Technology

Only 14% of CFOs Will Prioritize IT Infrastructure in 2023

Financial executives' wariness of risk is resulting in a focus on more finance-centric duties in 2023, per recent data.
Only 14% of CFOs Will Prioritize IT Infrastructure in 2023
Photo: Monty Rakusen

Despite weary predictions surrounding labor markets and the overall economy this year, companies of all sizes are continuing to allocate toward different types of technology throughout the organization. Ideas around technology and its integration into corporate finance, moreover, were the talk of the town at financial networking events last fall. 

Despite this shift in focus toward technology in recent years, CFOs told Deloitte in the Big Four firm’s recent CFO Signals Report that more traditionally finance-centric elements of business like cost management (52%), financial performance (50%) and growth (38%) are their top priorities in 2023.  Information technology, at 14%, wasn’t chosen as a priority by many finance chiefs.

Low Appetite For Risk

With the post-pandemic economic recovery still taking place and unpredictable global economic and political situations adding to uncertainty, CFOs are focusing on the Xs and Os of finance. By honing in on things like managing costs, performance, and growth, a majority of respondents to Deloitte’s survey appear to be putting their organizations in the best possible position to survive and possibly thrive during an expected economic downturn.

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“Although we did not ask CFOs to explain why they selected certain priorities over others, we believe that the top three priorities they did indicate — cost management, financial performance, and growth — speak to the key challenges they are navigating, such as record inflation and higher interest rates, which are increasing business costs in many cases,” Deloitte’s national managing partner of the U.S. CFO Program, Steve Gallucci told CFO.

Steve Gallucci jpeg.jpg

 Steve Gallucci

The Deloitte findings indicate that only 29% of respondents think that now is a good time for taking risks, down from 38% in the previous quarter. Despite a tendency for technology implementation to be risky and expensive, integration in the space isn’t slowing, according to Gallucci.

“[The] survey reveals the challenging economic environment that persisted throughout 2022 has impacted CFOs, both in their assessments of global economies and in their planning with respect to strategy, capital, operations, and talent for 2023,” Gallucci said in the survey’s release. “Still, CFOs don’t appear to be pulling back on new business investments, the introduction of new services or products, or their use of automation and digital technologies.” 

“It’s important to note that 23% of CFOs indicated transformation as a priority for 2023, and 10% [selected] data analytics, AI, and business intelligence. Those groups of priorities would likely entail some investments in technology,” Gallucci said.

But tech companies may be preparing for a slowdown in business spending. Tech CFOs had the lowest appetite for risk to close out 2022, found the Deloitte survey. Only 18% of tech CFOs embraced risk in the fourth quarter of 2022, down from 43% who said they were embracing risk in the third quarter.

Labor is a Top Concern

The most worrying internal risks for CFOs, according to the survey, were related to employees and the labor market. Employee retention (42%) and talent attraction and hiring (20%) ranked first and third in the top internal risks facing CFOs. Prioritization and execution came in second place at 22%.

In the analysis of where CFOs expect costs to rise, nearly three-quarters (74%) of finance leaders reported expecting higher labor-related costs. To remedy this, a majority are relying on technology. More than three-quarters of the CFOs (79%) said they will make use of digital technologies for operations, while 61% also said they aim to use technology to replace certain jobs performed by humans. 

Organizational Strategy

Deloitte found that 57% of CFOs agree that M&A and joint ventures will be part of their company’s strategy in 2023, alongside 47% of those who say their organizations would be “constrained” from a strategic perspective should a further downturn in the U.S. economy occur. 

The CFOs’ perspectives on strategy were much more impacted by domestic economic issues than international or political issues. When asked how the Russian-Ukraine War, U.S.-China relations, and the U.S. midterm election results were impacting strategy, barely a third of CFOs gave credit to any of those external situations as having a real impact.

“I found two data points particularly encouraging,” said Gallucci. “First, two-thirds (66%) of surveyed CFOs indicated that they plan to allocate or reallocate capital to new business investments [this year]. And nearly half (49%) said their organizations plan to increase their investments in ESG initiatives.”

“Together, those results signal that organizations are looking ahead and aren’t standing still,” he said.