The need for improving financial reporting IT systems may first be recognized by your business' controller or chief financial officer.
A Tibetan proverb says, “The wise understand by themselves; fools follow the reports of others.” Does it seem like your controller – or chief financial officer or whatever they're called in your business -- is constantly meeting with the IT people? Perhaps it is because he or she sees danger in “the reports of others.” The interaction with IT probably means you have a good controller, but it may also mean your reporting systems are inadequate.
In today’s business world “the reports of others” are a critical part of day-to-day business for both the wise and the foolish. Most corporate job descriptions include reporting of some form, but for many small-to-medium sized businesses, the controller and IT manager are at the frontlines of the reporting that supports your company’s most important decisions.
A good controller has tremendous insight into financial reporting needs, and he or she often leads the charge for improving systems. The controller understands that both timeliness and accuracy are at risk when reporting depends on manual data entry and an ever-growing spider web of linked spreadsheets.
As reporting needs increase, the controller’s job becomes awfully scary if systems don’t help. Many top executives would shudder if they understood the degree to which the “information” that drives major decisions is dependent on the data entry accuracy or the Excel skills of their most junior accounting employee.
Having visibility into key budget and profitability drivers is essential for decision making throughout the company. Controllers often help define technology needs, collaborating with the IT manager to understand and deploy appropriate business systems. Good controllers often become far more systems-savvy than the average employee, or even the average executive.
Take, for instance, the case of a Chicago insurance company. An unexpected resignation left the IT organization with a void in their financial reporting function during a difficult time in their business cycle. The company recognized the need for good information and acted decisively, hiring an interim controller to work with IT to determine what steps needed to be taken as the company approached their next phase.
The controller, working within the IT team, immediately began visiting face-to-face with department leaders involved in financial reports and analyses. Those discussions opened a dialogue that had been absent and helped to break down longstanding barriers.
The controller’s communication skills and in-depth financial knowledge helped the company discover profitability issues that would have otherwise not been uncovered. For example, the company had a tendency to fill job vacancies with contractors, rather than full-time employees, because it was assumed to be a preferable, cost-effective way to manage short term staffing. Deeper analysis challenged some of those assumptions, and enhanced reporting was created to allow managers to see the relationships between day-to-day hiring decisions and broader financial results. The controller also improved visibility into other profitability drivers, such as costs associated with myriad vendor contracts and the IT department’s employee and consultant budgets.
This company understood the need for timely information to enable them to make good decisions that would drive results. Their story illustrates the unique role an experienced financial executive can play when working at a detailed level with systems people. Neither group can independently create timely and accurate reporting, but acting as the link between IT and management, a controller has the “hands-on” insight to ensure that systems meet rapidly changing business needs.
So if it seems like your controller is joined at the hip with IT, it may be time to look at your financial reporting systems to see if they meet your business needs. Today’s wise business leader recognizes that quality decisions depend on quality information and therefore reporting isn’t a technology project, it is a business project.
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.