Japanese SOX solutions including BPM and SOA are very hot

徳田浩司(Koji Tokuda) 2006-07-30 08:35:29

J-SOX generates a big business opportunity

SOX (Sarbanes-Oxley Act of 2002) compliance is one of the most troublesome issues for all CEOs and CFOs of public companies in the US. They have to declare to the capital markets that the financial statements are correct. If it is discovered that they told lies, they are definitely unable to avoid going to jail. Now, the same law as US-SOX was established by Japanese government in Jun, 2006. In order to protect general investors, it is aimed at preventing from accounting fraud by public companies. Like the scandals of Enron and WorldCom, the former executives of Livedoor which is a Japanese major internet portal service provider like Yahoo Japan were arrested on charge of fraud. The law is so-called J-SOX (Japanese SOX; Financial Products Dealings Act of 2006) derived from US-SOX. It will be in force in April, 2008 (account end is May, 2009). All of the Japanese public companies are rushing to prepare for J-SOX, however, it is not so easy for them.

The reasons why I say so as follows;

1.Vague guidelines for J-SOX

The guidelines are not revealed at the time because of prolonging discussion in the “Internal Control Committee” of Financial Services Agency. US-SOX places a huge burden on all public companies. The major burden for SOX compliaince is documentation of all of the activities in a company. It makes additional cost of more than 3-5 million dollars. If J-SOX follows US-SOX as it is, it must arouses devaluation of all Japanese public companies and elevate the hurdle of IPO. Therefore, not only executives of Japanese public companies but also some of the Committee members insist that it should be much simpler than US-SOX.

Anyway, no matter how the guidelines should be, CEOs have to do something bothering additionally.

2.Unfamiliar with documentation regarding all activities in their firms

Liquidation of employees in Japanese economy is less than that of the US. Business process and business rules are handed down from person to person. They are not clearly documented in detail. There are very few manuals.

To prepare for J-SOX compliance, documentation is very important but it must be a bigger burden than US companies have.

3. There are few good tools for drawing workflow in Japan

For them, a workflow tool is very helpful to draw business flow and document business activities. But it is very difficult to get suitable tools in Japan. At most, MS-Visio or MS-Excel is used as drawing tool. They are not linked with IT foundation. Workflow management or BPM (Business Process Management) solutions is much better than drawing tools; however, they were not popular in Japan.

Solutions like BPM Suites includs Workflow Management, EAI (Enterprise Application Integration), ECM (Enterprise Content Management), Business Monitoring, and so on. They are based on SOA methods.

Are SOA and BPM acceptable for Japanese companies?

SOA is not so popular in Japan so far because most companies have been developing their own legacy system, in-house based development without using package solutions. It was very difficult to have them to take such methods and solutions. However, it can arouse huge demands for SOA and BPM solutions due to emergence of J-SOX. Like US SOX, in order to obey the SOX compliance automatically, it is necessary for Japanese public companies to ask IT supporting. They are gathering information regarding SOX compliance solutions.

According to Mr. Joe McKendrick on ZDNet Blog “Survey: SOAs have doubled since '05” “Study: SOA shaves costs five percent a year”, SOA is getting more and more popurar in the US. I believe that it will also get popular in Japan.

There are a lot of big opportunities to go to the Japanese markets related to SOX compliance solutions like not only SOA, BPM but also storage, recording, security etc.

Not so easy to penetrate Japanese market

To enter Japanese market, you should have some points below in mind.

1.Top-down approach is not the best way. Middle-up & down approach is better. You should not meet with top executives at first. It may causes bad result.

2.It takes long time to do marketing in Japan. But once one company’s competitors adopt new products and new methods, it follows them easily. It will be a big trend. Showing case studies to them is very effective.

3.The most popular solution in the US is not necessarily corresponded to the most popular one in Japanese market. It means that you have a chance to make big success even if you are not listed on top tear in the US. You should cooperate with influential system consultants, integrators and strong distributors. Direct marketing to users is not effective. When you speak with Japanese candidates as partner, do not hurry to make a contract. They start business without it.

You can read more articles of my blog (As they are directly translated by Google, they are not good English. But you can find what I would like to mention.)

BPM(Business Process Management), regarded as the key solution for J-SOX- (1)

BPM(Business Process Management), regarded as the key solution for J-SOX- (2)

BPM(Business Process Management), regarded as the key solution for J-SOX- (3)

J-SOX was passed ?Are you ready for J-SOX?(6)

Countermeasure for Chuo-Aoyama CPA Shock ?Are you ready for J-SOX?(5)

If you have any question or opinion regarding this blog, please feel free to contact me at;

jsox2006 at yahoo.co.jp

(Koji Tokuda;CEO of Fusion Reactor LLC in Sunnyvale)

追 記

9月1日追加情報

9月1日、旧中央青山の流れを組む、あらた監査法人と、みすず監査法人は業務を開始した。これは、旧中央青山監査法人の業務停止が8月31日で終了したことを受ける。

提携先である米国プライスウォーターハウスクーパースが「あらた監査法人」を設立し、900人強でスタート。一方旧中央青山監査法人は、「みすず」に名称変更し、た業務をを再開した。

みすずは、2500人。約3500人強いた旧中央青山監査法人のうち、約1000人が減少したそうである。一方、「あらた」は約900人でスタート。契約上場企業数はみすずがが3割減の580社、あらたが約400社だそうである。

旧中央青山の受け皿ができてひとまず安心である。ところでJ-SOX法であるが、対応の遅れは否めず、幸か不幸かガイドラインの発表も遅れており、中央青山の業務停止の影響は表面化はしていないが、どんどん対応が後ろ倒しになり、あとでそのツケが回ってくる可能性がある。

(徳田浩司 koji.tokuda at www.fusion-reactor.biz

Mr.Sam Nakane, formerly the CEO of SAP Japan review my entry and sent an email

Plese see it as following.

"Middle-up & down? No, Top-down is better! Email From Mr. Sam Nakane"

http://blog.japan.zdnet.com/tokuda/a/2007/01/middleup_down_n.html

And you may have some kind of risk regarding your business with Japanese companies because of J-SOX.

Please see my new entry as below,

"Business Checklist Working With a Japanese Company - May be requested for J-SOX compliance, Suddenly"

http://blog.japan.zdnet.com/tokuda/a/2007/01/a_business_chec.html

※このエントリはZDNetブロガーにより投稿されたものです。朝日インタラクティブ および ZDNet編集部の見解・意向を示すものではありません。

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