Lawson Report Says Compliance Costs More Than You Think
August 28, 2006 Timothy Prickett Morgan
If a study commissioned by Lawson Software is any indication, than the compliance regulations that companies in the Western economies are wrestling with are very, very expensive–and perhaps more expensive than any of us want to admit.
Lawson commissioned PMP Research, a British consultancy, to poll companies in the United Kingdom to see the effect of compliance regulations on financial services firms in that country. Because they handle other people’s money, financial services firms have perhaps lots more regulations than other industries, but the lessons learned by financial firms can be applied, in a general way, to any company that is facing regulations that deal with business practices, access to data and applications, and related compliance issues.
According to the survey, 40 percent of the companies polled said that the cost of implementing compliance solutions exceeded the budgets for these projects, and 13 percent said they “considerably exceeded” their budgets. While 36 percent of those polled said they hit the budgets, not one single company said a compliance project came in under budget.
About 80 percent of the companies polled said that Sarbanes-Oxley (SOX) and International Financial Reporting Standards (IFRS) regulations are the key drivers of compliance projects. The financial services companies polled said they like to do their own compliance projects, with 92 percent reporting that they tap in-house talent to implement their governance and compliance practices and software; 72 percent of the companies said that they get help from industry organizations, and only 62 percent said they sought help from consultants with expertise. (If you do the math, obviously somewhere between one-third and two-thirds of companies are tapping inside executives and getting outside help at the same time.)