Companies find silver lining in compliance cloud

Complying with legislation such as Sarbanes-Oxley can help firms become more efficient, says Hyperion
Written by Andrew Donoghue, Contributor

Legislation such as Sarbanes-Oxley may be major headache for IT departments but some companies are beginning to realise that compliance can be an opportunity to streamline inefficient processes according to business intelligence specialist Hyperion.

At the company's annual user conference in New Orleans, Hyperion said it has recently introduced new management tools to help companies monitor their financial disclosures under Sarbanes-Oxley and other legislation.

The vendor, which specialises in a branch of analytics it calls business performance management, said the latest version of its Hyperion Financial Management product is built from the ground up to support compliance. The software delivers financial data to its information aggregation product — Hyperion Compliance Management Dashboard — to provide financial managers with a cross-section of accurate information on their compliance status.

"Meeting and sustaining regulatory compliance is a fact of life," said Rich Clayton, Hyperion vice-president of product marketing. "However, leading companies are now moving from a defensive posture to an offensive one, where the burden of compliance is shifting to an opportunity to improve business performance."

Sarbanes-Oxley was signed off in 2002 and is designed to prevent financial malpractice and accounting scandals such as the Enron debacle. Overall spending on complying with the Sarbanes-Oxley Act was estimated to be around $5.5bn (£2.9m) last year, according to a recent survey by AMR Research.

Complying with legislation is often viewed as an unnecessary headache for IT and financial staff but it can also be seen as an opportunity by some companies to take stock of systems and processes which may go unexamined amid the day to day pressures of doing business.

In a recent interview with ZDNet UK, Stephen Ashton, director of Global IT business investment bank Dresdner Kleinwort Wasserstein, said that overall compliance was good for IT departments as it forced companies to reorganise disparate systems that in many firms had grown into random silos that did not communicate effectively.

"I think it is a great thing not just for IT but for business generally. From an IT perspective I think it's a doubly great thing, obviously it helps us straighten things out but it is also helping us generate new value," he said.

From a systems management perspective, Ashton said, complying with Sarbanes-Oxley has forced the company to catalogue its existing IT systems and investigate exactly how those systems are being used currently. He described how in many companies IT systems are akin to a "monster" that has no respect for time and space. Complying with regulations means taming this monster in order for companies to be able to provide the kind of transparency required by the legislation.

Analyst Robert Krugel from Ventanna Research said that the work companies do complying with legislation such as Sarbanes Oxley may cause some short-term pain but longer-term it should mean that their systems are ultimately more efficient and they have to devote less time to day to day admin.

"Our recent audit and control research study demonstrated that CFOs must redesign and restructure financial processes and systems to improve their efficiency. Fortunately, these same changes should enable them to reduce the time spent on transaction processing and other low-value administrative chores while simultaneously allowing them to focus on more strategic activities to improve performance," said Krugel.

Krugel added that by freeing up time from admin tasks, financial and other senior managers would have more time to devote to strategic planning. "In particular, they can expand their analytical support to provide the entire operation with greater internal and external insight."

A film detailing the roots of the Enron scandal, which contributed to introduction of Sarbanes Oxley, is due for release in the US on 22 April. More information on "Enron: the Smartest Guys in the Room", can be found here.

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