The year 2020 represented one of the most challenging on record, and CFOs are feeling the pressure of an extended period of uncertainty. Not surprisingly, their mood has shifted significantly over the past 12 months – optimistic expectations of growth and profitability have been replaced with uncertainty and crisis management as companies, and their CFOs, wrestle with mitigating the effects of a protracted downturn and keeping their heads above water.
Industry Prospects Compared With 2019
Conclusion: CFOS are far from optimistic about industry prospects.
In this year’s Stanton Chase CFO Survey, we canvassed more than 250 CFOs from around the globe to gain their perspectives on what they and their organizations experienced in 2020 and their expectations going forward. Several trends stand out compared to our last global survey, most notably the steadily broadening scope of the role of the CFO and an increasing focus on strategy, technology, and human capital. CFOs were hard-pressed not to view everything through the lens of COVID-19 as they dealt with the immediate fallout. Changing environments and new risks have clearly led to shifting priorities and support the continued evolution of the CFO’s expanding role.
More than two-thirds of CFOs reported noting a decline within their industry in 2020 compared to 2019. As the pandemic continues unabated in many business markets, much of the early optimism for a potential hockey-stick recovery has ebbed, with signs increasingly pointing to a longer-term – and much more uncertain – W-shaped recovery.
Respondents cited a downtrend in revenues indicative of other drops on the market. Some industries, such as essential and e-commerce retail, saw an initial uptick in profits. But the temporary boost in sales was often “more than offset by higher CV-19 costs and supply-chain challenges,” according to one retail CFO respondent. Another CFO from the industrial sector noted that government incentives and support have eased the slump but that “this has mostly been borrowing from future demand.”
“Much of the early optimism for a potential hockey-stick recovery has ebbed, with signs increasingly pointing to a longer-term – and much more uncertain – W-shaped recovery.”
The Biggest Challenges Facing CFOs
In our last global survey, a majority of CFOs ranked digital transformation and implementing innovative technology as their greatest challenge. While this certainly remains at the forefront for many, and still ranks among the top three challenges that CFOs perceive for the next few years, the current and longer-term impacts of the pandemic and overall economic volatility took center stage in 2020. Therefore, while digital transformation remains a priority, it has been displaced for many CFOs as they face the more immediate challenges of correcting course.
The most pressing issue at hand for CFOs is the long-term and financial impact of the global pandemic, with almost 80% of respondents listing this as their top challenge over the next three years. Almost the same number of CFOs cited future economic volatility and global recession as one of their top concerns, although the two are most definitely closely related. A third of CFOs surveyed continued to prioritize digital transformation and the ability to keep pace with digital trends and innovation, and roughly the same number of respondents again listed industry disruption and increased competition as challenges they anticipate in the near future.
Conclusion: Fewer than half said they were prepared for the coronavirus.
“With all the challenges presented by the global pandemic and the financial constraints it has imposed on every level of business, CFOs are prioritizing technology as the means to recovery.”
With 2020 presenting a whole range of unprecedented challenges, many organizations and their CFOs were caught unawares as to the extent of the newly presented risk. Fewer than half (41%) of CFOs surveyed reported feeling that they or their organization are adequately prepared to address the risks associated with the coming year’s challenges.
A Renewed Focus on Tech
With all the challenges presented by the global pandemic and the financial constraints it has imposed on every level of business, CFOs are prioritizing technology as the means to recovery. An increasing number of CFOs are recognizing the importance of developing and attracting talent with the requisite technology skills, a trend consistent with our past survey results.
Impact of Tech in Past 3 Years
“Nearly twice as many CFOs in Europe versus those in North America voiced that organizational and digital transformation was a key value creator during the past year alone.”
Executives and management have come to rely heavily on technology, and this reliance is only set to increase in the years to come. Nearly twice as many CFOs in Europe versus those in North America voiced that organizational and digital transformation was a key value creator during the past year alone.
Digital Technologies With the Greatest Impact in the Next 5 Years
A vast majority (79%) of CFOs indicated they expect data and predictive analytics to most significantly impact their finance organizations. Others cited cloud deployment and data security (53%), artificial intelligence and machine learning (46%), and technologies to support effective and efficient remote work (45%). While the topic of remote work represents an emerging consideration for many CFOs – and a new question added to this year’s survey – it is clearly one that has quickly risen to the top of the CFO agenda, as organizations seek to streamline the capability of employees working from home and business being conducted virtually.
Read the Whole Survey
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