- Inflation and other macroeconomic factors have pushed digital transformation to the top of CFOs’ priority list, a recent study found. The 2022 Global CFO survey — conducted by Everest Group and supported by business process management company WNS Holdings Limited — found today’s CFOs are identifying digital as a key priority.
- Seventy percent of CFOs pointed to implementing digital technologies that can improve efficiency, effectiveness and stakeholder experience as their main priority, the study of more than 300 CFOs found.
- In order to meet their goals of agility and resilience at their firms, as well as develop a “future-ready” finance function, CFOs “must adopt an end-to-end approach toward transformation in order to drive business growth, optimize stakeholder experience and scale business initiatives over the long-term," Keshav R. Murugesh, group CEO for WNS said in a statement.
While digital transformation became a key strategic priority for many companies during the COVID-19 pandemic, the challenges facing CFOs in today’s environment have shifted, impacting their approach to digitization.
A 2020 Everest Group study found CFOs pointed to changing customer needs as their top challenge, for example, while inflationary pressure and other related factors mean cost and pricing pressures are now top of mind for today’s financial leaders. Pricing and cost pressures were the third largest challenge identified by CFOs in 2020, according to the group’s previous study.
Investing in automation or other key technologies can not only aid CFOs in reducing costs, but it can also allow finance departments to operate more strategically, “serial CFO” Christina Ross, now CEO of FP&A software provider Cube, said in a recent interview.
Investing in such technologies now, amid forecasts of recession, also means CFOs will be able to lower costs and increase productivity, she said.
Notably, while 65% of CFOs said access to stable funding was key to successfully implementing their digital transformation initiatives, in practice, securing consistent funding remains a challenge, according to the study.
Overall, finance executives are more willing to invest in 2022 than in past years, with approximately 70% of companies stating their willingness to invest compared with 47% who said the same in 2020. However, most CFOs are still reviewing technology spending on a case-by-case basis rather than investing in large-scale initiatives, the study found.
Forty percent of CFOs said they prefer a “step-by-step approach” to funding their digital transformation initiatives, while about 33% indicated they had the appetite to invest aggressively in these initiatives in order to outstrip their competitors.
The need to reevaluate digitization strategies comes as the pandemic’s impact also drove CFOs to take more of an active and essential role in this space, with financial heads seeking to balance both the immediate survival needs of their businesses against long-term organizational goals, Murugash wrote in the study’s foreword.
The CFO, therefore, “emerged as the linchpin of the transformative change that enterprises were focused on to become resilient and agile,” he wrote.
CFOs’ expanded role has persisted into 2022, with financial heads taking notable technological steps to address the challenges currently facing their organizations. Both FP&A transformation as well as risk management have emerged as key investment areas for today’s CFOs.
Concerns about the slowing economy’s have prompted finance leaders to reconsider their firms’ compliance and risk management practices, with 60% of CFOs stating they are prioritizing building out more robust practices in this area. This includes upgrading their governance, risk and compliance (GRC) systems as well as strengthening their risk libraries for added resiliency as the economy continues to wobble, according to the study.
FP&A transformation, meanwhile, is now the space with the highest active investments — more than two-thirds of insurance, life sciences and manufacturing firms report “actively investing” in transforming their FP&A processes, for example, compared to 50% of firms in other industries.
When it comes to successful actions taken to address these challenges, 68% of CFOs report adopting cloud infrastructures, for example, while 61% report that they are reassessing compliance, controls and policies at their firms, according to the study.
Approximately 40% of firms are also moving to fund transformation of “judgment-intensive” FP&A processes such as regulatory reporting and treasury and risk management, as opposed to simply transforming transactional processes such as accounts payable (AP) or accounts receivable (AR) processes.