The US Sarbanes-Oxley (SOX) Act of 2002 is one of the single most important acts of legislation affecting corporate governance, financial reporting and accounting practices. European organisations with securities registered on US stock exchanges are already governed by this Act, forcing them to monitor, track and manage the creation and reporting of all financial information. As the threat of a European SOX Act gains momentum, electronic document management (EDM) technology for the automated electronic storage of financial documents, is becoming a must have for European organisations, with more and more IT resellers piggybacking off this growing demand.
Electronic document management, which involves the electronic storage, retrieval, delivery and management of incoming and outgoing business documents, such as invoices, purchase orders and statements, is vital in helping companies to achieve compliance. The upsurge in the popularity of EDM technology will continue for as long as European organisations recognise that sooner rather than later, they will be compelled to introduce effective practices to ensure compliance. An EDM solution not only helps to deliver compliance, it also streamlines business processes, reduces costs and increases profitability.
Benefits of EDM for SOX compliance
The effective use of EDM technology means that key corporate information is permanently preserved, which is a major enabler for compliance. With EDM technologies, reliance on paper-based documents is replaced by the generation of digital images that cannot be altered, shredded or lost.
As access to mission-critical documents is based on strict levels of authorisation, this makes document management a vital tool for enabling compliance with SOX, particularly when integrated into systems that maintain audit trails of associated business processes such as supplier invoice approval.
The Increased popularity of EDM
With SOX gaining more media coverage than ever, organisations are increasingly implementing EDM technologies for reasons of compliance. According to its latest research, AIIM, the Enterprise Content Management (ECM) industry association, found that
Ironically, the research also found that despite the U.S. having the most litigious culture in the world, only 64% of U.S users consider the storage of electronic information as very important or quite important in relation to potential future litigation. This contrasts with 83% of
How resellers are benefiting
European resellers are piggybacking off this increased demand for EDM in the age of SOX, and are reaping numerous rewards. For instance, Foundation Systems, the specialist UK direct delivery arm of Systems Union Group, has recently partnered with document management and imaging author, Version One, after responding to demand from its users for paperless office technology. According to Foundation Systems, new legislation and the penalties associated with non-compliance with regulations, such as Sarbanes-Oxley, are amongst the key market drivers behind its users increased demand for integrated financial and document management solutions.
By responding to this user demand, resellers and software authors can inject tremendous value into existing software systems, making them much easier to sell. This technology also substantially improves the resellers bottomline whilst providing a door opener for new business.
Its not just SOX driving demand
Although SOX is having an impact on the document management industry in
Also driving the EDM demand is the swift return on investment organisations can expect and the significant savings of time and money from the reduced printing, photocopying, filing and retrieval of documents. Through implementing an electronic imaging system, Johnston Press plc, the UK's fourth largest publisher of local and regional newspapers, is experiencing over 500,000 of savings every year. The freeing-up of expensive office space as the volume of paper held is radically reduced is also a significant business driver for some businesses.
Chris Finnerty, Company Secretary from roofing and building membranes manufacturer, Icopal, says that his reasons for implementing EDM technology include cost and time savings. The company also envisages better relations with customers and suppliers and improved cashflow as all POD, purchase order and invoice queries will be handled far more quickly. With EDM technology, the laborious task of manually filing and retrieving documents will also be made redundant, freeing-up over 100m of storage space and putting an end to lost and misfiled documents.
The SOX Act and threat of a European version of the act undoubtedly is driving increased use of EDM technologies across a number of European countries. Not only do these technologies ensure documents are safely stored with no way of altering, shredding or losing them, they also provide a detailed audit trail to help with financial reporting. Of course, other benefits such as cost, time and space savings also continue to drive the increased demand for EDM technology, and will continue to do so for many years to come!
Catherine Murphy (pictured above) is the marketing manager for Version One Ltd, author of electronic document management and imaging software. These solutions enable the automated electronic storage, retrieval, management, enhancement and delivery of business documents such as invoices, purchase orders and statements.