Softworld preview: the IT factor

Sarbox is making waves. Enough column inches have been given over to its effect on big international businesses. What’s new is its impact on the IT spend of smaller players.

Many UK businesses have had to face Sarbanes-Oxley in one way or another. From holding a US listing, or being a small supplier that is being scrutinised because a client is undergoing a thorough Sarbox audit, many companies have been affected by the US controls legislation.

Yet the reach of Sarbox has extended further than imagined. The UK business software industry is buoyant at the moment, because Sarbox has been focussing business minds on corporate governance across the business community.

‘The market’s driven by compliance – even though it is not yet subject to stringent legislation like Sarbox,’ according to CODA director Dave Turner.

‘But there is a mood that governance and risk management now has to be absolutely watertight.’

Turner added that the company’s ‘big topic’: the speeding up of clients’ financial close process, would see CODA perform well since improving controls is a key feature of good governance.

Increased corporate governance in sectors such as financial services and the public sector/higher education have also seen a flurry of spending on internal controls, workflow and more up to date accounting systems.

Kevin Simmons, partner and head of financial management solutions at Atos Consulting, sees the Markets in Financial Instruments Directive (MiFID) as a big driver of IT expenditure, alongside Sarbox rationalisation projects.

The public sector, especially local government, is reorganising itself to be more business-like to get the best use out of packaged business software – as they attempt to drive efficiencies to meet targets set by the Gershon Review, suggests Simmons.

And a strong M&A market means lots of business IT integration. ‘Lots of businesses are in the process of integrating acquisitions,’ says Simmons.

The impact of the internet upon IT strategy will also be of interest to FDs, whether they are looking to bring down the cost of IT, or how finance can make use of online applications to handle accounting processes.

Software as a Service and online hosted applications could influence how IT benefits are spent in the small and mid-market – enabling companies to work more closely with clients, while handing over some of the responsibility and risk of running the application to a third party.

The largest enterprises are already looking to take this on one step further – integrating outsourcing, applications as a service and in-house IT to create a Service-Oriented Architecture.

SOA has come to the fore as a strategy of integrating applications into the processes of a business – which means no one application

is tied to any one department or function. It means you can use those applications across different parts of the business, driving down the cost of IT.

‘SOA is the industry admitting that you can’t get everything from one vendor – specifically SAP and Oracle admitting this,’ argues Turner.

‘They are now opening up systems because they want to become the default platform for big systems while running best of breed applications.’

At the smaller end of the marketplace, Access MD John Beech still sees FDs using Excel.

‘Recently many have played around with its connectivity to business systems, we’re looking to demystify how Excel will connect – to give them more to play with.’

FACTS/FIGURES

43%
IT decision-makers expect IT budget to increase in 2007.
Datamonitor

49%
of financial institutions overspend while introducing IT compliance products.
PMP Research/Lawson

80%
of large enterprises cite Sarbox and IFRS as key drivers behind recent IT projects.
PMP Research/Lawson

$3bn
size of business intelligence software market by 2009.
Gartner

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!