Rapid changes in the regulatory environment are viewed by CEOs as one of their greatest challenges, because companies have to quickly adapt their operations to comply. 

Mauritz Kloppers, PricewaterhouseCoopers SA Advisory senior manager, says that traditional business systems can take a while to adapt to and support the new regulatory changes and this drag can negatively impact on operations.
“We have recently seen the introduction of the National Credit Act which impacted financial services institutions and retailers. For example, one of our clients had to revert to a manual process to comply with the National Credit Act (NCA) and this manual process has now being followed for six months. To automate that portion of their origination process will probably take another two to three months; therefore, the NCA negatively affected the service delivery in their origination process for a total of nine months.
"An organisation with systems built around a more service- oriented approach would have been able to accommodate the new requirements imposed by such legislation far more flexibly than a more traditionally-designed business that sees itself as a system designed across divisions and departments.
“Service-oriented architecture (SOA) is not just about IT technology” Kloppers adds. “It is a conceptual or logical structural framework based on the concept of services – the many resources that support the activities in the processes of the business. In the SOA mindset, we disconnect or loosely couple the services from the processes, then granularise these services and even decouple them from the underlying supportive technologies.
"The systems environment, therefore, becomes far more agile. Services can be added, removed or changed independently from changes in underlying processes or technology and processes can utilize services in a different sequence to produce a different business result without modification of the underlying supports.”
Kloppers says that one of the foremost benefits of an SOA framework is that the organization can respond more rapidly to external changes in the environment. These triggers can be varied, but are frequently coming from changing or new legislation.
The next significant piece of legislation that will impact SA companies is the Consumer Protection Bill and again, businesses will need to reformat systems in order to comply. In traditional systems, lead times for change are too long and the design is more reactive then adaptable. Any change in the business requires the modification of several tightly-woven, interconnected systems.
"But in the SOA environment, processes are modelled and changed to incorporate new compliant services without changing the underlying technologies. Compliance with legislation or statutory requirements is defined as a specific service, which is standard across the organization and well embedded into the business processes. When legislation changes, the company can adapt without disrupting the systems below as the SOA concept is based on reusing not redesigning," he says.
It is not just the initial compliance with new legislation that is important. Kloppers says that organizations need to embed such compliance in their general operations and monitor and measure the adherence or compliance.
“The risk is that the business is initially compliant but over time adherence to the new legislation dwindles and the company will only realize that non-compliance is occurring when it is already a troublesome issue, and that would be too late.”
Kloppers says that, for example, lending institutions are probably at the stage where their loan approval processes are fully compliant with the requirements of the National Credit Act.
“But it would have taken some effort to make the required changes in a traditional-structure organisation. Over time, there is the risk that these approval processes will see instances of business units starting to use short-cuts, resulting in non-compliance with legislative requirements. Business activity monitoring as part of the SOA framework can ensure the environment remains complaint at all times as this will be embedded in the general operations.
“The overall benefits of SOA are that it allows a business to respond more rapidly to external changes such as new legislation. It also ensures the changes are permanently embedded in the business and facilitates easy modification when the legislation gets updated or amended. The ability to react quickly and effectively to such changes gives a business a strong competitive advantage.”