Turn data regulation to your advantage
James Sherwood looks at both the burdens and the opportunities that regulation presents for the channel.
It sometimes seems as if the channel and its customers are being swamped in a flood of data and finance regulations.
Nine out of 10 executives expect their business cost to rise over the next three years as a result of business regulations, according to recent research from the Economist Intelligence Unit (EIU).
The EIU conducted a survey of 230 senior executives from a cross-section of global firms, which found they believe that data regulations help to stifle innovation and regulation is the biggest potential threat to their businesses, ahead of IT network failure, financial problems and terrorism.
Gareth Lofthouse, global risk briefing editor at EIU, said: “Businesses feel there are too many complex regulations to deal with. The regulations are becoming more invasive and prescriptive, and personal accountability can be severe.
“It is proving extremely difficult to keep up with the regulations, and businesses find it harder to be able to say they are fully compliant,” he said.
And businesses have little option but to comply with the regulations imposed upon them. Chris James, European marketing director at Overland Storage, which has so far spent more than £1m of “dead money” on internal compliance, said resellers can come up against a multitude of problems in their attempts to make sure they are compliant.
“The more businesses learn about a regulation, the more complex they find it becomes. The result is that businesses become overly paranoid about regulations, which can lead to a stifling of funds in areas such as research and development,” he said.
In the survey, more than one third of businesses said regulations have stifled innovation, and admitted that they could potentially become less competitive against rivals as a result, according to the EIU.
James added: “There are two categories of reseller when it comes to regulations. There are those that don’t care, which tends to be SMEs that are not affected by regulations very often, and those that have a reasonable level of understanding.”
Data regulations have repercussions for businesses on all internal levels, including the IT department and chief executive level. The most notable regulation of late is the Sarbanes Oxley Act, which aims to regulate accounting methods.
However, Tony Cotterill, managing director of BridgeHead Software, said resellers should break compliance up into sections, beginning with those regulations that impinge on their working practices most directly.
“Resellers should look at their internal and external data regulation requirements, and then at how these affect what data is stored, for what length of time and on what medium. Resellers can then select a technology solution based on this assessment,” he said.
The Data Protection Act and Freedom of Information Act were recently named as two of the major incentives for the data strategies of 265 UK IT executives, according to a survey conducted on behalf of BridgeHead Software.
While such regulations may spur resellers to initiate their own data storage and archival policies to aid data compliance, many also now realise that regulations can lead them towards customer-facing opportunities.
“The fastest-growing applications are CRM and email. As data volumes expand the amount retained for compliance also increases. So from a business opportunity point of view that is very positive,” said James.
In the months following the establishment of the Freedom of Information Act in January, the major storage vendors positioned their products around compliance.
Hewlett-Packard recently released two fibre-attached disk drives, which it claimed allow end-users to segment information according to business relevance, as well as achieve faster retrieval speeds.
Removable storage media vendor Imation also recently released a Linear Tape Open third-generation Worm cartridge, which it has claimed enables end-users to meet increased data retention and archival requirements, owing to the IT market’s “added focus on regulatory compliance”.
Cotterill reiterated James’s view that data regulations have provided resellers with up-sell opportunities.
“To be aware of all the data regulation acts that have been passed is a full-time occupation. Resellers could train a handful of sales people on the relevant Acts, and then use these skills to provide a consultancy service, hence making some money out of the situation,” Cotterill said.
Lofthouse agreed: “It is feasible for resellers and consultancies to benefit from regulations and jump on the compliance bandwagon, which will lead to storage and archival opportunities for the channel.”
When providing IT products or services to international businesses, resellers must also recognise that data regulations can affect an end-user’s data retention in different ways in each of the countries it operates in.
Astley Gayle, product marketing manager at storage distributor CMS Peripherals, said: “There can be lots of red tape when dealing with international companies. We have sent out formal letters to our resellers as part of ongoing efforts to keep them up to date with compliance.”
While it is clear that the channel can both benefit from and be hampered by data compliance regulators, it is certain that more regulations will be created in an effort to control and regulate our increasingly information-driven society.
Lofthouse said: “The regulators are pausing for breath, but they are beginning to realise that their efforts to regulate can be damaging to business. What businesses must do now is to work out how the regulators will move next.”