IT Solutions Aligned with Finance and Accounting
For every organization, there are some departments which are core to the growth and expansion of the organization. Some of the departments may be revenue centers while others may be cost centers. Certain other divisions will be a combination of both but still imperative for the smooth functioning and inter-departmental co-ordination.
There are certain divisions, which although on the hindsight are revenue generation centers, but it may be difficult to directly measure their profit contribution to the organization. Take the case of a project implementation team in a service oriented organization. A well-trained technical team having high level of professional expertise is a pillar of any organizations competence and brand image. However, again it seems highly unrealistic to measure the revenue contribution of such a team to the company since returns are more measured in terms of customer satisfaction.
A similar evaluation is necessary for the three other mainstay departments of the organization namely – Information Technology (IT), Finance and Accounting. Each division has their own importance and their own role to play which needs to translates into the desired growth path for the organization. However, a stark difference is visible from a historical perspective of each of these divisions’ role and responsibilities. There is no doubt that IT as a function is more recent to present day corporate houses. The divisions of finance and accounts are as old as the concept of a corporate unit itself. An individual role of each department followed by a combined role helps in setting out the right priorities for each division.
As technology developed and the need to have them ingrained into a company’s operations was felt acute, IT teams were set up in order to offer cross-departmental support on hardware and the software side. The need of the hour was to effectively use IT as a tool for a optimized flow management from a combined angle of customers, vendors and suppliers. The IT department makes the necessary decision to procure and maintain new hardware like computers, servers, switches, routers, and storage and security devices. The IT department again is responsible for software implementation or development as the case may be. The departments are headed by highly professional Technology heads.
The finance department has to plan out the entire costing and expenses for the particular business entity. It is the duty of the finance division to allocate the budget required to ensure smooth working of the entire organization. The necessary working capital is defined by the finance team in tandem, of course, with business heads. At the same time, it is the responsibility of the finance department to set the necessary financial turnover numbers to charter the profitability route for the organization. The profit and loss account, as well as the balance sheet, is prepared by the finance department. Viewed from this angle, it is but a fact that financial heads play a major role in deciding the company strategy.
The accounts department is a subset of the finance department, in the sense that this department also deals with financial figures and numbers. But the difference is that, accounts is more concerned with managing the day to day cash inflow and outflow, the vouchers, maintaining the bank statement and in fact looking into details of the day to day financial operational management. In other words, accounts department are the cash management wing of the every organization.
On a combined note, IT and even Finance has a more dynamic role to play as compared to accounts. Today a lot of IT technologies are aligned to financial packages and solutions. Software like ERP has modules which take care of financial and payroll management. Any upgradation of technology is closely interlinked with Finance departments. At the same time, the allocation of IT Budgets is a financial heads responsibility. All the three divisions are operational centers and hence not directly into revenue generation. In spite of this, they are the nucleus of every corporate setup.
About Rajesh Padmanabhan
My self is Rajesh Padmanabhan from Bangalore, India. I have been in this field of freelance article writing for above 5 years and i am working in one of the software firm in Bangalore.