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News < Back Sarbanes Oxley : Auditing : Back Office Compliance Having A Significant Impact On IT Budgets
According to preliminary results from Gartner's 2005 Financial Compliance Management Survey, IT financial compliance management spending will increase to between 10 percent and 15 percent of IT budgets in 2006, up from less than 5 percent in 2004. In October and November 2005, Gartner sponsored a financial compliance management survey of 326 audit, finance and IT professionals in North America and Western Europe, who are knowledgeable of compliance practices and efforts within their companies and organizations. Preliminary results indicate that compliance initiatives, as defined by the Sarbanes-Oxley Act (SOX) in the United States and related regulatory mandates in other geographies, are diverting a large amount of new IT project discretionary resources to support corporate governance efforts. "Projects that were not aligned with compliance and corporate governance were delayed or cancelled, and SOX efforts inhibited the purchase of large amounts of software related to building new technologies and deploying new projects," said French Caldwell, research vice president for Gartner. "However, by the second half of 2005, increased interest in IT solutions to ease the burden of compliance has begun to drive new spending." Although software is not required to pass a SOX audit, Gartner analysts said it can help to significantly reduce the compliance burden. The majority of the initial spending for SOX projects was for professional services focused on consulting, audits, process management and workflow, documentation, and planning. New software that will be purchased for these projects will provide business process management, corporate performance management, information access and decision support, document and records management, security, IT operations management and storage using established systems. "Companies should look for solutions to support multiple regulations and multiple business units," said Tom Eid, research vice president for Gartner. "Sustainable compliance, that is, a level of effort that is sufficient but not excessive, will only be achieved by consolidating compliance efforts through a programmatic rather than project oriented approach." Gartner said through 2007, companies that choose one-off solutions for each regulatory challenge they face will spend 10 times more on IT solutions for compliance than their counterparts that take a sustainable programmatic approach. The pressure of meeting SOX deadlines may have led many CIOs to implement one-off projects and miss opportunities to secure long-term benefits for their businesses. This will, in some cases, mean more budget will be spent to advance these projects in 2008 and 2009. "IT organizations need to implement IT controls for compliance management without increasing architectural complexity. This requires that IT organizations work hand-in-glove with financial, legal and business operations to manage operational risk," said Mr. Eid. "Expanding compliance and operational risk demands offer an opportunity for IT to build long-lasting value for the firm, or face the threat of becoming a scapegoat for operational and legal deficiency." The complete Gartner Financial Compliance Management Survey will be available in January 2006. The report will evaluate the impacts of financial compliance management on the IT organization and its planning. The report will provide CIOs, IT compliance managers, and audit, finance, compliance and risk managers with analysis that will help them define the roles of IT and the IT organization in supporting their approaches to sustainable compliance. Preliminary survey results can be found in the report "Sarbanes-Oxley Compliance Hits 15 Percent of the 2006 IT Budget." Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 9,000 clients, including CIOs and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Gartner Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has over 3,900 associates, including more than 1,200 research analysts and consultants in more than 75 countries worldwide. For more information visit www.gartner.com 
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