Abdication and neglect by Finance & Accounting organizations has resulted in IT taking over responsibility for F&A business processes & data. Time to take them back!
Who owns Finance & Accounting (F&A) business process and data at your company today? Seems like an obvious answer (the CFO of course!) but before you respond, consider the systems utilized daily by your company’s staff to accomplish their responsibilities - like the ERP - and who maintains them.
Where do you go when there are problems with the systems or when configuration changes are needed? Invariably the answer is the IT organization. You may not have thought about it before in this light, but your IT organization is the accountable owner of F&A business processes and data because they are the ones responsible for upkeep and improvements.
For the vast majority of companies, IT owns the F&A business processes and data. How did IT come to own it? The answer centers on two explanations: technical skills and benign neglect.
ERP and other systems require technical skills to configure, implement, and maintain. IT staff are rightly assumed to have high degrees of technical expertise. Processes are largely defined within systems. Data also resides in systems. Hence, many companies automatically look to IT to define data taxonomy and to determine, configure, and implement process flows with whatever F&A input is available.
Even in those rare cases where company F&A staff originally configured their own systems and started out owning processes and data, these responsibilities often migrated to the IT department because they were better staffed and skilled to maintain the platform over time. This abdication of ownership stemmed from poor redundant staff capability. As F&A staff changed jobs or left the company over time, their expertise left with them. Rather than rebuild their capability, F&A looked to IT to save them.
Expertise and accountability matter. Experts are experts in their chosen discipline for a reason. Focus and depth facilitate efficient and effective operations. Straying too far from core capabilities increase increase the likelihood of errors and poor performance.
General core capabilities critical to any IT organization include: physical and logical architecture, domain operations, security, back-up, recovery and physical data integrity throughout (at rest and in transit).
Conversely, general core capabilities of F&A organizations include: accounting, data generation, transaction processing, business process, controls, data manipulation, data integrity, and analysis. These capabilities are utilized across the band of F&A responsibilities (close, reporting, budgeting, payroll, tax, etc.).
Purely on an expertise basis, it seems odd F&A organizations might choose to abdicate their core capabilities related to business process or data generation and management responsibilities, while simultaneously creating more risk for the IT organization?
On an accountability basis, consider the following:
o When system errors cause transactions to be incorrectly recorded, who puts in the hours to correct the entries?
o If the books are not closed on-time and the SEC quarterly filing is late, who does the CEO look to as responsible?
o When configuration problems result in wrong P&L numbers and a financial restatement, who gets fired?
F&A is highly accountable in all the scenarios noted above. Accountability is far more palatable when it coincides jointly with authority and control.
The argument is very strong for F&A to truly own its business processes and data and the accompanying configuration capabilities. Doing so consolidates accountability and control where it belongs, while also allowing both IT and F&A to focus on and leverage their core strengths.
For F&A to assert its process and data ownership implies rebuilding and exercising its process development and technical muscles. The nature of its relationship with IT will also need editing. Main areas of focus will need to be:
F&A functional staff will require higher levels of technical capability and skills. In particular, staff will need to develop technical system configuration and testing skills for their functional area (e.g. AR, AP, GL, etc.)
Staff will need to regain core knowledge of process development methods, including process maps and associated RACIs.
F&A leaders should develop strategies to ensure redundant technical skills and positional back-ups, including personnel development plans that regularly substitute roles to ensure back-up retain competency.
A revised operating agreement with IT should be crafted, with a well-articulated scope of responsibilities to ensure all participants clearly understand their respective roles.
F&A is accountable for integrity of the numbers and protection of assets. Fulfilling that responsibility is best accomplished only through capable staff exercising strong ownership over process and data integrity. Now is the time to regain control and take your team to the next level of effectiveness!
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