What challenges and priorities will CFOs and their teams be focused on in 2023? A discussion of key findings from our 2023 Finance Key Issues research, with Senior Director Shawn Fitzgerald and Principal Tom Willman, who lead our finance executive advisory program.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Gary Baker, Global Communications director at The Hackett Group. Today’s episode will discuss the key findings of The Hackett Group’s annual 2023 Finance Key Issues Study. His guests today are Senior Director Shawn Fitzgerald and Principal Tom Willman, who lead the Finance Executive Advisory Program at The Hackett Group.
This year’s Finance Key Issues Study surveyed executives across a number of functions, including finance, IT, supply chain, procurement, HR and global business services. They asked about top priorities, top challenges and confidence in overcoming these issues. From that information, they received responses from over 20 industries. They also asked how large the companies were from a revenue standpoint and saw a wide range of business sizes.
Throughout the last several years, finance has been increasingly asked to do more with less. This trend, Tom reveals, will be sticking around for the foreseeable future. Finance respondents projected their workloads to increase by about 8% in 2023, which is double last year’s increase. In line with this, staffing is declining by an average of 1% and budgets by 2%. The good news, however, is that technology spend is expected to increase by about 5%. This underscores that technology will be a primary lever for financial organizations as they work to improve productivity, efficiency and drive business value.
The study also outlines the top 10 finance objectives for the coming year. The No. 1 priority again this year for finance organizations is investing in and accelerating digital transformation. Finance leaders must be prepared to invest in these technology solutions to create capabilities, redeploy capacity and reduce costs. The second is to support growth strategies, reflecting a newfound sense of optimism for what is to come. Finance really can be a catalyst for growth. Tightly aligned with this, the third is to focus finance as a strategic business partner across the value chain. Finance leaders are emphasizing building cross-functional relationships and defining the right interaction model between finance and the business. Fourth is accelerating preparedness for uncontrollable issues. Scenario planning is one of the ways they can do this. Finally, the fifth is improving finance agility.
Then, Shawn outlines the rest of the top 10 objectives on the list. No. 6 is really turning data into actionable insights. Doing this is a major differentiator between leading finance organizations vs. their peers. Seven is about optimizing working capital. With rising interest rates and supply chain disruptions, it is no surprise that companies are trying to improve their customer-to-cash cycles and transactional activities. No. 8 is retaining the right skills and talent. Simply put, there is way too much demand and far fewer people with the supply and capabilities to fill that demand. The need to attract and retain the people you have by upskilling and reskilling is vital. Ninth is to support process efficiency improvements. Transformation is all about rethinking business processes and activity sets, which comprise those processes. Technology can be used to reimagine how the work gets done. Finally, 10th is all about driving cost reduction. Organizations are looking for areas where they can take costs out in a sustainable way.
Next, Shawn and Tom share their biggest surprises in regards to this list, including the high confidence organizations are displaying in terms of their ability to achieve their digital transformation objectives in 2023. Additionally, 73% of respondents claimed to have a major formal initiative being undertaken in 2023 to support that acceleration. However, the other nine priorities do not have well-thought-out initiatives. For example, only 8% of respondents said they had an initiative in place to help them attract and retain talent. The important takeaway is to make sure that you know not only what you need to be working on, but the resources needed to make progress and deliver on the betterment you’ve planned for.
Listen as Tom outlines the top challenges for finance in terms of digital transformation. Funding and resource allocation and capacity constraints of IT organizations to support finance were cited as the top two challenges. The Hackett Group’s recommendation is to resist the urge to delay these investments in technologies. The capabilities and outcomes of accelerating digital transformation will be critical in helping to navigate and thrive in the uncertain conditions of today.
In closing, don’t miss the most important areas for finance to focus on in order to be successful in 2023. With the disconnect between top objectives and the areas in which companies have formal initiatives planned, companies do need to take a step back and realign their investments to reflect their priorities. As they’re talking about digital transformation, it is crucial to focus on how to deploy these technologies at scale. Finally, it is time for finance organizations to get serious about talent retention by working with HR to reevaluate their employee value propositions.
- 0:56 – Welcome to this episode hosted by Gary Baker
- 1:26 – An overview of this year’s Finance Key Issues Study
- 3:16 – Doing more with less
- 4:25 – Top five finance objectives for the coming year
- 8:35 – Rounding out the top 10 objectives list
- 11:37 – Biggest surprises regarding these results
- 16:28 – The top challenges for finance in digital transformation
- 17:45 – The most important areas for finance to focus on