2024 Finance Key Issues Research

February 13, 2024
Season 5, Episode 13

In 2024, finance organizations will need to do more with less, with cost containment and cash flow optimization back at the top of their priority list. A discussion of findings from our 2024 Finance Key Issues research, with Shawn Fitzgerald, a senior research director at The Hackett Group; Tom Willman, a principal in the Finance Advisory practice; and John O’Mahony, a principal in the European Enterprise Performance Management practice.

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 Shawn Fitzgerald, senior research director at The Hackett Group. Today’s episode will discuss findings from the 2024 Finance Key Issues research. Shawn is joined by Tom Willman, principal of the Financial Executive Program, and John O’Mahony, principal of Enterprise Performance Management practice in Europe.

To begin, Shawn gives an overview on the financial study, which is an annual effort that The Hackett Group performs. They ask various chief financial officers and finance executives about their objectives, initiatives, and issues in finance from the year. Tom and John first discuss that the 2024 Finance Key Issues research is organized around finance maturity – there has been progress, but there is still more work to do. In 2024, they expect 53% of organizations to be challenged with adding value and efficient operators if you compare what administrators are doing and what is necessary but not liberating true value on behalf of the organization. Financial companies need better forecasting and tools, and have the right structures in place. In terms of trends, the research shows increases on average of 2% in enterprise revenue, an uplift in activities and driving productivity in finance, along with investing in technology, the expectation that finance will do more for less and operating the transactional processes in a more productive way.

Next, they discuss the key objectives in finance for 2024. There have been significant shifts relative in 2024, which includes cost management and optimization and cash flow and liquidity as the first two top objectives. The third is timeliness and reliability of data, and the fourth is profitable goals, including margin expansion. The fifth and sixth objectives include digital transformation and reliable forecasting, with a priority on upscaling existing talent. The eighth objective is business partnering, and the last two objectives include regulatory compliance and capital investment allocation. Projects and programs to help support these key initiatives are first to focus on simplifying, standardizing, and automating more processes. Organizations need to establish and expand global business services and the center of excellence footprint, along with the use of self-service tools. Businesses also need to improve analytical, forecasting and reporting capabilities, and improve master data management and governance capabilities. Optimizing the planning process and working capital performance are included among those initiatives. They also need to educate sales around the impact of the effect on working capital.

The top digital transformation challenges in 2024 are first the economic environment – what is affordable and being able to invest. The second challenge is the journey from legacy technologies to modern technologies, and managing that change with the right skill set. They also need to enable the actual technology itself. Another challenge is having the ability to implement continuous improvement by having processing skills and change management skills. 

Companies need to figure out what components bring value and what is unnecessary. There is the issue of failed transformation programs due to the adoption of the new ways of working, which is seen outside of finance too. Stakeholders also need to know what’s coming when and help make the transformation successful with strong guidance and support.

Lastly, John and Tom talk about how finance is evaluating generative artificial intelligence (Gen AI). They are seeing roughly one-third of organizations focus on that opportunity, but they expect that to change rapidly. Gen AI makes transactional opportunities smoother and provides better outcomes. They are also looking to their customer eco base to adopt a new way of Gen AI and bring about a better outcome for customer experience. Gen AI brings more accurate forecasts and better budgets, and helps with the collection of data, external reporting, embedding within the organization, and providing insight around likely outcomes. Organizations need to have the right structures in place around data management, security, and quality and integrity.

In closing, they recommend what finance areas need to be focused on in 2024. This first includes prioritization and not overcommitting, along with using resources effectively. Another is cost optimization to take a data-driven and informed approach to optimizing those costs. Companies need to focus on data, and take advantage of Gen AI.

Time stamps:

0:46 – Welcome to this episode hosted by Shawn Fitzgerald. 

2:20 – What are the 2024 Finance Key Issues research organized around?

4:18 – What does the research show in terms of trends?

6:30 – Key objectives in finance for 2024.

12:34 – Projects and programs to help support these key initiatives.

16:38 – Top digital transformation challenges in 2024.

21:07 – Is finance evaluating Gen AI?

26:48 – What should the finance area be focused on in 2024?