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20984 RYB May 06

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  • pg 1
									         FINANCE




                     Finance and IT –
                 a special relationship?
     Making proper use of information is the real challenge
                                                                  By John McCarthy

People often perceive the Finance and IT          handling of cash is the accountants                 only half the battle; making proper use of it is
functions to be inseparable. Some would even      responsibility then it stands to reason that        the real challenge. Information Systems,
say that there is a special relationship          lack of it is also their responsibility –           which are properly designed and implemen-
between these two functions. What could           doesn’t it?                                         ted, will produce valuable information. In
give rise to this perception?                                                                         common with any other production process it
                                                  Accountants who mis-manage cash can be
                                                                                                      needs raw material, and in this case the raw
•    Is it because accountants make good IT       held responsible for this mis-management but
                                                                                                      material is data. Information therefore, is the
     people? - depends on which side of the       if the business is not generating cash is he/she
                                                                                                      product of applying Information Technology
     fence you sit!                               to blame? Cash is generated by a business
                                                                                                      to data, which must be entered into a
                                                  doing what it is supposed to be doing well. If
•    Is it because IT people make good                                                                computer system in a consistent fashion.
                                                  the business is delivering a quality product or
     accountants - not in my experience,                                                              Whilst this may appear to be stating the
                                                  service to happy customers then invoices
     although some IT colleagues would                                                                obvious, this consistency, or lack of it, is a
                                                  issued will be paid - if the credit control
     disagree!                                                                                        major reason why Information Systems
                                                  department are on the ball.
                                                                                                      implementations fail.
•    Maybe it is because accountants can          If however the business is not delivering the
     achieve an obvious benefit from                                                                  IT systems implementations succeed how-
                                                  required quality to keep customers happy
     technology – this is true, but so can most                                                       ever, when the following steps are success-
                                                  then cash will at worst not be collectable or at
     sections of a business.                      best be difficult to collect. If this is the case   fully achieved:
                                                  then it would not be unreasonable for the           •   Systems analysis
What could possibly explain this                  accountant in the business to point it out –
special relationship?                             forcefully.                                         •   System development / sourcing
If a special relationship exists then this bond
                                                  A similar case can be made in the case of non-      •   User commitment to procedures and
could be based on the fact that in a lot of
                                                  performance of IT systems. If the technology            standards
businesses that I have come across, there is a
                                                  just does not work then of course it is the
perception that every ill that could possibly                                                         •   Training
                                                  responsibility of your IT staff or supplier and
befall a business is usually the fault of IT or
                                                  they should be held accoun-table. If however
Finance. To be honest if IT and Finance allow                                                         •   System hand over and acceptance
                                                  the non-performance, as it often does, relates
themselves to be blamed - which they often
                                                  to ‘user issues’ then this needs to be pointed      So where is the special relationship? I often
do - then this allows the perpetuation of this
                                                  out – again forcefully.                             hear IT people giving out about accountants
myth. Of course IT and Finance have
                                                                                                      because ‘they’ will not spend the money.
responsibilities within a business and            Being the convenient fall guy could explain
                                                                                                      Maybe ‘they’ are indeed being unreasonably
are at fault when some things go wrong but        the special relationship between IT and
                                                                                                      tight fisted and short sighted or maybe they
not everything.                                   Finance but perhaps there is another reason.
                                                                                                      are just good at their job. By good at their job
                                                  In my view there is, and should be a special
Take cash flow for example – the lifeblood of                                                         I mean that maybe they are asking the right
                                                  relationship between IT and Finance – and
any business. I have seen accountants blamed                                                          questions of the business and not getting the
                                                  this is why.
for bad cash flow and the people doing the                                                            right answers. Since the accountant is
blaming can see no other reason why cash is       An essential weapon in any business' arsenal        responsible for control in a business it stands
constrained in the business. Since the            is information. Having the information is           to reason that before any investment is made


                                                                                                                                          May 2006
    18
                                                                                                                             FINANCE



they should ask for – and get – a sound            enough money on the project – in                    not need to be staff dedicated to the IT
business case for proceeding with the              other words...                                      function. One of the cardinal sins of smaller
investment. IT people should also be asking                                                            businesses is to dump the responsibility for IT
for the same thing because unless the              By all means buy inexpensively from a
                                                                                                       on the shoulders of the manager who finds it
business case is sound the project is likely to    reputable source – but for heaven’s sake don’t
                                                                                                       easiest to turn on a PC. This is very often an
fail and there will be no return on investment.    buy cheap.
                                                                                                       accountant in the business! The end result of

