportunity to clean up their processes and systems and use it to their business advantage."

Large companies are the most confident that they have the IT and financial resources to make their compliance efforts go more smoothly. Medium-size businesses are spending the smallest percentage of their overall IT budget on compliance, yet they're the most likely to invest in financial reporting software to meet the deadline and the most likely to say they expect to reap significant business benefits from their compliance efforts. Meanwhile, small companies are most likely to say they won't be able to meet the compliance deadline, citing an inadequate budget as the major obstacle to compliance.

Two-thirds of IT executives surveyed said they're investing in financial technologies to help comply with Sarbanes-Oxley. Companies are most likely to spend money on document management and financial reporting and transaction software. Large and small companies are focusing on document management, while midsize businesses are most likely to use financial management software.

CIOs cite problems with data structures, difficulties ensuring adequate security and business continuity, and variations in infrastructure between business units as three of the top four obstacles to compliance. These issues are closely related. "They are the result of years of building information systems one-by-one in complex organizations, where data definitions, business rules and operating procedures are set department by department," said Marcus Blosch, Vice President, Gartner EXP.

The 2004 Sarbanes-Oxley Survey was co-designed by the editors of CIO Insight and research staff of Gartner EXP, Gartner Inc.'s membership program for CIOs, in conjunction with Equation Research, a supplier of custom research services. IT executives gathered from Ziff Davis Media publication subscriber lists and Gartner's client lists were invited to participate in the study by e-mail. The questions were posted on a password-protected website and 198 qualified respondents replied from February 26 to March 15, 2004. Of the respondents, 51.5 percent were CIOs or CTOs, 4 percent were IT compliance directors, and the rest held titles of Vice President of IT or higher.

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