As organizations of all sizes endeavor to achieve their financial goals in terms of revenue growth and profit margin, CIOs must be able to understand not only the technology capacity of the business, but also the needs of their colleagues and cross-functional business leaders.
In Aberdeen's February 2011 research study Financial Planning, Budgeting & Forecasting in the New Economy, 23 per cent of companies surveyed cited poor IT integration and interoperability as a key challenge in deploying financial solutions.
Overcoming these barriers is critical for ensuring business continuity — allowing companies to capitalize effectively on the use of current and archived financial data. Consequently, 70 per cent of the top-performing companies in our study concentrate on standard processes that enable better interdepartmental communication for evaluating, selecting and deploying financial IT solutions.
Figure 1 depicts the top pressures faced by CFOs today, pressures that require the support of the CIO to address.
Figure 1: Leading Pressures Faced by CFOs, 2009-2011
Source: Aberdeen Group's annual research on Financial Planning, Budgeting & Forecasting (January 2009, February 2010, and February 2011)
A classic distinction among IT stakeholders includes:
1) the procurement decision-makers
2) the end-users
3) the implementers.
Life might be easiest if these three roles were one and the same person, but reality dictates that they are often different.
A typical financial application deployment, for example, would involve the CFO (budget holder) as the final procurement decision-maker, the financial staff (whether from accounts payable, accounts receivable, or the treasury) as the end-users, and the IT staff as the systems integrator and administrator.
The challenge becomes how to get all three parties to select, deploy, and use the technology effectively — all towards the best interest of the company.
In deploying financial management solutions, the top business objectives usually include improvements in:
- Financial planning, budgeting, and forecasting
- Procure-to-pay management
- Order-to-cash management
- Financial reporting and filing
- Tax management
- Risk management
To support these critical financial functions successfully, the CIO must overcome the deployment challenge by collaborating closely with the various stakeholders, by promoting open communication among the budget-holders and end-users, and by understanding the exact business-support requirements prior to implementation.
Armed with budgetary and business requirements, a CIO can then evaluate available financial solutions for best-fit.
The role of the CIO in managing financial solutions has become increasingly important in recent years.
In a dynamic regulatory environment, where financial reporting and filing requirements are constantly evolving, human capabilities are at a distinct disadvantage over software automation.
In our March 2011 research study on Enabling Compliance and Business Improvements through XBRL, for example, 55 per cent of companies are struggling to meet the upcoming XBRL mandate issued by securities and exchange legislators.
Consequently, 44 per cent of top-performing companies are depending on their technology executives to implement this automated financial reporting and filing system (XBRL) to ensure compliance.
Working in all global time zones around the clock, technology has facilitated the capture and use of critical financial information to increase corporate productivity and compliance.
Saving hours of paper-based transactions among their staff, companies can effectively minimize resource costs and manually-induced errors with effective deployment of technology.
Additionally, with multinational organizations supporting distributed teams, decision cycles can be greatly reduced with real-time visibility to centralized financial information.
Reduced budgets for IT initiatives are a common theme these days. CIOs can do their part in advocating for additional resources if they can justify a case for strong business support.
Thus CIOs should continue to seek and encourage the input of the financial staff to understand the core business requirements and budgetary constraints during their source-selection process for financial management solutions.
Furthermore, understanding the various business goals also allows CIOs to prioritize their IT initiatives. Finally, to ensure system compatibility and data interoperability, top CIOs seek further guidance from their IT constituents and solution providers to streamline the deployment process.
William Jan is senior analyst, financial management and GRC at Aberdeen Group