Comply or... what?

Many vendors see compliance as the most critical issue of the day – but regional companies just don’t care. IT suppliers need to recognise that their agendas need to come into line with Middle Eastern customers, and not the other way around.

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By  Eliot Beer Published  May 21, 2007

|~||~||~|Compliance is possibly one of the most frustrating topics in the world right now. Outside the US, no one really seems to understand it – and inside the US, one often gets the impression that people still don’t have a clue what it really means.

For many organisations, compliance has become the catch-all excuse for inaction in some areas, and rampant expenditure in others. Most large organisations now have a compliance officer, someone who’s job is very literally on the line – the line at the bottom of the auditor’s report.

In the often paranoid and litigious atmosphere of corporate America, many vendors – despite often being burdened with their own legal burdens – seem to be making hay from organisations’ s desires to comply with the increasingly complex legal framework which the US government has set in place.

Every new software product with an eye to the US market generally includes at least a nod to regulatory compliance – and many hardware offerings also claim a hand in helping companies reduce the burden of ticking a very long list of boxes.

For the Middle East, almost none of this is an issue. As yet, there are very few specific regulatory mechanisms in place to ensure absolute integrity in financial reporting – neither are there laws which restrict what a company can say about its future activities.

The region’s stock markets are still relatively youthful, and its accountants and executives haven’t yet found the need to resort to the ingenious accounting scams seen in the US to boost bottom lines and personal pay packets (although the reality of human nature suggests that someone will get round to this sooner rather than later).

All of this leaves IT vendors and regional organisations in something of a quandary. The former are all geared up to sell a product on the basis of legal necessity – which applies not at all to the latter.

This has resulted in many US-focused vendors making slightly desperate claims about the attitude of Middle Eastern companies: “Oh, more and more of them are looking at it very closely”, “It’s becoming a very important issue for many companies here”, and so on.

If you speak to non-US vendors, though, they are much clearer on the point. Middle Eastern companies, for the most part, have no practical interest in becoming compliant with laws such as Sarbanes-Oxley that only apply half a planet away.

Strangely enough, compliance tends only to matter if it’s a legal requirement – hence the name. Many vendors seem to have forgotten this point when pushing products which will help regulate internal reporting procedures.

Yes, it’s good to have best practices ingrained throughout an organisation – but a company will only go through the pain and expense if it really has to.

Currently the only regulatory issue on the horizon is Saudi Arabia’s commitment for its banks to be Basel-II compliant by the end of 2007 – but even this doesn’t impact a lot of internal reporting processes.

Once again the issue comes back to localisation – vendors need to update their sales pitches for the Middle East market, rather than assuming the region’s agenda is the same as the rest of the world’s.

In a region where a country’s regulator praises public companies for all filing their financial statements on time – for the first time ever – there is a long way to go before compliance is a serious issue.

What are your views on compliance? Is it an issue which does impact your organisation? Write to eliot.beer@itp.com with your views.||**||

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