In the year 2005, companies will be confronted with a number of far-reaching provisions and legal regulations which they will have to realize: As of 2005, the Sarbanes-Oxley Act (SOA) will apply to all European enterprises which are quoted on the US Stock Exchange. In Germany, utilities, high tech companies and other enterprises will have to deal with emission allowances, the Kyoto Protocol, the RoHS- (Restriction of the Use of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment) Directives, and chemical enterprises with the REACH topic. And as a current study shows most companies are only poorly prepared for this: According to a survey carried out by PWC, 40 percent of all heads of corporate groups do not know how much money they spend on compliance. And those responsible for IT in German companies are even prepared to an „alarmingly poor“ extent, as a survey carried out by the Economist on behalf of Mercury reveals.
Nonconformity Is Expensive
Compliance is what experts call the adherence to laws and regulations which have also external effects. “Konformität“ (conformity) is the German word that is closest in meaning. According to the PWC survey, more than half of the top managers of US American and European company groups expect an increase of their expenses for controlling of and complying with external and internal environmental provisions within the next one to two years. Experts anticipate an average increase of 23 percent.
However, the costs for noncompliance with given rules and regulations will be even higher. They include environmental clean up costs, fines, resulting losses in sales or management capacities bound by compliance issues. But there are also other immense consequences that might arise for a company which, however, cannot be quantified: An industrial accident which causes damage to the environment and which could have been avoided by adhering to respective regulations might result in a considerable loss of image. In addition, many enterprises are aware of the fact that a sustainable management in the areas of environment, health, safety and quality will create a higher corporate value on the long run. This is the reason why more and more businesses commit themselves to stick to standards defined for these fields. For companies which aim at long-term economic success have to meet also their social responsibility and integrate this aspect as part of their corporate management. Therefore, the issue of Corporate Social Responsibility will gain increasing importance during the next years.
Current investigations show that companies do not have knowledge of their compliance controlling sector. „Often, executives are not able to estimate the company´s compliance costs,” says Jürgen Schwab, Chairman of the Board of TechniData AG. „This means that many companies are faced by a multi-million black box which could easily be seen through by means of a comprehensive IT solution.“
Compliance Solutions Provide Competitive Advantages
Jürgen Schwab explains why Compliance is more than just realizing provisions by laws and regulations. It also gives companies the opportunity to gain competitive advantages in the respective markets or on international level: „In order to be ‚compliant’, enterprises have to establish integrated processes throughout the entire company and with customers and suppliers. This also allows to achieve higher efficiency in logistics or HR processes.“ For this purpose companies rely on IT solutions. Today, there are only few solutions on the market which are able to cover also the requirements of globally operating and highly networked enterprises.
As already for issues of general environmental protection (EH&S), TechniData AG here again leads the way: So, for example, the IT solution „Environmental Performance Management“ allows enterprises to collect environmental, health or hazardous substance data across the entire company and to display it for decision making. „Compliance for Products“ guarantees uninterrupted reporting on the ingredients of individual products, also including all suppliers involved. With this fully integrated solutions all relevant data is permanently entered and maintained. This means that reportings can be provided at any time – quasi at the push of a button. Spreadsheet-based processes and thus time-consuming collection, consolidation and matching of data from various divisions are a thing of the past.
Up-to-date IT solutions help companies save valuable resources, use optimization potentials and thus improve corporate performance.