Compliance Technology: How To Choose the Right Tools

The compliance technology market is still embryonic, but most public companies are purchasing software to help make compliance a natural outcome of their business.

To download a PDF file of the complete Compliance Technology Buyer's Guide functionality comparison, click here.

Year one of Sarbanes-Oxley compliance was simply overwhelming for many companies. In most cases, the process was burdensome because the required documenting, monitoring, verifying and reporting was performed manually. IDC, a research firm based in Framingham, Mass., estimates only about 10 percent to 15 percent of public companies used some type of compliance management tool in year one. Most companies didn't have the time to consider technology. CFOs felt they first had to determine what to document and where to insert controls before they could start thinking about how to automate.

Year Two promises to be quite different. Now that companies better understand what the law requires and where their process weaknesses lie, they are prepared to choose the kinds of compliance technology they need to make year two's filing less onerous than last year's.

Demand for technology solutions in this space is heating up. "Governance needs will be the single most important driver of change in IT spending in the next several years," says Lee Dittmar, principal, leader of the enterprise governance practice and co-leader of the Sarbanes-Oxley service offering at Deloitte Consulting LLP in Glen Mills, Pa. "Compliance technology going forward needs to address better information, not just transactions. How do you know if you even have a compliance problem if you don't have the right tools to find out if anything's wrong?"

In year two, finance managers are asking themselves whether they have too many controls in place or the right amount of emphasis on each control, how they can standardize compliance processes, and what role technology can play to improve those procedures, Dittmar adds.

Nearly every business software provider will tell you it has the technology to answer those key questions. How do you sort them all out? Do you stick with your ERP vendor's compliance offering or turn to a best-of-breed (BOB) software provider? Should you settle on your business performance management (BPM) vendor's compliance product or continue to use the interim compliance tool that your accounting firm provided? Here's a look at the scope of the compliance technology market and guidelines for finding the right solution for your company.