SmartAdvice: Cost Is Only One Factor In Outsourcing Decisions

Outline very specific goals for outsourcing before you lock in an agreement, or be prepared to be disappointed, The Advisory Council says. Also, ways to get better customer service from PC vendors, and how to turn compliance with Sarbanes-Oxley into a plus.
Question C: What does Sarbanes-Oxley really mean to me as an IT manager?

Our advice: Sarbanes-Oxley presents a major challenge for IT leaders in most public corporations. With deadlines approaching, many IT departments still have unresolved questions about how to comply with the various sections of the Sarbanes-Oxley Act, which regulates how companies report their finances. A study by AMR Research found that 77% of companies will increase IT spending on Sarbanes-Oxley, with compliance costs predicted to be more than $2.5 billion.

The problems are magnified in organizations that have grown through mergers and acquisitions, since they tend to pull financial information from dozens of operational systems and general ledgers generated by multiple business units in various locations. With shorter reporting deadlines, IT managers will need to work more closely than ever with their counterparts in finance to close the books quickly and accurately.

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Surviving Sarbanes-Oxley and other Accounting Issues

IT leaders need to make the business case for investing in comprehensive, flexible solutions that will support closed-loop processes for continual compliance and constantly improved performance.

Essentially, IT needs the capability to track, store, document, and audit every financial process across the organization. IT also requires technology to reduce reporting cycle times by quickly accessing, consolidating, and cleaning financial data.

Baseline capabilities required to meet compliance standards include:

  • Assessing and validating financial statements using sophisticated reporting and analytics;

  • Creating an auditable, traceable, searchable repository for financial documents, processes, and controls;

  • Handling the storage and retrieval of E-mail communications, creating a huge process and storage challenge;

  • Consolidating data from disparate sources more quickly and accurately;

  • Tracking, analyzing, and reporting on risks and material changes; and

  • Monitoring the effectiveness of compliance and governance initiatives.

Jeanette Slepian, president of BetterManagement, a leading Internet-based executive education resource, advises IT leaders to regard Sarbanes-Oxley as a unique opportunity instead of a problem.

"Although Sarbanes-Oxley compliance issues will generate many challenges for IT departments, these financial-governance issues also create the opportunity for examining overall technology consolidation and governance," Slepian says. "That's the silver lining and the truly golden opportunity for forward-looking IT executives."

That's good advice for all of us with IT responsibilities in large or growing corporations.

-- Jay Helmer

Ian Hayes, TAC Thought Leader, has extensive experience in improving the business returns generated by IT investments. He is the author of three IT books and hundreds of articles, a popular speaker at conferences, and his clients include many of the world's top corporations. He helps companies focus on value-creating projects and services by better-targeting IT investments, improving the effectiveness of IT execution, optimizing the sourcing of IT activities and establishing measurement programs that tie IT performance to business value delivered.

Peter Schay, TAC executive VP and chief operating officer, has 30 years of experience as a senior IT executive in both IT vendor and research industries. He was most recently VP and chief technology officer of SiteShell Corp. Previously at Gartner, he was group VP of global research infrastructure and support, and launched coverage of client/server computing in the early 1990s.

Jay Helmer, TAC Expert, has more than 15 years experience with leading companies, including BellSouth, Kraft General Foods, and Procter & Gamble. As Internet business manager at Oxford Health Plans, he helped create the leading managed care Web site. His expertise includes eHealth strategy and execution, managing usability testing, content management, transaction development, and the development and execution of CRM programs. As an entrepreneur, he founded and later sold an animal health start up, helped develop significant new business for a health-content company, and has development business plans for several start-ups. His newsletter, eHealth TrendWatch, is read by thousands of health-care decision makers.