The transformation toward being data-driven is a high priority for many finance chiefs, but despite the resources allocated at many organizations, it is happening very slowly.
The results of the latest Horváth CFO Study found that “the standardization of processes as well as the topics of data integration and the further development of data platforms are currently among the top three strategic priorities of CFOs," said Achim Wenning, a partner at Horváth, a global management consultancy.
In addition, “many [CFOs] are also aware of the benefits of placing data more at the center of economic activity,” he added.
But only 20% of the 150 global CFOs that Horváth surveyed in October have “developed a solid data culture,” despite knowing that doing so will bring a higher quality of decision-making (85%), faster decision support (71%), and better financial planning and forecasting (67%).
What’s hindering progress? Lack of data quality and data infrastructure are the two most often cited reasons in the survey. And “many CFOs complain about a prevailing silo mentality that hinders cross-divisional collaboration — a basic prerequisite for making large amounts of data usable,” said Horváth. “Resistance to change” was the fourth most-cited reason.
To discover how far organizations have advanced in implementing digital methods and technologies in finance, Horváth asked the 150 CFOs about the implementation status of nine different data-dependent technologies.
“Digitalization is stagnating in finance as a whole – which is severely slowing down the development of companies into a 'data-driven company," said Wenning.
The management consultancy found that smart dashboards were the most frequently fully implemented in practice — in 18% of the finance departments surveyed. Predictive forecasts had only reached a complete level of maturity in 7% of the organizations and at least partial use in a quarter of them. Advanced analytics models were firmly established in everyday working life in just two 2% of finance departments. Robotic process automation (RPA) had so far been used the most (43%).
At the bottom of the ranking was generative artificial intelligence. It had 2% of mature users and 12% of at least partial users. "This is, of course, [because] GenAI is a much younger technology,” said Wenning. “As long as the groundwork in terms of data quality, infrastructure, and governance has not yet been done, this figure does not surprise me.”
Wenning suggested that ESG and other regulatory requirements force CFOs to allocate valuable resources to projects in those areas. And organizations pressured by increased costs overall will have their planned investments in digitalization jeopardized.
“This results in an environment that makes further digital transformation very difficult," said Wenning.
The CFOs Horvath surveyed worked for organizations from 16 different countries. A majority of them had over 1,000 employees and annual sales of 250 million euros ($274 million).