The Quick Read
- 71% of Chief Financial Officers (CFOs) expect to focus on the digital transformation of operations over the next 12 months, including through the automation of workflows
- Consequently, 62% of CFOs anticipate that they will strive to collaborate more with other departments, including IT
- Around half forecast that spending on digital innovation will grow or stay the same over the next year
- Developments across automation, data analysis and payment tools are among the trends reshaping the way finance teams operate
The changing nature of business is reshaping finance leaders’ roles into more strategic ones.
They’re now expected to apply the traditional tasks of financial management, asset protection and performance analysis to more than just the finance department. To perform their expanded workloads more effectively and to bring greater value, CFOs are turning to technology, according to the American Express 2023 CFO Survey.
The poll of 156 finance leaders illustrated that CFOs are aware of the importance of technology to their organisations’ futures and are planning accordingly. The survey, conducted within large corporations in the UK, Germany and France, found about half of CFOs expect to commit more resources to digital innovation. They also anticipate that they will collaborate more with other departments, particularly IT, and use data-intensive predictive applications to prepare them for an uncertain future.
In this article we identify four key areas of digital disruption that are reshaping the way finance teams operate:
- Automation - finance teams are integrating innovations such as bots, or robotic process automation (RPA) capabilities, into their enterprise resource planning (ERP) software to streamline and improve workflows
- Data Analysis - they are also using data analytics to find new business opportunities and risks
- Payment Tools - Virtual payments can be processed faster, are simpler to reconcile and are more secure
- Team Management - technology is enabling continued remote working among finance teams and helping leaders to navigate challenges around staffing and employee engagement
What’s the risk?
CFOs say they are preparing for economic headwinds in the next 12 months, but are also focussed on business growth. Finding the insights and efficiencies necessary to improve financial performance in a challenging market is highly unlikely without embracing technological change.
What’s the reward?
A tech-led transformation can help provide buffers against the impact of this uncertain economic outlook. It can help them reduce costs and improve productivity through automation. Also, data analysis can provide insights to guide better decision-making and surface revenue-generation and risk-mitigation ideas.
The Deep Dive
The evolution of finance leaders’ roles has been dramatic and shows no sign of slowing. Our survey found that 61% of CFOs are preparing to take on more responsibility for strategy, beyond their own department, in the coming year.
To help them manage their heavier workloads, they are placing more importance on technology, evidenced by the findings that 71% include digitalisation among their top priorities. This commitment is reinforced in the responses to other questions: 62% expect to collaborate more with other functions such as IT and marketing; and 46.2% said they would increase spending on technology, while just 3.2% said they would reduce it.
Below are some of the key areas where technology is disrupting and reshaping the way finance teams operate.
1. Automation
Software-based workflow management tools aren’t new but recent digital advances are turbocharging them. RPAs, for instance, are being integrated with ERPs, the technology that provides the backbone of day-to-day workflows within finance teams.
RPAs are software packages that automate tasks within business and IT processes via “bots” that emulate human interaction with the application user interface [1]. These can help improve the accuracy and productivity of enterprise processes and liberate talent from routine tasks to concentrate on value creation.
Major tech companies like IBM and Microsoft provide RPA packages, as do ERP providers Salesforce and SAP.
Transaction processing systems (TPSs) are another focus of transformation. They give CFOs digital tools to manage sales, purchases, receipts and payments transactions. TPS automation brings greater accuracy, speed, and reliability to credit card authorisations, bill payments and other forms of exchanges that are critical to keeping an organisation running.
2. Data Analysis
Digital applications consume data but they also generate it. The survey found that 48% of CFOs expect to use more modelling, forecasting, and data planning to anticipate business conditions. This indicates that more recognise the value they can get from analysing data available in their own systems as well as those of their supply chains and partners.
Software platforms that take data, organise, analyse, and present it visually are helping CFOs to make evidence-backed business cases for new projects, enabling them to identify where operations can be tightened and where risks can be mitigated.
More advanced technology, such as machine learning (ML) and artificial intelligence (AI), can also build predictive models from the data to indicate new ways of approaching different functions and tasks. A joint survey by the Bank of England and the Financial Conduct Authority found that 72% of firms in the financial services sector are already using ML in some capacity. As ML technology advances, those surveyed said they expected the biggest benefits to come in relation to enhanced data analytics, increased operations efficiency and improved combatting of fraud and money laundering [2].
3. Payment Tools
The combatting of fraud is one of the key reasons that finance departments are modernising their vendor payments and embracing tools such as virtual payments.
Of those polled in our survey, 73% of CFOs said virtual payments would be very or extremely important.
Virtual payments can be processed faster, are simpler to reconcile and are more secure. For example, American Express® vPayment assigns a single-use account number to a transaction, project, commodity or staff member and allows finance teams to set specific pre-authorisation amounts and date ranges for transactions. This speeds up the payment and reconciliation process while giving finance teams greater control over company spending.
When combined with finance systems, the data provided by these transactions can provide deep, real-time visibility into how cash and capital is being used – information that, in turn, can help managers adjust and optimise spending and capital deployment. American Express vPayment, for example, integrates easily into companies’ existing ERP software.
4. Team Management
The biggest change in how finance teams work together today was not driven by technology, but it certainly has been enabled by it.
Coronavirus mitigation measures prompted many to decentralise their workforces so that staff could work safely away from the office. Managing that on a continuing basis is occupying CFOs’ minds; 75% of those we spoke to in our survey said that remote work and virtual teams will be very or extremely important in the next year.
Knitting distanced workers together has fallen onto the shoulders of remote team management platforms that connect individuals with each other and the enterprise’s central systems in real-time [3]. But CFOs have also had to find ways to provide virtual technology-based equivalents of facilities present in the office – such as easy communication, the convening of meetings and huddles, pastoral care and other intangibles that make working life rewarding.
This is vital when considering that while only 19% of respondents told the survey that they would be making strategic hires in the following year, almost 65% said the threat of losing talent was an important factor for them.
Employee retention within virtual teams has required business leaders to identify new incentives and engagement policies. Technology is helping: HR platforms can be reconfigured to provide more flexibility around working hours and automation can remove some of the laborious tasks that may contribute to employee burnout.
To find out more about how today’s CFOs are turning risk into opportunity, read the full 2023 CFO Survey Playbook here.
[1] Gartner, Magic Quadrant for Robotic Process Automation, 2022
[2] Bank of England, Machine learning in UK financial services, 2022
[3] Deloitte, Remote control: How finance works, not where, matters most now, 2020