GROWTH AND PROFITABILITYOptimizing the Finance Function for Small and Emerging Businesses phần 8

tomer needs, host companies may be (for a myriad of business reasons) reluctant

to alter their slate of offerings and comply. Other disadvantages include:

■ Internet access and connectivity must be adequate to ensure full usability of

the applications

■ Long-term contractual commitment may be required

■ The company is not in control of its own data

■ Customizations are not an option

■ The agreement may involve applications that are underused or not needed

■ If the ASP goes out of business, the company may be left with significant

service downtime

The finance strategist must examine the ASP model thoroughly to determine

if it is appropriate for the company. Although there are trade-offs, the model has

benefits, especially for the small company that needs to have a quick up period.

Getting past these initial strategy considerations (particularly the role of processes

and the understanding of data customers) as they relate to systems development

leads to developing a comprehensive project plan.

PLANNING

Why Plan?

The disposition of IS, whether they involve network, hardware, or software compo￾nents, requires significant preparation and planning. Upgrading or installing system

components, whether it is within the context of a finance strategy or not, will have

many key dependencies and considerations. Whenever a complex systems project is

taken on, competent, proven professionals must be sought out to help in the planning

and implementation. This is imperative when such projects involve intricate knowl￾edge of technical specifications and specialized concepts and theories related to net￾works, systems, and the like. Although small and emerging business owners may

have built their businesses with a strong do-it-yourself attitude, the systems aspect of

business development works best when qualified professionals are involved.

Strategizing the finance function involves conceptualizing and planning the

role of IS, a step the strategist must fully engage in, long before equipment pur￾chases, consulting contracts, and time-consuming implementations begin. Con￾ceptualizing the layout and design of systems will require choosing a particular

philosophy of design and maintenance and understanding the impact of the gen￾eral approach and philosophy chosen. Depending on where the organization is in

developing a finance function, this process can be seen as either a subset of strate￾gizing or a part of the finance strategy itself. Regardless of the motivation and

form, this planning process must consider the general philosophy of decentraliza￾tion versus centralization, the suitability of the organization to implement and

maintain applications, and the capacity to develop relevant documentation.

PLANNING 175

Centralized versus Decentralized Designs

Early in the planning/strategizing process the finance strategist must determine to

what degree applications and processes will be centralized. Determining whether

the IS and finance function will be centralized or decentralized often is rooted in

the management style of owners or culture of the business. Dictating uniformity

in processes, as well as application and system components, embodies central￾ization. Centralization also may prescribe the location of all core hardware and

software applications in one designated site company-wide. The true characteris￾tic of centralization is the use of uniform, prescribed processes throughout the or￾ganization. Decentralization in its purest form is the opposite of centralization,

especially as it relates to location and specifications of core applications and net￾work tools. It is also characterized by the propagation of nonstandard processes

made up of tasks that are conceptualized and implemented by the various com￾ponents of the organization.

In reality, no finance function is totally centralized or decentralized.

Processes and systems, in practice, fall somewhere on the continuum that bridges

these two polar concepts. The finance function usually is more centralized or

decentralized; hence the terms refer to the general philosophical approach to fi￾nance. Centralization in some cases is a more rigid approach to managing the

finance function. Centralization travels with words such as accountability, disci￾pline, and structure. Nevertheless, decentralized approaches can include all these

things as well. Key factors in applying centralized and decentralized approaches

to the finance function are often related to the geographical and cultural scope of

the business. Small or domestic organizations often are more suited to centralized

infrastructure. Commonality in time zones, issues faced, and competence level of

process participants makes centralization more palatable to the organization.

Multinational organizations face challenges related to statutory reporting rules

and availability of qualified finance staff. Limited infrastructure may be a chal￾lenge in some countries. Challenges like these may require varying approaches to

data flow and systems issues. As a result, the finance function for multinational

companies ends up with a core, centralized component and peripherals that are

decentralized.

Advantages of one philosophy over the other are circumstantial. Centraliza￾tion implies uniformity, which makes troubleshooting easy and minimizes the im￾pact of turnover. Decentralization, however, implies flexibility and the capability

to overcome challenges in unique ways. Centralization often leads to rigidity and

the inability to accommodate unique circumstances or presents solutions that cre￾ate more challenges than they solve. If planned poorly or applied inappropriately,

centralization can result in unnecessary hierarchy and bureaucratic hurdles. De￾centralization may enable the development of processes or systems that are counter

to the overall objectives of the finance function. Allowing the loose development

of finance function components may enable blatant inefficiencies to infiltrate the

176 INVESTIGATING INFORMATION SYSTEMS