Digital Transformations for CFOs

Navigating the Dynamic Financial Landscape: CFO Challenges and Trends

June 6, 2023

In an era of growing economic uncertainty, CFOs are stepping into the spotlight as strategic business partners, overseeing critical financial and operational data. As they confront the challenges of a rapidly evolving and unpredictable business landscape in 2023, CFOs are increasingly focused on sustainable and responsible business initiatives to secure long-term success for their companies.

The findings of a study by the Institute of Management Accountants revealed that 72 per cent of surveyed respondents firmly believed that the scope of the role of CFOs will expand considerably by the year 2025.

And with the waves of economic turbulence surging ahead, they’ll be shouldering even greater responsibilities to guide their organisations safely through.

Gartner’s survey of 234 CFOs in July 2022 further revealed the primary challenges for 2023, where the majority of CFOs identified hiring and retaining staff as the foremost challenge, with 36 per cent of respondents selecting forecasting and 35 per cent choosing cost-cutting as key difficulties.

CFOs are instrumental in driving value and resilience within their organisations, and many have set their sights on the transformative path of digital innovation. This transformation has become an essential enabler for streamlining operations and enhancing critical decision-making through data-driven insights and analytics, thereby providing them with a competitive edge.

Here are the key trends future-focused CFOs need to watch:

1. Optimising Costs and Operational Efficiency

In the face of a recessionary environment and inflation challenges, CFOs face the imperative of optimising costs and enhancing operational efficiency. They must navigate market conditions to deliver top-notch services without compromising quality, make strategic financial decisions, implement cost-saving measures, streamline operations, negotiate favourable vendor contracts, and maintain financial viability. Consequently, CFOs face constant pressure to monitor, manage, and optimise cash flows—a lifeline that directly impacts their organisation’s financial health and stability. Real-time insights into cash flow are essential, enabling CFOs to visualise and adapt to the company’s liquidity needs effectively.

In a recent global survey of CFOs conducted by Everest Group and supported by WNS, the enhancement of cash flow remains a top priority for a significant majority of CFOs. The survey indicated that most of the CFOs interviewed actively support their organisations’ efforts in identifying opportunities to improve cash flow.

2. Prioritising Sustainability

Sustainability is the norm, particularly for organisations aspiring to enhance their reputation among stakeholders and attract potential investors. CFOs are increasingly prioritising environmental, social, and governance (ESG) factors in their financial decision-making to unlock the economic benefits associated with sustainable practices. They are embracing circular economy principles to reduce environmental impact, lower energy consumption, and optimise resource utilisation. The 2022 PwC Pulse survey showed that a notable 40 per cent of CFOs are working to establish policies, procedures, and controls to effectively collect and manage climate-related data.

The regulatory landscape further amplifies the need for action, with initiatives like the European Union’s Corporate Sustainability Reporting Directive (CSRD), the UK’s Sustainable Disclosure Requirements (SDR), and the USA’s Climate Disclosure Rules, among other sustainability disclosures, compelling companies to proactively address sustainability concerns. By adhering to the compliance standards, CFOs unlock not only economic benefits but also garner greater investor interest and access to capital.

3. Managing Information

CFOs must effectively manage and analyse vast amounts of data to optimise strategic decision-making. CFOs are tasked with the challenge of integrating data from different departments, including sales, marketing, customer service, operations, and social media and transforming it into valuable insights for decision-making.

Collaborating with the Chief Information Officer (CIO) also allows CFOs to gain a panoramic view of the market’s key data and information drivers that aid investment decisions and enable stress testing through scenario planning. Artificial intelligence (AI) tools prove invaluable in managing complex data and extracting valuable insights. However, CFOs must exercise a responsible and secure usage of machine learning and data analytics to cultivate trust and loyalty among stakeholders. By leveraging cutting-edge technologies such as AI, data lakes, and automation, CFOs unlock valuable insights, enhance financial performance, and drive their organisations forward.

4. Talent Retention and Management

Securing and nurturing a skilled workforce remains a top priority for CFOs. As per a recent survey by Gartner, one of the top challenges CFOs face in 2023 is acquiring people with the necessary skills to effectively staff their departments.

CFOs are exploring various hiring and training strategies that prioritise technological literacy and communication skills to align with the changing demands of finance responsibilities. As reported by Forbes, a majority of 80 per cent of CFOs prioritised technological literacy as a key factor when evaluating potential candidates. A robust financial team ensures sustainable operations, empowers organisations with valuable finance insights and analytics, and drives the attainment of key objectives.

Moreover, with the rise of hybrid work models, CFOs face the additional challenge of supporting remote teams while realising productivity gains through location-flexible arrangements. These arrangements hold the promise of cost returns on investments, employee well-being, and mitigating burnout risks.

5. Risk and Compliance Management

Managing risks to safeguard the organisation’s assets, reputation, and financial stability is a significant responsibility for CFOs. With the continued prevalence of remote workforces, concerns over sensitive data protection and detecting potential fraud and cybersecurity threats have heightened. And failure to address regulatory compliance can further lead to financial losses, legal complexities, and regulatory penalties.

The allure of cloud solutions lies in their security advantages, prompting CFOs to invest in enhanced security measures and control frameworks. By leveraging digital solutions and harnessing the power of digital transformation, CFOs can fortify risk management practices, navigate compliance challenges, and ensure a robust financial ecosystem.

6. Digital Technology in Financial Planning and Analysis (FP&A)

Traditional approaches and intuitive decision-making are no longer sufficient to navigate today’s dynamic and unpredictable business landscape. Instead, CFOs must embrace digital innovation to tackle uncertainties head-on, leveraging improved forecasting models, automated operations, and enhanced productivity. The PwC Pulse survey also showed that 52 per cent of CFOs are keen to accelerate digital transformation using data analytics, AI automation and cloud solutions.

So, investment in digital transformation by employing digital solutions—D365 Finance, D365 BC, and D365 FinOps—is crucial for generating better insights in FP&A, identifying trends, and making informed data-driven decisions that build resilience.

Fluid Digital Transformation to Enhance Your Finance Strategies

Financial decisions and implementing technologies are comprehensive processes. Make sure it’s a sustainable investment.

Here at Dogma, we offer Microsoft’s comprehensive suite of finance solutions—D365 Finance, D365 BC, and D365 FinOps—to support CFOs in overcoming these challenges. These powerful tools simplify and streamline financial and operational needs, enabling you to fortify your financial prowess. Digital tools strengthen financial controls, reduce the risks of fraud and errors, and maintain compliance standards. Advanced analytics and data visualisation unlock valuable insights that enhance risk management practices and strategic financial planning.

Reach out to us for further support in strengthening your financial capabilities.

Learn how CFOs can navigate through challenges, employ finance strategies and digitally transform financial operations