CFOs should think about automation as an “additional teammate” in their financial departments as they look to push digital transformation initiatives forward in the new year.
CFOs are bracing for a potential recession as 2023 begins, with some predicting a downturn to start within the first quarter of the new year amid slumping consumer spending and increased costs. As finance chiefs face talent retention pressures, CFOs are looking for solutions that will allow them both to keep up with business advancement as well as clamp down on spending.
This is where investing in technologies such as automation comes into play, said Jenny Herald, VP of product for strategy execution platform Quantive, formerly Gtmhub. Quantive offers products including objective key results (OKR) software to help companies improve business outcomes.
“Financial departments I think are going to take a bigger leap into digital transformation through automation in the new year,” Herald said in a recent interview.
Automation as a teammate
The majority of CFOs anticipate that a coming recession will have an impact on their businesses — a study released in November 2022 by software provider OneStream found 85% of financial leaders are revising forecasts in advance of a pending recession, for example, with only 4% reporting such a downturn won’t affect their business as the new year unfolds.
CFOs facing persistent cost pressures will begin to grow more conservative in their hiring plans in 2023, the OneStream study also predicted, which will likely lead to an increase in tech spending as financial leaders look to balance growth and costs. Fifty-seven per cent of finance leaders said they plan to increase their investments in cloud-based planning and reporting solutions in the new year, for example.
Meanwhile, 48% of finance leaders pointed to financial reporting as the top use case for implementing artificial intelligence (AI) and machine learning, the study found.
Automating part of their teams’ workload is one step CFOs can take to cut costs and improve efficiency in the face of an economic dip. When it comes to financial departments, automation can be applied to categorize expense reports in real-time, for example, making previously manual and time-consuming processes more accurate and efficient.
“Automation can be thought of as an additional teammate in the financial department rather than something to be wary of,” Herald said.
Setting OKRs for tech investment
However, it’s critical that financial leaders looking to implement automation do so with a tailored approach, especially as CFOs continue to battle both economic uncertainties and regulatory changes regarding initiatives like environment, social and corporate governance (ESG) goals throughout the new year.
The war to retain top talent also “continues to be challenging,” Herald pointed out. “CFOs are going to have to be thinking about discretionary spending, where they might have to make cuts so that they can retain quality personnel,” she said.
Establishing objective key results (OKRs) can be a helpful tool for CFOs when they consider where and how to invest in automation and new technologies, therefore. When having a conversation about digital transformation or automation, “you don’t start with tech,” Herald said. “You start with your goals.”
Pairing OKRs with other metrics such as key performance indicators (KPIs) can also broadly aid CFOs as they look to navigate their businesses through an economic downturn, Herald previously told CFO Dive in an August 2022 interview.
It’s critical for financial leaders to have that kind of “really clear understanding of the goals you’re trying to set for the organization,” Herald said, and to keep the people and processes where the technology will be applied top of mind.
“I can’t tell you how many times I’ve heard horror stories of, ‘well, we implemented X, we’re done,’” she said. “And then the teams actually could not work with that new system because the people who had implemented the new system did not realize there were a lot of processes they didn’t take into consideration, so those rollouts were not successful or were partially successful.”
This article was originally posted on CFO Dive, and republished with permission.