In an age where data-led decisions have become the standard, there are worrying signs that many finance chiefs have yet to plug fully into the data ecosystem.
A research report published by software firm Workday, The CFO-CIO Partnership, points out that more than half of CFOs are still basing financial choices for their businesses on gut instinct. The most common reason they cite for this is that the data on which they could be basing such decisions isn’t readily available to them.
Some CFOs feel like they’re living in the dark ages when it comes to getting hold of this material, according to Workday’s vice-president of product strategy, Tim Wakeford.
Their problems often stem from the technology that many companies use, such as data warehouses, he says. These are meant to store and organise the mass of data drawn from various operational and core processing systems.
“Creating a report or conducting financial analysis requires the extraction of data from the warehouse, but this data is accurate only at the time it’s loaded and refreshed from legacy systems,” Wakeford says. “Business intelligence tools that create reports and analysis based on the contents of data warehouses are highly likely to be out of date. This renders any resulting insights unreliable, making finance leaders feel that data is not readily accessible for them to make decisions at the point of need.”
Another barrier to finance’s digital maturity is the use of legacy transformation systems. Forward-thinking CIOs are viewing this as a chance to rethink their traditional enterprise resource planning systems by choosing agile new tech that streamlines IT functions and offers better access to data.
Organisations are also becoming increasingly complex, notes Mark Bodger, director at tech consultancy ICit Business Intelligence.
“Usually, the data to support decision-making is held in disparate systems, such as finance, sales, HR and operations,” he says. “As businesses evolve through organic growth or acquisition, the problem becomes more challenging to solve as each new area of the business brings its own data systems to add to the company’s stack.”
How can CFOs improve their working relationship with IT?
But the problem is broader than the simple inability to access useful data. In many instances, the CFO and CIO are out of step with each other on three key matters: data and insights; tools and technologies; and skills and capabilities. A survey published in November by FT Longitude revealed that full alignment between the finance and IT functions was lacking in 31% of organisations. It also found that 41% of CIOs did not participate in critical meetings concerning finance.
The C-suite colleagues seemed happy to blame each other’s departments for this dysfunctional situation too. CFOs cited a lack of financial literacy within IT while CIOs cited a lack of tech literacy within finance as major barriers to the digital transformation of their firms’ finance functions. It’s clear, then, that organisations need to equip both functions with the tools and skills they require to improve interdepartmental cooperation.
Wakeford has a straightforward recommendation for firms seeking to promote a better working relationship between finance and IT.
“It’s important to have people sitting in the CIO’s team who understand finance and people within the CFO’s team who understand the importance of data,” he says. “Having this level of common knowledge can help create a shared language between finance and IT, leading to more effective transformation.”
Getting access to non-financial data, too
Tamsin Ashmore, CFO of IT consultancy Ultima Business Solutions, argues that achieving the right sustainable commercial outcomes is less about aligning finance with IT and more about establishing the latter function as the foundation of business-wide support.
This entails “ensuring that all information and processes are fit for purpose and accessible as needed, forming the basis of intelligent decision-making,” she says. “Fundamentally, this is about the digitalisation of information and how it is used as business intelligence. The true success of business intelligence is how it is integrated across the enterprise. It should capture all data – financial and non-financial – and use this to create insights and even promote a culture of success.”
Ashmore adds that successful CFOs cannot rely on accounting stats alone. “In an agile, disruptive world, it’s the operational data that drives the right finance outputs and longer-term direction,” she says. “The CFO can be successful only if they are fully integrated across the board as a voice of, and to, the team. It is more important than ever to inform broader strategic thinking and influence relationships that matter, whether those are internal or external to the organisation, so that the right tools and insights for decision-making are available.”
Benefits of aligning finance and IT
There are clear benefits for the finance team in working more closely with IT. Improving access to data, and the quality of that data, is a key opportunity for CFOs and CIOs. By rethinking data, technology and skills, finance chiefs can help their businesses to generate and preserve value, according to Wakeford.
“By investing in appropriate systems, CFOs can instantly connect to data from any enterprise management, human capital management or customer relationship management system, so they can unify their ESG and financial metrics. The result is a complete and up-to-date view of performance against all measurement pillars,” he says.
Similarly, cloud-based systems offer agility and can quickly adapt to changes such as the enactment of new regulations.
Bodger says: “Ultimately, both functions exist to support the execution of the company’s strategic goals. The CFO will be looking to the IT team to help solve often complex problems, both in customer-facing operations and in back-office information systems. The benefits of an agile business to the CFO ensure that new opportunities are seized rather than lost because of a potential backlog of IT projects. As we have seen in recent years, those businesses that adapted quickly not only survived; they became market leaders.”
If they can work effectively together, IT and finance have the power to create a new C-suite ‘power couple’ and set the foundations for a data-driven enterprise. Establishing a clearer line of sight between the offices of the CFO and the CIO will give the business access to better, more reliable data that will complement financial information and, ultimately, enable the finance chief to make better decisions.