This past year pitted finance leaders against a constant flow of surprises. What caught us off guard in 2023? The U.S. economy managed to avoid the expected pullback. The constant interest rate hikes continued, until they didn’t. Layoffs were plentiful, but labor markets remained tight and the U.S. unemployment rate remains at near-historic lows. Artificial intelligence (AI) hit the mainstream and became a business expectation. And global instability increased, among many other issues. Many leaders in finance and beyond were left guessing and scrambling to adjust plans and budgets.
To better understand how CFOs reacted to these challenges, Planful surveyed just over 1,000 CFOs and finance leaders. It’s a CFO’s job to avoid surprises and, when they happen, to be ready with a plan to minimize their impact. After a year full of surprises, here are the top lessons learned, according to the survey’s results.
Deft workforce planning must be a key CFO strength
Nearly half of those surveyed said their number-one pain point was workforce planning, which has been a thorny issue the past few years. CFOs continued to put outsized effort into managing workforces to find the right level of resources to support changing business conditions and forecasts.
Between the global pandemic, tight labor markets, and relocating workers, workforce challenges might seem like an obvious pain point. However, it appears as if these big swings in workforce budgets happened because most companies have been missing growth projections for the past few quarters.
Finance already spends too much time finding and understanding data and too little time digging into it to prepare better forecasts. CFOs and finance teams that have quick access to data and intuitive analysis tools can create better forecasts for the workforce and beyond. Surprises will always appear, but when CFOs can see them earlier or react to them more quickly, the business has more time to respond effectively.
The best CFOs have built tight bonds across the business
It’s been said again and again, but 2023 further solidified the CFO’s role as a strategic advisor for the entire company. But that requires alignment, collaboration, and trust that goes both ways and extends to all corners of the business.
In the survey, finance leaders said the executives they partnered with most often were the CEO, CMO, and Chief Product Officer, in that order. The CEO is obvious, but given the number-one lesson learned above, it is surprising to see that Chief People Officer didn’t make the top three. People are usually the biggest cost in an organization, so having tight alignment with the heads of Finance and HR helps both avoid surprises and better react to changes.
Finance leaders must understand at a detailed level how the rest of the business is performing. Spending more time with decision-makers across the business is how you learn about issues before they become unwelcome surprises.
AI is the real deal for the Office of the CFO
The hype around AI and generative AI exploded in 2023, as did investments in related startups and AI technology solutions. This amped up the pressure on CFOs to understand the benefits and risks of AI, and to quickly find the resources to keep up with competitors.
In many cases, AI is being used effectively to improve efficiency and productivity, elevate the customer experience, reduce costs, and, critical for finance leaders, analyze large volumes of data to spot errors and find valuable insights that humans might overlook. It is a sure thing that AI use will only continue to grow, so finance must find ways to use AI to catalyze business growth and profitability.
In 2023, AI and generative AI have also been proven to help the CFO’s teams specifically. Survey respondents mentioned report generation, forecasting, and identifying data anomalies as the top three AI use cases for finance. Generative AI is also showing promise to automatically explain variances, summarize reports, and make suggestions that CFOs can then use to enhance decision-making and gain a better understanding of the broader economic and business context.
CFOs must supercharge their team’s tech
Finance and accounting teams will always use spreadsheets, but Excel shouldn’t be the operating system for your financial performance management efforts. The problems with spreadsheets today are the same problems with spreadsheets two years ago and two decades ago: they're disconnected, they break, you can't collaborate … you get the point.
More and more, CFOs are moving the bulk of their financial performance management (FPM) to dedicated planning software over spreadsheets. Seventy percent of the respondents to the survey say that their organizations increased FPM budgets in 2023. Of all respondents at organizations that have already deployed an FPM solution, 78% say they realized a return on investment (ROI) in 6 months or less.
But, while CFOs are putting more resources into modernization, the transition must be accelerated. If not, you’ll miss out on automated processes, reduction in friction, having more time to investigate and understand the numbers, and building a platform for finance-focused AI technologies that provide more insights and help eliminate even more surprises.
Learn from the past to avoid future surprises
Getting better at workforce planning, collaborating more with all leaders across the business, investing in AI, and modernizing finance tech were key lessons learned in 2023. For 2024, CFOs can start the year off strong by making moves to improve how finance operates, and you’ll be able to face any surprises with calm composure and cool confidence.