Bridging the Gap Between Ambition and Reality in Finance

by Alok Ajmera

Uncertainty has become the new standard for organizations in nearly every industry. To overcome current obstacles and succeed no matter what new challenges the future holds, finance leaders need to be able to connect the dots between today’s reality and tomorrow’s opportunity.

©Nastco/iStock/Getty Images Plus

What will it take to elevate the finance function to new heights this year? Prophix’s 2023 Finance Leaders Report polled more than 700 finance executives across a variety of industries globally to explore how the finance function is evolving and adapting to meet the present environment – and how leaders are preparing for what comes next.

In addition to looking at best practices, processes, and technology in finance, the report also sought to unpack the leadership approaches that are helping the most successful finance teams adapt and thrive. Prophix refers to the three roles identified in the survey as such: 

  • The Visionary is focused on a grand plan for the future of finance and the organization. Leaders in this mindset need the ability to share their vision effectively – and the data to back it up. 
  • The Innovator looks at current processes and technology to find new ways of boosting efficiency and efficacy. Leaders in this mindset can spark a culture of experimentation and agility. 
  • The Realist is focused on practical next steps to guide a team through the next few years. While it’s more grounded in the here-and-now than the other two, the Realist approach is still concerned with improving and adapting the finance function. 

Each approach has proven effective over the last couple of years as teams have not only safely navigated their organizations through an unpredictable and turbulent global economic environment, but also created new and innovative pathways to success within the finance department. We see finance leaders adopting and assuming each of these styles based on situations they’re facing, and sometimes a combination of all three, as they drive their teams and businesses forward. 

Across these roles, Prophix’s survey found that finance leaders are focusing on innovation, agility, automation, technology and the future overall – while anticipating some more macro economic challenges still ahead of them. 

Finance Needs to Drive the Organization Forward While Battling Economic Volatility 

Finance leadership today is focused on transforming the finance function to a more advisory, predictive, and nimble role within their business. This future outlook is, however, balanced by a more practical approach to development and deployment. 

The Prophix report found that overall, finance leaders are feeling positive about the progress they’ve made in their digital transformations of planning, budgeting and reporting. For example, nearly half of respondents (43%) said their business was performing above target for 2023, 17% said well above target, and only 7% of finance leaders said their business was performing below target. 

Additionally, many finance leaders feel they are now able to focus on innovation, with 43% of respondents saying they are “finding innovative ways to drive efficiencies and generate insights within our current processes,” with the overwhelming majority of respondents (84%) agreeing or strongly agreeing that efficiency and effectiveness are a priority. This positive outlook exists even though many are feeling the heat of external pressures, with the top three identified as inflation, energy prices, and recession. 

Playing a strong role in driving the business forward was critical to almost a third of respondents, with 31% noting their top focus was “ensuring the finance department is elevated to play a key role as a strategic contributor of the business.” And a quarter, 25%, said they are “preparing and elevating the organization for challenging times ahead.” This value is echoed when it comes to finance leaders’ personal ambitions, as the majority of respondents (83%) agree or strongly agree that finance should lead the business forward. 

The findings show that while there is still concern around economic volatility, finance leaders have a substantial focus on innovating within their departments and advising their businesses. In addition, finance is well suited to help steer organizations through upcoming challenges, with a clear willingness to take on that role. 

Though it can be Difficult to Progress, Finance Leaders Value Automation 

As seen from these findings, business leaders are continuing to focus on automating their finance function with digital tools, a trend we’ve been seeing since the wake of the pandemic as finance teams have recognized the need for speed, nimbleness and having the ability to scenario plan on the fly to quickly reforecast in response to constant change. Nearly half of respondents (41%) said automation was a top initiative, and 35% noted automation would free their finance teams to focus on more high-value tasks. 

Despite automation’s perceived benefits, finance departments still have a way to go. Just 27% of respondents said their financial performance management processes were over halfway automated, and only 2% noted they have fully automated their processes. Worth highlighting, though, is that 65% of finance leaders planned to be over halfway automated by the end of 2023. 

Surprisingly, the top challenge in implementing automation wasn’t budget, but rather skills and training, with 26% rating that as the number one obstacle. Funding for technology, time to implement and learn, and organizational inertia were all ranked similarly as additional reasons. 

Agility and Technology are Key to Supporting Finance Leaders’ Objectives 

With the need for flexibility in today’s fluctuating economic environment, it wasn’t entirely surprising to find that, overall, agility was essential for the majority of respondents when it came to supporting the finance effort. Almost all (96%) said agility was either important or very important to them.

To become more agile, leaders said organizational challenges were more pressing than budgetary concerns. As many as 63% responded that having a plan to align people, processes, and technology was a substantial obstacle, while 62% noted implementing new technology was a top concern. Departmental collaboration and finding/upskilling talent were challenges for 57% of respondents, respectively.

With regards to technology investments, most respondents said their budgets were likely to increase in 2023 compared to 2022. While 52% expected a slight increase, 24% expected a significant boost. Only 4% anticipated a decrease. 

Respondents reported that the top area of technology investment was cybersecurity, with over 20% noting it as a leading investment priority. This makes sense, as 44% rated cybersecurity as one of their top business challenges for 2023 and beyond. Cybersecurity wasn’t the only area of focus though, as nearly 20% of respondents anticipated investing in planning, budgeting, and forecasting technology (PBF) this year, with 18% more expecting to do so in 2024. There was also growing interest in AI investment, with 12% planning to invest in 2023. That number will increase in 2024 and again in 2025. 

Overall, the survey findings demonstrated a significant upward trend in expected investment in technology over the next three years. Respondents planned to invest more in AI and machine learning, financial planning & analysis (FP&A) resources and training, and improved scenario planning capabilities compared to the previous three years – demonstrating the increasing value and critical importance these technology areas have on the finance function. 

Despite the challenges throughout the world over the past few years, the survey respondents have shown that many of their organizations are performing at or even above their target objectives. And most of these finance leaders are not only planning for the near-term but also preparing for the future by adopting automated financial performance management solutions and other technologies that enhance their department’s flexibility, efficiency, innovation and capabilities – which will help drive their businesses forward in the years to come. 

Alok Ajmera is CEO at Prophix