How to Use IT More Strategically in 2008

Global corporations have made extensive investments in information technology over the years, and typically they use these systems to their benefit. Yet when we look at the functioning of finance organizations, we consistently find that most underutilize their information technology assets. Digging further, we have concluded that they can get more value out of these systems simply by understanding better what they can do and making the effort to apply these capabilities to key processes.

In the spirit of the new year, then, we offer a few suggestions about where finance organizations likely can improve their performance and thus contribute more to the business overall.

First, work to get more of the right information to the people who need it. Financial information continues to be the data most relied upon to manage organizational performance because it is both the most readily available and the most reliable. Many companies collect potentially useful nonfinancial information about their operations, but they don't use enough of it. For instance, only about half of companies involved in our research provide managers and employees with enough information about their own job performance.

Similarly, most of the data people receive in reports looks backward. Only 9 percent have enough leading indicators to help them anticipate changes in their business, while half reported that they get little, if any, of this kind of information. Most organizations are good at collecting internally focused data, but few systematically provide insight about a company's external environment. For example, only 21 percent regularly track how their competitors are performing. Business is not an us-vs.-us exercise, yet management reports rarely touch on the world outside.

A considerable amount of information on key aspects of performance resides in the company's enterprise resource planning (ERP) system. This software has helped to reduce the cost of operating the finance organization, but ERP systems contain other capabilities that most users have not taken advantage of -- and may not even know exist.

A case in point is the ability to automate the management of tasks that span multiple organizations or silos of information in business units. Two-thirds of companies in our research have used their ERP software to support purchase-to-pay processes that handle buying end-to-end, from the initial request through the creation of a purchase order, sourcing, receipt of materials, and, finally, payment. But from the sales end, only half have implemented an order-to-cash system, which manages the process from receipt of an order to confirmation that money has been deposited. If your finance organization isn't one of these, there's potential here for performance improvement.