The Role of CFO’s in Economic Uncertainty: A Technology Report

October 2, 2023

Even as concerns over a potentially crushing U.S. recession have diminished and a softer landing (but not necessarily a soft one) seems more likely than it once did, lots of CFOs in North America and abroad remain concerned about how best to control costs, invest in growth and maintain a competitive edge. It is then no surprise that we are seeing CFO’s play an increased role in IT as well.

“Many CFOs see the incorporation of digital technology as a key route to improving profitability in volatile times,” said Marko Horvat, a Gartner Finance research vice president. “They are so commonly involved in these areas, not just because they think they are hard to achieve and need close monitoring, but also because their success or failure will be critical to how a business performs in the coming years.”

In a recent survey of CFOs by financial software maker Coupa, the top strategy — tied with increasing efficiency — for boosting profitability was (no surprise) increasing digitalization. Part of this tech enhancement also includes the use of Business Spend Management systems (Coupa’s specialty) that give CFOs a granular view of finances across the organization. At present, 46 percent said they lack that type of overview.

“Automation technologies allow CFOs to chart a course through the storm and emerge stronger,” Coupa CFO Tony Tiscornia said. “With a potential recession on the way, it’s absolutely critical that CFOs optimize for financial health by equipping their organization to respond faster and more strategically to disruption. It’s how CFOs will help their companies survive a recession and come out of it ready to accelerate growth.”

(Related: These same financial leaders also said they’re at odds with CIOs and other IT professionals about how to allocate technology funds in the short term.)

What CFOs really want to avoid in their quest to cut costs and boost efficiencies is more layoffs, which rippled through countless companies large and small in 2022. Using layoffs to cut costs is like using a butcher knife to perform surgery. In business, as in the operating room, precision is key. “Nearly 9 in 10 (87 percent) say layoffs solve an immediate problem but create long-term issues,” according to Coupa’s survey. “CFOs and finance leaders are prioritizing a range of alternate cost-cutting measures now, with an eye toward brighter financial horizons.”

That’s where digital automation can help by allowing CFOs to “optimize for financial health by equipping their organization to respond faster and more strategically to disruption.”

But implementing more digitalization is no easy feat, especially for organizations that are hampered by antiquated legacy systems. In fact, Gartner’s Horvat noted, “the greatest proportion of CFOs felt that leading digital transformation would be the hardest area to achieve success this year” and that they’re “mostly not comfortable delegating oversight over such matters.”

communicating your business continuity plan

But they need to get over that insecurity. Besides leaving organizations open to all manner of cyber attacks, legacy systems “leave finance leaders vulnerable to blind spots and misguided assumptions when managing spend and making financial decisions,” as Coupa’s survey points out. “It’s a serious, increasingly perilous deficiency, especially given that less than half have proactive or predictive financial forecasting and risk management in their organization.”

Seeing as most SMBs can’t afford to hire many (or any) in-house IT specialists to handle these crucial digitalization improvements, outsourcing day-to-day operations and responsibilities is becoming more common. As contributor Steve McNally wrote earlier this year, “Partnering with a managed service provider (MSP) to provide an IT help desk and related support can certainly mitigate the risk of unexpectedly losing an internal team. More importantly, such a partnership can provide access to a group of IT professionals with varying areas of expertise and skill sets. As such, your new team will likely provide a deeper and wider level of IT support than the typical internal IT department, and potentially at a lower cost.”

In the end, however it’s accomplished, investing in the latest technology — for tracking finances, bolstering security or any number of other key functions — can make a huge difference. And the smartest CFOs know it.

“As shifting customer preferences, regulatory changes, skills shortages and rapidly evolving technology threaten long-term profitability, CFOs are moving from protection to investment mode,” a PwC survey indicates. “They’re doubling down on new capabilities like GenAI and advanced analytics to create a mutually reinforcing transformation ecosystem that drives outsized outcomes.”

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