The CFO and CIO: establishing information strategy, architecture and processes
To read the full report from which this article is drawn, follow the link at the bottom of this article.
Our global survey of financial leaders, Partnering for Performance, found that only 49% of CFOs make a significant contribution to information strategy, architecture and processes. But accurate and accessible data feeds into financial and strategic decision-making and is therefore is a top priority. In this article we explore how CFOs and CIOs can collaborate to align the finance and IT agendas.
Information is available today in such quantities and in so many dimensions that it presents a major opportunity to drive improvements in organizational performance.
However, many companies do not manage their information — they mismanage it. Data can be trapped in legacy IT, or there can be multiple versions of the truth.
This is why organizations need:
- A strategy, which outlines the organization’s data priorities and where to focus effort and investment
- A coherent architecture to reorganize the tangled web of legacy systems to enable data to flow more freely across the organization
- Defined processes, covering activities from ensuring data accuracy to establishing its ownership
No individual functional leader can solve this challenge alone. “Information management should follow a multidisciplinary approach,” says Stephen Pearce, CFO, Fortescue Metals Group. “It cuts across a lot of areas, including finance, operations and marketing. It’s got to be both broad enough and specific enough to cut across each of those areas in a way that fits the strategy and allows people to get on with delivery.”
To realize the potential of information management, CFOs and CIOs need to collaborate to develop a strategic approach to solving business challenges through data.
Four success factors for CFO-CIO collaboration on information strategy, architecture and processes
1. Swap seats
Christine Ashton, Senior Vice President for Technology at Thomson Reuters, argues that CFOs and CIOs need to understand each other’s view as the first step toward alignment.
“There’s a dichotomy between what CFOs want and the on-the-ground complexity,” says Ashton. “In any large business, there are many, many thousands of transactions. From all of that data, the CFO wants to see the numbers at the top of the pyramid, the ones they need to worry about over, say, the next three years and to know that everything is in compliance. If you’re a CIO, that’s not what you’re dealing with: the situation isn’t that black and white. We have to build a better bridge from one world to the other.”
2. Commit to creating a single version of the truth
What does good alignment look like? In most cases, organizations should be moving toward a common source of data for both reporting and analytics. Doing this provides organizations with the opportunity to move from a reporting-centric approach to an analytics-centric one.
Christian Mertin, EY’s Finance Performance Improvement Advisory Leader for EMEIA, says: “In the future, new technologies, such as in-memory computing, will dramatically change the processes and role of the finance function. A single, central data architecture will enable better end-to-end decision-making, will drastically lower cost of ownership and will increase data accuracy. It’s vital that CFOs gain an understanding of these technologies and work closely with CIOs to assess their implications.”
3. Be clear about data accountability
Many organizations suffer from siloed data structures, with the critical information and data required to drive more effective decision-making residing in multiple spreadsheets, databases and other sources. Different definitions for data are often applied and insufficient governance is established around how data is entered and stored. When data resides across multiple regions and business units, it also makes it difficult to form a “customer-centric” view.
Chris Mazzei, Global Chief Analytics Officer, EY, says: “I see plenty of organizations where different functions think they own different parts of the data. Analytics is transformational in forcing organizations to share and govern data differently to collect it from across the business and convert it into valuable business insight. The CFO can add a holistic business perspective to overcome the functional barriers.”
4. Adopt a business-led approach
Because implementing a robust, scalable information strategy is such a huge task, many companies that try to tackle it as a whole do not know where to start. Others adopt a technology-led approach and focus on fixing problems within the legacy framework. Mazzei argues that both of these approaches are misguided.
Instead, he argues that companies should seek to address small, manageable problems first. “There will come a point where you can go from doing a small number of discrete projects to a much larger portfolio of initiatives across the organization,” says Mazzei. “That’s when you can take the leap to put in place enterprise-level teaming, infrastructure and technology.”
To read the full report from which this article is drawn, click on this link.