Thursday, 23rd May 2019

CFOs to navigate economic uncertainty by harnessing the power of big data

Multiple scenario planning takes centre stage as CFOs strive to remain agile.

Adaptive Insights has released its global CFO Indicator Q1 2016 report, revealing that while chief financial officers (CFOs) remain worried about growing economic volatility, the vast majority of the 377 CFOs surveyed remain confident in their forecasts, and believe that the combination of big data, analytics, and scenario planning will likely be the key to navigating their organisations through the current financial uncertainty.
Enabling them to accelerate the pace of change and remain agile, scenario planning is viewed by 48 percent of CFOs as the activity that will provide the most strategic value to their organisations during a downturn. Seventy-eight percent believe that applying financial data analysis to achieve profitability will provide the most strategic value overall to their organisations. Other key findings in the report include:
  • High forecasting confidence: 85 percent of CFOs feel moderately, very, or completely confident in their forecasts for the first half of 2016
  • Strong trust in the value of big data and analytics: 43 percent believe big data and analytics will have the single biggest effect on their future role
  • Agility highly valued: 59 percent rank transformation and innovation experience as the second most beneficial attribute to their performance—second only to technical and analytical skills (65 percent)
“A strategic CFO is an agile CFO—one who can pivot on a dime and react decisively regardless of what the future holds,” said Robert S. Hull, founder and chairman at Adaptive Insights. “When the financial outlook seems unclear, planning for multiple scenarios can significantly contribute to agility. While transformation and innovation experience helps inspire myriad possible outcomes, technical and analytical skills can be applied to more rapidly model multiple actionable plans—helping financial leaders to remain agile as they navigate even the most turbulent markets.”
Technology savvy CFOs chart course in turbulent markets
Driven by such factors as potential changes in regulatory requirements and taxation laws, economic uncertainty is the only certainty for today’s CFO. In fact, potential changes in regulatory requirements alone is driving 64 percent of CFOs to plan for multiple outcomes. It’s no surprise then that scenario planning has been identified as a key task for driving strategic, agile decision-making.
To support strategic activities, 56 percent of CFOs indicated that they were either very or completely likely to invest in dashboards and analytics and identified cloud-based, or SaaS, solutions as their preference. According to the study, CFOs estimate that 33 percent of their IT infrastructure is SaaS today, and they forecast this to grow to 60 percent of their infrastructure in four years. CFOs cited collaboration (24 percent) as the top reason for implementing SaaS solutions, followed by less reliance on IT (21 percent), and significant cost savings (17 percent).
And with growing reliance on technology and scenario planning, CFOs are not only feeling confident in their forecasting capabilities but also in their use of technology. Ninety-three percent report they are moderately, very, or extremely proficient in technology.
Shifting priorities for CFOs
While most CFOs (93 percent) see compliance as their top priority today, only 62 percent see this as a priority three years from now. Rather, they expect to begin focusing on talent management (78 percent), transforming financial data into intelligence to drive growth (77 percent), and understanding how to leverage IT to take advantage of evolving market opportunities (74 percent).
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