VideoA majority of business decision makers don't have ready access to high-quality, reliable, useful information on operating and financial performance at their companies — so say senior finance and IT executives in this global study of information quality (IQ). As a result of this IQ shortcoming, decision makers are forced to spend time building special reports and analyses and reconciling the "multiple versions of the truth" provided by their disparate, non-integrated business processes and IT systems.
But finance and IT executives see real value and investment return in improving the quality of their management information — in boosting its timeliness, accuracy, and transparency. They foresee broad benefits, including the ability to make better operating decisions more quickly, better annual planning, and greater confidence in business process controls.
To remedy their uneven quality of information, companies are investing in process simplification and tighter integration of their IT systems. Doing so, say survey respondents and executives interviewed for this study, requires not just time, money, and attention, but also a new and much closer collaborative relationship between the CFO, the CIO, and their teams. This new relationship calls on finance to take greater responsibility for information quality and for companies to instill accountability for IQ throughout their organizations. Collaboration, responsibility, and accountability may not be enough, however, to solve the IQ problem effectively.
Companies' IQ and the collaborative relationship between finance and IT will benefit from the CFO and the CIO building their real knowledge of the other's discipline. When finance comes to understand IT — its capabilities, limits, and role within modern enterprise — and when IT comes to see robust financial thinking as a source of business value, and not just of cost control, companies will be on a path toward higher IQ and sustained operating and financial improvement.
In the summer of 2005, CFO Research Services (a unit of CFO Publishing Corp.) launched a research program to explore the quality of management information and its proficiency in meeting information needs at large companies around the world. Through a survey and interview program among senior finance executives in North America, Europe, and China, we sought to understand how companies rate their information quality — its accuracy, timeliness, reliability, and transparency — and their capabilities in providing information relevant to achieving governance and performance objectives. We also sought to document how the chief financial officer and the chief information officer are working together in new ways in an effort to boost information quality. This report contains our findings and was prepared in collaboration with Deloitte Consulting LLP.
All told, we gathered 385 responses to the survey, two-thirds of which were from executives at companies with more than $1 billion in annual revenue. Seventy percent of respondents are from North American companies, 22 percent are from European companies, and 8 percent are from Chinese companies. We sought to include both finance and information technology executives in this study. Executives with top finance titles such as CFO, controller, and vice president of finance make up 64 percent of respondents, while IT executives — including CIOs, VPs of IT, and directors of IT — comprise 18 percent of respondents.
Companies Still Have Trouble Delivering Basic Information
If information is the lifeblood of business, the corporate
vascular system appears to be blocked.
It has been more than 50 years since the introduction of the first electronic computer, a generation since the debut of resource management applications for manufacturing, and a decade since the advent of performance management software. Over the past five decades, companies have poured tens of billions of dollars into information technology aimed at automating business processes, improving data management, enhancing customer interactions, digitizing records, and enabling E-business.
But what about information for making decisions, monitoring performance, reporting financial performance, and governing the enterprise? Despite massive IT investments, today when executives reach for the accurate, timely information that they need to make well-informed decisions and to report performance, they often come up empty-handed. In what might surprise many observers and confirm the views of their more skeptical peers, this study finds that fewer than half of finance and IT executives surveyed believe they have achieved their IQ objectives. Indeed, in a recent survey of senior finance and IT executives around the world, 61 percent of respondents say they could still do a better job of just making sure the financial information they generate accurately reflects the performance of their businesses. The business impact of this poor IQ, say respondents, includes widespread decision-making problems that are often tied to inaccurate, untimely, and irrelevant information.
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