Sweetening the pill of compliance

Lessons from financial services

Significant demands have been placed on the financial services sector as a result of compliance related requirements over the past three years, according to a study carried out by Freeform Dynamics involving the interview of 100 UK based IT managers from a range of Banking and Insurance organisations.

The study also reveals that while the importance of efficient and effective compliance solutions is well appreciated, fewer than half are satisfied with the ability of current measures to cope with future requirements in the areas of document management, archiving and retrieval. Gaps are even wider with regard to electronic messaging, where only one in twenty are fully satisfied with their capability.

And compliance is one issue that is not going away. Almost 60 per cent believe the compliance related burden on IT will increase over the coming three years, with a further 22 per cent saying it will not let up.

So how have compliance issues traditionally been dealt with and how might we better prepare ourselves for the future?

In the past, the emphasis has been placed on application specific initiatives and point solutions. But as more regulations have been introduced and current ones modified, it has become apparent that this is really just a band aid approach and a more overall compliance strategy is required. Also, as technology advances, more and more different types of data need to be recorded, stored and easily retrieved, not just for compliance, but as part and parcel of performing our day to day jobs. Opportunities therefore exist to tackle other business problems at the same time as compliance related requirements leading to a much more value oriented approach to investment.

So, simple as that then?

Well, not quite. In practice this involves the challenge of getting the right people round the table, dedicating time to mapping out existing processes, and looking at areas of overlap between necessary compliance related requirements and other business problems. If this can be achieved though, the cost benefit of moving forward with an architectural approach with a greater degree of reuse, flexibility and responsiveness becomes apparent.

The importance of getting the right people involved to create an atmosphere more conducive to breaking down budgetary boundaries is highlighted by the research. It is no coincidence that organisations who routinely involve IT management in the business planning process and vice-versa are much more likely to be moving down the architectural compliance route.

In practical terms, the nature of the transition to an architectural approach will obviously vary from organisation to organisation depending on the amount of fragmentation and legacy in their current IT landscape and budgetary constraints. While the respondents in the study place a higher emphasis on taking an architectural approach towards compliance in the future, they also acknowledge that there will still be a need for application specific initiatives and point solutions. Hopefully, the necessity for such measures will diminish over time, but it is important to be realistic in the shorter term.

For those interested in some guidance, the concept and practicalities of building compliance into the underlying architecture are discussed in greater detail in a paper by RedMonk entitled “SOA Meets Compliance: Compliance Oriented Architecture”, which is available free of charge from www.redmonk.com.

But at the end of the day, does taking a strategic architectural approach actually make a difference?

While evidence is limited due to the relatively recent introduction of this approach, early indications show that those organisations who have moved down the architectural compliance route feel significantly more confident in their ability to deal with future regulatory requirements. Perhaps these early movers in financial services can provide a lesson for the broader IT community.

Helen Vile is projects director at research firm Freeform Dynamics. More details of the research discussed in this article are included in a report entitled “Value Driven Compliance” which is available free of charge and may be requested here