| | By Mick James
Politicians may make
headlines by promising
to cut red tape at City
dinners, but, in the
real world, businesses
know that regulation is
an ever-increasing
burden. For
consultancies the
challenge of regulatory
work has been for
companies to direct
their spending in ways
that achieve genuine
business benefits to
offset the costs of
regulation, rather than
achieving basic levels
of compliance.
Now, according to a
survey by Achiever
Business Solutions, a
provider of governance,
risk and compliance
(GRC) services, a new
wrinkle has been added
to the equation. In the
global survey of nearly
800 companies, most said
they expected their GRC
spend to increase, and a
majority said they were
or would be looking to
software solutions to
help with the burden.
But although compliance
is taking up around 20%
of IT spending, that
spending is increasingly
out of the control of
the IT department.
“What was surprising
from the survey was a | |
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| | noticeable shift in
who’s managing the
budgets,” says Achiever
marketing manager Cherry
Rance. “In a lot of
cases these people come
from a quality
management background,
or they might be former
operations managers –
it’s not just finance
and IT.”
The reason is that,
compared to other areas
of IT spending,
compliance is very much
at the top of the
C-suite agenda.
“They’re the guys
that go to prison or pay
the fines for
non-compliance,” she
says. “So they want
someone to manage that
responsibility outside
the normal job roles,
that’s why we’re seeing
this new genre of
compliance and
governance managers
emerge.”
This presents both
opportunities and
challenges for
consultants. Sweeping
regulatory changes such
as Sarbanes-Oxley and
Mifid may have created a
welcome stream of work,
but this can be a mixed
blessing. The wave of
compliance related-work
is currently passing
through the industry | |
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| | like a hamster through a
snake, causing
short-term resource
headaches and possibly a
bigger hangover in the
future.
The struggle is also
to persuade clients to
devote a meaningful
level of spending to
this type of work, the
danger being that
clients will be focused
on getting through the
short-term deadlines
imposed by each wave of
regulation and unwilling
to look at the bigger
picture. At the same
time, compliance work
takes major chunks out
of IT budgets that could
be spent on more
interesting stuff.
Respondents to the
Achiever survey
estimated that 20% of
their IT spend went on
compliance, and a third
of that on maintenance.
When clients feel they
are running faster and
faster just to stay
still, it can engender a
weariness and
frustration with IT
spending. In the
immediate aftermath of
Y2K, for example,
companies were pretty
much deaf to the
positive benefits of IT
and many spent years
just sweating their | |
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| | assets.
“Consultants can help
their clients by making
them understand that all
these different
compliance requirements
can be managed by one
set of processes,” says
Rance. While the survey
showed that many
organisations are
beginning to manage
different compliance
requirements together,
too many organisations
managed areas such as
health and safety and
environmental concerns
separately from areas
specific to their
industry such as
financial regulation.
“The key message is
that it’s much better to
take a holistic approach
than to keep applying
sticking plaster to
small wounds,” says
Rance. “You need to have
an overall compliance
system that can
encompass what comes
along in the future.”
Most of the more
forward-looking
consultancies would
endorse this approach.
Regulation and
compliance may be a
burden, but it also
generates a level of
information and
self-awareness about a
business that can be | |
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| | translated into much
wider benefits. However,
the emergence of a new
tier of buyers in the
boardroom presents its
own challenges, not
least that of reaching
them. Problems could
also emerge if
compliance departments
end up at war with other
factions in the
boardroom. IT, finance
and operations all have
their own take on
compliance, and given
that this neatly mirrors
the current divisions in
the consultancy
industry, this may be a
recipe for confusion.
Of course, it may be
that in the future some
politician may make good
on a promise to roll
back regulation and ease
the burden on business.
Even the government’s
own Better Regulation
Commission has spoken
out against our
increasingly
“risk-averse” culture. I
don’t mind the odd risky
activity, but I don’t
think I’ll be holding my
breath waiting for
government to cut back
red tape.
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