CFO optimism may be at its highest level in decades in the United States, but CFOs are still taking a scalpel to their finance organizations in a bid to run more efficiently.
According to Hackett Group‘s Key Issues Study for 2017, despite executives’ projections of revenue growth of 4.1% in 2017, finance organizations’ budgets will be cut by an average of 3.8%. CFOs will also be slashing headcount in finance by an average of 4.4%, according to Hackett’s survey of executives at 180 large U.S. companies.
The cost-cutting also comes at a time when finance chiefs are planning to increase overall payrolls by about 3%, according to the first quarter’s Duke/CFO Global Business Outlook Survey, and hike wages an average of nearly 4%.
Cost-cutting is the top initiative of finance functions this year, according to Hackett’s survey. It is even ahead of “redeploying capacity to more value-creating activities” and “improving finance’s analytical, modeling, and reporting capabilities.”
While finance teams at large organizations have continually faced budget and staff reductions for more than a decade, the latest cost-cutting plans are also part of the movement toward automating routine and manual-intensive tasks.
Robotic process automation is enabling finance to automate repeatable, standardized, or logical tasks historically handled by people. In finance and accounting, RPA is being tested or used to automate procure-to-pay, order-to-cash, and record-to-report processes.
Of course, enterprises are taking advantage of many other technologies as part of the move to digital innovation in products, services, and customer relationships.
Ninety-one percent of executives say digital transformation will alter the way finance delivers its services. The transformation is already underway. In 15% of organizations, finance teams are revising job profiles or competency models, according to Hackett, and on average executives say they are dedicating 16% of their finance organizations’ staffs to digital transformation.
“The low percentage reflects the early-adoption stage of digital transformation,” said the Hackett Group’s report accompanying the survey results. “To push digital transformation to the next level, it is essential that organizations assign and dedicate a larger share of their resources to digital projects.”
Dedicating more resources to digital efforts while shrinking budgets may require some fancy footwork from CFOs. “Cost cuts alone will not help finance deliver on enterprise goals,” Hackett cautions. “Nor will they foster innovation, attract new customers, or help deliver fresh insights.”