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02/05/2016
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By Jeff Thomson, Contributor

How IT Is Changing The Finance Department

How IT Is Changing The Finance Department
02/05/2016
By Jeff Thomson, Contributor

How IT Is Changing The Finance Department

With the onslaught of big data, cyber security concerns and other technological innovations, the finance department is increasingly taking on more IT responsibilities. Just this past summer, Jockey International announced its CFO would also fulfill the role of CIO, while PepsiCo shared its CFO would be in charge of the company’s IT function.

In light of these shifts, it’s crucial finance professionals have a thorough understanding of IT, so they’re able to leverage its insights to provide organizational value and to ensure their skills remain relevant. For more insight into the connection between IT and the finance department, I connected with Ryan Fathers, CMA and Controller at Schukra of North America.

This interview has been edited and condensed.

Jeff Thomson: You’re the Controller at Schukra of North America and you also oversee the IT department. How do you ensure IT decisions are aligned with overarching business strategy and financial goals?

Ryan Fathers: Aligning individual department activity with overall business objectives is a common challenge. In our organization, the Controller is responsible for the financial consolidation of the operating branch’s annual strategic planning process. As a result of this role, I am well versed in the overarching business strategy and financial goals, both at a branch and corporate level. This exposure enables me to make decisions directly aligned with our ‘bigger picture’ objectives.  For example, if corporate focus is on improving working capital via inventory optimization, I’m able to align IT resources to support this effort. This could take the form of day-to-day decisions such as prioritizing manpower towards material requirements planning (MRP) troubleshooting, or launching an initiative to deploy a new software module that will significantly improve just-in-time material management.

The day-to-day activity is directly addressed by our IT Manager. I ensure that his decisions are aligned with our overall strategy and financial goals by setting relevant individual objectives for performance review purposes. Decisions that extend beyond daily operations, and those that require material financial outlay, are subject to a formal review process and paperwork that requires Controller sign off. This is supplemented by frequent leadership team meetings and forums that allow the IT Manager and me to assess ongoing business needs, and provide a joint response that aligns with overall company objectives.

Thomson: According to a recent report, many finance leaders see IT as a cost center, instead of an asset. Why is IT so valuable to the finance department?

Fathers: As the importance of data continues to grow, and as technology continues to penetrate nearly every aspect of business, I would argue the traditional perspective of IT as a cost center is rapidly evolving. The IT department is very valuable to my company’s finance function, specifically in the areas of data management and internal controls. We rely heavily on our business and systems analysts to address frequent changes in reporting requirements. This has ranged from designing automated dashboards for communicating key financial metrics, to developing data links between our ERP system and third-party financial planning software. Like finance, our IT group plays an important role in financial statement attestation.

In addition to meeting department-specific SOX requirements, our  IT team has been instrumental in bolstering various process controls and automating new compliance procedures via system solutions. IT’s value extends far beyond the finance group within my organization. Our operations team has been able to dramatically improve waste costs via live monitoring tools designed by our IT analysts. They’ve also targeted inefficiency gaps and improved inventory accuracy via connected equipment and corresponding reporting tools. These examples help illustrate how strategic IT investment can be directly traced to a financial return, or supported via cost avoidance justification.

Thomson:
In what ways can the finance team leverage IT insights to drive strategic innovation?

Fathers: The first step in leveraging IT insight to drive strategic innovation is to ensure your IT professionals remain on the cutting edge of developments within their field. My organization is committed to investing in continuing education so our IT group is able to recommend the latest technologies that could potentially add value to our operations. This investment, both at a branch and corporate level, has recently allowed us to capitalize on two key industry trends: mining big data and equipment connectivity. We are one of many subsidiaries within a global organization that has branches across various industries and regions, many of which are using unique ERP systems. Corporate IT spearheaded an initiative to consolidate all individual branch data into a central repository. This data is then fed into software tools designed to identify global synergy opportunities and improve areas such as sales and operation planning, customer and product profitability, and inventory optimization. At a branch level, our IT team is currently leading the implementation of HMI equipment and system connectivity that will supplement existing ERP data for the initiatives listed, and will be used to identify new strategic manufacturing opportunities. IT’s ability to collect data, standardize formats and implement the appropriate software tools has enabled finance, and other end users, to drive strategic innovation via fully optimized information capital.

Thomson:
How can controllers and other finance leaders better manage the risks associated with cyber security breaches, whether internal or external?

Fathers: Although adopting new technology typically drives improved efficiencies and cost reduction activities, it can also increase an organization’s exposure to information security breaches. In my experience, finance leaders play a very active role in mitigating internal risk by establishing a strong framework of controls. Our finance department works closely with the IT team to maintain various system controls such as segregation of duty reporting, exception alerts and tools for monitoring access to key financial modules. Network folders and financial spreadsheets are also subject to controls, such as user access restrictions and file password protection. These proactive measures have been paramount to limiting our exposure to fraud and safeguarding the integrity of our financial data.

On a broader scale, finance should be a key participant in a cross-functional team responsible for managing an organization’s overall information security strategy. Similar controls should be in place to protect non-financial information such as intellectual property, sensitive customer information and employee records. Financial leaders are ideal advisors in this capacity as they have ample experience safeguarding financial data. While protection against external threats requires the technical expertise of IT professionals, finance – and the organization as a whole – should support IT’s efforts by ensuring cyber security is a company-wide priority, and by providing proper resources and capital funding.

Thomson:
Earlier this year, IMA identified key technology trends for management accountants in 2015, including data governance, the cloud and the Internet of Things (IoT). Which of these trends do you believe will be most important in 2016 and how should management accountants prepare?

Fathers: Several of the trends identified by the IMA are at the forefront of current strategic initiatives within my organization. In my opinion, data governance is the most important for us, and potentially the most important overall. A significant number of today’s technological advancements focus on improving the availability and accessibility of actionable data, upgrading business intelligence and analytic tools, and safeguarding sensitive information. All of these trends have a common thread: data. As summarized by the IMA, a key component of data governance is managing the utility, integrity and quality of information. Pursuing several of the other technological trends listed is futile if the information finance helps optimize is flawed or inconsequential relative to strategic goals.

Experienced management accountants have the ability to be key contributors to an organization’s data governance strategy, and should take the lead in pushing a data governance agenda if one does not already exist. In doing so, they can help align functional area information needs with an organization’s overarching strategic objectives, and apply backgrounds in financial data management to ensure the information being extracted is of the highest utility, integrity and quality. By making data governance a priority, management accountants can help ensure the application of other technological trends adds the utmost value to their organization.


This article was written by Jeff Thomson from Forbes and was legally licensed through the NewsCred publisher network.

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