With rising interest rates, continuing supply shortages, and increases in energy costs ahead, CFOs today need to be strategic and nimble, and ready to respond to changing economic and market conditions.
Given this and heading into 2023, CFOs need to focus on several key areas, including where the business risks and opportunities lie, prioritizing talent recruitment and retention, and digitizing operations.
A recent survey from research firm Gartner found talent is the top challenge facing CFOs heading into 2023, with accurate forecasting and cost management following close behind.
“Following the massive changes brought on by the global pandemic, no company or business is the same as it was three years ago,” says Tom Donnelly CFO at Datasite. “And while some have been challenged, others have thrived.”
He explains that as a finance leader, it’s important to understand how to drive growth for the organization, while also being prepared for the possibility of higher operational costs next year.
“CFOs need to understand where new customers or revenue streams can be generated, or new products or services can be offered to ignite new growth,” he says.
This could mean something as big as a potential partnership or acquisition, or a new marketing or sales strategy. In 2023, they will need these strategies to offset higher business costs and minimize any potential losses.
“At Datasite, we continue to invest in innovation,” Donnelly says. “For example, during the pandemic, we introduced three new products to help dealmakers market assets, prepare assets, or acquire assets.”
CFOs Tap RPA, AI to Improve Performance
Gartner analyst Marko Horvat points to robotic process automation (RPA), machine learning (ML) and natural language processing (NLP) as among the technologies increasingly being used in finance to increase the speed, accuracy, and auditability of the finance function.
“It's not just experience with technologies and technology literacy that CFOs are looking for,” he says. “What is also important is the ability to translate these digital workflows back to traditional workflows and stakeholders to explain how these technologies interact and improve them.”
He says it's also important that talent be digitally ambitious while at the same time be aware of the limitations and biases that can be inherent in some of these applications and approaches.
“Finding talent that is willing to constantly evolve while at the same time relate back to the traditional way of doing things is a difficult thing to do,” he says.
Donnelly agrees that finding professionals who can use technologies including AI or cloud-based software applications, and possess finance experience, is a balancing act.
“Some candidates will likely have the technology skills, but not enough finance and accounting experience,” he says. “Conversely, some candidates will have tons of finance and accounting experience but not enough tech savvy.”
Using Tech as a Tool to Leverage Talent
Daniel de Haas, CFO at iBASEt, says he looks for technologies that help the company maximize productivity across its employee base, including leveraging talent in key geographies around the world.
“If companies can figure out how to work smarter globally by maximizing the value of technology, it will lead to more effective operations and higher productivity per employee, which ultimately improves the bottom line,” he says.
From his perspective, it’s critical to focus on driving real ROI from all investments rather than operational changes that drive soft savings but may fall short in generating real value from a financial standpoint.
When it comes to improving forecasting accuracy, Horvat says the specific tools can vary from organization to organization based on their level of digital maturity and certain pre-requisites that need to be met.
“However, the best way to improve the accuracy is make sure that your operating model aligns with your financial one so that the correct drivers of business performance are accurately captured and analyzed,” he says.
De Haas says his organization is always exploring a variety of tools to help provide additional visibility and build forecasting models to help us manage their operations accordingly.
“We consider everything from ERP export modules to relational databases like MySQL, and power visualization software like Power BI to help us make better sense of data in a dynamic environment,” he explains.
Horvat adds it's best to focus short-term, to allow CFOs to iterate and test their assumptions more quickly so that they can see if the story that the forecast is telling makes sense more quickly.
Deriving Business Value from Tech Investment
Abhi Maheshwari, CFO at Aisera, says he believes it's important to get a complete 360-degree view of the buyer journey.
“This can be achieved only when all key functions of the business are driving efforts towards the common end goal of building a strong pipeline and closing more business for the company,” he says.
Whatever marketing technology (MarTech) sales technology (SalesTech) or revenue operations (RevOps) technology can help him achieve this 360-degree view in our CRM is something he fully supports and backs.
“Eventually, it's all about deriving business value and ROI from investing in tech that scales as you scale your business,” he adds.
Horvat says the best practice would be to have the metrics in place prior to the investment so you can measure and track against it. This requires an honest assessment of the problem that is being addressed and what the expected and acceptable range of outcomes would be.
“Broadly speaking, a good framework would be for the CFO to breakdown the components of what exactly makes up ROI, cost, return, and risk and see if the investment reduces cost, increases returns, and/or reduces risk,” he explains.
He adds the big thing that is moving the needle for CFOs right is the notion that in this highly volatile environment, there are a lot of external factors that can affect your ability to control costs.
“We see a focus more on maximizing returns and reducing risk with the hands that they are being dealt,” he says.
Building Pipelines, Closing Deals: Key ROI Metrics
Donnelly says Datasite recently completed the first phase of a significant investment in upgrading the company's enterprise resource planning (ERP) system and all its related processes.
“This is part of an effort to digitize all our operations, including collecting, storing, managing and interpreting data to support many business activities and efficiencies,” he says.
The project includes new technology and tools to assist with financial planning and analysis to ensure accurate and timely financial information that influences decision making and protects the assets of the company.
For Maheshwari, determining ROI comes down to two elements: Building pipeline and closing deals.
“Those are the only two metrics we are focused on to measure ROI in tech investments,” he states. “If we can’t build a sustainable and scalable pipeline, it will impact our forecasts as we continue to grow the business across SKUs, global markets, and partnerships.”
He adds that similarly, if the organization can’t be closing deals, increasing average deal sizes, increasing lifetime value of customers then it can’t be supporting more tech investments for building pipeline.
“It’s a vicious cycle, but one that can be mastered with the right talent across the key functions of the business,” he notes.
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