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Financial sea change

Financial sea change

Transparent and flexible business processes, along with a shift in reporting lines, have brought new challenges to information and finance executives. A panel of CIOs and CFOs share their views on how to deal with changes in the networked enterprise.

Technology will transform organisations over the next five years, with the challenge for New Zealand business being to ensure their core systems are stable, flexible and up to the task. As well, CEOs and boards of directors must be convinced of the need to replace legacy systems so staff can work more efficiently — a daunting task that is still considered a potential career breaker for CFOs and CIOs.

In a recent roundtable organised by finance and accounting recruitment agency Robert Half, a group of CIOs and CFOs shared their views on where technology will take accounting and finance in the next five years, and how to prepare for a sea change where staff will be more IT savvy and technology will have a much greater impact on in-house functioning.

Mark Benjamin, CFO, Excell Corporation says new terminology largely classified the CFOs and CIO around the table as ‘digital migrants’, while the next generation, who had been bought up with technology, were ‘digital natives’.

“They will come with technology as a core skill set, adding all the other skills such as project management and business acumen as needed. These people will be far more aware of how they can use IT to make business improvements.”

You want it when?

Pieter Bakker, group manager, information technology, Ports of Auckland, says there is a growing demand for on-line, real-time solutions. For instance, CFOs are no longer prepared to wait a month to know the state of finances, but want access to intranets for daily profit and loss balance sheets.

David Alley, CFO with training company Competenz, says the key was being able to work out the indicators and how to capture the information fast enough. “A lot of systems need to catch up, especially in service and information delivery.”

Improved output was vital for New Zealand’s future says Terry McLaughlin, CEO, New Zealand Institute of Chartered Accountants.

“People who were reluctant to invest would need to get over that hump. New Zealanders worked the hardest in the OECD,” he claims, “but we’re the least productive.”

Future view needed

David Ingram, CFO of Zeacom, warns the sea change ahead meant technical people would be doing less transactional work. There would be more integration between systems and more timely access to data that would be entered once, delivering a better overview of business performance. “There will be more opportunity to see what’s likely to happen in the future, rather than analysing what happened in the past.”

The more tech-savvy generation raised on Web 2.0, Facebook and mobile technology expected better reporting tools, and the challenge, says Excell’s Benjamin, is how to deliver these with business integrity.

Kelvin Wong, CFO of the Institute of Chartered Accountants Institute, believes the finance team in particular was missing out on more user-friendly tools that made better use of graphs, tables and images.

To build next-level tools, including optical character reading of invoices, however requires a stable technology platform. Pieter Bakker of the Ports of Auckland says many mid-tier companies had invested in ‘the big end of town’ to beat Y2K, but there had been a huge increase in functionality and flexibility in mid-tier systems that integrated with standard Microsoft platforms and delivered workflow and configurability.

While technology to enable greater collaboration and integration is already here, with key staff well aware of good design and affordable best practice software, many employers remain reluctant to commit.

Simeon Wright, CFO of Dystance NZ, claims many companies were locked in, had difficulty quantifying the value of major changes and found it easier to work with older systems.

Y2K all over again?

Mark Benjamin of Excell had first-hand experience of this and was already overloaded with sorting through strategic issues and priorities relating to system changes that impacted finance, IT and everyone else. The pressure was only increasing as many systems implemented in the lead up to Y2K were coming to the end of their usual life and were difficult to maintain.

Y2K had been the justification for changing systems but next-step business benefits needed be quantified, “boards wanting broader efficiencies and gains and to provide services and products to customers often challenge any proposals to spend money,” he says.

Judith McKay, GM of Finance, AUT University, says there were fears replacing or upgrading systems could blow the budget through additional enhancements or changes made along the way. There was also the concern that technology itself was progressing so quickly, that once implemented there was always something better.

Meanwhile, skills shortages across both new and old technology have resulted in a growing trend to outsource support to overseas, but David Ingram, CFO, Zeacom says this often resulted in communication problems. “We had a case where the time frame of bringing them up to speed to understand our needs would have been a lot faster if we had someone locally doing it.”

