Companies Act 2006 will bring IT closer to business


Companies Act 2006 will bring IT closer to business

The Companies Act 2006, which comes into force in October 2009, is reminiscent of the 2002 Sarbanes-Oxley Act in the US. Sarbanes-Oxley has impinged mightily on the working lives of British IT professionals working for companies listed in the US, so the kinds of implications it bears are nothing new. But the Companies Act betokens more of the same, and for a wider group.

The new rules take into scope modern electronic communications, which were not widespread in 1985 - the year of the last iteration of the act. Company directors will need to ensure that the right IT systems are in place to store and retrieve documents and data. They will also need to make sure that electronic communication with shareholders, via websites or other means, is robust and secure.

These tougher governance requirements mean, as with Sarbanes-Oxley, that the IT function has to become closer to the heart of the business. It also raises the stakes. Directors and managers, including IT directors, could go to jail if they fail to comply with the act. And in terms of that long-cherished IT dream of strong board-level influence, it could be a case of being careful what you wish for.

The better news, however, is that senior IT directors say they are more confident both about business-IT alignment and the strength of professionalism than in the recent past. The Computer Weekly CIO Confidence Index for 2007 shows that most UK IT leaders (94%) think communication between IT and the business is improving, up from 86% in 2006. The survey also shows an increase of 10% among those who "agree strongly" that the board understands the importance of IT to the business.

But perhaps the most significant finding is that IT management is perceived to have become more professional - moving closer to the status of lawyers or accountants. This is surely a stronger footing than lusting after a generalist business executive status that misguidedly belittles valuable technical expertise.

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This was first published in December 2007


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