More stringent oversight of companies' financial controls isn't all bad news for business. It is certain to produce a gusher of new revenues for the usual suspects -- accountants, consultants, and lawyers -- who help companies with regulatory compliance. But others will get a fillip, too, particularly software makers specializing in business systems and possibly info-tech outfits that provide hardware. Across the board, companies report that they are inundated with pitches for goods and services related to the controls.
Without a doubt, the Big Four accounting firms stand to benefit most. Traditionally, they've used audits as a loss leader for other services. Now, with the avalanche of new work, they can both jack up their fees and earn more of them. As a result, they may rake in 50% to 100% more from fees next year -- and hang on to them in the future. But they won't have the field to themselves. The new mandates on companies have opened the door for the smaller accountants and risk-consulting outfits -- such as FTI Consulting Inc. and the Protiviti subsidiary of Robert Half International -- to pick up business.
Of course, much of the spending will go mainly to support the compliance effort. So the likes of Oracle, SAP, and PeopleSoft are tuning up their existing business systems to help companies document their work for auditors. Vendors such as Ariba and Concur Technologies that sell software to track and manage expenses also stand to sell more licenses.
But many smart companies are seizing the chance to improve their productivity by upgrading their IT systems at the same time. Therefore, says John Van Decker, an expert at Stamford (Conn.) researcher Meta Group, IT spending could get a $10 billion boost in the next year -- a quarter of the sector's expected growth.
By David Henry in New York