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In today's tough economic climate, managing risk has never been more important. This is especially true when it comes to handling the risk associated with regulatory non-compliance. Companies cannot afford to ignore the growing number of government regulations affecting their business operations -- their reputations and their bottom lines depend on it.

As companies grapple with the question of how to best manage regulatory compliance risk, many are turning to Software as a Service (SaaS) solutions as a way to address this issue in the most cost effective way possible. The SaaS model displaces risk with little more than a browser. There are no IT investment costs involved, the solution can be delivered much faster than other alternatives and it can easily be scaled to meet customer or regulatory demand.

Non-compliance with new and existing regulations can not only tarnish a business's brand, but it can also lead to a loss of customers and revenue. For instance, it was widely reported that RC2 Corp. and subsidiary Learning Curb Brands Inc. agreed late last year to pay a $1.25 million settlement for importing and selling Thomas and Friends Wooden Railway toys that contained lead levels well above the legal limit.

The Zhu Zhu Pets brand was recently blemished when a consumer group raised concerns just before the holiday shopping season that its products may not meet standards of the U.S. Consumer Product Safety Commission (CPSC). While those accusations turned out to be false and the popular toy did meet government safety standards, the mere accusation still caused a flurry of media coverage and placed a black mark on the Zhu Zhu brand image.

Unfortunately, this burgeoning of regulatory mandates, is coming to the forefront of the business community just as companies are having to tighten their wallets and wrestle with reduced budgets.

SaaS has proven to be an effective and affordable way to manage regulatory compliance, and it allows for a faster time to delivery than an internal IT organization could provide. For instance, a business could set up a community of thousands of subcontractors within merely 24 hours and then immediately begin communicating with those subcontractors about the need for them to comply with federal regulatory guidelines on various issues.

With SaaS, users gain visibility through real-time monitoring tools that show whether or not their entire trading partner community is adhering to specific regulatory initiatives. So the model is allowing these businesses to communicate with one another to be sure they and all their partners are in compliance with government regulations, without the enormous overhead that can often accompany managing such a task.

SaaS has moved beyond its early uses in basic applications such as customer relationship management, and it is now being adopted in a variety of new areas such as collaboration and IT service management, according to a Forrester Research study published last year. In fact, Liz Herbert, a senior analyst at Forrester Research, called SaaS applications a "game changer" in the enterprise software market.

"SaaS adoption continues to increase, and it is now relevant for a wide array of applications," Herbert said. "This new research provides strategic direction to end users evaluating SaaS technologies and planning their next decade of investments."

This model's affordability and ease of use has made it attractive to many businesses trying to keep up -- and comply -- with an array of government regulations. However, some are still slow to the table.

Federal contractors, for instance, are required to submit information on all of their subcontracting work through the government's electronic Subcontracting Reporting System (eSRS). But many federal contractors still manage their eSRS data via phone, email and fax. In some cases, this means that their subcontractors aren't even submitting the eSRS forms and the government is then imposing fines on the contractor for non-compliance.

However, the few federal contractors that are ahead of the curve and have moved to a SaaS solution to track subcontractor compliance with eSRS are finding several advantages. For one, they are able to educate their subcontractors on reporting best practices and, as a result, those subcontractors are following or adopting the eSRS reporting guidelines. Also, they have greater ability to audit and track exactly which subcontractors have (or have not) submitted required forms by the deadlines.

Additionally, these federal contractors are finding that they need fewer full-time employees to administer program compliance -- so they are saving money and minimizing interruption in day-to-day operations.

In other words, they are learning what many businesses have already come to understand: SaaS is an affordable and simple tool for lowering the risk of non-compliance at a time when complying with government regulations is paramount.

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