Why Must CFOs Think Vertically In Professional Services Accounting?

thinking-vertically-accounting | http://www.flickr.com/photos/76029035@N02/6829285309/sizes/q/CFOs must think and act vertically to make the most of today’s new technologies.

As an article on CFO.com explains, the corporate computer no longer is a big box, but rather a network. That’s why managing horizontally in professional services accounting doesn’t work.

Finance leaders need to look at the entire picture and not focus on just one aspect before making decisions. The article uses a car analogy to describe this. Organizing your important IT capabilities horizontally is like having one group manage the tires, another manage the wheels and a third group in charge of the suspension. If each group acts independent of one another, the finished product might move, but it won’t be optimal in terms of cost and performance.

The key is to not focus just on one piece — like the tires — and ignore the rest of the vehicle. Instead, businesses need collaboration amongst the different departments, which are traditionally “siloed” and have little interaction, making sharing information and collaboration nearly impossible.

Of course, the downside to that is if you’re not careful, the decision making process will take forever. That doesn’t mean companies shouldn’t think vertically, but at the same time, it’s important to keep things moving and not get stuck in an “analysis paralysis.”

Everyone tends to focus on addressing where the pain is or what the most pressing problem is at any one moment in time. When you’re focused on solving immediate needs, it’s easy to lose sight of the big picture.

For instance, when different groups — such as real estate, network and IT infrastructure — talk to one another, they’ll understand how their individual actions impact cost, performance and security for the enterprise as a whole.

A similar philosophy should be used when making technology purchases, the CFO.com article advises. Don’t just look at how those purchases impact one department. Consider how they would impact the entire organization by taking a comprehensive approach to decision making.

Source: CFO.com, November 2012