A report from research firm Gartner points out that the "Enron Effect" is already making the CIO's job tougher. "The fallout from the collapse of Enron will have significant repercussions on CIOs' sphere of influence in governance, sourcing, systems and people. CIOs should take action today to avoid unpleasant surprises," Gartner warns. While Gartner says the Enron Effect manifests itself in various ways, CIOs would do well to especially take note of its warning that "investors and regulators will demand greater transparency in company performance and, hence, in company data deeply buried in systems".

"The size and scope of the Enron failure, coupled with the potential political fallout, means that investors, regulators and government in the United States and around the world will now marshal their forces. Changes will likely emerge in auditing practices, accounting standards and reporting regulations - changes that will require enterprises to disclose more information about their activities and financial status," Gartner says.

We have already seen activity from all corners of the globe confirming Gartner's prediction.

Keith Skinner, chief operating officer Deloitte Touche Tohmatsu, warns the level of accountability demanded of directors - particularly non-executive directors - has already started and will continue to increase quite substantially. Judgments in recent legal cases involving Nick Whitlam at NRMA and Ray Williams and Rodney Adler at HIH make it clear courts today are taking a very different line on their interpretation of what directors should or should not have to do in determining whether a company is meeting its obligations, Skinner says.

"I think it's going to lead to directors requiring a lot better information, which in turn is going to require a lot better systems to support what [directors] are going to require [in order] to independently determine whether a company is fulfilling its responsibilities," he says. "So I think the ante is going up quite substantially and is continuing to do so. There will be a bigger role not just for the CIO - it's hard for him to do it by himself - but I think all of the executives - the CEO, CFO, CIO, COO - are all going to have to, together, really improve a lot of the information systems and the reports that they get."

Good technology cannot overcome unsound financial practices. However, systems that make the financial health of the company more transparent, along with better risk assessment, might. That puts an onus on CIOs to examine closely all business operations and the systems that can keep them on track. While it is not the role of an IT executive to uncover financial fraud, they will have a crucial part to play in keeping companies honest in the future. And it elevates the importance of IT governance to heights so far unrealised in all the debates. (See CIO October for a comprehensive look at IT governance.)Before becoming COO, Skinner was regional Asia-Pacific and Australian head for Deloitte Touche Tohmatsu's corporate reorganisation group, and has spent the past 20 years doing corporate restructuring and insolvency work. He says in all that time, he saw no company with great information systems collapse. In fact, lack of good information systems is a common theme in just about every company that fails.

"I wouldn't go so far as to say an information system causes a company collapse; there has got to be something fundamentally wrong with the business," Skinner says. "But I think it's important to look at a business and look what the real critical performance factors are, what really needs to be measured and monitored, and then make sure you've got systems that are capable of doing that and presenting meaningful reports."