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Compliance-Related IT Spending Set to Grow

In a recent survey on the importance of regulatory compliance to Asia Pacific companies, 75 percent of CIOs in the region indicated that compliance will be one of their top IT objectives over the next year.

Asia is waking up to the relevance of international compliance requirements such as Sarbanes-Oxley and Basel II to the region, and this will play a key role in shaping IT priorities of CIOs for the coming year.

In a recent survey on the importance of regulatory compliance to Asia Pacific companies, 75 percent of CIOs in the region indicated that compliance will be one of their top IT objectives over the next year.

Singapore emerged as the country seen to be leading the charge in meeting regulatory compliance standards (31 percent), followed by Hong Kong (23 percent) and Japan (20 percent).

The survey, which was commissioned by Serena Software, also indicated that IT will have a major role to play in meeting regulatory compliance standards, with three quarters of the CIOs indicating that compliance will be one of their top IT objectives over the next year.

"Relevance for compliance in Asia will be driven by corporate headquarters demands and global trade requirements," said KC Yee, vice president for Asia Pacific at Serena Software.

"If companies in Asia want to do business with an MNC or trade with an overseas company - they have to meet a certain grade of standards. Assurance must be given to customers and partners that you can work at the same level that they do."

At BASF South East Asia, for example, meeting regulatory compliance standards is a major IT objective for the chemicals company, according to Karl Grupp director, Asia Pacific, Regional Information Services.

"In our chemical business it is mandatory especially in environment/health/safety (EHS) to comply with country regulations. This means, in our standardized regional ERP (enterprise resource planning) system respective information has to be provided for required documents," said Grupp.

In the Asia Pacific CIO survey, 88 percent of CIOs said IT has a major role to play in ensuring regulatory compliance. This means that CFOs and CEOs may no longer be the only executives responsible for compliance activities. In fact, 57 percent of Asia Pacific CIOs polled felt that they may be held directly accountable for compliance activities in the future.

However, currently, a low proportion of the IT budget is being spent on compliance-related activities. The majority of companies (60 percent) said that they currently spend "less than five percent" of their total IT budget on compliance-related activities with only nine percent of companies saying that they spend "more than 15 percent."

This reflects general trends in the implementation of regulatory compliance programs - only 21 percent of Asia-Pacific respondents have already implemented such programs. However, more than half (52 percent) are planning to do so by the end of this year, consistent with projections that 27 percent of companies will spend "over 15 percent" of their total IT budgets on compliance-related activities over the next two years.

The Asia Pacific CIO survey was conducted in October-November 2005 for Serena Software by MarketShare Corp., which interviewed 148 CIOs from medium to large companies across Australia, China, Hong Kong, India, Japan, Korea, and Singapore.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: BASF, Serena Software

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