Software Market: Hurray for More Regulation!: Page 2

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Essential to these functions will be a high degree of industry specificity, and with it a significant increase in the amount of automation that is currently the norm for BI tools. What is needed in the regulatory economy are tools that – as much as possible – fully automate the virtuous circle of discovery, reporting, and remediation that will make the regulatory economy run as smoothly as possible. A lack of automation is what has historically made compliance an expensive and onerous task, and fixing this side of the regulatory economy will be one of the ways in which enterprise software softens the blow of significantly increased audit and reporting requirements.

Nonetheless, complying with the regulatory economy won’t be cheap, let’s be honest. There will be the need for new software, new processes, maybe new skills. But virtue won’t be the only reward of the regulatory economy. In fact, it’s a distant third on my list.

Reward number one is improved governance and oversight: being forced to comply with the regulatory economy will force your company to be better managed, or at least have the tools to better manage itself. This effect is not dissimilar to the secondary impacts of the Y2K hoax: Y2K fears drove thousands of companies to upgrade their enterprise software environments to cope with the unfounded fear of a Y2K meltdown, and in the process gained a leg-up on the efficiencies that modern enterprise software can provide.

For most companies, the real payback for their Y2K investments came after January 1, 2000 turned out to be a non-event. While the need for the regulatory economy is genuine, as opposed to the Y2K nonsense, a similar secondary effect from investing in the regulatory economy will be felt across the enterprise.

Reward number two comes from the benefits of having a safer and more highly visible ecosystem. One of the downsides of living in a global economy has been the domino effect that obtains when one link in the global chain breaks. For example, a single supplier interruption in China can impact multiple businesses up and down the line: supplies aren’t shipped, manufacturers can’t meet their obligations, retailers don’t have product to sell, consumers have nothing to buy.

Living in a more regulated economy will mean that these potentially catastrophic events will be easier to see, easier to plan for, and easier to mitigate once they’ve taken place. And knowing that the other companies in your supply chain are being forced to play fair and play safe means your company is less likely to be whipsawed by the results of illegal or illicit activities.

And then there’s virtue – reward number three. As cynical as I tend to be, I hope some businesses will be proud to be well-regulated, and use that in their promotional activities the way everyone – polluter and green business alike – is now touting the eco-friendliness of their company.

The regulatory economy might not be an ideal solution to our current problems, but, to paraphrase Winston Churchill’s famous comment about democracy, it’s the best one we can come up with, considering the alternatives. I, for one, am sick of the alternatives running the show, and, in particular, running the show into the ground. If this is what it takes – a little more regulation – and if enterprise software can help limit how onerous that regulation can be, then I’m all for it. Considering the alternatives....


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Tags: software, IT, economy, Enterprise, Sarbanes-Oxley


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