VideoWhile many companies are using Sarbanes-Oxley as a selling aid today, experts say that long after meeting those requirements becomes second nature to corporations, the role of IR should continue to benefit from new capabilities. BCG's Hansell and Olsen say that from the perspective of the financial markets, equity drives the company. "Equity funds the company to do its business, serve customers, and provide value to the economy," says Hansell. "The company must be run in a fashion to give competitive returns to equity shareholders."
Investors As Customers
Hansell and Olsen believe that most corporations have some pieces of technology in place to effectively treat investors as customers, profile their objectives, and tailor outbound information to suit their specific interests. "Some of the infrastructure is already there," says Hansell, who cites, for example, global research services from Thomson Financial, which offer a means of "knowing who is buying and selling [and] how their styles line up with your objectives."
Still missing, Olsen says, is "a system that enables you to gather and control all the information you need to talk to your investors about the issues that concern them." Which is to say that despite the flurry of activity in IR-oriented IT, technologies have tended to come onstream piecemeal — an "ERP of IR" is a murky concept some way off. Even if it did exist, says Shareholder.com's Schultz, it would need to be matched to a new skill set within IR. "Soon IR will have to develop expertise in marketing," he says. "This is all about fine-tuning the information flow to specific investors."
Laton McCartney is a New Yorkbased writer and editor. His most recent book, Across the Great Divide: Robert Stuart and the Discovery of the Oregon Trail, will be published later this year.
Sidebar: Compliance -- Who's At The Internal Controls?
The Sarbanes-Oxley stipulation that management must have effective internal controls over financial reporting in place (Section 404, the requirements of which were approved by the SEC in late May) has given rise to a miniboom in Sarbanes-Oxley controls-oriented technology. Scores of vendors and consultancies are rushing to develop solutions or position existing technology as a means of enabling customers to meet compliance requirements. For example, BearingPoint and Hyperion now provide a suite of out-of-the-box solutions that support disclosure-control processes. Other players in this emerging market include KPMG, Ernst & Young, and Deloitte & Touche, as well as various business-process management (BPM) and workflow software vendors such as HandySoft in Vienna, Virginia, and OpenPages in Westford, Massachusetts.
The former offers BizFlow, a BPM and workflow solution. "The technology allows customers to streamline and automate business processes throughout the enterprise," says Daryn Walters, HandySoft's vice president of worldwide marketing and strategy. BizFlow, he claims, enables corporations to leverage existing financial, ERP, and other legacy systems to minimize the cost of compliance. It also provides the project and task management capabilities for defining significant accounts, processes, risks, and internal controls that conform to the standards laid out by Sarbanes-Oxley. In addition, BizFlow identifies problems and improvement opportunities in auditing and internal-control processes, including real-time monitoring capabilities to assess the status and performance of controls, the company says.
The OpenPages solution, SOX Express, is made up of a controls-design module and an operational-deployment module, and works with enterprise software from Oracle, BEA Systems, and others. Its approach is to create a centralized and secure home for the documentation of internal controls and to enforce financial reporting and internal-control workflows while providing audit trails and archives of internal-control processes and the required testing procedures. "One of the big challenges," says OpenPages CEO Michael Duffy, "is to document those accounts where there is risk and show that controls are in place to deal with that risk." Like Thomson Financial, Hyperion, and other vendors, OpenPages also provides management dashboards that CFOs and investor-relations officers can use to monitor internal controls.
Some of the controls-oriented Sarbanes-Oxley technology is targeted at chief legal officers as much as financial executives. For instance, Steelpoint Technologies has come out with what it calls compliance and litigation risk-management software, which company vice president Mark Jesser claims enables customers
to monitor critical internal-information flow — both paper-based and electronic — through workflow and document-management capabilities. Using the company's litigation-support software, Introspect eCM, a user can place all this information in a common repository, locate conflicting information and problem areas, and assess potential risk. "The customer has to be able to access compliance and litigation risks and manage the documents involved in larger case and enterprisewide litigation," explains Jesser. "There may be 50 [million] or 60 million pages of information being accessed by 20 or more law firms concurrently." Steelpoint is partnering with both Filenet and IBM to develop Sarbanes-Oxley-related content-management applications.
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