First Midwest BankFirst Midwest Bank logoArrow DownIcon of an arrow pointing downwardsArrow LeftIcon of an arrow pointing to the leftArrow RightIcon of an arrow pointing to the rightArrow UpIcon of an arrow pointing upwardsBank IconIcon of a bank buildingCheck IconIcon of a bank checkCheckmark IconIcon of a checkmarkCredit-Card IconIcon of a credit-cardFunds IconIcon of hands holding a bag of moneyAlert IconIcon of an exclaimation markIdea IconIcon of a bright light bulbKey IconIcon of a keyLock IconIcon of a padlockMail IconIcon of an envelopeMobile Banking IconIcon of a mobile phone with a dollar sign in a speech bubbleMoney in Home IconIcon of a dollar sign inside of a housePhone IconIcon of a phone handsetPlanning IconIcon of a compassReload IconIcon of two arrows pointing head to tail in a circleSearch IconIcon of a magnifying glassFacebook IconIcon of the Facebook logoLinkedIn IconIcon of the LinkedIn LogoXX Symbol, typically used to close a menu
FDIC-Insured - Backed by the full faith and credit of the U.S. Government
Executive studying large screen.jpg
Get Insights

Get monthly ideas delivered right to your inbox.

Subscribe for Insights

For Your Business February 5, 2023

CFOs zero in on digital transformation

CFOs facing economic headwinds as 2023 begins are keeping their focus on costs, looking to reduce discretionary spending as a potential recession continues to loom.

This does not mean initiatives like digital transformation have fallen by the wayside, however: CFOs continue to view digital transformation as strategically important for their businesses.  “Irrespective of what's going on, it’s something that has to happen and still remains a priority,” said Marko Horvat, VP, research for Gartner, regarding how finance leaders are thinking about such initiatives.  

A recent study by Gartner found planning and sequencing finance transformation as well as setting a finance technology strategy roadmap were both among the top ten priorities for CFOs moving into 2023.

But finance leaders are still facing challenges when it comes to moving forward with their digital transformation initiatives. There are definitely some cost and spending pressures associated with digital transformation, Horvat said. The “big challenge with CFOs is justifying the digital investments,” he said. “So how do you measure the digital return on what you're getting?”

Recession and tech spending trends

A coming recession could change finance leaders’ strategies when it comes to digital investments or tech spending. Though inflation dropped for the sixth consecutive month in December, according to the Labor Department, concerns about a recession in the U.S. — though a potentially mild one — still remain top of mind for both CFOs and other members of the C-suite. Inflation slowed to 6.5% in December, according to the Labor Department.

Spending on automation should be “all about value,” Christina Ross, CEO of FP&A software provider Cube said in response to questions about how financial leaders can think about their technology spending among current economic trends.

Automation “should be a money-saver in the short- and/or long term,” Ross wrote in an emailed response to questions. “Once a solution is implemented, it should save time and resources, while adding enough value to more than offset the cost.”

This doesn’t mean technology budgets will necessarily shrink in 2023, Ross wrote in response to questions. But what might occur is a redistribution of spending, with more investment in automation technology while at the same time, companies take steps to reduce the number of platforms they use, for example, Ross said.

Technology spend and the finance function

An economic downturn will create a need for finance leaders to prioritize spending, but digital transformation is something CFOs “consistently rank as being really difficult,” Horvat said.

Evaluating the results of one’s digital transformation efforts is a constant challenge for financial leaders, who must also deal with finding and retaining digital talent as well as aggregating all of the information one needs across their organization in order to build a technology roadmap, Horvat said. 

CFOs currently are focusing in on the finance function when it comes to their digital transformation efforts, therefore.

“What they're prioritizing is really maturing that FP&A function, getting FP&A-specific tools to platform their planning and budgeting,” Horvat said.

Ninety percent of CFOs surveyed pointed to evaluating their finance strategy, scope and design as their top priority for 2023, according to the survey, while 83% pointed to planning finance transformation efforts.

According to Horvat, it is also important to note that CFOs are personally involved in their organizations’ digital transformation efforts both broadly and within the finance function.

“I think a lot of it has to do with owning that strategy piece of it, to make sure that that it's advancing in a way that serves the interests of the organization,” he said.

 

This article was written by Grace Noto from CFO Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

Subscribe for Insights

Subscribe