Hiring compliance services is a given for much of corporate America, but success is far from guaranteed.
A lack of standards and possible conflicts of interest hinder the effectiveness of many compliance services, according to the latest Byte and Switch Insider, this sites paid subscription research service.
The report, Compliance Services: Help or Hindrance? shows there's no lack of demand for compliance services. AMR Research Inc.
forecasts $3.79 billion will be spent on compliance services this year, as organizations battle to comply with the Sarbanes-Oxley Act, the U.S. Health Insurance Portability and Accountability Act (HIPAA), and myriad other regulations.
Yet not all companies are successful in their compliance projects (see Compliance Services: Get What You Pay For). In the storage networking industry, BakBone Software Inc. (Toronto: BKB), Brocade Communications Systems Inc. (Nasdaq: BRCD), and Veritas Software Corp. (Nasdaq: VRTS) have run into accounting problems in dealing with compliance issues (see BakBone Still Out of Whack, SEC Gets Formal With Brocade, and Veritas Misses 10K Deadline}. At the least, these kinds of problems are embarrassing. At the worst, compliance failures can result in fines, lawsuits, or other penalties.
Despite the proliferation of services, help isn't always easy to get. Most firms dont cover the full range of requirements, so companies often engage more than one to meet their compliance needs. A lack of standards makes it tough to ensure that outside consultants meet best practices. The report also questions the objectivity of vendors that peddle compliance services as an adjunct to their own products.
