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A CFO’s Script for IT Investments: A Play in Three Acts

  • By Bryan Lapidus, FPAC
  • Published: 5/6/2021

As a member and advisor to AchieveNext, I always look forward to quarterly roundtables to stay connected to how middle market CFOs and financial leaders are stewarding their companies. This quarter’s discussion focused on how to get the most from your IT investments. We separated into small-group breakout sessions, from which the discussion unfolded like a three-act play.

Act One: Strategy Roadmap

The IT organization for most companies is a blend of in-house and third-party people and assets, and all assets increasingly are physically dispersed. What is holding this together?

“Our IT people are technicians, and they do a great job connecting the various systems and sources” to uses around the company, said one CFO, but that is not a growth plan.

A second member agreed, saying, “We don’t have the person with the vision to see the connections” and to deliver a cohesive vision. The group pointed to a need for a roadmap of how the company is growing, a plan that anticipates the support required to get there, and the flexibility to add or change at various states.

Act Two: Getting Approval for the Investment

The discussion noted two different avenues that a finance function could follow: the cost versus the value CFO. The cost CFO is measured by the ability to meet the control functions of CFO and the lowest cost: financial reporting, accounting, satisfying auditors and regulators. The value CFO is applying financial and quantitative methods to become a trusted advisor to the business. One member said her company split the finance function into a control side, headed by a chief accounting officer, and another under FP&A that examines growth opportunities.

To get significant investment, CFOs need to convince their CEOs and BODs they can automate and streamline the cost side and then shift resources to the value side. Finance (often through FP&A’s efforts) can deliver value to the business by applying quantitative methodologies to support decisions. Be warned: these benefits may be difficult to measure since they accrue to products and other departments, so it may be best to line up endorsements from those other departments.

Act Three: Not Throwing it all Away

Throwing technology at your finance challenges without corresponding changes in processes and upskilling people is just throwing your money away — and this is not limited to middle market companies. A member provided two examples of companies (among the world’s largest at the time) that wasted billions of dollars on failed implementations of finance systems. “For one company, after an accounting scandal, the Department of Justice mandated they get an ERP to promote clarity and control in their financial accounting. But they changed nothing. They downloaded forms into spreadsheets, printed them out to complete them out manually, and key-punch them into the system.”

He concluded: What analysts and outsiders want is confidence that your people know the business.

Epilogue: Technology is an Enabler

Discussion moderator Tom Stewart adroitly summed up the conversation: Technology is an enabler and not an end to itself. It can enable your strategy to be enacted by delivering your service/product to the customer, it enables your people to do their best work, and enables operational effectiveness to get the work done. Obviously, this play simplifies the challenges to attain and deploy technology investments in the office of the CFO, but it does prepare you for the sequel.

Bryan Lapidus, FPAC is the FP&A subject-matter expert at the Association for Financial Professionals, a not-for-profit dedicated to the success of the corporate finance practitioner. He is also a member of AchieveNext’s Global Advisory Board.

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