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Strategy

3 Things Keeping CFOs Up at Night


by Gordon Stuart

Difficulties in accelerating digital transformation is just one area finance teams are concerned about.

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The pandemic and the associated economic fallout have been a trial by fire for companies worldwide. Every business had to pivot quickly and adapt to the personal safety aspects of the crisis and rapidly changing business conditions and buying patterns. CFOs and finance teams were and are navigating their companies through the crisis.

After almost a year of rising and receding waves of infection, safety countermeasures, and now the vaccine, businesses have settled into something approximating normal routines. But three things are still keeping CFOs up at night.

Uncertainty and isolation in the new normal

We’ve adapted to uncertainty out of necessity and CFOs are doing more scenario-based planning than they used to and are expected to be more agile than ever. Companies with advanced scenario modeling technology are in a better position to plan a response to all potential disruptions on an ongoing basis.

People who are working from home have largely adapted to the virtual workspace. Still, CFOs are finding that the new normal causes unexpected issues, like interruptions in the informal flow of information. They now realize just how much they relied on chance breakroom encounters and casual check-ins to learn vital information that helps them work effectively with the rest of the organization.

That’s something they’ll have to address. The consensus view is that even after the pandemic is under control, we won’t go back to the office in quite the same way. So, planning for a hybrid workforce should include ways to facilitate the free flow of information. Plans should also address issues like training for new employees who didn’t experience the pre-pandemic workplace and don’t have a clear sense of business norms and behaviors ingrained in their more experienced colleagues. 

Difficulties in accelerating digital transformation

Another issue causing CFOs to toss and turn at night is the worry that they’ll experience difficulties in digital transformation. A recent Gartner CFO survey tells the story; more than 80% of CFOs surveyed said deploying advanced analytics technologies and tools are a top priority this year, but 78% also said they expect obstacles to achieving their digital transformation objectives.

One of the lessons CFOs took from the past year is the importance of getting information and data as close to real-time as possible. They know that digitization efforts now will enable faster, better decision-making in the future and allow CFOs to fulfill their role as a key strategic advisor. CFOs understand that AI and machine learning can detect patterns humans miss and enable greater agility.

But with time and budget limitations, CFOs have to prioritize technology rollout effectively, dividing digital transformation projects into “mission-critical” and “discretionary” categories. We’ve seen this play out throughout the pandemic, with CFOs at first focusing on ERP solutions after the initial adjustment and then turning their attention to FP&A solutions to strengthen forecasting capabilities.

Concern about changing customer profiles

CFOs are focused on getting better insight into customer pain points and changing purchase patterns in the year ahead. The concern about how the customer profile may have changed varies across industries. But it highlights a trend documented in a September EY survey: company leaders are widening their strategic focus from shareholders to stakeholders, including customers. 

Finance teams know they need a more accurate view of how customers are behaving in a changing marketplace. There’s been a significant shift to online interactions, and CFOs need to know if that will change, evolve to include other platforms, or hold steady. Are customers consuming more or less of the product? Have their work habits changed, e.g., are sales teams going to travel less in the future?

In the finance department, advanced analytics and tools can provide the answers to these questions and more. Using AI and machine learning to analyze huge datasets can give early warning about changes.  However, part of the uncertainty we’re all experiencing is that no one can predict exactly how customer demand will be affected by fast-changing conditions, which is a concern for CFOs.

Will CFOs ever get a decent night’s sleep again?

Humans are amazingly resilient. The pandemic and its effects have demonstrated that anew, showing us that we can live with higher levels of uncertainty than we thought possible and do our jobs in radically reconfigured workplaces. We’ve also learned how much businesses rely on information gained via casual interpersonal contact, and we’ll have to figure out how to build those bridges again.

More and better technology tools are part of the solution. Digitization allows CFOs to navigate uncertainty more confidently and collaborate with remote colleagues more effectively. It can also help us stay in touch with our customers as we help them navigate their way through uncharted waters. CFOs who get the tools they need to do all that will sleep more soundly in the months ahead. 

Gordon Stuart is the Chief Financial Officer at Unit4.