Dec 27, 2005 (01:12 PM EST)
Identifying Process Challenges in Finance IT
Read the Original Article at InformationWeek
When we asked workshop participants what major process challenges they face, they responded with a surprisingly broad range of issues. Responses fell into four major categories: high-level business issues, tactical business concerns, priorities and funding, and IT-related problems.
Aligning information availability with strategic planning requirements was a high-level issue cited by one of our breakout groups. This has been a long-standing challenge. Our research has found that a majority of companies get timely data about standard financial and operational results. Yet even after spending billions on business intelligence systems, companies either do not collect all the data they need for more long-term decision-making or do not understand what data they require for strategic planning.
Using undefined processes was another issue that came up. Too often, companies rely on tacit knowledge (“Everyone knows you have to …”) to guide process execution. Of course, not “everyone knows” the same things; as a result, activities based on these assumptions rarely are performed consistently, and they often take longer and require more resources than they should. A third daunting challenge is considering politics and culture in designing or re-engineering processes and projects. A related issue mentioned in the breakout groups was eliciting buy-in. Executive sponsorship is always a good thing to have, but managers of business IT initiatives routinely fail to realize they also must sell the project internally to those who will be involved in or affected by it.
Our workshop participants reported they run into a number of tactical business problems as well. For one, organizations do not always have a process for developing a clear set of requirements for their finance IT projects, despite the fact that that clarity is critical to achieving success. Specifications may be too vague or the language one group uses may have subtle but important differences from another’s. As a result, the requirements may end up incomplete or may be an impractical wish list. At the other end of the process, participants identified post-implementation issues, such as user training and knowledge transfer from systems integrators or consultants to the in-house business owners, as important points to build into project planning.
Conflict over priorities and funding is routine. Many companies find themselves with more IT-enabled opportunities than money to fund them. Disillusionment with poorly managed projects has led finance to control IT spending more tightly and to demand ways to measure post-implementation returns. Governance boards are one common solution. Nonetheless, Ventana Research often finds inconsistent and poorly structured investment methodologies and assessment processes at work in large and midsize companies.
The IT-related issues the workshop participants mentioned most often included bringing finance and IT together from the start to improve the efficiency of the process, a point Ventana Research continues to stress as vital to maximizing return on investment. Integrating new systems with existing ones is a critical issue that must be addressed in the requirements-setting phase of the project. Failure to do so can yield less-than-optimal results, higher than necessary costs or outright failure. Participants also cited the difficulties caused by inaccurate or inconsistent data as well as the challenge of dealing with data that had an undefined context. For example, the designation “Sales” might mean gross or net, or it might mean contracted sales, not revenue recognized under generally accepted accounting principles. Ventana Research finds managing information, not just data, is a major challenge in Global 2000 companies.
© 2005 Ventana Research