Financial systems vendors are incorporating new regulatory requirements into their marketing.
The Sarbanes-Oxley Act, which was passed last summer by the US government, attempts to bring clarity, speed, and accountability to corporate financial reporting. The act is providing the impetus for a series of compliance issues related to IT. CEOs and CFOs are now required to attest that annual and quarterly financial reports contain no material errors or omissions. With their own necks suddenly on the line, these executives are scrambling to make sure their systems are more timely and accurate.
As US companies brace themselves for the impact, enterprise resource planning and BI vendors are opportunistically incorporating Sarbanes-Oxley positioning into their financial management systems marketing. True, Sarbanes-Oxley does implicitly state a requirement for reliable financial systems, but sound financial management systems has always been a cornerstone for accurate financial reporting, and the requirement existed well before Sarbanes-Oxley. For the most part, vendors are exploiting a scare tactic of stricter financial reporting regulations to promote their existing transactional applications capabilities, and not necessarily introducing new functionality that specifically addresses Sarbanes-Oxley.
Organizations that already use leading financial management software and follow best-practice accounting and reporting principles should not need to worry. However, many companies with fragmented, disparate financial systems will be challenged. The question is whether or not vendors can provide value beyond their core consolidation and reporting capabilities to directly address Sarbanes-Oxley compliance. And if so, if they will be ready to stretch their IT budgets for a process they feel they should have in place anyway.
These vendors are counting on the combined weight of Sarbanes-Oxley and other new regulations to result in major systems changes at some companies, which in turn will drive further investment in financial management software. But customers should guard against excessive vendor rhetoric and hype that overstates the capabilities of software products to ensure compliance. Technology alone cannot fix ethical problems of fraud, nor can it ensure a sound internal control environment.
Source: Computerwire/Datamonitor
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