The CFO’s role has dramatically evolved due to the global pandemic and is now at the forefront of organizational transformation.
This has also meant the CFO’s challenges and priorities today are markedly different from what they were two years prior.
As the Global CFO Survey 2022 by Everest Group, supported by WNS, reveals, CFOs are taking decisive steps to respond to the prevailing macroeconomic situation and demands of the next normal.
If 2020 highlighted the CFO’s capability in helping the business navigate the pandemic and position for a rebound, 2022 and beyond would test the ability of a CFO to drive strategic decision-making and reinforce the organizational march towards future-readiness. CFOs are transitioning from a “survive the pandemic” mindset to a “thrive in the next normal” outlook.
The current macroeconomic situation – characterized by rising inflation, a looming recession, geopolitical instability and continued supply chain disruptions – rules out an early return to normalcy. CFOs thus realize the importance of embedding resilience in the finance function and future-proofing it from shocks and setbacks.
The Global CFO Survey 2022 by Everest Group, supported by WNS, finds that 70 percent of organizations show an appetite to invest in 2022, compared to less than 50 percent in 2020. The survey emphasizes the evolving scenario in 2022 vis-à-vis 2020 and how challenges arising from the volatile macroeconomic situation have taken precedence over pandemic-induced challenges.
Top Organizational Challenges in 2022 versus 2020
Source: Global CFO Survey 2022 by Everest Group, Supported by WNS
To address these challenges, CFOs are undertaking a few crucial steps, including:
Driving visibility to improve cash flow: We are seeing Finance and Accounting (F&A) functions adopt analytics-driven Days Sales Outstanding (DSO) and Days Payable Outstanding (DPO) dashboards to improve cash flow. There is high adoption of visualization tools across Procure-to-Pay (P2P), Order-to-Cash (O2C), Record-to-Report (R2R) and Financial Planning and Analysis (FP&A) to increase enterprise data visibility. Moreover, mature finance organizations are deploying predictive analytics to anticipate late payments and pursue customers based on behavioral analytics.
Strengthening risk management: The Global CFO Survey 2022 by Everest Group, supported by WNS, reveals that more than 60 percent of CFOs prioritize creating a robust compliance and risk management practice. To counter emerging threats and improve organizational resilience, CFOs are strengthening and consolidating their Governance, Risk and Compliance (GRC) systems and improving connections to other systems, designing mitigating controls and strengthening risk libraries.
Adopting digital to improve experiences and optimize costs: 70 percent of CFOs acknowledge implementing digital technologies to improve efficiency, effectiveness and stakeholder experience as their topmost priority. This contrasts with the findings of our 2020 survey that showed less than 50 percent considering an increase in the adoption of digital technologies to improve productivity, customer experience and control.
Along with transactional areas like accounts payable, complex areas such as FP&A are also attracting significant digital investment. Organizations are also implementing cloud-led digital solutions to enable hybrid working. 68 percent of the respondents are adopting cloud infrastructure to build an agile and resilient finance function.
Improving data management: CFOs realize that data consolidation alone will not yield expected returns. They also need to start looking at investing in data lakes and advanced analytics to develop Artificial Intelligence (AI) and Machine Learning (ML) capabilities. With these advanced tools, finance teams can better predict trends, apply the right controls and manage revenue leaks. For instance, detecting fraudulent expense claims or inflated vendor invoices with AI / ML tools.
Re-imagining the approach to change and talent management: More than 60 percent of CFOs believe a robust change management practice is vital to a successful change initiative. Organizations must rapidly evolve Key Performance Indicators (KPIs) to gauge business agility and outcomes. Investing in techno-functional skills is essential as businesses drive transformation through next-gen technologies. They must prioritize talent upskilling / re-skilling through customized programs and leverage innovative workforce models to manage volume fluctuations.
Implementing an integrated approach to finance: More than 75 percent of organizations from the banking, financial services and insurance sector have significantly improved the integration of the back, middle and front office functions, compared to less than 60 percent in other sectors.
CFOs are now prioritizing the end-to-end transformation of the finance function with standardized processes and digital enablement across the enterprise. Connected ecosystems, cloud-based infrastructure and global business services are driving costs down, improving efficiency and stakeholder experience, and helping enhance agility.
Success in tiding over the current challenges and making finance a strategic business partner will depend on how well CFOs chart the course. An integrated approach to finance with robust talent and change management practices, strategic partnerships, C-suite involvement and secure investment funding will power a future-ready finance function.
Read the findings of the Global CFO Survey 2022 by Everest Group, supported by WNS.
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