Legislation pushes up cost of financial IT systems

Legislative pressures are driving users to upgrade and enhance their financial and accounting systems more frequently, which is pushing up costs, according to a new survey from PMP Research.

Half of the companies polled by the Evaluation Centre reported having replaced or significantly updated their financial and accounting systems over the past two years. 

Some 28 per cent indicated they had done so within the past six months, while nine per cent had upgraded within the past year and 12 per cent over a one to two-year timeframe.

Around 46 per cent of respondents said that the main reason for doing so was the need to respond to changes in business processes and procedures.

A number of recent government measures, such as those to combat VAT 'carousel fraud', have had a substantial impact on how some companies operate.

Having to upgrade systems to cope with new working practices is replacing more traditional drivers such as software obsolescence (17 per cent), the need to fix bugs in the system (12 per cent) or the desire to keep up with the competition (two per cent).

However, companies are using the new systems to their advantage and offsetting the increased costs in other ways.

Organisations are responding positively to government requirements for more online filing, with 35 per cent reporting that they already file online in areas such as PAYE, Corporation Tax and Companies House information.

A further 22 per cent indicated that they are either planning to begin electronic filing shortly or will do so in the future.

The most compelling business benefits from online working are a reduction in transaction costs, better management information, operational gains since there is no rekeying of data and greater office efficiency respectively.

Companies are also continuing to extend the availability of key financial information to line managers.

Some 77 per cent said that it is now common in their organisation for managers to be able to access some of the data they need directly, rather than having to request a special report.

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