Business Cases

15 January 2016 | Category: News

When the head of production introduces a new manufacturing technology, nobody expects nothing to change. But how do the CEO and CFO behave when new IT technology is introduced for the financial sector? Answers to three questions.

The IT departments and the offices of the Controller and the Chief Financial Officer (CFO) are currently buzzing. New releases in the field of modern information technology, such as Business Analytics-Tools and Data Warehousing, are on the wish list. And yet, some financial decision-makers are brooding and are in no mood to enter the Christmas spirit:  they’re worrying over who will foot the bill.

But first, an overview of the system: it is safe, according to the IT manager, the simplification of database technology, the reduction of data volume and a reduction of maintenance costs are welcome elements when it comes to reducing the total cost of ownership in the finance department. The significance in savings after the implementation could even reach a double-digit percentage.

But how does the introduction of a radically new information technology for finance affect the business processes and the organisational structure? Is it still worth it when all this is considered, asks the IT manager, who is taking very seriously instructions received from the head of production to consider the expenses incurred in restructuring the business processes and the company’s organisation. The IT manager, however, shies away from asking the superior CFO plainly whether he is really prepared to pay the necessary costs for the IT project in the finance department through improved efficiency in this same division that he oversees.

As he is debating this, the Chief Financial Officer is only one floor up, and he is also intently working on the question of the cost of the IT project- only from a different perspective. He has been tormented with this question for weeks: how much should and can the financial and control organisation grow in three to five years? Many factors are involved. And he has not yet taken into account the revolutionary changes in information technology in his costing models.

Could this be the wrong decision? It is imperative that the CFO questions the IT professionals again and in greater detail, because so-called Simple Finance projects now offer the possibility to radically reduce those operations that do not contribute to the net value of the organisation, in both the financial sector and the controlling department.

Just the consistent merging of the financial and cost accounting prospects at a data level will result in a significant purification. Does this therefore mean that the key to success is “less data processing, therefore more support in the decision-making process”? In principle, this makes sense and sounds convincing. However, it does only function if the processes and skills in the controlling department are redesigned consistently. Initial estimates indicate a potential for rationalisation of 20to 30 per cent.

The CEO’s office is another floor up and he is asking yet other questions. The newly launched big data project, for example, is causing him much concern. He had personally promoted the project. But for now the project is unfortunately leading to an immense increase in the number of meetings with nerve‐racking subthemes, as well as numerous staffing requests for new types of jobs such as data analysts. The managing director, however, does not want to occupy himself with this small stuff;  he wants to ask the right strategic questions, gain practical insight from the new transparency and entrench the decision-making process in the lowest possible level in his organisation. He therefore begins to reshape the management processes, to gain time so he can ask the right questions.

The well-disposed reader will realise that each function is working on similar problems – but is unfortunately doing so independently from each other and, until now, without any coordination. My advice, therefore, so that this business case study does not become the reality for your business, would be to address all three perspectives in one sitting: M for Management focus, I for Information acquisition and S for System costs.

These are three key areas for action for all the top managers who want something new in 2016.

Author: Andrew Mountfield,

Brightcon AG, Switzerland
Tel: +41(0) 44/400 95 01

Brightcon GmbH, Germany
Tel: +49(0) 7 61/4 29 96 49

Thought Leadership
© brightcon AG 2013