Insider Business Club: IT and finance

Do finance directors have the necessary IT skills to drive their own
business forward?

John Tate, IT adviser to the Charity Finance Directors Group

We are fortunate today in that, in the majority of cases, finance directors have
experience of a number of IT projects, often in different organisations.

So if we compare ourselves to say five or ten years ago, we have got a much
broader range of skills and experience. But those that choose to follow the
research work that gets done in the IT sector will recognise there are still far
too many IT projects that fail to deliver what is expected of them either on
time or to budget.

Figures tend to start at about the 70% mark for the number of IT projects not
achieving what they set out to do, and in some cases research reports suggest
90%+ fail to achieve what they set out to do so the first thing a good finance
director or finance professional needs is a healthy level of cynicism.

Recognising the chances of the project going well are statistically a lot
less than the project going badly. I think having recognised the scale of the
challenge I’d kick off with my organisation’s business strategy and I would
place anything we do with IT clearly in the context of that.

If your organisation hasn’t got a well put-together and communicated business
plan, or strategy, don’t start doing too much with IT at a strategic level.

But off the back of a [planned] business strategy have a good look at IT and the
opportunities for technology in your organisation. Look at the things it can do
to improve how you work.

If you can get the board and the senior management team, as well as the
staff, behind the project and can give the right level of focus to an IT project
you can come out and make something work. Unfortunately with Y2K projects, where
the board and staff were involved, organisations ended up with exactly what they
had before so it was rather unrewarding. At least it showed and set an example
of how IT projects can work and some of the criteria that you can judge whether
a project is going to succeed or not.

Maybe you should take out the word IT from the topic and ask whether [finance
professionals] have the right skills in general. Clearly while there is a whole
range of different challenges to select and implement new technology, it has got
to start with a strategy that looks to achieve business objectives.

I won’t go through the complete list of all the skills an FD needs to oversee
the successful selection and implementation of new technology. Clearly knowledge
of what technology can offer is one, but in my opinion right at the top of the
list what is required are change management skills.

How IT savvy must FDs be? What have they learned from the challenges
they’ve faced?

Tim Lennard, business planning manager, Microsoft

We didn’t want businesses going down in the way doommongers had predicted
over Y2K, but that issue was a wake-up call for finance and IT in particular and
it raised a lot of issues and questions which I think have actually put people
in a much better state of health: given the whole notion of security of your
data, your business systems really came to the fore.

To a large degree that [focus] has remained which I think is good news. I
think some of the issues companies unravelled during that preparation phase have
stood them in great stead.

Lots of companies were sitting on very old code bases, programmes that were
written over a period of time, had been tied together in various ways and in
many instances weren’t appropriately documented, Y2K fundamentally exposed the
risk for all those organisations and I think what we’ve seen since that time are
businesses far more disciplined around that exposure, so there are more disaster
plans in place for organisations for example.

There is typically an improved understanding of the appropriate licencing of
software and also the documentation of bespoke programming. It has put us in a
better state of health and readiness and made us smarter in terms of investments
that finance directors in particular are making going forward.

IT is also more pervasive in business and even in our personal lives,
therefore it is, frankly, difficult to make good decisions unless you have a
good handle on the technology implications of those decisions you make, so I
think to that extent that people are getting up to speed. The better we all are,
the better the decisions will be made.

But all business are different, whether one has a dedicated IT department and
if IT reports into the finance function – or if IT reports to the MD. All these
things come into play in determining the depth of skills the finance function
needs, compared with just an effective collaboration between finance and the IT
department. I think that is a fruitful area for understanding and discussion.

But it is all about spending very wisely and back to our earlier points, being
aligned with your overall business objectives.

The role of finance is critical in helping to orchestrate that overall
business strategy and IT strategy needs to sink very much into what the business
objectives are. When projects go awry they tend to be ‘runaway’ projects if you
like, which are inconsistent with where the rest of the business is going and
where you haven’t had buy-in from the rest of the organisation.

Chaired by Kevin Reed

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