Whether or not you are a CFO by title, these sentiments and priorities are critical for us all.
At the very least, the CFO is a primary stakeholder, a direct or indirect influence and enabler for initiatives you are driving and hopefully even a beneficiary of that work.
So it was with interest that I read the CFO survey from American Express this week.
“The Futureproof CFO: Building Resilience & Growth” reports a clear shift in priorities over the past 12 months.
The emerging strategic priorities for finance leaders are surpassing the recent focus on direct cost reduction. The survey reports the latest CFO priority rankings as;
- Improving cash flow (81%)
- Digital transformation (75%)
- Revenue growth (68%)
- Improving risk management (67%)
- Fraud prevention (64%)
If this change in priorities is reflected in your own organisation, even if only partially, how does that affect initiatives that you are leading and what actions should you take with your own stakeholders?
CFOs are looking to improve cash flow to fund growth and innovation with 41% focussed on improving margins to achieve their cash flow targets.
In addition to the 67% of CFOs planning to increase spending on risk management, 37% report that their responsibility for risk management is increasing.
The drive towards digitisation is clear. CFOs are not merely responding to board-level pressures and FOMO (although 34% report that they are “under pressure” to adopt AI technologies!). CFOs are recognising the broader potential of technology to drive progress in efficiency gains, customer engagement and improved cash flow.
The digitisation drive is closely tied to cash flow optimisation, with 29% of CFOs planning to enhance their payment strategies to improve liquidity. 59% see virtual payments as a strategy for efficiency and working capital.
Managing change remains a big concern with 39% expressing challenges in adapting to more digital business operations. We know that these challenges are not primarily a resistance to technology itself, but to ineffective process designs and working practices that can lead to missing the critical lever of WIIFM (“What’s In It For Me”). Where WIIFM is well thought out and end-to-end processes simplified and well communicated, digital transformation is embraced.
With 50% of CFOs expecting to take on more responsibility for digital, 47% plan to increase technology spending in the coming year, making it the top investment priority second only to new product development.
“Caveat Emptor” – recognising the priorities of end-to-end process and WIIFM thinking, the technology investment alone will not drive success.
AI, as we have all worked out by now, presents both opportunities and challenges. While it offers great potential for augmenting human decision-making, it is not primarily a task automation (and thus human effort elimination) technology.
Despite choppy waters, 80% of CFOs feel confident about the future, with those in the US expressing the highest levels of optimism.
Interestingly, 89% of US CFOs express confidence in hitting digital transformation goals whilst, languishing at the bottom of the “league”, only 37% of UK CFOs feel the same way. Of course, this could be a “data bias” problem based on behavioural norms regarding “confidence” on both sides of “the pond”. Messrs Dunning and Kruger may have something to say on this also!
Thanks for reading . . .