When finance leaders were cast into the chaos caused by the global pandemic, many discovered what some better-prepared peers already knew: that in the face of economic tumult, the ability to operate with agility, forecast with confidence, and execute core finance tasks efficiently are exactly what’s needed to prevent their businesses from capsizing.
These revelations are reinforced by our 2020 CFO Indicator Survey. This report, commissioned by Workday since 2015, records how 225 CFOs view finance digital transformation—that’s when businesses apply the power of cloud computing, machine learning, and augmented analytics to essential activities like planning, forecasting, and budgeting.
What’s striking about the results of this survey is that they captured the value of digital finance transformation at the moment its benefits likely mattered most. The CFO Indicator team queried CFOs from March through May of 2020—just when businesses began to sustain the full brunt of the pandemic. And it found that finance digital transformation is not just saving businesses today—it’s equipping them to thrive in the future.
“The CFO Indicator team queried CFOs from March through May of 2020—just when businesses began to sustain the full brunt of the pandemic.”Michael Magaro Vice President, Business Finance and Investor Relations Workday
Fifty-four percent of CFOs surveyed say they’ve implemented digital transformation efforts of some kind. The report identifies these organizations as “digital accelerators” and distinguishes them from “digital novices,” or the 46% who have yet to begin their transformation journeys.
This is about more than categories, however. The results show that the difference between accelerators and novices comes down to real-world performance. And it reveals a direct link between finance digital transformation and the agile business practices needed to prosper in the new normal.
Among digital accelerators, 79% say their teams are “more than somewhat proficient” at efficient reporting, planning, and financial close processes. Fewer than half as many (38%) digital novices were able to say the same.
Digital transformation has also helped accelerators gain more confidence in their two-year P&L forecasts compared to novices (73% to 43%). And at a time when agility is everything, 70% of digital accelerators say they’re more than somewhat proficient at responding and reacting quickly to change. Just 43% of digital novices expressed the same level of proficiency.
With up to twice as many digital accelerators reporting proficiency in key areas compared to novices, it’s easy to see that delaying finance digital transformation initiatives comes at a cost to businesses. For instance, digital novices are likely to find themselves less equipped to address the business priorities they named this spring, including cost containment (59%), revenue projection (53%), cash and liquidity management (54%), and workforce planning and optimization (61%).
These priorities speak to the urgent need for efficiency, confidence, and agility to meet those priorities. These are disorienting times, and focusing on activities like containing costs, reforecasting revenues, and redeploying workforces only makes sense.
But waiting to begin your digital transformation journey until the crisis passes, whenever that may be, could be a mistake that your business pays for well after lockdowns end and industries recover. Here, the CFO Indicator report offers some insights into moves finance leaders can make now.
One reality that contributed to the digital novice status of nearly half of survey respondents is simply that their workplaces weren’t set up for transformation. Nearly one-third of finance leaders reported their digital transformation initiatives had stalled because their organizations lack the skills and change-ready cultures needed to make the change.
But survey data suggests that CFOs can start building a more agile workplace by shattering these obstacles to transformation. They can begin working with HR, through both recruitment and reskilling, to build a workforce capable of working with emerging technology—a need cited by 34% of finance leaders. The most urgent skills shortages are in predictive modeling and scenario planning, as well as the ability to identify and manage risk. (The skill CFOs rank below all others? Spreadsheet proficiency. Clearly, with an abundance of cloud-based, AI-driven planning solutions available today, finance leaders no longer see spreadsheet ninjas as critical to their long-term success.)
And by becoming better stewards of financial and operational data, CFOs can knock down another barrier to transformation. Nearly half said they believe critical business decisions are delayed because finance is not proficient in delivering meaningful insights from data. This certainly speaks to the skills deficit in analytics, but as data becomes an increasingly vital business asset, only 27% of CFOs say they have a significant role in managing how data is collected, stored, and analyzed.
Taking a more hands-on data stewardship role could also help with efforts to safely return employees to the workplace. For instance, combining workforce with external health data could help executives determine who is ready to return to work safely.
Planning for an uncertain future is hard enough without having to prod an incalcitrant culture toward change. But the results of this latest CFO Indicator show that finance digital transformation not only helps manage chaos in the present, but it helps organizations plan for the disruption to come.
CFOs, it appears, seem to be recognizing this. Finance digital transformation may have been a priority for just 1 in 20 (5%) of CFOs surveyed as the pandemic took hold. But a third (34%) expect it to be a priority a year from now.
That’s a good sign. Because if this CFO Indicator shows us anything, it’s this: Now is not the time for novices.