Why Information Silos Are the Enemy of Agile Finance — and How to Eliminate Them

Digitally savvy finance leaders rely on easy access to data – and not just data from their own department, but from across their organization. This vital information feeds strategy and empowers CFOs and others to make more informed decisions. Yet, all too often, finance leaders struggle to obtain a unified view of their organization, customers and suppliers, as information is held in separate apps and by different teams.

In fact, more than a third of finance leaders say their organizational structure is too complex, and that data is held in silos, according to Agile Finance Revealed: The New Operating Model for Modern Finance, a new study by the American Institute of CPAs (AICPA) and Oracle. Another 26 percent say that, as a result, finance teams have difficulty getting the information they need.

If you're trying to build an agile organization, your first priorities should be tearing down information silos and finding ways to encourage information flow.

Data disconnects

Having tight-knit units within your broader finance team or across your entire organization isn't necessarily a bad thing. Problems arise when groups hoard information or make decisions in a vacuum. For example, individual business units drive 60 percent of IT spend, according to a 2016 Oracle study. In many companies, various business units are buying and using different cloud-based software and apps, often to accomplish similar goals.

Obstacles to finance transformation

This is certainly the least cost-efficient way to purchase technology. Of greater concern, according to the AICPA/Oracle report, is that "organizations end up with a cobbled together system of standalone offerings from different vendors." This creates disconnected pockets of information and varied performance metrics tracked from multiple places.

Imagine being asked to identify your most profitable customers. The standalone Marketing Cloud will tell you which customers were acquired at the lowest cost, the Sales Cloud will tell you about the largest deals in the pipeline, and the Service Cloud will tell you which customers are absorbing too much time with support. But as a finance leader, you need to combine all these datasets into one, holistic view of your customers.

For finance leaders charged with making strategic decisions rooted in the best information, such information disconnects are more than problematic; they make your organization less responsive to opportunities and less able to make smart, strategic decisions. In fact, the nearly 500 finance leaders surveyed in the AICPA/CIMA report said that these complex IT systems prevent their organizations from becoming more agile.

Breaking down walls

If you want your finance team to support your organization's agility, eliminating these information silos is crucial. Fortunately, there's action you can take to prevent this disconnect and consolidate your data. Here's how:

• Simplify your IT systems: Use a comprehensive cloud-based ERP software to headquarter your finance and business process data in one place, instead of relying on a hodgepodge of vertical solutions within in your LOBs, providing various data sets. You also want to make sure that your own finance data isn't coming from multiple applications. With a single information source, you can ensure that your organization's decision-makers are looking at the same data. This makes tracking KPIs across the organization easier, and gives your C-suite cohesive and timely information.
• Integrate, integrate, integrate: At the same time that cloud-based technology can help integrate your data sources, cross-functional teams can help you integrate staff skills and expertise. For example, consider enhancing your finance team with data analysts, product marketing or HR experts. Not only does this ensure that finance is making the best use of information it receives, but it helps your team bring even more value to the entire organization via forward-looking activities focused on change.
• Align your organization's KPIs: Finance leaders should work with their C-suite to develop common goals, then implement KPIs that resonate across the company. "These KPIs need to be aligned with strategic and operational objectives," according to the AICPA/Oracle study. Those include both financial and nonfinancial KPIs, such as reputation and talent analytics. With every team working toward the same end — and relying on the same data to mark their progress — information silos become a thing of the past.

In this new digital era, the ability to make proactive, strategic and forward-looking decisions rooted in data is what separates industry leaders from those who fall behind. Identify and eliminate information silos in your finance team and beyond . . . and you'll set up your organization for even greater success.