By: DigitalCFO Asia Editor | 10 December 2021
CFOs will need to re-strategise these 5 things for 2022.
In 2022, CFOs can anticipate that they will require a powerful “rapid response” program to bolster remote workforces, reorganise credit and collections and alleviate financial risk. In 2019, it appeared that CFOs and finance executives’ objectives, for the upcoming decade, were on track. However, the economic upheaval caused by the pandemic put their plans on hold for a period of time, allowing them to see the flaws in their procedures. This highlighted the importance of a response program, as pre-pandemic strategies may no longer be applicable, and they must evaluate which ones should be modified to match changing business conditions. To meet the new economic demands, CFOs will need to re-strategise the 5 things listed below.
1. Align Digital Strategies and Business Outcomes
CFOs must have a defined digital plan that is linked to business goals and offers direction on the scope, size, and timing of initiatives. Revenue growth and expense reduction should both be aided by digitalisation. Understanding how technology can enable new business models or enhance existing areas of business is critical for CFOs in narrowing investment priorities. According to Gartner, “64% of business leaders said they will utilise COVID-19 and similar economic crises to concentrate on revamping their operations” and 69% of respondents believes that “digitalisation efforts are speeding up.”
2. Fund Digital Growth with Flexible Budgeting
Finance executives have traditionally handled annual budgeting and planning of operations in most organisations. However, the fragile new economy necessitates that this be done more frequently. National financial authorities’ budget limits hinder the CFOs’ capacity to pivot and seize new possibilities.
To assess expenses and development potential, finance leaders require a new outlook. CFOs must be clear about their business goals and restructure the budget to assist the finance department. Rather than picking investments depending on external criteria such as popularity, they should concentrate on those that have a big impact.
3. Fast-track Digital Transformation Within the Organisation
According to a PwC survey, 68% of CFOs indicated their organizations expected to engage in digital transformation in the coming year, and 58% said automation was a top priority to “help balance the absence of institutional knowledge when individuals leave their companies.”
Value-added work is built on the basis of reliable technology. Employees are capable of engaging in higher-value work when repetitious and manual activities are eliminated from their plate. This will have a positive and direct influence on the organisation’s bottom line, as well as a higher degree of team satisfaction. As a result, CFOs will be pressed to come up with new strategies to enable and maintain growth in a hybrid workplace. In 2022, businesses that succeed will surely be fueled by an engaged and technologically enabled finance department.
4. Hire, Develop and Retain Digital Finance Skills
To endorse an always-on, technology-driven business, digital expertise is required. Finance directors require an “always-on” skills-sensing ability to detect new talents and analyse skill-development priorities since skill needs to be updated so frequently. This allows finance to make quick course corrections and deploy skills closer to when they are needed. While some organisations merely want individuals who can show how analytics is crucial to the finance function, CFOs are progressively searching for individuals who can exhibit critical-thinking and analytical abilities.
According to a poll of 769 finance leaders conducted by EY , 57% of respondents believe that developing prescriptive and predictive analytics capabilities is critical to their company’s long-term success. In addition, their performance as a CFO is contingent on employing personnel with emotional intelligence and interpersonal abilities to fully realise the potential of implemented technologies.
5. Use Analytics Insights for Informed Decision-making
Due to a lack of accessibility to high-quality data, CFOs are unable to have a better understanding of the financial operations’ efficiency and make educated decisions. According to the D&B survey, data quality is fundamental to 41% of finance executives’ current objectives to boost finance processes. According to the Gartner poll, 84% of respondents plan to devote more time to this initiative.
The D&B survey revealed that the top two data-related challenges for CFOs are keeping customer data in a single location and getting information from data with minimal human participation. CFOs should choose an automated approach that obtains high-quality data from a variety of sources, integrate it into their system, and assist them in updating customer information in real-time while minimising human errors.
Finally, in order to become a truly dynamic business unit, the CFO must keep up with current digital changes. CFOs can ensure that finance stays effective in generating business success by embracing the right technologies, making informed decisions from data, aligning digital strategies with business outcomes and recruiting qualified talents.