CIOs Bemoan Sarbanes-Oxley's 'Big Impact, Little Benefit'
Finding IT professionals with business skills and complying with Sarbanes-Oxley are among the biggest headaches chief information officers are dealing with this year.
Finding IT professionals with business skills and complying with Sarbanes-Oxley have proved among the biggest headaches chief information officers are dealing with this year.
At a roundtable this week at Connexion by Boeing in Irvine, Calif., hosted by TechBiz Connection (TBC), a non-profit trade association, five top executives candidly agreed to disagree on a variety of subjects. But when the discussion focused on business skills and the pains brought on by Sarbanes-Oxley, all sang a similar tune.
Describing his changing role as senior vice president and CIO at biomedical company Beckman Coulter Inc. and some of the challenges, Bobby Spaid said "Sarbanes-Oxley has been the biggest impact to our bottom line, and brought us little benefit."
Companies will spend a combined $6 billion to comply with the Sarbanes-Oxley Act in 2006, according to AMR Research Inc. The research firm said compliance across a range of mandates from government to trading partners, such as Wal-Mart Stores Inc.'s radio frequency identification (RFID) supply chain project, will cost companies $28 billion in 2007, up from $27.3 billion this year.
The resources allocated to Sarbanes-Oxley and the impact on systems development has been fierce. Instead of pulling IT professionals and others working on projects, Beckman Coulter outsourced technical skills. "It’s a huge cost to the company with very little return," Spaid said. "If you don't do it successfully, you stand a chance of not being in business, especially since we are heavily regulated by the Food and Drug Administration."
Spaid said Beckman Coulter will hire four more professionals to manage the company's Sarbanes-Oxley audit practices.
The problem, CIOs said, U.S. companies expanding into other countries are trying to tell "the whole world they must live within Sarbanes-Oxley" rules and regulations.
Executives at Oakley Inc., which recently agreed to acquire privately held OSA Holding Inc., The Optical Shop of Aspen (OSA) and other companies outside the U.S., are having major internal discussions on moving the companies toward Sarbanes-Oxley compliance.
For Oakley, meeting Sarbanes-Oxley regulatory compliance provided the needed structure to grow the business. "We took the initial hit a year and a half ago on finances, and clearly it was at a cost to the business," said Jon Krause, senior vice president of operations at Oakley. "We have a cool product. The environment was pretty free wheeling and loose."
The executives agreed it's been difficult finding and hiring IT professionals with business skills. "We're struggling, and must do something to get those skills back," said Doris Hall, senior vice president and CIO at BAX Global Inc, an international freight transportation and supply chain management company.
Nodding, Allan Lubitz, senior vice president and CIO at Option One Mortgage, an H&R Block company, said IT professionals with business skills are difficult to find and would consider hiring someone from the construction industry because many have been taught project management.
IT professionals today wear several hats. They are the ones that are looked upon, not only to develop the software applications, but manage and deliver the project on time, agreed John Gilboy, CIO at Amcor Sunclipse, a distribution company.
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