28 August 2002 The enterprise application integration industry could be boosted by the US government’s post-Enron requirements that CEOs and chief financial officers guarantee the accuracy of their companies’ financial reports.

The new, tougher financial reporting requirements unveiled by the US Securities and Exchange Commission (SEC) has “created an immense, high-visibility challenge to many organizations that lack the level of systems integration needed to accurately gather, analyse and report on their company’s performance,” says Giga Information Group analyst Ken Vollmer.

This is because only 2% of senior financial executives have their business applications fully integrated to the extent that accurate financial statements can be produced. Furthermore, only 29% will have this ability within the next three years, according to a recent survey of 265 senior financial executives by market research company CFO Research Services and Cap Gemini Ernst &Young.

“The requirement for sophisticated solutions that can support more accurate financial reporting will be the primary driver of integration technology for the next two to three years,” says Vollmer. Integration software vendors will not have as much need to prove a return-on-investment for their products, because buyers will be driven by fear of prosecution, not cost effectiveness, he adds.

“The potential personal penalties for senior management attesting to what later turns out to be inaccurate financial reporting are severe and will result in a laser-like focus of senior management on efforts to improve internal integration. There will be no return on investment analysis on this issue – it will just get done,” says Vollmer.

The challenge for integration companies that wish to take part in this supposedly burgeoning market is to “quickly devise customisable solutions directed specifically at this new and powerful demand driver,” concludes Vollmer.