Finance IT Roadmap – your link between the company's three major strategies

The business strategy, financial strategy and IT strategy are all central to your company's ability to create value. However, many companies experience challenges in creating coherence between the three strategies, and that is a shame. This leads to a number of undesirable consequences – and there is great potential in getting the three strategies to work together. Basico's Finance IT Roadmap focuses precisely on this issue. 

The foundation for all companies' long-term success is a well-considered business strategy. 

The business strategy enables your company to react to a wide range of factors. It must be able to respond quickly to the market, supply and demand, economic upturns and downturns, political influences and other external factors.

The business strategy is the foundation upon which your company is built. From the business strategy, results are created which, to a greater or lesser extent, drive the need for a financial strategy and an IT strategy.

The financial strategy sets the course for many years of growth to come and drives and supports the process of optimising management reporting.

The CFO's goal should be to achieve the right balance between timely, accurate and insightful management reporting. Timely reporting is absolutely essential in a rapidly changing market – and the faster you can produce your reporting, the faster you can create value for the business.

Accurate reporting is a classic result of the 'Garbage in = Garbage out' problem. If the underlying data is not correct, then all overlying reporting is also incorrect. This increases the risk of making wrong business decisions. Insightful reporting is about having the right reporting that creates value for the recipient and drives the right behaviour; as opposed to heavy reports, endless PowerPoint presentations and inadequate decision-making foundations.

The IT strategy identifies the need now and in the future for infrastructure, hardware components, competencies and agility etc. At the same time, the IT strategy helps you prioritise in relation to the business' needs and the financial framework.

The IT strategy also defines the ownership of applications and services, licence management, hardware and software as well as the company's approach to new technology and development pipeline.

With this, the task is clear for most people. It is about creating the best possible business strategy, financial strategy and IT strategy – and then getting out there and implementing them.

The big challenge is simply that it is not quite so clear how you ensure that the three strategies support each other when they are to be implemented in practice.

Many CFOs end up with a long list of systems, applications and underlying finance processes that do not work as intended. Employees cannot use the technology or do not understand what happens when reports fail, data is not correct, timing is wrong, or trust in the conclusions is lost. This is naturally extremely critical for the important decisions that must be made based on the reporting – and for the critical feedback to the business that is necessary to be able to change course in time.

A classic example that most CFOs have faced is a financial development project that goes over budget, fails to meet the timeline, increases complexity etc. The original purpose of the end product was simplification, standardisation, cost savings and user-friendliness, but it ends up becoming a heavy, mastodontic tool that is so advanced that "it could probably launch rockets".

The primary reason for this divergence is that the project's requirement setters are given free rein without a strong coordinated effort from the project manager across Finance, IT and the business.

This typically reflects a lack of coordination between the end user's needs, what Finance is willing to pay for, and what IT is capable of building, as well as the underlying project competencies.

Another well-known example is the expensively purchased BI platform that fails to meet expectations. The reports are too heavy, data load times are too long, and no one understands the technical setup, so when something goes wrong, it requires external experts to resolve the issue. Regardless of the reason for the missing link between the three strategies, the result is the same. When daily pressures mount, there is no time to fix the underlying problems – and you end up building workarounds and other manual processes rather than fixing the inadequate integration, duplicates in the product hierarchy, deficient data in the consolidation matrix or similar issues.

It is Basico's experience that a lack of focus on the interplay between the three strategies drives inappropriate behaviour – and in the worst case, can be limiting to your company's potential.

By focusing on the CFO's area of responsibility and the systems that support the finance function, we can help identify the most vulnerable areas where the CFO is not getting full value from the underlying IT platform and is thus missing the opportunity to add value to the business.

Finance IT must be the leverage that the CFO uses to execute the financial strategy. If the CFO does not have control over their IT support, it becomes, if not impossible, then more difficult to support the business strategy.

Basico's Finance IT Roadmap (Figure 1) is a framework for reviewing the underlying applications that support the CFO's area of responsibility.

The framework is based on an analysis of the IT platform and the effect that applications such as ERP, CRM, BI, workflow etc. have on the activities and deliverables carried out by the finance organisation. In addition to applications, the general foundation that supports finance is analysed, such as master data, system integration, governance and IT user skills within the organisation. The roadmap provides a recommendation for the company's vital finance applications as well as the supporting foundation with a view to upgrading, replacing, retaining or discontinuing their use.

When we help digitise and automate finance functions, we optimise applications and tools that meet your needs. We do this in a way that ensures the solution provides the best possible support for data, processes and the people who work tirelessly behind the scenes.

The business strategy, finance strategy and IT strategy are all central to your company's ability to create value. Therefore, Partner Thomas Malmros has written this article, which introduces you to Basico's Finance IT Roadmap, focusing on how you create coherence between the three strategies.