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The Time is Now

Mike Boyle, the lead partner for PricewaterhouseCoopers’ CFO advisory service in the U.S., says that after delays — caused by Y2K and M&A’s — it’s finally time for IT and Finance to get serious about communicating more efficiently.

IT-FINANCE: Where are we in the drive to have finance and technology departments on the same page?
Boyle: I would say were at a possibly at a tipping point…Where I see convergence now, finance needs to step up its game and deliver more insight and be a more strategic partner. Since the 1990s, a number of things have sidetracked companies. Market downturns, technology busts, SOX and Y2K threw wrenches into realizing the final end goal of creating deep insights into business performance and corporate performance and [turning] insight into better performance. Balanced score cards, driving better transparency, that’s been all talk. Finance needed to address needs other than its own. To become a business partner in today’s world really requires a strong understanding of what the technology is capable of.

IT-FINANCE: Why hasn’t it happened to date?
Boyle: To some extent M & A have set the most advanced companies back a step or two. The investment in ERP and technology now [in light of the M&As] have infrastructure in duplicate, or multiple sets. Companies are still constantly fighting the battle of how to bring them together and have finance deliver value to the business. We always had ERP, now we are seeing a lot more investment in governance risk and compliance, tools for finance and risk officers to manage and address risk and compliance, SOX and other much broader compliance efforts. And the other piece of the new frontier is business performance or corporate performance applications that are more attuned to what finance needs.

IT-FINANCE: What is the goal?
Boyle: A good financial officer who understands details, what drives the business, can measure performance in HR, operations, sales, customer and competitor information, geopolitical information and environmental data and pull the data together to get the big picture. That is really done through technology.

IT-FINANCE: How close are we?
Boyle: What you have right now to varying degrees is technology expertise sitting in finance. In the next few years, finance will develop tools internally and license some from companies like Hyperion and Cognos. Many PC-based spread sheet applications can be used to do analytics, capture data from various sources and do whatever manipulation is necessary but it is not cost-effective. It is very limited.

Where we really see the need is for finance to step up. If you look at a shop floor guy or logistic person [or a person from another department], that person is capable of understanding much more of technology orientation in that function, understanding what to do, than the finance person. Finance has less of that. They’re not driving or thirsting for technology information, the knowledge they should have if they want to really deliver.

If I have a problem in logistics, there are people in that function who are very knowledgeable and understand the systems they are using. Their understanding of sophisticated applications is very strong, whereas the level of understanding of the tools and applications finance uses isn’t as high.

IT-FINANCE: So finance people have less information than their counterparts in other departments?
Boyle: Existing ERP [and other programs] have features and functions that are not used, some of which entirely and specifically deal with finance. There are features built in by finance to deal with more efficient and effectively inter company communications. They are not turned on and implemented. The tech application IQ isn’t where it should be.

IT-FINANCE: How do you address this gap?
Boyle: The first point is to depend much more on technology companies to deliver the kind of training and insight to allow them to upgrade finance capabilities and increase their technology IQ. Have them come in and talk more about the technology and how to better ourselves with the technology. The second thing is bringing more technology-oriented people into finance. Some of that starts with a younger generation that is much more attuned to technology. They should be combining training, management programs for very experienced finance people.

IT-FINANCE: Where do you start this educational process?
Boyle: First, I’d love to understand how much IT has determined or defined or understood the requirements of the function. Could I go to the finance organization and with them define the top priority requirements that companies rate high for use of technology in finance and whether IT knows about them and how well they are meeting those needs? Those companies that complain the most probably have the largest gap and probably don’t understand requirements. They have no agreement on the requirements.

This is not anything new. IT or R & D should sit with finance to understand what is going on, what they want. They should sit with IT and come up with a collective solution.

IT-FINANCE: Is this finally beginning to happen?
Boyle: It does seem to me to be a period of some quiet. The M&As have quieted slightly, though there still are some transactions happening. SOX has curtailed a bit, there is a tight credit market and pressure on spending. That is going to start a period of reflection. A lot of company do finance transformation. For example, when an application company designs a solution for a plant operator in which People Soft or SAP solutions fit with existing ERP applications and are designed that meet the company’s needs, the lights go off and investments are made. The companies best positioned to take advantage of that are good already BUT need more comprehensive solutions to take them to the next level.

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