Finance is from Mars and IT from Venus
Is cross-department collaboration just a buzzword or is there a way to intentionally work on making it better? How can finance and IT find a common language and common goals?
I recently caught up with a finance systems leader in a high growth software company. We agreed that it sometimes can feel like finance is from Mars and IT from Venus. I asked him what each function could better understand about the other and what it takes to create a collaborative culture.
What can IT better understand about finance?
IT teams don’t fully appreciate the strict requirements that finance has when it comes to audit compliance. Of course IT teams are used to other types of compliance, but audit compliance is different.
There's a big disconnect there because IT says, “hey, we can just do this real quick and dirty” but finance says, “hold on, we need the data in a particular way.”
IT doesn’t fully appreciate the importance of internal controls and segregation of duties in preventing fraud and embezzlement and the control over cash and ability to audit every penny back to its point of origin. IT isn’t trained to think this way.
And what can finance learn from IT?
Finance and accounting folks don't think too much about data structures, how tables work, parent and child records, data flow through integrations, and so forth.
So for example, an accountant might ask IT for a customization to process a journal entry a particular way. And sure, IT could probably build it. But accounting doesn’t think about whether it’s the best approach to leverage a piece of technology.
IT, on the other hand is thinking about the implications of customizing the product and creating a ball of yarn they will have to maintain and untangle for five year or more and the ongoing cost and pain of doing that. This makes cross departmental collaboration a challenge.
So as the person sitting in between these two very different ways of thinking – which are both valid of course – how do you bridge the two?
Principally, I think about it as needing to use software products principally for what they were designed to do. For the functions they have and the problems they were designed to solve. Using native functionality leads to success and reduced costs. Overcustomization leads to disaster.
Obviously, some customization is often needed and is appropriate but if you don’t consider the downstream consequences in terms of complexity and maintenance, watch out. The road to hell is paved with good intentions! I like to think of it as creating tech debt and administrative debt.
(Side note: perhaps there is a way to bring the two functions together... Afterall, accountants understand deferred revenue accounts!)
This is especially crucial for fast growing companies. We’re a different company every two, three, four months. We have to make sure that our systems foundation is flexible and scalable, because when some new decree comes down from the top, you have ot pivot on a dime.
Have you seen the downside of not taking this approach?
Absolutely. I was an ERP consultant for years and my bread and butter was projects with companies that had over customized their systems beyond repair and were willing to spend a lot of money for me to rescue them! It was rescue, rescue, rescue, rescue. And it was always because of overengineering.
Aligning finance and IT is an ongoing process
Figuring out how IT and finance work together is by no means an easy task. Unfortunately, companies that don't spend time on cross functional planning often end up customizing solutions that fail in the long run. Even worse, maintaining them costs a fortune and eventually becomes unviable.
One of the solutions could be finding a common denominator for both your IT and finance teams. Someone like the finance systems leader I talked to who has experience with both sides' approach and understands their unique perspectives.It also helps when you're not over engineering and having to put out fires all the time. A platform like Leapfin can integrate your finance and IT data from multiple types of sources, process it and spit out a standardized format based on the business logic you need.