Smooth Integration between Finance & IT
Are you stuck in a cost cutting cycle driven by simple expense trimming that isn’t tied to the business’ outcomes and goals?
Unless you are like some companies where the Finance Director is also the IT Director, it can be hard for the two departments to work in harmony.
It is the job of the Finance Department to look at how the business can save costs and make profit, whereas the IT Department want their IT to run as smoothly and efficiently as they can with the latest cutting-edge technology, and this usually means spending money!
Gartner said in a recent seminar “Cost cutting has been a perennial challenge at a time when IT demand is increasing”.
Due to budget cuts the light at the end of the tunnel has been switched off! *small-flashing-lightbulb*
There are many different reasons for an organization to make cuts
Industry Contraction and Expansion – This is when prices within an industry rise or fall because of the phases of the business cycle in which the economy as a whole is either in decline or on the up. Companies will react to this by lowering or increasing their prices which has an effect on the end consumer. An example of this happening frequently is within the oil and gas industry where oil and gas prices rise and fall throughout the year.
Business Woes – This is the most common reason for cutting the budget. A company with a traditional product line where there is no innovation or change means that profits become stagnant, and a major turnaround is needed. This usually means a heavy investment into various sectors within the business such as R&D, Marketing and Sales. Some companies will not make the change and others may move budgets from other areas of the business to fund a new venture.
Low IT Credibility – This is when money is not the issue. It’s more about the value of IT and the business not seeing the importance that IT plays within the organization. Cutting costs is inevitable in most companies, but how much is cut and from which department can be changed if the value and perception of the department is changed.
“IT is critical to any business because anything that is done at scale is going to involve Information Technology“. Barb Gomolski, Managing VP at Gartner.
How can Finance and IT align?
Risk Strategies: The management of risk should be essential to your business’ overall strategy. Risk analysis should be about operating performance and technical failure but should also focus on cost overruns and regulatory compliance.
Choosing line-of-business systems: The selection and implementation of any new system is a critical stage in any business. You need to choose a system that works in terms of both value and cost for your business with a successful return on investment. As an IT professional, you will want to ensure the system performs as best as it can for the business and as a Finance professional you will want to ensure you aren’t spending too much or indeed too little on any system.
Paul Harding wrote for Computer Weekly:
IT’s commitment to keeping the operational side of the business running smoothly is critical, but the rest of the business should not be forgotten. Given finance’s influence on the organization and its involvement at board level, successful interaction between the two departments can only help to raise the profile of the IT department and prove that IT can talk the language of business.
What can be done to save costs?
Upgrades – Replacing or upgrading IT systems, infrastructure and software that are running on legacy technology is a good start to saving money. New equipment will perform more efficiently, increase productivity, and take less power to run. Business downtime will also be reduced saving operational costs.
Cloud Migration – Moving some systems to the Cloud will help streamline processes and day-to-day activities will become more efficient. This will significantly reduce operation costs as they become less manually intensive.
New Technology – If your company has plans to grow, ensuring you have technology that changes and expands as you do is a worthwhile investment. Think about sourcing technology that can handle large quantities of data, is flexible and scalable and of course can remain secure throughout its use.