- Efficiency and quality benefits from automation and modern data technology often cannot be realized
- Generative AI in finance departments is still at the very beginning
- In addition to staff shortages and cost pressure, a lack of data culture and silo thinking are hindering digital progress
150 CFOs of large companies have once again provided management consultancy Horváth with insights into the development of their company and finance department. Most of them expect their company to grow in 2024 (66 percent). However, growth is likely to slow down in the coming months, as almost 30 percent expect their company's financial situation to worsen. Just as many are pessimistic about the development of liquidity."In these challenging times, it is more important than ever to use technological potential to increase efficiency – and yet finance departments are finding this extremely difficult in some cases," says Achim Wenning, head of the study and Partner at Horváth.
Not a single technology has been fully and productively implemented by more than a third – 70 percent do not yet have a utilization concept for Generative AI
When asked about the implementation status of nine different data-based technologies, it is revealed that smart dashboards in particular are fully implemented in practice – at least in 18 percent of the finance departments surveyed. Predictive forecasts – although mature models have existed for several years – have only reached a complete level of maturity in seven percent, and at least partial use in a quarter. Advanced analytics models are firmly established in everyday working life in just two percent of finance departments, and partially in a quarter. Robotic process automation (RPA) has so far been used the most (43 percent), although only three percent have a high degree of maturity.
At the bottom of the ranking is Generative AI with two percent of mature users and twelve percent of at least partial users. "This is of course due to the fact that GenAI is a much younger technology. As long as the groundwork in terms of data quality, infrastructure and governance has not yet been done, this figure does not surprise me. Digitalization is stagnating in Finance as a whole – which is severely slowing down the development of companies into a 'data-driven company," says Horváth expert Achim Wenning.
Becoming a data-driven company is a priority, but is still a long way off
For more than 80 percent of respondents, the transformation towards a data-driven company is a high priority and almost a quarter of the total transformation budget is already being allocated to this goal. "There is still no lack of awareness among those responsible in this field of action. The standardization of processes as well as the topics of data integration and the further development of data platforms are currently among the top three strategic priorities of CFOs," says Achim Wenning. "Many are also aware of the benefits of placing data more at the center of economic activity, although, as expected, CFOs are primarily thinking of valid and fast decision-making bases as well as more accurate forecasts and planning – and improved risk management in some cases. But there is still a lack of imagination when it comes to deriving and tackling opportunities for business models, products and services. However, with an increasing data mindset and a pronounced data culture, this will happen in the future," says Achim Wenning.
Lack of data culture, silo mentality and staff shortages hinder progress
Several obstacles still need to be removed in order to take advantage of all the opportunities. More than half of CFOs (59 percent) continue to complain about a prevailing silo mentality that hinders cross-divisional collaboration – a basic prerequisite for making large amounts of data usable. Things should also be better when it comes to data governance, but the study shows that less than half of companies have already defined all important roles and responsibilities in this regard (49 percent). In addition, 40 percent of participants have a general problem finding specialists and experts with the necessary skills and abilities to drive forward digitalization measures.
"To be fair, this initial picture needs to be put into context," says Horváth Partner Achim Wenning. "ESG and other regulatory requirements are forcing CFOs to allocate valuable resources to projects in these areas for the time being. The increasing cost pressure, which is jeopardizing planned investments in digitalization, comes on top. This results in an environment that makes further digital transformation very difficult," says Horváth Partner Wenning. And this puts companies in a poor position when it comes to their digital future viability. However, this is essential in a tense year 2024 and beyond.
About the study
For the Horváth CFO Study 2024, a total of 150 CFOs were surveyed across industries and countries, from companies with a majority of over 1,000 employees and annual sales of 250 million euros. The survey was completed in October 2023.
Click here for the study report: https://hrvth.com/3sqxWgt
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