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Business in the Age of Regulation |
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How Being Compliant Brings Benefits |
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One of the hottest business topics today is compliance. More than 74 percent of all American companies and 45 percent of European companies cited legislative compliance as the most difficult challenge faced by their information technology departments, an Economist Intelligence Unit study revealed. In the past, businesses have considered compliance an expensive burden and an intrusion into their processes. Attitudes are changing, however, as systems that facilitate compliance bring other business benefits. |
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What is compliance? |
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Compliance in the business sense means to act in accordance with regulations that set certain standards. Two of the biggest areas subject to regulatory scrutiny are financial controls and privacy. Legislation such as the Sarbanes-Oxley Act of 2002 requires companies to retain records of all electronic communications and transactions for seven years. And if audited, a company must produce requested data within 24 hours. The EU Data Protection Directive states that organizations have to keep personal information secure from accidental and unlawful loss or destruction, alteration, and unauthorized disclosure or access. There are as many other types of compliance issues as there are industries and ways of doing business. The value-added tax, environmental standards, and human resources regulations are all examples of areas in which businesses must be able to document compliance. |
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What does a company have to do in order to be compliant? |
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To begin with, firms of all sizes are subject to compliance regulations and sanctions. One of the advantages a small business has is that policies put in place early on will carry forward, avoiding confusion and difficulty later. One of the first initiatives necessary for compliance is establishing state of the art record keeping. This covers everything from the creation of a document to its storage and archiving. Business enterprise software such as IBM Lotus Notes and Domino track documents through their life cycle. Components of this software allow for electronic discussion about the document to be recorded. A complete history of all business aspects of this document stays with it. That way, should a regulatory question ever need to be answered, every bit of information surrounding this document is instantly retrievable. The next consideration is security, which must be incorporated into every aspect of the business. A secure database is absolutely essential. Companies who are found to have had personal information stolen from them suffer on many levels. They face regulatory punishment, the wrath of their customers, and the loss of their reputation. The best security software, such as that found in Lotus Notes, should have end-to end encryption and embody all the best practices. Another priority is instituting comprehensive protocols to preserve electronic communications. In 2004, on average, a corporate user received 94 emails every day. The sheer volume of electronic communications necessitates a robust mail archiving system. Lotus Domino servers, for example, have a mail archiving capability that links the mail server and the archive repository. The appropriate storage system being in place makes it easy for employees to adhere to company compliance policies. |
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How does being compliant benefit a business? |
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Research is showing that companies of all sizes that have compliance as a top priority gain many advantages. The first advantage is the additional data that comes to light makes for an information rich environment that supports making informed and expedited decisions. In addition, increased risk visibility means less exposure to lawsuits. Firms that take compliance seriously may find they pay less for insurances. Businesses save money as a result of the more efficient, streamlined processes that are in place. And if a business agreement is ever in question, comprehensive records will back up a firm's position. Plus, if a company ever does accidentally commit an infraction, being able to demonstrate the compliance steps taken generally lessens the severity of financial penalties. |
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Regulatory compliance is an issue that is getting more complex all the time. From small businesses on up, firms that deploy proactive compliance strategies will operate within regulatory standards. But compliance is just the beginning. Forward thinking companies who view compliance requirements as an opportunity to refine the way data is organized and stored will benefit from improved business processes, faster decision making, and increased security. |
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