SOX spending less than a quarter of $27.3 billion earmarked for compliance in 2006 as companies focus on broader governance, risk issues
Boston — March 8, 2006 — Less than a quarter of corporate spending on compliance in 2006 will be devoted to meeting the requirements of the Sarbanes-Oxley Act, with companies focusing on broader compliance issues as they continue to contend with government regulations and tighter governance and risk policies, according to a new report from Boston-based technology consultancy AMR Research.
Corporate spending on compliance in 2006 will reach $27.3 billion, with $6 billion (or 22 percent) allocated to the Sarbanes-Oxley Act, AMR reported in "Spending in an Age of Compliance, 2006." Based on a recent survey of 325 North American business leaders and IT professionals, the report predicted that spending will climb even higher in 2007, with companies devoting $28 billion to compliance initiatives.
Governance, risk management, and compliance have been front of mind with many business and IT executives during the past few years, largely the result of the introduction and enforcement of the Sarbanes-Oxley Act starting in 2004.
"Spending on Sarbanes-Oxley is only the visible tip of the compliance iceberg," said John Hagerty, vice president of research at AMR Research. "Any expectation that compliance spending might moderate is just wishful thinking as companies in all industries grapple with increased regulatory concerns and stricter governance and risk policies within their own firms."
Survey respondents reported that they will address a plethora of compliance issues in 2006.
The survey also shows that technology is playing an increasingly significant role in the integration of compliance requirements into existing business processes. In fact, 75 percent of companies will leverage compliance to improve business performance, with almost $9 billion of the $27.3 billion spent on compliance in 2006 earmarked for technology.
Companies that treat compliance as more than just a necessary budget item are seeing unexpected benefits. Survey respondents ranked the top business benefits of compliance:
- Streamlining business process — 36 percent
- Better quality — 28 percent
- More secure information environment — 14 percent
- Supply globalization efforts — 11 percent
- Better visibility to operations — 10 percent
- Other — 1 percent
Additional Articles of Interest
— Learn how a business process network ties in to the success of government mandate compliance and the 10 steps your company should take to accelerate business results in the SDCExec.com exclusive article, "The Role of Trading Partner Integration in Achieving Compliance with Government Mandates."
— SAS audits can help ensure that your supply base doesn't trip up your Sarbanes-Oxley compliance. Read about SAS audits in "Supplier Compliance: The Responsibility Lies with You," the Final Thoughts column the October/November 2005 issue of Supply and Demand Chain Executive.
- More research from AMR Research.
