Do you comply?

With what seem like an escalating number of regulations impacting on European businesses today, the costs are mounting and the pressure to be compliant is becoming more than some smaller organisations can bear. So what’s the key the surviving the compliance challenge? FST corners Armin Trautner, Managing Director of iGrafx Germany, to get his views on getting away unscathed.

FST. What are main the challenges that businesses face today in Europe when it comes to compliance with regulations?
Implementing the necessary procedures to adhere to the various different regulations that face companies today represents a particularly great expense burden. Furthermore, it is an unfortunate fact that compliance issues tend to impact small- and middle-sized firms the most. Even though many of these companies have international operations, they may not have the depth of human resources to enable them to create a dedicated compliance officer position. What’s more, the Sarbanes-Oxley Act is now taking on increasing relevance for companies in Europe, as it affords smoother interaction with US investors and fills the void that comparable European Union regulations, soon be introduced, will fill.

Companies that have to date ‘come away unscathed’ will undoubtedly have their first encounter with compliance the next time they apply for a loan, if not sooner. The Basel II guidelines are of key importance in this regard, and it is therefore a subject of real concern to nearly every business enterprise in Europe.

FST. What sorts of difficulties are businesses likely to encounter with Basel II?
Unlike previously, it no longer suffices simply to have your historical figures in order. Internal rating procedures now also integrate forward-looking elements such as economic outlooks and market trends, as well as soft factors like management and staff quality. In other words, in addition to sales, target-versus-actual comparisons and cash flow, corporate strategy is also relevant along with managerial competency and staffing and tactical/operational planning.

If a company fails to invest enough in IT, it represents a risk; if it invests too much, the cost/benefit ratio is unbalanced. This is one of many points to which banks must pay particular attention. This issue comes up particularly with regard to IT investment, as many firms are now having to upgrade their infrastructure, replacing prior investments.

FST. How does compliance impact on business processes?
The discipline of risk management, which is related to compliance, has long played an important role in the six sigma method, the goal of which is the minimisation of errors. Issues of process optimisation are therefore only one logical step removed, as efforts to ensure compliance are integrated simultaneously into cost-cutting.

Anyone that takes the opportunity to optimise their own processes instead of merely responding to mandatory compliance rules can therefore benefit doubly.

FST. What is the trend among companies in this regard?
Many companies are already focusing on optimising their processes. These companies frequently employ centralised databases that allow business processes to be mapped in three dimensions. This management tactic is now adapting to meet the new compliance requirements. However, even those firms that have not yet engaged in optimisation will have no problems with regulations like Sarbanes-Oxley, as long as their processes have been properly documented.

FST. And how are you as a company positioning yourself in this area?
For one thing, we provide support to those companies that have already documented their processes in transitioning over to compliance management. That may be through the use of third-party products with which we can interface, or by using our own proprietary solution, the iGrafx FlowCharter. Our new software package, iGrafx Enterprise Central, is tailored specifically to risk and compliance management concerns and helps alleviate the problems described above.

But even those who are only now just starting to document and analyse their business processes can obtain important support from us. We do not view analysis as an end in itself, but rather as a valuable opportunity to streamline convoluted processes. This provides for cost savings and increased customer satisfaction.

A brief bio
As Managing Director for iGrafx Germany, a division of Corel Inc. Armin Trautner is responsible for all business operations in Europe and the Middle East.

Prior to Corel’s acquisition of Micrografx, Trautner was managing director for Micrografx EMEA, where he spearheaded the iGrafx sales activity throughout the region. . Trautner is well-known within the process excellence industry, and holds more than 17 years of experience in the IT industry, including positions at Siemens-Nixdorf and Informix, evosoft Kommunikationstechnik GmbH and Micrografx.