“There has never been more information at the fingertips of Chief Financial Officers (CFOs) – and yet their job has never appeared to be more complex”, Fexco Financial Services
New technology advancements are changing the way businesses operate, executive roles are changing just as rapidly to meet today’s challenges head on. Organizations that fall behind risk losing market share to their competition. The perception of CFOs role has also shifted, from that of a number cruncher to a business partner, placing equal importance on financial and compliance matters as they do on strategy and vision. Business leaders expect CFOs to demonstrate business leadership in addition to mastery of their core competencies.
In 2019, Implementing transformative technologies and maximizing the benefits to increase business value have been 2 of the 5 top challenges for CFO’s. Ramona Dzinkowski, SMF Magazine
We no longer focus on ‘why you’re off budget.’ Instead, we set targets and relevant forecasts, and discuss how the business can come together to deliver the outcome. Andrew Westermeyer, (Download Report here by Gartner..
Top 3 challenges for CFOs around IT department
Understanding Soft cost: Most companies classify soft costs as those expenses that simply can’t be immediately identified or included on a company’s balance sheet. For instance, there’s no space on a company’s balance sheet to track the costs of business risks, productivity, the time needed for approvals or the day to day costs of poor efficiency and redundant processes. CFOs do a great job at understanding, calculating and forecast IT Hard cost, however hard cost of IT Department is a small cost compare to other business expenses, but it impacts business soft cost which is usually many times higher than hard cost. Since most CFO’s don’t have process to calculate or assess soft cost, it remains un attendant...read more on soft cost
Managing Business Risks: IT budget forecast without managing business risks will never be accurate in case any of the following risk occurred. Cost of lowering and managing business risks should also be part of IT budget. Here’s list of common business risks:
HR Risks: Considering IT Professionals change organization on average every 2-4 years and IT industry has highest talent turnover 13.2% based on LinkedIn research, most organizations don’t have process to assess IT skill set required for their business, hiring process for new IT Staff and training/onboarding new staff. Employee turnover in business is inevitable and cost/process should be part of managing risks.
Financial Risks: Any unpredictable event will have financial impact in business either loosing critical payroll hours (time in payroll) or loss of opportunity to generate revenue.
Technology Risks: Modern technology is all about efficiency and speed, as technology matures, it provides new options for business to improve their business process and be competitive. Business interruptions because of antiquated technologies will impact profit margins.
Security Risks: Gone are the days when companies could pass the headaches of cyber, network or system security to the IT department, as it has become more of a business issue.
Data Loss/Theft and Confidentiality/Privacy Risks: Data breaches happen daily, in too many places at once to keep count. Data theft is a growing problem for individuals as well as large corporations and organizations.
Business Continuity Risks: In IT, failure is not an option. Not surprisingly, organizations have made it a high priority to develop and implement reliable business continuity plans to ensure that IT services are always available to internal users and outside customers.
Compliance and Regulation Risks: Remaining compliant with data has always been a concern for organizations. Previously, most compliance initiatives were driven by national legislation like HIPAA and SOX and rooted in security concerns around hardware and software.
Developing IT Budget Roadmap: In today’s fast-paced, digital world, CFOs are realizing that they need more accurate and timelier data for data analysis, reporting, budgeting, and forecasting in order to become a partner to the broader business.
CFO are driven by assessing number by looking into past data, even if they have to forecast future budget it is usually based on past data. However, most critical functions of IT department are all about looking into future and dealing with planning, performing work and/or managing risks.
IT Process for budget: As technology and it’s impact on business is changing all the time, IT budget needs to be part of ongoing IT operational process. Deploy IT Process to fist build IT budget forecast and then deploy ongoing process to update IT budget with testing and on-going gap analysis...read more
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