IT and finance must pull together

Finance system replacements are infrequent, but they need not prove a headache if finance and IT collaborate to achieve clearly defined objectives

The selection and implementation of a new finance system is one of the most critical IT processes you and your organisation will ever engage in. It is one of the few times when IT and finance are required to work together as a project team, so roles and boundaries need to be clearly defined. This partnership is vital to ensuring the success of the project.

Finance system replacements are infrequent, so it is quite normal for little or no experience to exist within the organisation. As an IT professional you will have overseen numerous successful technology implementations, but how do you strike the right balance of collaboration with the finance team if they do not understand what your involvement is?

Few finance professionals would deny that IT is vital to executing strategy and delivering value. Often regarded as the "operational backbone", reliance upon hardware, software and networks is second nature in the modern business environment.

But while selecting the right system is essential, successful return on investment is as much about implementation as the technology itself, and getting it wrong can lead to disastrous consequences.

A study by CFO Research Services exploring executives' views on the business risks posed by systems implementation, found that a common contributor to project failure was poor performance when selecting implementation partners, rolling out the technology, managing process change and measuring results.

The report also concluded that risk analysis was often too focused on operating performance and technical failure rather than cost overruns and regulatory compliance. More worryingly, the majority of finance respondents said they afforded less risk scrutiny to IT projects than to other major investments.

Given the risks involved, it is hardly surprising that only a minority of companies are keen to adopt cutting-edge technology. But migrating to new finance systems or upgrading existing systems does not have to be a nightmare if the IT department is prepared to work closely with the finance department to ensure finance needs are met, as well as ensuring the technical side of the project is working smoothly.

IT can help in many ways. It can help in understanding what the upgrade process is, what risks are involved and what support is required.

It is imperative that the IT department supports the information-gathering process when the business is selecting the system, so that the requirements are understood. During the selection, it is useful to look at how many times users have upgraded to the latest version.

If it is infrequent, or if many users are still stuck on old versions, it could be that the upgrade process is too hard. Confidence, preparation and the setting of clearly identified and achievable objectives are vital to successful implementation.

Companies need to be sure they can carry data forward with the next version, but with the advantage of improved functionality. It is also advisable to run a pilot project to instil confidence, but this is something that the finance department might overlook.

Strong leadership and change management are also paramount to successful implementation. All too often finance departments fail to utilise their systems because they are not aware of what they can do, and this is where IT plays a vital role. This is why pilot projects are so useful before committing time and money to a lengthy implementation. The business also needs to understand how it can achieve greater effectiveness and efficiency as a result of any new technology.

Better efficiency and effectiveness through the implementation of new technologies are not limited to commercial organisations operating in complex regulatory environments.

More and more non-profit organisations, or companies not affected by the rigours of Sarbanes-Oxley, are now seeking to achieve better process control through automation. Accountability and good governance are essential for charities and non-profit organisations, for which reputation is everything.

With so much at stake, it is easy to understand why firms are reluctant to upgrade or implement new software. However, there are steps you can take that, if adopted, can significantly reduce risks and minimise potential project issues.

It is important that the finance department should lead the project with support from IT - not the other way around. At least two senior finance professionals, one sponsoring the project and one representing the users, should be tasked with heading the implementation.

IT professionals should make predictions of how much time project leaders will need to devote to the project, along with defining and agreeing the roles and responsibilities of each individual involved in the project.

Along with this you need to set clear, measurable objectives that are agreed with all the business stakeholders. You also need to agree milestones and try to deliver some benefit with each one, so that users see visible progress at each stage and can buy into the process.

It is also important to consider core business requirements when prioritising the implementation, and how they will be affected by the project timeline.

Rigorous focus on potential business risks is also required, taking into consideration misalignment with business needs, project governance, regulatory compliance and enterprise-wide issues.

You will need to establish what the system should look like, and if migrating, what functionality should be retained from previous systems. Ensure that the supplier is involved so that you understand what is possible from the new system - you may discover that you can do things you did not know were possible, or do things differently to how you were operating before.

The training needs of project leaders and users should be identified before roll-out. Good change management is vital to the success of any implementation and is crucial to achieving overall objectives. This requires strong leadership, communication and HR involvement, as well as training. Poor change management is often the root cause of project failure.

When it comes to implementation, ensure that the project team has the time to focus on the systems project. Get back-up or temporary replacements for them, so that they are not just doing the implementation in their spare time. No matter how good the system or third-party consultants, only your staff can really ensure the project achieves what it set out to do.

It is always a good idea to use a pilot project to enable testing of a new system and to encourage assessment of unfamiliar processes that might have been devised. Test rigorously against the existing system and look for ways of improvement while doing this.

Last, do not forget to publicise any successes. IT projects are never easy and will encounter problems. Therefore, it is important to realise that at any point during project implementation there could be major issues, and it is all too easy for bad news and rumours to spread around the organisation.

If employees hear that the project is a disaster then it can quickly become ruined for good, making the task of selling the system to users and getting their buy-in later on very hard indeed. So trumpet any triumphs and be clear about issues that have arisen and how they are going to be overcome. That way rumours have less chance of spreading. The supplier will often help with this, since it is in their interest for the project to be delivered successfully.

Adopting these principles will shield your project from failure. But the key to success in implementing a new finance system is to follow a standard, proven implementation methodology. Doing this will take you step-by-step through the process to ensure a successful implementation.

A proven implementation methodology will cover key areas such as:

● Ensuring you gain consensus and buy-in to the requirements, definition and design of the new finance system.

● Appropriate knowledge transfer to the right people in your organisation.

● Piloting the system to ensure it meets requirements and delivers adequate reports, along with any specific development such as integrations into other systems.

● Rigorous system testing.

● The final move towards "go-live" for the system.

● User training, timed to ensure that user knowledge is current and appropriate to requirements, as the system becomes operational.

IT's commitment to keeping the operational side of the business running smoothly is critical, but the rest of the business should not be forgotten. Given finance's influence on the organisation and its involvement at board level, successful interaction between the two departments can only help to raise the profile of the IT department and prove that IT can talk the language of business.

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