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5 Steps to Fixing the Marriage Between Finance and IT

"Every time you feel yourself being pulled into other people's drama, repeat these word: Not my circus, not my monkeys." -Polish Proverb

Anyone whom has spent time in a larger enterprise and had some cross-functional responsibilities can probably relate to the advice above about steering clear of dramas and circuses. At an individual level, following this advice makes sense, but from an enterprise viewpoint, following this advice can be toxic for the improvement and advancement of the organization.

Drilling down further, the most typical divide I have seen across corporate functions is the relationship between Finance and IT, as neither wants to cross the line into the other’s business. Communication is lacking, support is not bi-directional, they are growing apart, not making each other better and all the signs are pointing to serious marital problems.

But for all the current problems, Finance and IT need each other now more than ever especially as the pace of markets and technology continues to increase and evolve. 

Innovation in technology is changing everything (digital movement, internet of things, Artificial Intelligence, Big Data, etc.) and although this should not be news to anyone, the reality is that there are significant gaps within organizations as they look to capture opportunities and manage the risks that are coming.

A useful analogy might be to compare a corporation to a group of explorers ready to set sail on a new journey targeting new lands where the CEO/CFO is the tactical strategist choosing the destination and best route. The finance team are the sailors and the IT team are the ship builders. IT builds a ship based on the destination, path and various requirements to get to the target destination.

The problem today is that the sailors (Finance) are not appropriately communicating their plan, course or requirements and as a result, the ship builders (IT) are building ships that are either built from the wrong material, are not capable of handling varying conditions or just don’t perform. Building integrated planning and analytical capabilities that can deliver in different conditions or change, requires careful planning.

An example of this disconnect is often found in Business Intelligence tools where IT purchases tools in order to improve reporting capabilities. Then IT builds reports and shows them to Finance and Finance will typically say, “that looks nice, but that is not how we view the business.”

It’s not uncommon for large enterprise groups to have 6-8 reporting tools, all of which do generally the same thing and none of which are providing real value toward steering the financial ship. This is but one example of the disconnection between the groups.

From a leadership point of view, the practice of taking a “mulligan” on analytical tools is tremendously costly, frustrating and prevents true tangible transformation.

The following five principles will lead to a more collaborative approach between IT and Finance by delivering sustainable and flexible analytical solutions which will ultimately lead to better decision making across the enterprise:

1. Review Processes and Identify Enablement Opportunities

Every business planning activity typically has a process. The problems that typically exists are:

  1. Processes aren’t documented
  2. Finance teams do not understand the full processes
  3. These processes are not explained clearly to IT teams

This leads to all sorts of problems with requirements-gathering all the way through to delivering solutions that don’t align with expectations of what Finance needs. Map out the process, print it, show it to people, discuss it, identify gaps and only then move forward with discussions of solutions.

2. Cross Functional Education for Finance and IT

For IT groups that support finance,  it makes sense to have these resources do a few shadowing sessions with Finance so they better appreciate the daily activities that Finance performs (building models, running reports, sharing reports, putting together PowerPoints, etc.). IT teams are typically very good at solving problems and automating manual tasks, so simply setting up some shadow sessions over lunch may just lead to potential synergies for Finance. Likewise, educating Finance on how IT works, what constraints they have and how they manage their business will create a better appreciation for both sides.

3. Establish Innovation Cadence

I have seen some organizations set up a monthly Innovation meeting for Finance (led by IT) where they introduce Finance teams to new innovative technology, new systems and new solutions that are being implemented and a roadmap for the future. This really improves collaboration and communication across the groups and helps Finance understand how IT can be the Innovators that improve capabilities and help the business adapt to change. If the technology roadmap for change doesn’t explain why it’s good for the enterprise and for the Finance team, then it needs to be revised.  Also, we know that CIOs and CFOs are meeting to discuss strategies, but this collaboration is not trickling down to the people actually doing the work, which is what has to change.

4. Establish IT Business Partner Network

For larger organizations, establishing an IT Business partner function works well as these partners can sit between IT and Finance and effectively cover the three suggestions above. They work to understand both Finance needs and IT capabilities and put the two together. They are the equivalent of translators and while their value often goes underappreciated, they can align both functions and move both groups in the right direction. If the budget exists, consider adding people that can talk to finance about balance sheets and cash flow and then turn around and talk to IT about choosing between a relational database versus OLAP.

5. Create Cross Functional Incentives for Project Work

Here is a scenario: A problem is identified, requirements are gathered, a technology is chosen and the implementation begins… only to see the wheels fall off a few months later as deadlines, deliverables and budgets are missed. We’ve all seen this story play out. What I haven’t seen is a framework that rewards both Finance and IT for the delivery of successful projects. Designing something that collectively puts both groups on the same team would certainly go a long way towards improving collaboration and camaraderie and giving both sides a little more motivation to ensure success.

Financial Analysis is hard work. Aligning IT across an organization’s people, processes, projects and systems is also hard work. Doing each in a vacuum and not collaborating actually makes the whole thing a lot harder. By incorporating some of the recommendations above, organizations will be better aligned on the analytical requirements for building the right solutions, tools and guides that will enable them to reach their target destination.

Article written by Drew Brieman
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