One primary reason companies take on transformational
efforts is due to regulatory and compliance demands.
Business transformation has become commonplace
because of regulations which developed from the financial crisis of 2007-2010.
Since 2008, numerous pieces of legislation have forced corporations of all
industries to transform major parts of their business, if not their entire
business. Regulatory and compliance acts are now driving companies
towards transformation because of even stricter rules.
One of the most impactful pieces of legislation
is the Dodd-Frank/Wall Street Reform Act. The Act, enforced in 2010, has
brought transformation necessity to many industries, including Banking,
Financial Services, Energy Trading and Insurance among others. The Act
has forced companies within these industries to implement a number of changes
ranging from re-engineering investment and banking rules, restrictions around
trading of commodities and derivatives, and monitoring aspects of the insurance
industry, including gaps in regulation of insurers that could contribute to
further financial crisis.
These rules can drive a number of changes across
an organization, including but not limited to:
- Modifying, developing, and/or purchasing new technology
- Improving processes that have to be absorbed and integrated within operating models
- Facilitating changes in the company culture which must support and align with the transformation
- Modification of intellectual property, including employee knowledge bases.
These changes are usually necessary for
companies to maintain compliance with the legal and regulatory parameters of
their respective industries. Non-compliance often becomes expensive based
on paying for fines or other legal battles.
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