Heads of finance and IT departments need to raise the level of their conversation beyond spreadsheets and infrastructure and find a way to jointly look at process improvements that can add value to the company. In times of IT disasters the finger often points straight to the IT department, regardless of who signed off on the system, escalating the blame game between CFOs and CIOs. Typically fuelling the feud, is the failure of finance to understand what they’re getting into and the reluctance of IT to communicate at a business level.
The local arm of photocopier, printer and document management corporate Ricoh, has progressed in ‘leaps and bounds’ over the past five years. It is under a new proactive culture where the CIO, CFO and a business analyst form a high-level process improvement team to overcome those obstacles.
Fingers pointing backAt a recent finance conference, Ricoh New Zealand finance director Haroon Mohammed asked finance directors about their number-one problem getting things done. “The answer was, ‘IT, they’re always too bloody busy to help us’.” He asked the same question at an IT conference, and was told ‘finance people’ were the big problem. “Everyone wants the same thing, but they don’t define it properly.”
IT manager Paul Thomas says having a CFO who understands IT has made his life a lot easier, when it comes to getting capex approved and deploying technology that can change the business.
“In the past switches or infrastructure purchases would be turned down, despite wonderful documentation and explanations, because the person responsible for signing off didn’t understand the business case,” he states.
Both Mohammed and Thomas agree the new culture at Ricoh New Zealand has
enabled a more proactive approach, moving the relationship away from the cost of infrastructure and giving them more room to be creative.
Having time to think is the crux of being a good CFO or CIO, says Mohammed. “You can’t be too busy chopping the tree to sharpen the axe. And it’s no good starting a dialogue when the CIO dumps a request for capital expenditure on the CFO’s desk. If I’m aware of what’s being proposed at least I can read up on it.”
Mohammed reckons less than 10 per cent of IT managers or CFOs claim they’re too stressed to be involved in areas of innovation or process improvement and for that reason are unlikely to be considered for promotion. “Get into value add, process improvement and strategic stuff with the managing director and that’ll get you a step up above.”
Borrow from the future
Thomas says ‘process improvement’ often gets lost in a limbo where no-one really wants ownership, or it’s considered a one-off project. Many organisations avoid it because they’re afraid people will lose their jobs, so they keep doing what they’ve always done. “It’s not about redundancies, but reducing the number of staff hired in the future. Once people understand that, everything’s fine.”Thomas was bumped up to IT services manager two years ago, after being virtually sidelined as head of an add-on department that finance took little interest in. Under a period of Australian control, the operation saw even less alignment of IT to local business. When Mohammed, came on board after being GM of process improvement for Owens Group, Ricoh New Zealand underwent a major transition to turn IT into a profit centre. He offered Thomas a promotion if he was prepared to work on process improvement.
“I accepted a certain amount would be spent on infrastructure. I didn’t need to know all the details, just where it fitted into the process. That meant educating myself so that if Paul [Thomas] came to talk about server
virtualisation, I wouldn’t have to ask him what that was.”
There was potential for this closer relationship to be confrontational. “I may want to talk to a third-party IT consultant about Paul’srecommendations. It’s not that I don’t trust him, I just want to be sure we’re making the right decisions,” says Mohammed.
Thomas had to delegate responsibility at the hands-on level, admitting he felt a little threatened to start with. “In the end Haroon [Mohammed] has to sign-off on it and he has to feel comfortable, particularly if he doesn’t understand the technology. I do alot of research and study on my proposals anyway and 99 percent of the time it has come back in favour of my recommendation. In the end it takes a lot of the risk away.”
Both agree collaboration is more satisfying, more creative and delivers more to the
bottom line. Sometimes solutions are achieved by simply getting a group of people around the table and asking: “Is there another way to do this?”, rather than getting caught up in the technology.
If it aint broke…
Initially Mohammed was told of the urgency to dump the old ERP system and get something more functional. “After discussing this with the senior business people I helped them redefine what they wanted. The ERP was basically a transaction processing system and was doing fine. What they really wanted was a CRM, a business intelligence system and data warehouse.”
For Ricoh New Zealand, 50 per cent of its overhead costs are staff-related. The key was to determine how various groups within the company used their time and to develop processes to improve that. Automating certain processes for 50 salespeople eventually saved 50 hours a month. CFO and CIO collaboration meant there were no surprises when the final system was implemented.
Breaking down average employee hours a month delivered more surprises and opportunities for improvement. “In sales we found it was taking too much time to write proposals, so we looked at a specific proposal writer. I found the accountant spent three days a month doing detailed branch reports, once we automated this it took five minutes.”
In 2003 the accounts receivable department at Ricoh New Zealand had four credit controllers and a turnover of $40 million, five years later the turnover is $80 million and there are three credit controllers. “That’s an impact of process improvement. You really haven’t got any choice. Get educated, get involved, simply because of the impact it can have on the business and the staff you need to employ in the future. If you’re too busy with your stuff, you just end up hiring more staff,” says Mohammed.
He’s not convinced that IT managers or CIOs should be reporting directly to the CEO or the board. “At that level they don’t want to talk about or understanding technology. If they really understood the huge improvements that can be achieved through the cost of labour, they would be involved in process improvement.”
An IT-savvy CFO however can be invaluable. “At a click we know every machine we have, who our most profitable customers are by region or month, machine model or whatever criteria. We know what our competitors are doing across similar companies and the result is a high level of innovation.”
Rather than the wrangling over budgets and infrastructure, CFO and CIO teamwork has raised the level of both disciplines, helping Ricoh New Zealand become the best-performing branch in the Asia-Pacific region with
business intelligence systems that are considered exemplary worldwide.
© Fairfax Business Media
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