The latest piece of good news for companies seeking to make compliance a performance enhancer instead of a reactive drag on earnings comes from Cartesis, which in mid-March announced that it had bought the right to offer its customers the specialized BWise governance, risk and compliance (GRC) software and have it work smoothly within their Cartesis business performance management (BPM) system.
Relabeled Cartesis Governance, it will sit side-by-side with the other modules of the Cartesis 10 Suite and "will integrate back into Cartesis Finance," says James Fisher, Cartesis' director of product marketing. He insists that current Cartesis users will be able to license and integrate the new governance piece easily, and he points out that Cartesis will enjoy a competitive edge when it comes signing up new customers that want a single source for all data related to financial reporting, performance management and GRC.
The largely separate current BPM and GRC software offerings cover complementary activities and are natural candidates for the convergence that is sweeping the financial technology marketplace, observes Kathleen Wilhide, research director for GRC and BPM solutions at IDC, Wilmington, Del. "It's expected, and we've seen some partnering among vendors, but what Cartesis and BWise have announced is probably the most formal and most innovative collaboration to date. It's definitely a step in the right direction."
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Wilhide notes that finance executives prefer specialized GRC software as a rule–a plus for Cartesis, BWise and other best of breed providers. While other GRC vendors like IBM Corp. and SAP AG provide a range of applications, "we're a pure GRC player," notes Luc Brandts, BWise's founder and CTO. "That's all we do."
How valuable a standalone GRC solution will be in an age of convergence and end-to-end processing depends on how successful Cartesis and its peers are in making separate packages work together as one integrated system. Lack of IT support should not be a problem. Wilhide reports that implementations will be "user-driven" and require only modest IT help.
According to Gartner Inc., BWise is one of 19 vendors of GRC solutions. Gartner places it in its third quadrant based on size and categorizes it as an innovator. But it still calls its choice surprising, given that BWise is based in Europe with a largely European clientele.
But BWise is more than a niche player, Gartner's fourth quadrant of players. It has been around since 1994 and has a broader, more mature product than some players who went into business simply to mend SOX. And BWise is more user-friendly than some other solutions, Wilhide notes. Since market penetration of GRC systems is as low as 10% to 15%, Cartesis won't have a big headache dealing with clients that have already installed GRC systems from other vendors, she adds.
Low penetration of GRC solutions and lagging integration with BPM systems means that there is a lot of room for efficiency gains. "When you uncover all the touch points, you find a lot of compliance activity that could be mapped and automated," Wilhide says. Bringing it all together in one process brings a more cohesive view of activities that should be linked.
Cartesis may be catching a wave. Given the high cost of manual compliance with Sarbanes-Oxley and other regulation, Gartner is predicting 24% annual growth for the GRC market, Fisher points out. The next two or three years should see large numbers of public companies switching from manual hunting and gathering to software that automates and controls GRC activity, even if it isn't as extension of BPM systems.
The obvious quick payoff will be a reduction in cost. "We're attacking the costs of those processes and replacing manual activity with automated, high-tech activity," Fisher says. And those costs are considerable. Gartner predicts that public companies that don't adopt automated systems will spend 50% more on governance and compliance than those that automate, Fisher explains.
CFOs anticipate a bigger payoff. Automating these cumbersome processes also strengthens their control over business and financial activities. "Better controls mean you can improve performance across a broad range of activities," says Fisher. "It's the key not just to cheaper, faster, more consistent governance but to better governance."
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