Finance and information technology departments within large companies are uniquely positioned to drive strategic value. Finance stewards the business, from its breadth of experience developing business cases with stakeholders to understanding intricate accounting details. Finance crunches the numbers and translates accounting into usable information for leadership and shareholders. Similarly, IT enables processes within the business and connects with customers, partners, and vendors through technological innovation. IT is uniquely positioned to determine how technology can be used to drive business value. Therefore, IT and Finance are well positioned to be the linchpins for enabling business strategy and gaining competitive advantage.
Unfortunately, Finance and IT are often overlooked and relegated to the back seat when strategic decisions are made. Overlooking Finance or IT during strategic planning has negative consequences later when delivering the strategy. Here’s how Finance and IT can be positioned to boost strategic partnership:
Strategic finance and IT partners support other functions in the organization by continuously improving and sharing knowledge. Executives, operations, or sales leaders repeatedly asking the same questions or asking for more information indicates a teaching opportunity.
In our experience, sales managers at a chemical company bemoaned every month about the accounting for sales accruals. The sales team did not understand how the accruals worked and why they fluctuated month to month. The finance team engaged with them to explain the sales accrual process. Once the sales organization understood the process, the sales managers worked with sales teams to change billing cycles and eliminate 80% of the accruals. As a result, the sales team better understood accruals and the finance team was able to spend more time driving strategic value. Teaching stakeholders how accounting and finance really work allows stakeholders to take preventative actions and find ways to improve the bottom line.
Teaching goes both ways. It’s difficult to correctly train stakeholders if the stakeholders’ side of the business is not understood. For example, an exploration and production company had an endless thirst for information IT could never seem to satisfy. The IT managers started spending time in the field through “ride-alongs” with field supervisors, asking questions to better understand the business and the interminable desire for information. Engagement in the field was a great way to build strategic relationships with operations (little secret: it doesn’t require an engineering degree to understand how to extract oil). Understanding daily activities and operational lingo helped with training and building rapport, ultimately allowing IT to develop a clear set of information requirements for operations.
Here’s the bottom line: stakeholders are more likely to include business partners in important decisions when partners understand all aspects of the business and less time is spent chasing down tactical issues.
Valued IT and finance business partners proactively identify and fix problems before small issues turn into big ones. Finance and IT can engage with stakeholders to understand pain points and solve the root causes of issues to prevent reoccurrence.
For example, an oilfield service company financial analyst was on a ride-along with a district manager. The district manager was vocal about incorrect financial reports, and he shared his displeasure with other district managers. The financial analyst asked to review the reports with the district manager. They found certain assets were incorrectly categorized, resulting in an incorrect field asset profitability. Asset categorization had a trickle-down effect on all district financial reports. Once corrected with a simple change by finance and IT, the district managers had renewed confidence in these reports. The finance team gained instant credibility with the district managers, and discussions with operations now focused on value-added activities.
Operations, sales, and executive teams rely heavily on various tools to work effectively. Tools include standardized financial reports, customer relationship management tools, and project tracking tools among others. Valued IT and finance partners are continuously evaluating the value these tools provide. Technology is moving fast with the advent of cloud technologies and apps. As a result, operations and sales teams often take it upon themselves to find new ways to do business.
For example, a manufacturing company’s engineers were struggling to use the tools IT and Finance put in place to track spending. These tools were hard to use and required IT to create new reports, and the engineers wanted to access data when they needed it and build reports on the fly. The engineers created a makeshift solution, making their own databases and reports to track spending. They needed a new, more optimal solution: a self-service, cloud-based business intelligence tool where data could flow directly from financial systems into a series of “data lakes.” Now, engineers could generate a report in minutes with real-time data. IT supported this modern business intelligence tool, and engineers now had immediate access to the information they needed. The improvements allowed IT to spend less time writing reports and focus on more strategic initiatives.
Strategic IT or finance departments recognize the needs of stakeholders and adapt quickly to provide the right tools to run the business.
IT and Finance becoming strategic business partners requires being proactive, taking time to teach, and providing the right tools. Trenegy has helped many IT and finance organizations become more strategic and ultimately drive business value. Contact us for a free consultation at info@trenegy.com.
