Making plans on a hunch does not suffice, CFO decisions need to be data-driven

CFOs can no longer look in the rear-view mirror. Continual disruptions over the past few years have highlighted that reliance on historical data and previous performance is no longer sufficient to make the quick, informed decisions required. Subsequently, 29% of CFOs identify the implementation and acceleration of structural change within the business as a significant opportunity in the coming downturn, and the success of this change will hinge on data.

No longer staying in their finance swim lane, CFOs are becoming key players in determining how the business operates, where they should invest, what areas need more staffing support, and how to plan and prepare for uncertain times. From building resilience to scenario planning to a focus on supply chains, CFOs’ data-driven decisions will be vital to navigating the economic challenges ahead. 

First, to build resilience CFOs must look to update outdated systems and lengthy processes. For many companies, legacy on-premises systems that require expensive infrastructure, constant maintenance and costly upgrades can have a huge impact on business continuity and annual expense. This technology can have a profound impact on the efficiency and cost across supply chains, IT operations and even the finance function itself. Staff cannot be expected to perform their best when they are held back by slow, siloed software.

CFOs should put resilience at the centre of their digital transformation strategy. The first step is to look closely at their cost base, understanding how productivity and prioritisation take shape across the business. Identifying these insights will require access to information across the front and back office, and multiple business functions. When organisations bring all finance, operations, and human resources data together on a centralised, common platform, areas of inefficiency can be identified.

Ultimately, this integrated data needs to balance cost reduction against the potential impact on business performance as CFOs look to build much-needed resilience into financial strategy. For example, having three months of cash reserves available, or establishing stock levels that can sustain operations for periods of disruption are vital ways to build resilience, but effective decisions here can only be made when backed by the right data.

CFOs need to preserve business continuity as much as possible – but they also need to plan for the unexpected. In especially turbulent economic times, CFOs must build data into decision-making, conducting rapid impact analysis and scenario planning to boost resilience and deliver meaningful insights to the business.

The CFO is in a unique position. As macro conditions change, they are best placed to advise on how to adapt strategy and execute changes quickly. They can gather intelligent insights into the costs and values of every department, build a holistic view of business data, and work closely with other department leaders to forecast scenarios and plan for disruption. In this way, CFOs can be a catalyst for real change, able to feed centralised data into enterprise resource planning (ERP) systems and suggest strategic changes in the way the business is run and structured. Artificial intelligence (AI) solutions can prove invaluable for scenario planning, taking the pressure off the CFO by analysing and interpreting vast quantities of data at speed, able to automate repetitive, manual tasks and provide teams with instant insights.

As CFOs are met with increased pressure to accurately forecast future revenue, plan for any scenario, and maintain growth, they must use their unique data position to work closely with business leaders across every department. One of the key areas is supply chain.

Supply chain disruption rages on in 2023, with shortages of raw materials and consumer goods ultimately having a big impact on the bottom line. CFOs must connect dispersed supply chains and work with COOs to plan for, and mitigate, supply chain disruptions with the help of integrated business planning software and systems. Increased visibility of data, from product locations to partner data to logistics, enables businesses to make their supply chain more resilient. With incoming regulations set to formalise ESG reporting of end-to-end supply chains, the transparency of this business function is more important than ever, and likely to rely on input from the CFO and their data.

When global uncertainty is coupled with increased scrutiny from the CEO, board, investors, employees, and customers, every move a business makes is critical. When CFOs have a single source of reliable data in place, they can make better decisions across the entire business, build better scenario planning, and create more transparent, connected supply chains. Data-driven decisions will be vital to weather economic challenges throughout 2023, and it’s up to CFOs to take the lead.