As more companies realize the importance of regulatory compliance, the take up of compliance programs has also increased significantly. This year, 42% of APAC companies had already implemented regulatory compliance programs, compared to 21% of respondents last year. Outlook is also promising with another 39% planning to implement compliance initiatives by the end of 2008, according to a survey conducted by MarketShare for Serena Software. The survey interviewed nearly 350 CIOs from medium and large companies across Australia, China, Hong Kong, India, Japan, Korea, Malaysia and Singapore. The survey measured the understanding of regulatory compliance and IT, levels of compliance-related implementations, and IT spending directed at compliance-related activities.
Last year, the main driver of compliance-related programs in APAC was due to globalization factors. Companies who were looking at trading with overseas companies/ markets, had to adhere to regulations from the market they were trading with. This is still a major factor this year with nearly one-third (30%) of respondents indicating that “doing business/ trading with foreign companies” is a major reason why compliance is important.
But the main driver of compliance in APAC in 2007 is due to local in-country regulations. Nearly half (46%) of survey respondents indicated “local regulations (current and upcoming)” as the main reason to implement regulatory compliance programs. Other findings from the survey:
- 79% of APAC respondents believe that they will gain an advantage over their competitors by complying with regulatory compliance standards, compared with only 69% a year ago.
- Japan is the leader in regards to current take-up of regulatory compliance, taking over from Singapore. 56% of Japanese respondents say they have already implemented compliance programs compared to the APAC average of 41%. Singapore is now in second place at 52%.
- In APAC, Japan is also seen as the country leading the change in meeting regulatory compliance standards, taking over the top position from Singapore a year ago. 34% of companies surveyed feel that Japan is the most active in regards to meeting compliance standards, compared to 26% for Singapore.
- The ‘banking & finance’ industry currently has the highest rate of regulatory compliance take-up in APAC at 58%. The ‘telecommunications’ and ‘information technology’ industries have the next highest rate of compliance take-up (38% and 37% respectively). The ‘travel & tourism’ industry has the best outlook with regard to future take-up of compliance activities with 56% of companies from this vertical indicating that they will implement compliance programs by the end of 2008.
“While the take-up of compliance initiatives in Asia has increased, the main drivers have also changed, with local regulations being a major factor. This can be expected with countries such as Japan already creating J-SOX which is set to go into effect next year. Other countries in Asia are following suit and developing their own industry regulations and this will be the main driver of compliance activities in Asia over the next two years,” said Mr. KC Yee, Vice President for APAC at Serena Software.
The survey also indicates that the understanding of IT’s importance in meeting compliance standards is becoming more widespread throughout the organization. Last year, CIOs already showed that they understood the role that IT played but there was little support from senior management. This year this situation has improved with CIOs getting more support from senior management – 63% of CIOs feel that senior management also agree that IT has a major role to play, compared to just 47% one year ago. Other key findings:
- Even more APAC CIO respondents (88%) think that IT has a major role to play in ensuring regulatory compliance.
- Because IT is involved in all aspects of the business, CFOs and CEOs are no longer the only executives responsible for compliance activities – CIOs are also responsible. 67% of APAC CIOs think that they can be held accountable for compliance activities, compared to only 57% last year.
- The survey shows that APAC companies are starting to spend a larger proportion of their IT budget on compliance. This year, over 25% of respondents indicated that they spend “more than 15%” of their total IT budget on compliance, compared to only 9% of respondents last year.
- Singapore is seen as the leader in terms of budget percentage spent on IT compliance (18% of companies spend more than 15% of their budget on compliance).
IT applications are used in all aspects of the business, therefore to ensure regulatory compliance, companies need to run and evaluate their application development lifecycle more closely – costs and activities need to be traced and justified. But the application development lifecycle is complex because it is heterogeneous, global, and collaborative, and due to this complexity many non-standard, labor intensive processes exist. This leads to IT building applications that do not meet requirements, are late to market, and are of poor quality. |
