CFOs are facing unprecedented challenges and few industries are exempt from the disruption caused by new technologies. But for the first time in years, optimism is high about the prospects for growth
Despite political upheaval, policy uncertainty and changing geopolitics, CFOs are more optimistic for 2018 than they have been for the past couple of years, as global economies show glimmers of growth.
What’s more, their bosses are confident too. According to PwC’s 21st CEO Survey, this year saw the highest ever jump to the highest ever level of CEO optimism about global prospects over the next 12 months. Optimism was strong among executives in the Middle East, with more than half saying they were confident in global economic growth, compared with 26% last year.
But the ground is shifting all the time. Our recent survey of CFOs and Heads of Finance across the Middle East Region revealed the following top five challenges that CFOs face this year.
1. Insight and Analysis
Technological advances are stepping up their pace. Although it is causing major disruption for some industries, it is also the catalyst for innovation – throwing up myriad opportunities for many CFOs.
KPMG’s Global CEO Outlook survey found that 85% of CEOs polled say CFOs can furnish their organisation with major strategic value by applying financial data to achieve profitable growth. And growth is what organisations are seeking this year.
2. Nurturing Talent
The traditional role of the finance team is evolving quickly because of new technologies. To stay ahead of the game, finance professionals must remember that their organisations are only as good as their teams. CFOs must ensure their teams have the right tools, skills and capabilities to arm the board with cutting-edge insights and analysis.
Executives will be expecting predictive and prescriptive analysis. Behavioural skills, strategic thinking, relationship management and communication are becoming just as important as more traditional technical finance skills. Almost all CEOs (97%) in KPMG’s Global CEO Outlook survey say that attracting and retaining top finance talent is part of the role of the CFO.
Finance officers will be expected to look for new ways of working that could involve overhauling business models and operations in order to harness the opportunities that emerging technologies offer.
CFOs should be looking to cloud technologies, robotics, machine learning, natural language processing and mobile to move organisations towards greater automation, and thus greater insights. PwC projects that AI will contribute an additional US$15.7 trillion to global gross domestic product by 2030, an increase of 14%. But the benefits of AI will only be captured by those who are rising to the challenge now.
More than six in 10 CEOs (65%) see disruption as an opportunity, not a threat, for their business. Three in four (74%) say their business is aiming to be the disruptor in its sector. CFOs will need to keep this at the forefront of their minds in order to deliver for their organisations.
4. Supporting Growth
CFOs are placing a much greater priority on growth – whether it be organically, M&A, introducing new products and services or moving into new markets – over the next 12 months than at any point since 2009. The willingness to expand is close to the highest level in seven years. Corporates are still interested in growing their businesses.
5. Cost Control
Controlling costs will always be a priority for chief financial officers. Yet despite economic growth returning in many economies, organisations are not yet taking their eye off the ball in terms of cost cutting. CFOs enter 2018 more focused on controlling costs than at any time in the last eight years. Despite this, CFOs are more optimistic today than they have been over recent years, and perceptions of uncertainty are far lower than anytime of the last 24 months
It’s a challenging time to be a CFO – but with optimism high in the sector, the opportunities are there for a skilled exec willing to adapt the role, push for innovation and drive growth.