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The pandemic has accelerated digital transformation, speeding up businesses’ adoption of automated tools that help streamline and optimize processes. As economies contracted globally and uncertainty enveloped firms over the past two years, finance departments and CFOs worldwide had to grab the helm of their businesses to steady the ship amidst the raging storm.
CFOs and their financial planning and analysis teams found themselves juggling a variety of issues: how to handle economic factors that are constantly in flux; how to integrate new technologies and optimize work production; how to curb the impact of rising inflation, and how to retain a team of talented financial professionals during the Great Resignation.
With these factors in mind, Datarails commissioned a survey of 200 CFOs in the US and the UK at SMBs/SMEs (100-1,000 employees) to shed light on the challenges they face, the tough decisions they make, and how the long shadow of COVID-19 is affecting their practices.
The results highlight the strains CFOs face both professionally and personally. They reveal, among other insights, how manual data processes are slowing down workflow and how this takes a heavy toll on the work-life balance of finance teams.
Manual Labor is a Drag
81% of CFOs surveyed believe they have the most manual labor-intensive role on a day-to-day basis compared to other C-level executives. This fuels stress and often boredom at work, and significantly reduces the time they must spend with family and friends. Not to mention, manual labor is a serious drag on finance departments’ operations – and it is estimated to cost $7.8 billion in the US alone in 2022.
Within finance departments, the problem often stems from the Financial Planning and Analysis (FP&A) functions, where 41% of work is done manually. Tasks include gathering and consolidating data for budgets, P&Ls, balance sheets, and month-end reporting, that translate into 10 hours each week of skilled finance talent spent on processing data and fixing errors rather than undertaking more value-added tasks like strategic analysis or strategic decision-making.
Manual labor entails real costs for CFOs, both in terms of lost efficiency and productivity but also in terms of opportunity costs: what if CFOs weren’t so bogged down by manual tasks? Financial teams and the CFOs at their helm prefer to spend time on value-adding activities, but a significant gap remains. According to Bain & Company, only 25% of FP&A is currently spent providing value-added analyses.
Additionally, core company processes like budgeting and accounting are often bloated, with “too many chefs in the kitchen.” Sharing financial documents and spreadsheets across many stakeholders adds complexity and creates delays, causing frustration among CFOs and their financial teams.
The results indicate there is vast room for improvement.
Excel vs New Technologies
The pandemic has highlighted that digitization is key to businesses’ survival. By adopting new technologies, firms can more readily respond to and anticipate customer behavior and expectations. Those who don't adopt new technologies risk getting left behind. Globally, 90% of firms are prioritizing an increase in capital allocation toward digital transformation, according to EY. Furthermore, they expect 80% of typical finance tasks to be automated, consolidated or done by providers by 2025.
Our survey found that 70% of companies still use Excel for financial budgeting and forecasting needs, demonstrating the impressive staying power of the nearly 40-year-old software. But our survey also revealed a surprisingly low level of proficiency among financial professionals using Excel. The widespread use of Excel is a major point of entry for automation happening in the CFO’s office.
However, Excel and new tech are not a zero-sum game. Companies can continue to rely on Excel while simultaneously taking advantage of the latest technologies, including consolidated data, Machine Learning, and artificial intelligence (AI). There are many options, and CFOs should make sure to invest time into choosing the technology that will maximize their productivity.
The Impact of COVID-19 on CFOs
Our survey shows that the majority of CFOs (60%) believe their departments remained resilient under the strain the pandemic added to their budgeting and forecasting processes.
CFOs also recognize the changes COVID has catalyzed, with 92% saying they have initiated significant modifications since the pandemic began, ranging from accelerating digital transformation to adjusting the workforce – in particular making sure that employees are retooled and re-skilled quickly to manage the challenges of a post-COVID digital era.
Lightening the Load
Unprecedented global instability is turning into a defining feature that CFOs will need to take into account in their daily business modelling. To meet this challenge, finance teams will need the very best talent, the very best technology, and the very best strategies.
Because CFOs are already carrying a heavy burden, taking up more critical roles to keep their businesses thriving in a shaky economic environment, it is crucial for finance departments, companies, and the economy overall, to find ways to alleviate this load.
Didi Gurfinkel, CEO and Co-Founder of Datarails.