Financial Rules May Promote E-Business Investments

CIOs who are still struggling to get their company to invest in e-business systems have a new line of argument: Doing business online can keep executives out of jail. New Securities and Exchange Commission (SEC) rules against corporate fraud give large public companies less time to report key information to investors. Theoretically, at least, companies that keep their most important records in electronic form will find it easier to comply with the government’s requirements.

The rules require companies to file their 8K forms disclosing material events within two days of a major transaction, such as the sale or purchase of a major asset or the cancellation of business with a key customer. Currently, companies have at least five business days to file such reports.

The SEC believes that two days will give dishonest executives less time to hide their misdeeds. But honest companies will be forced to scramble to enter data about paper-based transactions into the systems that generate their financial reports. Without that data, the reports won’t be accurate, and if CEOs approve inaccurate reports, they’re supposed to go to jail.

Unfortunately, hardly any company has entirely eliminated paper. According to a recent study by Plano, Texas-based management consultancy A.T. Kearney, only 11 percent of companies’ total spending is documented electronically at the time of the transaction.

But the new rules will force companies to report even a glitch in the supply chain, such as a major supplier running out of inventory, if it affects production. That’s a problem A.T. Kearney contends most companies don’t have the technology to spot.

Jim Walker, senior analyst with Cambridge, Mass.-based Forrester Research, says that eventually, vendors will sell audit applications that compile financial and transactional information for disclosure reports from e-business systems. But before CIOs can deploy it, they must have more data available electronically.

The message?that investing in e-business systems can help the bottom line?is an old one. Now there’s an argument that’s easy to understand.
-Ben Worthen

Tech-Savvy on Capitol Hill

The congressional Internet Caucus boasts almost 200 members, but only a few of them get their hands dirty making IT policy. What makes a tech-savvy representative or senator? He or she has learned how IT works. Of the approximately 400 House members and 31 senators running for reelection on Nov. 5, here are three that are IT experts.

Rep. Tom Davis (R-Va.) First elected in 1994, Davis was once vice president and general counsel at McLean, Va.-based systems integrator PRC, and his suburban Washington, D.C., district is home to numerous federal IT contractors. He knows government agency information systems and information security. He chairs the Government Reform Subcommittee on Technology and Procurement Policy. Davis has sponsored bills to promote e-commerce standards and improve IT worker training.