|By Roger Oberg||
|August 9, 2006 01:00 PM EDT||
Why the recent surge of interest in regulatory and standards compliance? With the health and welfare of their citizens and local businesses in mind, global governments are requiring more accountability from organizations that do business within or across their borders. Since 1999, new legislation has passed in the United States that subjects business, IT, and even the software development process itself to audits. Some of the better known legislative acts, such as Sarbanes-Oxley, Basel II and the Health Insurance Portability & Accountability Act (HIPAA), have placed financial services and health care providers directly in the spotlight. These industries are spending money on ensuring compliance, but with mixed results so far. In the United States, for example, an estimated $2.5 billion will be spent annually by Fortune 1000 companies on compliance-related projects.
It doesn’t help that compliance requirements are often a puzzle in and of themselves. They are mandatory, but the steps to achieve compliance are not always outlined. In section 404 of the Sarbanes-Oxley act, for example, it says a company must have “good controls,” but it doesn’t clearly state what they are or how to achieve that. Regulatory requirements are also ever-changing, yet businesses are required to constantly demonstrate compliance. So for many businesses, well intended compliance requirements involve risk without clear guidelines for managing that risk.
Complying with regulations and standards is all about encapsulating business processes. It’s about clarifying and formalizing the way you do business – everything from taking an order to preparing goods for shipment, shipping and taking payment, and then allowing for scenarios like credit returns, faulty products or discounting – and appropriately recording that information.
Many companies have automated these processes by buying off-the-shelf IT packages and customizing them or, in many cases, by building their own custom-made applications. In either case, the modifications or new applications introduce yet another dimension to the puzzle: new pieces that must be shown to fit. This is the stage where compliance can become an even greater challenge.
In custom systems there can be a lot of people working on the development of the applications and errors can creep in, things can change. To withstand an audit – whether internal or external – a business has to be able to prove that the software system it has said it was going to build is the one it actually built, and that the software it built is the one it ultimately deployed – two separate processes. In essence, to achieve true compliance, businesses must be able to demonstrate the reliability and accuracy of any business process and show transparency throughout their development process.
It’s possible to demonstrate business process reliability and accuracy and have a transparent development process by manually compiling information at the time of an audit, but as you might imagine there is a high degree of overhead and risk associated with this reactive approach. There is a direct cost as well as the staff distraction and lost opportunity costs.
Establishing an effective governance framework for software delivery, what IBM Rational Software calls “Business Driven Development,” is a better choice. IBM Rational’s Software Development Platform provides guidance to customers with regard to best practices in developing software. Rational’s portfolio, requirements, testing, and software configuration management products provide a wide range of tools that capture information about what’s going on and what changes were made, what tests were done, what the design documents were and so on. It’s an ongoing process, so businesses can continuously capture information and maintain compliance. Using Rational’s automated workflow system for software delivery, a number of people in various locations can sign off on changes and allocate work. Instead of one hour per day spent on compliance issues, an hour-long conference call per week may be all that is required.
As an example, various companies in the financial services industry have chosen to work with IBM Rational to strengthen their testing and requirements practices to improve traceability and compliance with regulations like Sarbanes-Oxley. One such customer, a leading provider of data processing and information management services solutions, replaced a competitive testing solution with tools from Rational to improve its application testing processes, resulting in streamlined IT governance and regulatory compliance capabilities.
Aside from the assurance that comes from knowing the business is compliant, organizations can benefit from reduced risk and lowered costs in the long-term, improved infrastructure and project ownership, as well as better governance and understanding of business processes. With the right software delivery governance framework in place, the regulatory and standards compliance puzzle will look a lot more solvable.
|JDJ News Desk 08/09/06 12:29:42 PM EDT|
Imagine trying to solve a puzzle without being certain what the end result should look like, much less how the pieces fit together. Now imagine trying to build the puzzle pieces themselves. Bit of a challenge? To say the least! But this is exactly the situation facing many business and IT executives when it comes to complying with the increasing number of standards and regulations in their industries today.
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