Governance Gauge: The Regulatory Pendulum Swings

History teaches that regulations regularly swing from tough to lax and back again. In early 2006, signs of regulatory retreat (or practicality, depending on your perspective) abound. Sarbanes-Oxley is not going away, but the SEC's advisory committee for small business recommended exempting companies with market capitalizations of less than $700 million from internal controls audits required by SOX Section 404 and that SOX not apply to those valued below $100 million. Once, the SEC talked of requiring larger companies to file their quarterly reports in 30 days instead of 45, but it scaled that back to a two-stage reduction to 40 and then 35 days. Now, the requirement will stay put at 40 days.

Meanwhile, in the United Kingdom, a rule for increasing information provided investors in the Operating and Financial Review (OFR) was quashed. Although the decision was largely political, there were practical issues. Unlike U.S. companies, those in the United Kingdom do not have a "safe harbor" law protecting them from lawsuits over the management forecasts required by the OFR.

"Practical" is the watchword for companies' SOX compliance efforts in 2006. Companies should simplify internal control structures, investigate SOX tools and reduce audit activities by redesigning processes, increasing automation and eliminating stand-alone spreadsheets. IT organizations must prepare for greater scrutiny of internal controls.

EMC Takes On Grid Software

EMC has joined Sun and IBM in their move toward grid computing. In January, EMC invested $30 million in grid software from Acxiom. The two companies will jointly develop an information grid that Acxiom will host. They also will integrate existing systems, software, services and data from both companies with the grid software to offer a product-based (rather than hosted) information grid solution for clients. It remains to be seen whether grid storage will be different from virtual storage.

Progress Advances Mainframe Access

Application infrastructure provider Progress Software is acquiring data connectivity company NEON Systems and will make it part of Progress' DataDirect operating unit. The result, it is hoped, will let DataDirect offer a range of data-access products and technologies, including access to mainframe data sources such as DB2, IMS/DB VSAM, Adabas, CICS/TS, IMS/TM, CA-IDMS and Natural, as well as relational databases such as Oracle, DB2, SQL Server, Sybase, Informix and Progress OpenEdge.

Mercury Purchases SOA Provider

The latest in the wave of companies investing in service-oriented architectures is business technology optimization software vendor Mercury Interactive, which has agreed to acquire Systinet for $105 million. Systinet's products provide a "system of record" and a set of governance and lifecycle-control capabilities that bring visibility, control, quality and integrity to Web services, which otherwise can be chaotic and poorly managed.