Asian companies to increase compliance spending

More CIOs from the region are planning to dedicate over 15 percent of their IT budgets on compliance spending in the next two years, a new study finds.

Companies in the Asia-Pacific region are poised to devote more of their IT budgets on compliance-related IT tools, according to a new survey of nearly 150 CIOs (chief information officers) in seven countries.

Conducted by customer satisfaction and lifestyle research company Marketshare, the October study found that about 27 percent of companies plan to spend over 15 percent of their IT budgets on compliance-related activities over the next two years, compared to 9 percent at the end of last year. The majority--60 percent--of companies, however, were found to spend less than 5 percent of their budgets in the area of compliance.

The study also found that only 21 percent of companies currently have in place regulatory compliance programs, and 52 percent are looking to have such initiatives in place to adhere to regulatory standards by the end of 2006.

"Asia is waking up to the relevance of international compliance requirements such as Sarbanes-Oxley and Basel II to the region," said K.C. Yee, vice president for the Asia-Pacific region at Serena Software, in a media statement. Serena Software, which commissioned the study, specializes in managing change in the IT environment.

"If companies in Asia want to do business with an MNC (multinational corporation) or trade with an overseas company, they have to meet a certain standard," noted Yee. "Assurance must be given to customers and partners that you can work at the same level that they do."

The survey findings tie in with those from a study by research analyst Gartner last month, which indicated larger budgets for compliance-related spending in North America and Western Europe.

Singapore, Japan and Hong Kong were picked by CIOs in the region as the top three countries with the ability to meet regulatory compliance standards. The study also covered Australia, China, India and Korea.

Nearly 90 percent of the CIOs indicated that IT has a major role to play in ensuring regulatory compliance. Yee added that the increasing importance placed on compliance would create additional demand for change governance solutions to support these activities.

The respondents also noted that compliance was important for various reasons, including having the ability to trade with companies overseas and be listed in foreign exchanges. About 70 percent of them also believed that being compliant would give their companies an edge over their competitors.