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Compliance spending shift may spark IT budget boardroom brawl

While regulatory heat is intensifying, things are also hotting up in the boardroom as IT managers prepare to fight compliance officers for control

By Maggie Holland, 10 Nov 2006 at 17:46

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Despite increasing regulatory pressures and the role technology plays in complying with legislative objectives, IT departments are no longer in the driving seat financially when it comes to deciding how money is allocated, according to research.

A new breed of internal compliance officers are grappling the purse strings away from IT decision makers, with just 39 per cent of spend on governance and regulatory compliance (GRC) systems coming from technology budgets.

The lion's share of financial and decision making resources originate from emerging organisational compliance divisions, according to the survey carried out by Critical Research.

Eight out of ten of those surveyed for the Achiever Business Solutions-commissioned research believe that their regulatory burden is likely to get heavier over the next two years.

But, some 90 per cent of businesses feel that weight would be lessened through the implementation of company-wide GRC systems, highlighting the need to minimise potential tension in the boardroom.

"Eighteen months ago, it was hard to find compliance officers let alone GRC departments," said Robert Dent, chief executive at Achiever Business Solutions.

"Now, with the extended reach of Sarbanes Oxley, and the threat of legal action and adverse publicity, boardrooms are worried about the potential impact on share prices and the P&L. There is, therefore, a huge momentum behind a new breed of executives who have been catapulted straight into the boardroom with the budget and authority to get what they need. These executives are compliance specialists and therefore are often not IT people."

Dent added: "Thus, in some cases, monies that would previously have fallen under IT executives' control are diverted into these new GRC divisions with decisions about the compliance systems chosen and the platforms used falling outside existing IT policies. This could lead to tensions in the boardroom as boundaries are re-defined and room at the top is made for the new kids on the corporate block.

More than 750 executives, from organisations with a combined budget of £70 million, took part in the research, of which a sample of 100 was used to conclude the changing nature of budgetary control.