Amid Inflation Concerns, CFOs Prioritize Automation

CFOs are planning to increase IT and technology spending in the next 12 months, according to a new survey of 200 finance leaders by Gartner. While CFOs are planning to reduce budgets overall, they are clearly seeing value in investment in technology. Automation is an area of focus, as finance chiefs view it as a key component to combat rising inflation.

Investment in Insight

Finance chiefs plan to increase spending on IT and technology by 40% in the next year. This trend reaffirms data from a May 2022 survey, which saw 46% of CFOs planning to allocate more money towards enterprise digital initiatives over the next two years. Fully 29% of CFOs are also planning to increase spending on R&D; CFO Dive noted that this increase indicates a commitment to digital transformation.

Marko Horvat, vice president of research for Gartner Finance, noted that, in addition to CFOs viewing digital technology as a “smart long-term bet,” it is also a critical piece in addressing rising inflation. “Nearly a quarter of CFOs think greater automation will help to combat inflation, and this aligns with CEOs who are even more bullish on tech with 85% planning to increase spend over last year,” he said.

Horvat elaborated in an interview, explaining that automation could be used in the very way that financial professionals have feared for years—reducing personnel and thus cutting costs. Finance functions are also poised to see cuts overall, according to 22% of respondents.

Still, that doesn’t mean that all financial professionals’ jobs are going to be phased out. Instead, Horvat sees finance pivoting away from its role as a record keeper to a department that provides financial insights and finds ways to save money across the organization. According to Horvat, a “transformation in data” is occurring, which requires the latest technologies. He sees the CFO is “morphing into this chief insights officer,” whose goal is to marry financial performance with operating statistics to gain a full view of how everyday decisions impact the bottom line.

Change in Mindset

Treasury departments have historically been underfunded in terms of both staff and technology. However, Jim Gilligan, former assistant treasurer for Kansas City, Mo.-based utility Evergy and currently senior vice president of MFR Securities, sees a change in mindset among finance chiefs when it comes to investing in treasury technology.

Gilligan observed an “absolute willingness to invest in technology” from CFOs that was not there in previous years. “I think that’s driven by efficiencies that are hoped to come out of the investment,” he said.

Throughout the COVID-19 pandemic, many treasury departments have struggled to find people to do the work. Technology can help to bridge some of those gaps. However, Gilligan noted that often technology spend can often fall under the purview of a chief information officer or other IT executive and that individual may prioritize areas other than treasury. So even with a greater willingness to spend on treasury and finance technology, it might take years for some organizations to make those investments.

With that in mind, treasury teams that are in the market for a new treasury management system (TMS) may want to emphasize to senior leadership that these systems essentially pay for themselves in the long term. In addition to streamlining treasury processes and increasing the accuracy of cash forecasts, SaaS systems like Kyriba are fully managed in the cloud and therefore won’t be a burden to IT going forward.

“That’s what I personally always liked about cloud solutions,” Gilligan said. “And I think others that are in an operational role try to get away from having to have the support of the formal IT organization.”

Additionally, investing in treasury technology can help organizations maintain consistency over time. Gone are the days when treasury employees stay with the same company for decades. So, if a treasury analyst who performs a plethora of manual tasks decides to leave, it can be difficult to find someone new and train them up in time so that everything keeps running smoothly. But if treasury is using a modern TMS that automates many of those processes, the transition can be much easier.

Investing in the Future

As global inflation and U.S. interest rates increase and budgets contract, companies will be choosing carefully where they choose to invest. Nevertheless, the fact that CFOs understand that technologies like automation can help them in the long run is a positive sign. Automating processes can reduce errors while enabling members of the treasury and finance team to make strategic contributions; it’s a win-win for the organization.