Digital transformation, labor shortages, cybersecurity, and supply chain reported as top CFO concerns; rebounding finance budgets, FP&A investment to provide much-needed tailwind
MISSISSAUGA, ONTARIO, March 22, 2022 – Prophix Software, a global leader in mid-market Corporate Performance Management (CPM) software, today shared findings from its new “State of the Finance Function” survey completed in collaboration with CFO Dive. The survey revealed as much as 82% of finance executives are planning substantial upgrades to their automated financial planning and analysis (FP&A) processes in 2022, partly in response to challenges faced during the pandemic, but also to support organizational performance and better respond to rapidly shifting macroeconomic trends.
The data also showed, however, that CFOs have significant concerns about their ability to attract and retain the skilled talent needed to accurately interpret the financial data and analytics these technology tools uncover.
“The finance team, and CFOs in particular, have been under extreme pressure since the onset of the pandemic to lead their businesses through enormous uncertainty,” said Alok Ajmera, CEO of Prophix. “Our survey shows many finance executives were able to quickly migrate their automated FP&A technology to the cloud during COVID-19 to address remote work. This underscores the need for digital transformation to enable financial professionals to be better equipped for whatever comes their way. But just as organizations are moving in the right direction with these technology advancements, our findings highlighted there is a shortage of employees proficient in these new technologies, particularly regarding the ability to accurately interpret data and analytics, which is a major concern for CFOs.”
Prophix’s survey queried more than 200 North American financial executives across more than 20 different industries to assess the top challenges they faced over the past two years and gauge their priorities for the year ahead.
Key findings from the report:
Top observations and learnings for CFOs include:
- Even after two years of pandemic-related pressures, 25% of CFOs believe their financial planning, forecasting, and reporting capabilities are too slow for today’s turbulent business environment.
- Although a post-COVID-19 future is in sight and CFOs have made significant strides to overcome their technology shortfalls through the adoption of technology-based FP&A solutions, new worries have emerged, including inflation, supply chain disruptions, cybersecurity, and a shortage of skilled financial and data analytics talent.
- Attracting and retaining talent is likely to dominate CFO agendas throughout 2022
- At least 33% of CFOs believe the lack of skilled workers is causing significant obstacles to automating their FP&A processes
- 86% of respondents believe finance professionals’ skillset must evolve given the new role data and analytics play in today’s continuous planning and forecasting
- Thirty-eight percent of CFOs point to data accessibility and accuracy in reporting as a top concern, which they believe can be alleviated through a combination of automated technologies and skilled talent.
Finance budget shifts:
- The majority (82%) of businesses plan to increase their budgets in 2022 by at least 10-40%, and technology is where they plan to spend their dollars
- Twenty-seven percent have plans to increase their finance budget by 10-25%, while 26% increased their finance budget by 26-40%
- At least 12% are making an increase of greater than 40%
- The top areas of investment:
- CPM software (55%)
- Business intelligence tools (51%)
- Artificial intelligence and machine learning (44%)
- Nearly half (49.3%) also plan to invest in cybersecurity technology in 2022
COVID accelerated the move to cloud-based automated FP&A:
- Thirty-six percent of businesses quickly moved their automated finance technology to the cloud during the pandemic to allow for more nimble adjustments to plans, budgets, and forecasts in a remote environment
- Almost a quarter (22%) of respondents said they scrambled to implement automated FP&A processes
- Just 10% barely managed through the pandemic by using manual or legacy processes, and are now investing in automated FP&A technology such as CPM software
CFOs learned important lessons about agility in FP&A and the need for better and faster forecasting, modeling, and cash flow management:
- At least 14% of finance leaders found it extremely difficult to react to changes impacting their business in a timely manner using legacy processes such as Excel spreadsheets
- After realizing the value of CPM technology to quickly react to change during the pandemic, more than 18% of finance leaders are now looking to invest in AI and machine learning capabilities
- Up to 73% of respondents increased the frequency of their forecasting during the pandemic and 77% put more focus on scenario modeling to help adjust forecasts
The survey also showed some obvious shifts in the finance function’s focus because of the pandemic:
- Reporting and analytics increased in importance by 6%, while budgeting dropped by at least 5%
- Forecasting grew in importance, with 50% of CFOs saying this is a main area of focus compared to 38% pre-pandemic
- Unsurprisingly, the focus on cash flow planning increased from 42% to nearly 50%
- Personnel planning increased from 38% to 42% to focus on the recruitment and hiring of technology-focused talent, along with upskilling current staff
- Capital expense planning jumped from 35% to nearly 42% to better prepare for additional/unknown costs in the future after experiencing impacts on the past two years’ budgets
“Although finance leaders will continue to be challenged by market shifts, talent acquisition, and other economic factors in the coming 12 months, one of the most encouraging conclusions from our survey was the fact that finance leaders are finally in a position to commit to cloud-based CPM software for more accurate, real-time data insights and improved forecasting – all of which address their struggles over the past two years to more nimbly forecast, plan strategically, and manage risk,” Ajmera added. “Thoroughly embracing digital transformation will help prepare organizations for the new finance imperative – to move at the speed of change.”
For more information, download The Future is Agile Finance: 2022 CFO Benchmarks eBook.