How to Build a High-Performing Finance IT Function

Most Australian finance organisations Gartner works with are currently undertaking or planning significant finance digital transformation projects. These initiatives include moving to cloud-based ERPs, implementing automation and hyper-automation tools, and piloting embedded AI solutions.

This focus is driving an increased investment in Finance IT, defined as a dedicated team within finance headcount, focused on driving finance-specific technology goals. Gartner predicts that Finance IT roles will grow fivefold from 2023 levels by 2025.

The first challenge with establishing or improving the finance IT function is where to start. To maximise the impact of this fast-growing subfunction, begin with defining the scope, structure, objectives and key results (OKRs), and the right capabilities necessary for success.

Define a clear mandate

A clear mandate is the foundation for the finance IT function; starting with a narrow mandate and broadening that as the function matures.

Specifically, finance IT should aim to fulfil three distinct purposes over time.

First, maintenance and operations that are focused on the shorter term, limited to maintaining current finance-specific IT systems and supporting end-user requests for access or changes. A team with this scope will often be the easiest to establish but limited in its transformational benefits.

Second, finance technology strategy with a team to establish and execute a long-term finance technology roadmap. With a more strategic mandate, this team will work alongside finance transformation and corporate IT leaders to determine how finance processes can be improved by specific systems and applications.

Third, finance technology development and innovation with a mandate to develop finance-specific tools and applications, in addition to owning the maintenance and strategy roles. This scope is suited to finance organisations with specific needs that cannot be met by off-the-shelf applications in the current market.

To determine the most suitable scope, consider the existing capacity for finance technology projects within corporate IT by assessing how fast current and proposed technology projects are progressing. It’s also important to assess end-user demand for customisation, the extent of integration needed, and the current level of technological knowledge of finance end users.

Structure for team impact

Based on the mandate defined above, the right team structure and reporting line need to be implemented. Three factors need to be considered to structure finance IT for maximum impact.

First, determine if a head of finance IT Is needed. If creating the function from scratch, finance IT leadership can be sacrificed for more direct support. However, a head of finance IT will be critical as the organisation, the function, and the need for technology support grows.

Second, define finance IT’s reporting structure, because the strategic importance of finance technology projects should dictate where the head of finance IT reports. Increasingly, this role reports directly to the head of finance transformation, the controller, or head of FP&A. If there is no head of finance IT, then the team may form part of a finance transformation team or report directly to a financial controller.

Third, establish finance IT’s internal structure. Gartner research indicates that organisations with less than US$3 billion in revenue have, on average, less than three dedicated finance IT headcount. Organisations with revenue upward of US$10 billion will have headcount of seventeen, on average. Regardless of size, leading finance IT teams should position themselves as a centre of excellence, meaning the exact structure should reflect the unique capability that it wants to deliver to the organisation.

Utilise OKRs to drive performance

Avoid measuring finance IT teams solely on the delivery of successful finance technology implementations. Instead, balance measuring the impact of those outcomes with the behaviours that are required to achieve them. Objectives and key results (OKRs) are shown to drive strategic outcomes and prioritise critical work by focusing on the “what” and the “how” rather than just “how well” work is done.

To create effective OKRs, build an absolute understanding of finance transformation goals. Regardless of whether the broader finance organisation uses OKRs, finance IT work must be linked to transformation outcomes.

Prioritise no more than three objectives at any given time with a maximum of three key results for each objective. OKRs should be reviewed regularly and updated quarterly. This cadence ensures teams can revise OKRs as their business changes and as they make progress toward their main objectives.

Source the right capabilities

Organisations need to define and source critical capabilities for their finance IT function, remembering that while core IT skills might be helpful, they must be supported by essential capabilities such as needs documentation, planning, and stakeholder management.

The good news is that many finance teams already have the foundational capabilities for finance technology support. Technology strategy, however, requires a different capability set. That will require an understanding of the finance process, prioritisation, and planning. Knowledge of finance technologies is also needed.

Finance transformation leaders working toward autonomous finance are investing in finance IT. Setting clear expectations and the right reporting line, linking performance to transformation outcomes, and develop a robust finance IT competency model will help in building high-performing finance IT teams.

Author –

Nick Duffy is a Sydney-based Director in Gartner’s Finance Practice and supports clients across various aspects of finance and shared service design and transformation. Nick is presenting a session on “Finance IT — The Secret Ingredient to Autonomous Finance” during the 2024 Gartner CFO & Finance Executive Conference taking place in Sydney on February 26-27.