Martyn Seddon, CIO, Turners and Growers, says the business side needed to take ownership in driving projects so they did not go over budget. Another concern was that a large amount of head office functions had been removed from New Zealand.

Securing staff

Megan Alexander, a senior manager at Robert Half, says finding staff to come to New Zealand was an ongoing problem. Even those people who returned home could be disillusioned with the wages and the opportunities to use their skills.

Robert Half’s research shows a main reason people leave organisations is inflexibility, with people indicating they would give up salary to have more flexible hours. Typically both men and women earning over $80,000 wanted more flexibility.

As far as Martyn Seddon of Turners and Growers was concerned, employees could arrive late or leave early as long as the work was results based. “There’s a trust factor; it pays dividends and people stay. Laptops are provided so people can have the flexibility.”

Meantime, the pressure was on for greater flow of financial information across CFO and CIO, for people with deeper IT disciplines, and for systems and tools that can facilitate positive business change. The stakes are high, the ability to retain and train a competent staff and the future competitiveness of the business.

It’s clear that CFOs need to become more tech savvy, while techies who plan on moving up the CIO ladder need the business skills to communicate to the finance department and to others at senior management level.

However, those who are ambitiously upskilling to bridge the traditional gap are creating a divide of a different kind in their wake. Accountants who move into IT don’t typically have the depth of knowledge to effect serious technological change, while IT people jumping into the business realm often have difficulty expressing themselves in business speak.

“You can’t survive as a CIO today without being able to speak the language of business, competently in front of an executive or the board,” says Ports of Auckland’s CIO Pieter Bakker. He’s always on the lookout for people with the right combination of business and technical disciplines to ensure better governance of projects. “IT is involved in just about every process nowadays; you need to bring business in so it doesn’t become a case of toys for the boys.”

For many corporates, the last major IT systems change was Y2K and they’re doing all they can to keep the old machinery ticking over while trying to avoid the next big surge forward.

The growing demand for more transparent and flexible business processes and a change in reporting lines has bought the CIO/CFO debate to a watershed, but this time complicated by widespread skill shortages.

Co-dependency

IDC statistics however showed 70 per cent of CIOs reported to the CFO in 1998 as compared to 5 per cent in 2008. And while the CIO and CFO essentially stood side by side, there was less chance of the CIO going on to a managing director’s position. “The relationship between the CIO and CFO should be that of co-dependency and that was unlikely to change,” says Bakker. He believed organisations should have a separate CIO and IT manager.

Martyn Seddon, CIO, Turners and Growers reports to the CFO, treating finance as a customer and IT as a service that delivers to the requirements of the business.

Seddon says the accounting side brought discipline to his domain, particularly when dealing with software developers, who were so enthused with technology it could be ‘like herding cats’. “It’s hard to keep projects on track and the financial aspect is needed, rather than technology for technologies sake.”

And it was clear some IT specialists and accountants should not be managing their peers. “If there was a technical person in charge of managing people, there was likely to be a ‘train smash’,” says Seddon.

Who’s the real techie?

Megan Alexander from Robert Half, says a lot of people in IT who began as chartered accountants soon find themselves in no-man’s land. “While they are a valuable resource, once they finish a particular project and look to work with another organisation, they often struggle because they’re not really techies.”

As businesses became more complex the responsibilities needed to be shared, but Simeon Wright, CFO at Dystance NZ, says, while it did make sense to split the CFO focus that was broadening at the top, he was convinced the CIO should not double as IT manager.

“What’s required is to achieve the right balance of relationships in the management team,” Wright says. “As technology is now ubiquitous, everyone in that team needs to have an input at an early stage.”

Mark Benjamin of Excell Corporation says while technology underlined everything, it was not part of finance. ICT, he says, deserves a place of its own among the traditional activities at the top table, along with finance, marketing, public relations and HR.

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Tags leadershipCIO rolefinancestrategycio and cfo

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