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Leadership

How CFOs Are Navigating the Waters of Economic Uncertainty


by FEI Daily Staff

Data analytics and planning for multiple scenarios give CFOs more agility and responsiveness to help combat market volatility.

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From fluctuating interest rates to the impact of Brexit, to the upcoming presidential elections, 2016 is turning out to be anything but predictable. Few feel this reality more than CFOs. In fact, a recent survey of 377 CFOs from across the globe revealed that more than two-thirds cite economic uncertainty as the top financial risk to their companies.

As CFOs take a more central role in business strategy, they are being called on to help companies navigate these uncertainties. Key to this process is the ability to plan for multiple scenarios simultaneously. According to the survey, nearly half of the financial chiefs listed modeling for different eventualities as the activity that will drive the most strategic value during the current market contraction.

At the heart of this drive toward greater scenario planning is data: Big Data. Nearly half (44 percent) of respondents believe big data and analytics will have the single biggest impact on their role in the future.

Analytics Core to Strategic Skills & Business Confidence

In spite of economic uncertainty and a volatile Q1 market, CFOs are growing increasingly confident in their ability to accurately forecast sales. Nearly three-quarters of CFOs (73 percent) plan to make few changes to their 2016 plans based on Q1, and 85 percent feel confident in the accuracy of their forecasts for the first half of 2016.

This confidence is grounded in their experience and skills. 65 percent of CFOs believe their technical and analytical skill is the top attribute to their own performance. Agility is also highly valued as 59 percent rank transformation and innovation experience as key attributes to performance.

CFOs Double-Down on SaaS

While skill and innovation are both key, savvy chiefs are leaving legacy behind and turning to cloud-based (or SaaS) solutions to get them where they need to go. CFOs say that approximately 33 percent of their IT infrastructure is SaaS, and they forecast this to more than double in the next four years. Collaboration (24 percent) was cited as the top reason for implementing SaaS solutions, followed by less reliance on IT (21 percent) and significant cost savings (17 percent ). The need for technology doesn’t stop with SaaS though, as 56 percent of CFOs indicated that they were either very or completely likely to invest in dashboards and analytics for their most strategic business activities, followed by reporting (46 percent) and predictive analytics (35 percent).

What Does the Data Say About CFO Planning Priorities?

Looking at data from Adaptive Insights’ customer base of more than 3,000 companies in almost every sector, a few scenarios stand out as priorities for CFOs at privately-held companies. Chief among them are cash preservation, profitable growth and mergers and acquisitions.

These come as no surprise as market conditions have made it much more challenging for VC-backed companies to raise money. As a result, many are looking to maximize growth opportunities, optimize their operations and preserve cash. In the current market, data analytics and planning for multiple scenarios give CFOs more agility and responsiveness than ever before to help combat market volatility.

Leveraging dashboards, analytics and real-time insights to drive corporate performance are key benefits of cloud-based financial planning solutions. Given the strong desire to plan for multiple outcomes, it is not surprising that CFOs are embracing this new era of data-driven insights and see it as a strategic necessity to thrive in the current and ever-changing economic conditions.

Download the CFO Indicator Q1 2016 Report for more insights, survey results, and charts based on input from the 377 global CFOs in Adaptive Insight’s latest survey.

Diane Orr is an experienced marketing and communications executive, who has played an active role in the global communications strategies of many high-technology companies. She is currently the Senior Director of Global Communications at Adaptive Insights, the leader in cloud corporate performance management.