Many CFOs and finance managers are currently facing the most challenging economic environment they’ve ever encountered. Near-record inflation is putting pressure on corporations to cut costs and some economists are predicting a recession in the upcoming year.
These challenges could make it harder for finance professionals to lead digital transformation efforts at their companies. In an environment like the one we’re in now, CFOs will have to focus on strategic decision making in order to shepherd digital transformation initiatives through their organizations.
Accelerating Digital Transformation
While the current environment certainly makes digital transformation efforts more challenging, nearly half (49%) of CFOs who responded to the most recent PwC Pulse Survey said they plan to capitalize on digital transformation initiatives, which they consider to be a high-growth opportunity that has exploded following the pandemic.
In addition, the Global CFO Survey 2022 by Everest Group found that digital transformation is moving higher up the priority lists of CFOs. Judgement-intensive investments, including financial planning and analysis (FP&A), are especially high on CFOs’ priority lists.
However, four out of 10 respondents to the KPMG 2022 CEO Outlook survey said that while digital transformation is still a priority, their organizations have currently paused their digital transformation strategies. And more than a third (36%) said they plan to pause these strategies in the next six months due to economic uncertainty and recession fears.
Acquiring the Right Technology
The first step to leading digital transformation in the current environment is to assess your company’s competitive priorities and differentiating factors. Then you can identify and acquire the right technology for your organization’s digital transformation. For many organizations, this includes FP&A, financial modeling and scenario planning tools.
If your digital transformation budget is tight due to recession or other financial challenges, consider initiating smaller projects that can demonstrate faster ROI than larger long-term initiatives like ERP and ERM projects. It can take years and long demo periods to gauge ROI on projects like these, which can make them easy targets for budgets cuts when finances get tight.
In contrast, smaller, best-of-breed digital solutions can usually demonstrate ROI much sooner. For example, an FP&A tool might cost $10,000 a year and yield positive ROI right out of the gate.
During challenging financial times, CFOs often have to work harder to cost-justify expenditures, including those for digital transformation initiatives. They can’t just make investments like these because “everybody else is doing it.” Instead, companies expect accountability when it comes to what benefits they can realize from digital transformation initiatives.
FaaS and Digital Transformation
Recessions and economic slowdowns often present opportunities for businesses to invest in digital technologies that improve current financial processes, lower costs and boost efficiency. Finance as a Service, or FaaS, is one good example.
FaaS is a modern alternative to building an in-house finance and accounting team that delivers greater financial visibility and improved operational scalability, along with a lower and more predictable cost structure. With FaaS, companies can achieve a full digital transformation by outsourcing their finance and accounting function to a third-party service provider.
In fact, finance is the second most outsourced function among corporations — nearly half (44%) of businesses say they outsource their finance function.
With FaaS, businesses enjoy scalability and cost efficiencies when compared to maintaining an in-house finance team. Studies have shown than using FaaS can lower the cost of the finance function by between 20% and 40% compared to the fully loaded costs associated with staffing an internal finance department.
The FaaS model allows companies to quickly scale up the finance function as needs arise. This results in both time and cost savings, as well as standardized reporting so companies can quickly and accurately assess the financial health of their portfolios and consistently understand financial metrics across time periods.
FaaS also allows CFOs to focus on more impactful business initiatives while reducing the cost and complexity of maintaining an in-house finance operation. Employees can reallocate their time from administrative finance functions to high-impact business development initiatives. Meanwhile, companies can reduce staffing and technology costs in the finance department, instead paying an affordable monthly fee.
FaaS from Consero Global
Consero Global offers Finance as a Service that can help you achieve your digital transformation goals. You can connect with us today at https://conseroglobal.com/request-a-consultation/ and learn more about the potential role of FaaS in your company’s digital transformation.
