Introduction
This paper will analyze and discuss how Information Systems can be used in my future career in finance and will describe the critical skills that I need to be successful in the said career.
This paper therefore assumes that I would be a finance manager in a certain company or a possibly a chief executive officer for purposes of asserting the importance of the use of information systems. This paper assumes a corporate set-up thus, the paper will be dealing with corporate finance to fulfill my career.
Analysis and Discussion
The nature of the career in Finance and what is the importance of IT in Finance
Corporate finance is geared towards having an efficient and effective management of the finances of an organization in order to achieve the objectives of the same organization. As such, there must be planning and controlling of how resources or funds are raised from, how these funds or resources will be allocated or deployed and the need how to control or make sure that planned sources and planned allocation will be effectively done.
In other words, finance function as exercised or practiced by finance managers, targets the optimum allocation of resources available and which can be presumed scarce because of opportunity costs of options. It is in this context that finance function has a very close relation to economics where there are scarce resources and the utilization of which must be maximized to benefit the whole economy. This time, the assumption in finance is in the firm or company which employs investments of stockholders into corporate decisions that should ideally maximize their wealth or caused them to be lost for many possible reasons including mismanagement.
The finance discipline is normally associated with that of accounting. It is indeed true that financial managers are required to have a firm understanding of management accounting to allow them to make decisions. They need also to have a good understanding of financial accounting to be knowledgeable to appreciate the results of their decisions to users especially the investors and the public at large.
There is however a significant difference between finance and accounting as the first is more about cash flows (Brigham and Houston, 2002) and therefore forward looking while financial accounting is more about past results of profitability, liquidity and solvency and therefore historical (Meigs and Meigs, 1995). For the purpose however of this paper, career in finance includes topics related to accounting which finance managers are required to know.
How people working in the finance field are using Information System or how they will use information systems soon?
In terms of seeking the employment of finance and accounting professionals, companies are putting their advertisements via different job sites specifying the requirements of different positions under the finance field. To cite an example, the jobsite under careerbuilder.com carries a requirement of more than 19,000 finance jobs at the time of writing of this paper. The qualifications the finance field normally contain knowledge of computer applications and softwares which may be considered as us of IT in their functions. This means that finance people must learn IT or be left not being hired because of lack of IT skills.
Some finance and accounting professionals are providing various finance and accounting services via the Internet (EDS, 2008). Some provide recruitment consultancy while placing finance and accounting professionals board level (Finance Professional, 2008)
Articles about how finance and accounting people uses IT
As stated earlier that the nature of finance has something to do with how to maximize the use of resources in order to attain the objective of the corporation which is primarily wealth maximization for stockholders. It has something to do with the keeping the stockholders satisfied since they have cost of capital entering into business. How to use IT must be very significant if the decision to be done will produce more wealth. Wealth however comes with investing and then expecting that investments will produce returns. Finance therefore includes choosing the right investments in order to they may produce the level of cash flows the present value of which can be justified using cost of capital as basis.
In the case therefore on what equipments to acquired, which are IT related like mobile phones, are still with the realm of finance field since it involves a choice of how the purchase or investment will affect the bottom line performance of the organization. In business article involving BlackBerry and Apple iPhone, the issues is not simply which is more sophisticated product between the two but which in the long run will ensure the attainment of corporate objective that would produce better benefits from a financial standpoint (BusinessWeek.com, 2008).
In an article about the timing of shredding data in relation to savings related to the decision may be viewed in the context on whether it is a justified investment to purge data because of the use of IT now in the world of business, which may have allowed the easy retrieval of those preserved using IT or the danger of having too much information that may be costing the company unnecessarily (Computerworld.com, 2008).
According to a survey on IMA members who have earned CMA or CPA, it was found that they have attained higher compensation on the average through out their career. As to how IT may have helped these CMAs and CPAs in their career is given from the fact that they are trained in the use of IT in their fields (Reichardt and Schroeder, 2008). Accountants are now using the latest software in information systems to provide to their clients or employers to make the fastest decision based on most relevant information as in the case processing transactions like point-of-sale solutions and barcode automation (Pathfinder, 2005).
As part of finance function, financial analysis is a requirement and to imagine that financial data could be very voluminous, just the use of the accounting software has contributed to the preparation of financial statement preparation before financial analysis could be made or even started. Since finance function is more of adding value, it would be a great loss of IT is not taken advantage by the professional.
There are already accounting softwares that would allow the financial information presentation or production with the ratios already being computed. In fact internet companies are making it available on line about financial ratios of listed companies. These companies include those of MSN, Yahoo Finance, and Goggle Finance. To cite an example, the financial ratios of Toyota Motors is available at MSN (2008), while that of Home Depot is available at Yahoo Finance (2008) and that of Ames National Corporation with graph is available at Goggle Finance (2008). Finance people need to make quicker decisions by the use of IT (Spiech, 2008).
Investing in broad net work has become a must if a company wants to remain competitive. This is what happened in the case of UPS where managers use advanced thinking by building scenarios if they have to identify drivers of their business (Dzinkowski, 2008).
A finance professional who is a member of CMA Canada has testified about his company Syncrude in Canada’s oil industry where innovation and creativity is the name of one of the games. Since the company valued flexibility, the company did implemented information based system that allow them to capture data at source which affords daily cost reporting with the feature of making every team leader understand the company’s position in relation to cost and target (CMA, 2008). In other words, the finance function of maximizing value to the company needs to employ IT to hasten decision making. The finance professionals involved in this company activity could only be required to use IT and know its cost and benefits if effective finance decisions are to be made.
Conclusion
Every decision that may affect the attainment of the objective of a corporation is technically a finance issue and therefore the finance professionals or practitioners must be aware of the implication of investing or not investing in IT by simply relating to its attainment to corporate objectives. The use of IT in my future career is very important. Finance theory has to go with globalization of the financial markets and the speed of information which causes a necessary effect on fast decision making if a company has to survive competition. The use of IT has facilitated the provision, modification exchange of information, within companies, across companies and even industries.
Finance professionals are not expected to be programmers or makers of accounting software, they only need to appreciate how to benefit from the use of IT and be able to measure the implication of using or not using in terms of attaining corporate objectives.
References:
Brigham and Houston (2002), Fundamentals of Financial Management, Thomson South-Western, US.
BusinessWeek.com (2008) BlackBerry vs. iPhone: RIM Takes It Up a Notch. Web.
CareerBuilder.com (2008) Finance Jobs in Finance and Accounting Industry. Web.
CMA (2008) CMA Professional Profiles. Web.
Computerworld.com (2008) When to shred: Purging data saves money, cuts legal risk. Web.
Dzinkowski (2008), WEATHERING ECONOMIC STORMS. Web.
EDS (2008), Finance & Accounting Services. Web.
Finance Professionals (2008) Overview. Web.
Goggle Finance (2008), Ames National Corporation. Web.
Meigs and Meigs (1995), Financial Accounting, McGraw-Hill, New York, USA MSN, Toyota Motors- Financial ratios. Web.
Pathfinder (2005) Point of Sale. Web.
Reichardt and Schroeder (2008) IMA 2007 SALARY SURVEY. Web.
Spiech (2008), MAKING MORE TIME FOR EFFECTIVE FINANCIAL ANALYSIS. Web.
Yahoo Finance (2008), The Home Depot, Inc – Key Statistics,. Web.