Regulations: What Are They Good For?
The September 26, 2006, article by Stan Gibson on eWeek.com, "Greenspan: Dump SarbOx," quotes the former Federal Reserve Chairman, Alan Greenspan, remarking that essentially the only good thing about the Sarbanes-Oxley Act of 2002 (SOX) was that it requires CEOs to certify their companies' financial statements, but "the rest we could do without." Greenspan continued with the indictment that "Section 404 is a nightmare."
Greenspan was addressing a meeting of the Massachusetts Technology Leadership Council in Boston and indicated that SOX restrictions were impeding initial public stock offerings, "driving them away from the New York Stock Exchange and to the London Stock Exchange." Greenspan called for changes to SOX and commented that "[a]ny bill that passes both houses almost unanimously cannot be a good piece of legislation."
Government regulations and mandates are often vague, and SOX is no exception. This is Political Science 101. However, after almost four years of businesses, both large and small, investing billions of dollars into becoming SOX-compliant, it does appear somewhat irresponsible for the former Fed Chairman to now recant the necessity for SOX and criticize the restrictions that SOX has imposed on publicly traded companies.
Have we forgotten the corporate scandals of WorldCom and Enron? These dramas are still playing out in the media as former convicted executives are now being sentenced to jail terms. Furthermore, thousands of former Enron employees lost their jobs and their retirement funds. The purpose of SOX is to ensure corporate governance and fiscal oversight. And IT shops played no small role in this. In fact, it was largely up to IT to develop the technological mechanisms that would enable companies to be and remain compliant.
For many businesses, SOX compliance has taken precedence over everything else. The small and medium-sized businesses took a colossal hit because of the need to reallocate already-overworked staff and shrinking budgets. IT was, in many SMBs, elevated to the status of business unit as it had to understand the "business" requirements that SOX imposed and then develop and implement the necessary reporting frameworks, audit trails, security, and governance pursuant to SOX.
In this analyst's humble opinion, IT decision-makers, as well as all business executives, should evaluate the processes they developed to become SOX-compliant and the resources spent on doing so and decide if their businesses are better for them. Then they should hold "birds-of-a-feather" sessions at IT and user group conferences and decide how to consolidate this information and share it with their legislators. IT is the bloodline of most companies, and it is about time that legislators understand the value of the IT organization to the business and to ensuring compliance with federal mandates and regulations. MC Systems Insight welcomes the opinions of its readership on this matter.
Like It or Not: Here Comes SOA...and BPM, and BAM
In an October 3, 2006, press release, New IBM Software and Services Accelerate Business Use of Service Oriented Architectures, and during a recent analyst briefing, IBM announced its new "software and services for building and expanding a service-oriented architecture (SOA)." IBM announced three key performance indicators:
- Sustained momentum in SOA with approximately 3,000 SOA customer engagements and 2,500 Business Partners
- "Flexible" entry points to enable customers to deploy SOA on their schedules and to meet specific business requirements
- Focus on four key areas: "the use of business process management (BPM) to exploit benefits from SOA; governance as the cornerstone of SOA success; preparing IT infrastructures for SOA; and creating industry-specialized SOA services"
In total, IBM announced four new and 23 enhanced products and 11 new professional services offerings. So what does this mean for SMBs?
During the analyst briefing, there was some discussion about the relevance of the announcement to SMBs. IBM's position is that for the SMB space, SOA will likely gain traction in its ability to solve a particular business problem such as consolidating islands of information into one portal to improve the customer, partner, and employee relationships.
Moreover, it will be imperative that whatever products SMBs buy from IBM, those products must be able to be integrated into the existing technology and business process "fabric" as well as be able to be re-used—a tenet of SOA.
IBM announced new software designed to accelerate BPM within an SOA to support Business Activity Monitoring (BAM) and human process management as well as business dashboards. Without getting into the nuts and bolts of all of this, essentially the drive toward an SOA starts with a review of business processes and the underlying technology. "Service-oriented architecture" is not a technology per se, but more a set of best practices and offerings. Some of the goals of SOA include the re-use of components (whether technology or business process components), the ability to streamline processes, the ability to reduce waste and redundancy, and the enablement of more dynamic and elegant responses to changing business requirements, among others. It is essentially the promise of Java writ large: Change once, propagate everywhere.
During the last several years, the industry has come to adopt the concept of business processes as being dynamic versus static. While this is still an ideal, there is value in being able to respond quickly and both automatically and autonomically to changes in business requirements. BPM coupled with BAM (are these acronyms driving you crazy, too?) enables customers to develop responsive, and eventually proactive, systems and to put in place technology to monitor events in a more granular manner and respond to them appropriately. The impact is not limited to systems' response; but will also better inform employees in real-time through use of dashboards. There is great value here, especially for those companies that continue to support various islands of information and automation. For SMBs, it is a question of knowing when to jump on the SOA carousel and what aspect of SOA to implement to demonstrate early return on value and generate momentum for continued upper management support. For SMBs it is, hands down, the creation, industry-specialized enhancement, and simplification of "flexible" entry points so that SMBs can reap short-term realistic and realizable benefits.
To IBM's credit, the company is seeking to advance its SOA agenda by offering industry-specialized services. This will appeal to SMBs as these services and offerings will provide a tangible value add. Incorporating SOA into the many, varied, and hugely successful Express offerings would also promote faster adoption of SOA among SMBs.
IT decision-makers interested in SOA should continue to watch this space as IBM is planning some deep dives into its SOA agenda throughout October.
Why Reinvent the Wheel?
Given IBM's SOA agenda, it is hardly a surprise that the company would reach out to those niche vendors whose products can provide IBM with the building blocks for its SOA offerings. To date, IBM has acquired Webify, MRO Software, FileNet, Internet Security Systems, and now the DORANA product line.
While it is beyond the scope of this article to provide an in-depth analysis of the merits (and/or deficits) of each acquisition, in this analyst's opinion, IBM's acquisition spree transcends just the desire of enhancing and expanding its product line and improving its bottom line. And IBM is not vying with Oracle to see who can make the most acquisitions. The time is right for SOA, and IBM, as it did with Linux, is spearheading SOA, and not only to enable adoption by IBM's constituents, but to ensure the future viability of the company.
It is an ambivalent, controversial, and exciting period in the IT industry—both in the global (macrocosmic) and parochial (microcosmic) sense. IT decision-makers in the SMB space need now, more than ever, to elevate the status of IT in their organizations. IT decision-makers must occupy a seat at the corporate decision-making table. They need to rethink their staffing decisions and seek to nurture the business acumen of existing staff and seek to hire more business-savvy IT staff. IT decision-makers must also examine current systems and processes, determine how to streamline them, reduce waste and redundancy, increase efficiencies, and transform the IT organization into a viable line of business, complete with profit and loss (P&L) and a role in corporate governance.
Maria A. DeGiglio is President of, and Principal Analyst for, Maria A. DeGiglio & Associates, an advisory firm that provides clients with accurate and actionable information on business and technology initiatives. You can reach Ms. DeGiglio at
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