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IBM pushes compliance offerings as deadlines loom

Analysts say IBM is playing off the regulatory compliance fears of firms and believe this offering is likely to be met gleefully by CEOs with open wallets.

With the deadline for Sarbanes-Oxley Act compliance only eight months away, many businesses admit to not being anywhere near ready. In fact, according to a recent survey, only one in 10 financial executives are currently in compliance.

Although not generally considered an optimistic bunch, financial executives say they're confident they'll be ready come July, even though they'll have to make significant changes to the way they do business.

Clearly, IBM, who conducted the survey, saw the writing on the wall months ago (as did a lot of other vendors), so it didn't really need the survey to prove that positioning itself to help customers deal with compliance issues was a smart strategic move.

Still, IBM is using the survey as a launching pad to repackage a number of its products, throw in a couple of completely new offerings and sell these tools to customers who are now in the midst of figuring out how to meet the deadline.

According to Steve McLaurin, a partner and certified information systems auditor with IBM's business consulting services unit, IBM is pooling its resources -- hardware, software and services-- to help businesses meet pending deadlines not only for Sarbanes-Oxley but also for the USA Patriot Act and several Securities and Exchange Commission regulations.

McLaurin cited a number of services and products that will make up its compliance portfolio, including an anti-money-laundering service and an e-mail archive and records-management service. He also mentioned DB2 Content Manager for Data Retention Compliance, Lotus Workplace for Business Controls and Reporting and Tivoli Storage Manager for Data Retention. Big Blue also has a write-once, read-many (WORM) media technology for the 3592 tape drive and a new serial ATA disk storage system.

IBM's initiative also involves teaming with a series of business partners to help build an ecosystem. Some of the key companies IBM is working with are iLumin, IXOS, KVS, Northrop Grumman, NuGenesis, SearchSpace, Siemens, and VeriSign.

McLaurin said IBM intends to pitch this portfolio by telling customers that these products, in addition to consulting and educational services, can help them meet a slew of looming compliance regulations.

"We want customers to understand that, if they've already invested in these tools, they can use them to help them meet compliance [issues]," McLaurin said.

McLaurin said IBM has thousands of consultants who are versed in every major regulatory compliance area, and he believes that the mindshare that Big Blue gained when it acquired consulting powerhouse PricewaterhouseCoopers last year gives IBM a leg up on any competition.

Analysts say that this repurposing concept makes sense, but only because IBM has the tools to back it up.

"This is really a testimony to the depth of IBM's product set, that they can reach into the bag and take this out," said Charles King, research director of Sageza Group, Mountain View, Calif. "You can look at this as a potential new product, but it's also a value-add for current IBM customers who already have it installed."

Analyst Patrick Gordon, of Compliant Systems Consulting LLC, Medfield, Mass., said that what IBM is proposing is a coherent set of services that are already in place, and that the company is now focusing on the one regulation that has got CEOs very nervous -- Sarbanes-Oxley. He said the level of fear it has created plays squarely into IBM's strengths.

"IBM is taking this golden opportunity to rein back its traditional customer base and will probably be greeted by CEOs with open wallets," he said. "IBM is really well positioned to do this. This is their sweet spot."


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