IT and Finance: A Business Clash of the Titans?
Throughout time there have always been opposing, or clashing, forces: oil and water; stripes and plaids; Democrats and Republicans; and the New York Yankees and the Boston Red Sox. Sometimes these opposites find a way to work things out (oil and water are useful ingredients when baking), and sometimes they do not (stripes and plaids just don’t mix… ever).
When it comes to business, the great divide between IT and finance is a key example of how two entities can clash. IT managers tend to think of financial executives as bean counters who are only happy when they are cutting budgets and saying “no,” whereas financial executives have a propensity to think that IT managers spend money like crazy on unnecessary gadgetry and don’t know how to bring projects in on time or on budget. Though these two parties work closely together, often with IT reporting into finance, and both have the best interests of the company at hand, they have difficulty when it comes to holding an effective dialogue and making their relationship work.
Today more than ever, the right IT investments are helping drive business initiatives, enabling companies to reduce costs and exceed the competition. Even the IT-leery financial executive knows that the right IT strategy and investments are essential, and the finance-weary IT executives understand the importance of cost-efficient business planning, but when the money people and the technology people can’t communicate effectively, the results can be detrimental. How then, can IT and finance start a productive dialogue, before their opposing forces turn into the “Clash of the Titans?”
Mix and match
Though you may think that your ideas and opinions greatly clash with someone else’s, often you will find that you share some common ground. Sure the Yankees and the Red Sox are baseball rivals, but in the end, they both love baseball. The first step in bridging the divide between IT and Finance is to sit down and discuss each other’s needs – find that common ground. In taking this step you will likely find that you see eye-to-eye on more than you thought you did.
Before you sit down with your opposing force, here are some things that you should know:
- Finance Managers wants reliable systems that produce accurate, valuable data: While the pain of insufficient systems can be felt company-wide, the finance group faces additional challenges when systems fail. They need to be confident that the company’s systems and data structures will ensure the accurate financial and operational reporting that are vital to running the business. It’s equally critical that core systems, like email, don’t fail and affect the entire company’s productivity and customer relations.
- IT Managers want to see that the importance of IT and the infrastructure is understood: IT can facilitate mission-critical activities such as faster closing processes, improved customer service, better inventory control, and the development of new products and services that wouldn’t be possible without a strong IT capability. A solid IT infrastructure is necessary to enable these higher value contributions. Finance support of infrastructure investments that can provide this foundation and reduce the cost of computing is critical.
- Finance wants accurate IT budgets and projections: The Finance group has good reason to be skeptical. According to the Standish Group, only 16 percent of IT projects are successful, whereas 31 percent are canceled and 53 percent are challenged (over budget, late, poor functionality). In order to manage expectations, finance wants IT to present a realistic budget and project plans. Supplying finance with an understanding of all costs associated with projects (future upgrades, maintenance fees, etc.) is also essential. Finance wants IT to understand how the business makes money and be able to explain the business value of IT investments in that context.
Work together to make IT decisions
IT needs to have other parts of the business involved in making IT investment decisions: Decisions about IT investment should not be made by the finance group alone. Other functional areas should establish objectives and inform finance’s thinking. Key decision makers must be engaged in discussions around priorities for new technology investments. The reverse is also true. As IT works to support the business, the business unit managers need to be accountable for commitments in cost savings or revenue increases they made as a part of the business case for IT investments. Finance needs to recognize that IT is not responsible for the failure to meet business objectives outlined by business unit leaders.
IT and Finance are at a good starting point. Each group tends to value analysis and measurement. And as with most relationships in life, communication is the key to success. Being clear about what each party needs to be successful is an important first step. From this starting point of trust, they can create an agenda that combines spending discipline with an IT-plan that supports the business objectives. Yes, the Yankees and Red Sox will always have a rivalry, and oil and water may not always mix, but when you recognize how to find common ground and understand each other’s needs, the impact can be powerful.
Lisa Metcalfe is a Regional Practice Leader in the Technology Leadership Practice of Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership nationwide.