This is the special relationship                   Standards and Infrastructure                        this is a stressed out member of staff
                                                   Ironically one of the easiest things to do on       struggling to do the job they are paid to do
These are the questions:                                                                               combined with maintaining computer
                                                   Information Systems projects is deliver the
Systems Analysis – Clearly stated                  technology. Many Information Systems                systems. Staff are employed based on their
requirements?                                      projects suffer though because of the quality       core skills and experience (e.g. accounting,
• Operating needs - Functionality required         and standard of the technology applied. There       design, etc.). Don’t mess about with their
   from a system                                   is no point in buying cheap and paying later in     responsibilities – you and they will get short-
                                                   terms of lost time for users, extra technical       changed and you won’t get value for money.
•   Storage needs - Data that needs to be          support costs, etc. i.e. the much talked about
    recorded and held in the system for future                                                         Outsourcing the technical support aspects
                                                   ‘Cost of Ownership’.
    use                                                                                                of the computer systems is a good
                                                   All personal computers are not the same. All        way of dealing with this problem of
•   Information needs - Information which          printers are not the same. All software is not      competing priorities.
    you want to be available from the system       the same, etc. Cheap technology is a major
                                                                                                       I know many Finance and IT people whose
                                                   factor why IT projects fail. Computers, which
System development / sourcing – Does it                                                                relationship is based on a mutual disrespect
                                                   are of a suitable quality and correctly
fit?                                                                                                   and would find it hard to consider the co-
                                                   implemented, should not need constant fixing.
One key objective in sourcing any system is                                                            operation required for this special
                                                   If you find yourself in this situation then
that it is compatible and will integrate with
                                                   maybe it’s time to seek outside help to audit       relationship. They are wrong. By making this
systems which are already in place or
                                                   your systems and put a plan in place to rectify     relationship work both parties can achieve
planned.
                                                   the root causes of the constant fixing. Not only    their objectives and make an invaluable
User commitment – are the users on                 will computer systems that are implemented to       contribution to the success of the business.
board?                                             known standards be more stable and better
                                                                                                       John McCarthy founded DWC Consulting
To achieve success, it is imperative that use of   suited to the job, but also problems when they
                                                                                                       Ltd in 1995. DWC specialises in working with
any system must be based on clearly defined        occur tend to be more easily rectified when
                                                                                                       small and medium sized businesses to help
procedures developed in conjunction with the       you are working within a known set of rules
                                                                                                       them implement technology successfully.
users.
                                                   Maintenance                                         For more information go to www.dwc.ie or
Training – What training is planned and            Be aware of the critical parts of your system –     contact John directly on johnmcc@dwc.ie or
when?                                              It’s not always just the server!                    086 2629185.
People resist change when they fear the
implications. So having defined the change         Assessing the needs of your maintenance             In association with the Institute of Certified
required, people must be kept fully informed       contracts is similar to assessing your insurance    Public Accountants in Ireland.
and trained before the changes are                 needs. You are seeking to predict and minimize
implemented.                                       exposure to risk in your business. You can get
                                                   cheap insurance, which, on paper will
System handover and acceptance – How               discharge your responsibility to carry it, but it
and when will the end of the project be            may not deliver when you most need it. The
identified? (or how do we prevent ‘feature         same is true of maintenance contracts. It is one
creep’ - which can keep a project going for        of the hidden costs of stable computer systems.     The Institute of Certified Public Accoun-
ever!)                                                                                                 tants in Ireland is a statutory accountancy
This is arguably the most important phase of       When choosing a service partner make sure           body, with almost 5,000 members and
any project. The system must be formally           that they have the staffing levels and skills to    students. CPA’s are active in practice and in
handed over to the users at the end of the         deliver on the commitments they make to you.        management of all areas of the private and
implementation phase. From then on, it is the      Be prepared to pay reasonable rates to get the      public sectors.
user's responsibility to operate the system.       best contract.
                                                                                                       For further information on how a CPA can
So having asked the right questions it is          Outsourcing IT                                      help you contact us at 01 676 7353 or
important to keep your nerve and spend             Depending on the business there may or may          www.cpairealnd.ie


May 2006
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