Many regulations, one truth

What do the Sarbanes-Oxley (Sarbox) Act, and its body of financial regulation, have to do with RoHS, a European Union regulation dealing with substances used in electronic products?

The answer is as follows. There are basically two kinds of regulation impacting manufacturers today: that

dealing with information (Sarbanes-Oxley, the FDA's 21 CFR Part 11, or various privacy acts); and that dealing with the environment, including materials compliance and health and safety rules. But even these environmental rules are addressed through information management.

Any information process used to address regulatory compliance must do both of the following: 1) protect critical information assets; and 2) make information available to appropriate parties.

This special report within the January issue of Manufacturing Business Technology introduces to its readers some emerging issues related to regulatory compliance, as well as some approaches being taken by leading companies to address it.

It's not unusual to hear pundits say the solution to the regulatory compliance challenge is to treat it as a profit center—that is, you can be both "lean and green," as Pamela Gordon, coauthor of one of the articles in this section, says in the title of her book on the subject.

Or, as GE Chairman and CEO Jeffrey Immelt puts it, "Increasingly, for business, 'green' is green," meaning environmental concerns can lead to more dollars.

GE is committing itself to this concept with "Ecoimagination," an initiative that will this year mandate the following:

• Double its investment in clean technology research to $1.5 billion annually.

• Double its profits from product and services that deliver environmental performance advantages from $10 billion in 2004 to $20 billion in 2010.

• Reduce its greenhouse gas emissions and improve its energy efficiency.

While it's hugely significant that one of the U.S.'s leading companies is embracing, rather than fighting, the environment, for the majority of companies facing increased regulation it will come at considerable cost. And as this issue goes to press, AMR Research , Boston, has released a report that highlights the substantial costs involved.

AMR estimates companies will spend $6 billion on complying with Sarbox requirements in 2006, on par with the $6.1 billion that will be spent in 2005. Budgets allocated to internal headcount are expected to fall by 8 percent, while money spent on technology will grow by more than 13 percent in real dollars over 2005. The box above breaks down these numbers by computing category.

Additional findings include the following:

• 39 percent of companies currently have an operational Sarbox solution, while 37 percent are implementing one in 2006.

• 40 percent of companies have a specific budget for Sarbox compliance; the remainder fund efforts from existing operations.

Specific to manufacturing, an earlier AMR report indicates a greater percentage of manufacturers are already addressing Sarbox—and that a greater percentage of manufacturers are already looking at document management and workflow technologies as a solution—than is true of the general population of companies.

Read further in this special section to learn how the electronics industry is being roiled by RoHS regulations, leading to wholesale changes in product-development processes; and how information technology, the glue that holds regulatory compliance efforts together, is reducing the costs of regulatory compliance, even as it makes workers more productive overall.