Why Collaboration Between CIOs, CFOs Is Essential for Making Sound Technology Investments
Collaboration among decision-makers drives business growth. Why? Because keeping company executives on the same page ensures that departments are working toward the same goals and their efforts are mutually beneficial. But unfortunately, department heads sometimes become so focused on their individual responsibilities that they lose sight of the organization’s shared objectives.
Collaborative gaps are particularly common among CIOs and CFOs—roles that often represent competing agendas. While the CIO wants to provide staff with the most sound technology implementations, the CFO has his eye on the bottom line and the ROI of proposed IT projects.
When we speak to potential clients about tax and accounting software, we typically work with the CIO and IT team first. Their motivation is simple: minimize the number of systems they are required to operate and maintain. The problem is that IT’s goal usually conflicts with the CFO’s goal, which is to cost-effectively ensure accuracy, especially when it comes to tax accounting issues.
For example, an IT manager or CIO’s instinct might be to customize their ERP for all required purposes. This makes maintenance easy and ensures employees only have to be familiar with a few key technologies. But while IT teams are often skilled at programing ERPs to do just about anything, the reality is that ERPs and other general systems struggle to manage very specific calculations—the kinds of calculations that are performed during tax accounting processes.
The real issue has to do with the importance of accounting to your business, highlighting the need for the CIO and CFO to collaborate and better understand the company’s requirements . If the company doesn’t have many tax important assets, the ROI of a more accurate system may be more difficult to justify. On the other hand, for asset-heavy companies, accounting and tax decisions may be incredibly material to financial statements.
With external auditors increasingly examining company calculations, the CFO needs to make sure that the CIO and his IT team have the technology to get it right the first time. This also ensures that company executives have the data and reports they need to attest to the accuracy of financial statements. The right technology is even more important for companies that may be going through corporate changes like an M&A, public offering or bankruptcy—events that create additional challenges and increase the need for exceptionally accurate financial information.
But technology costs money, so CIOs and CFOs need to be on the same page from the beginning of the process. Sometimes CFOs will be reluctant to spend money on more accurate technology because they just spent significant funds on an ERP system. The IT team may agree to customize the ERP, but down the line, both departments realize their mistake.
From the IT team’s perspective, tax calculations might have to be performed manually since an ERP is not suitable for that type of work. But they soon realize that a tax and accounting-specific system would be easier to manage in the long run. Meanwhile the CFO, who is wary of spending money, is also worried about accuracy. Just one small mistake could force the company to restate earnings, incurring costs that substantially exceed the upfront expense of a proper tax system.
The CEO just wants to get it right. It’s common for IT departments to “do more with less” to maximize their budgets, but at what cost? Rest assured, no CEO wants to be told, “We saved $20,000 a year, but created a footnote on our financial statements.”
In the end, C-suite collaboration ensures an accurate, yet financially feasible technology solution—a solution that protects the company and creates a more accurate plan for the future. The right analysis now means you can better prepare for 5 or even 10 years down the road.
The role of the CEO, CFO and CIO continue to evolve. As strategic executives, the CIO is responsible for more than the IT team and the CFO has concerns that extend beyond bookkeeping. Going forward, each department will need to be involved in decision-making from the start to maintain a more unified company vision. With improved collaboration, organizations can increase the accuracy of technology implementations and make everyone’s job a little easier.
Written by Dean Sonderegger, executive director of product management, Bloomberg BNA, Software Segment. Bloomberg BNA is a wholly owned subsidiary of Bloomberg, is a leading source of legal, regulatory, and business information for professionals.
Dean Sonderegger has over 20 years of experience in the development and delivery of tax and accounting software solutions, with a specific focus on large enterprise clients. During that time, he has helped some of the largest publicly traded corporations in the world select and implement BNA Fixed Assets™ in order to strengthen accounting controls and gain significant efficiencies.