Dublin, May 19th, 2020 – Management and technology consultancy BearingPoint’s new CFO 4.0 study reveals that the digital maturity of Irish and other European companies’ CFO functions is still halfway from the ideal, but CFO functions are keen to invest more in digital development in the upcoming years. Digital readiness helps companies ensure business continuity in challenging business and market situations.
The ideal digital maturity level of the CFO function is characterised by digital technologies and capabilities that improve processes, performance and drive new value generating business models. BearingPoint’s new study reveals that only 11% of Irish companies reach this level, the so-called third wave of digitalization, in their CFO function. According to the research, the average digital maturity level in Ireland was 5.1 out of 10.
Digitally mature companies recognize the value of digital innovations and have included those into their strategy. They also aim to utilise data more efficiently in decision-making processes and to have a technology-driven culture.
Many CFOs still spend most of their time on running core activities – biggest threats to successful digitalisation are linked to strategy and people
According to the research, 56% of the Irish financial professionals surveyed spend most of their time and effort in running core finance-processes as opposed to providing value-added services. However, 72% of Irish participants expect to invest more in technology so that financial resources can be utilised more strategically, focusing less time on historical reporting and more time on value-add activities such as driving insights from data analysis.
“Whilst we have seen improvements in Irish CFO functions, inefficiency in process, technologies and organisational design mean Irish CFOs are spending a significant amount of time on running core activities of the CFO function, instead of providing value-added services”, says Eric Conway, Managing Partner, BearingPoint Ireland. “There needs to a greater focus on applying new innovative ways of working along with the aligned methodologies and techniques for continuous improvement into their Finance functions where CFOs are thinking more like the innovators. Think automation, design sprints, innovation, technology efficiency, sustainability, etc.”
The research findings indicate that one-third of the respondents in Ireland are not confident in their CFO function’s readiness to respond to and leverage digital trends. The main barriers to responding to digital trends are insufficient skills and experience, competing priorities, lack of clear strategy and vision, unsuitable current IT landscape and the significant investment required.
According to the survey, 50% of respondents in Ireland believe that they do not have sufficient skills and experience to execute their organisation’s digital transformation. The ability to understand and leverage new technologies will be thus a key differentiator in future.
“Biggest challenge facing Finance functions both today and in the future is talent acquisition and retention”, Martin Deere, Head of Finance & Risk, BearingPoint Ireland, comments. “As the role of the Finance function shifts from financial accounting and reporting toward more forward-looking analytics, technology-related skill sets will increasingly be required. This will require investment in employee capabilities that have not been traditionally associated with finance functions.”
Finance Leaders in Ireland – Key highlights from CFO 4.0 Study
Digital readiness helps companies ensure business continuity in turbulent market situations
Due to the COVID-19 pandemic, the current focus of many CFOs is on critical business continuity, liquidity and performance. Current situation can either accelerate the digitalization within the CFO function or slow it down, depending on the capabilities of the organization. In this challenging context, it is particularly important for CFOs to not lose sight over the importance of short-, mid- and long-term transformation of the CFO function.
“Digitalization initiatives are even more important when business conditions change”, says Damien Palacci, Partner responsible for Consulting Portfolio at BearingPoint, “How companies stay connected, adapt to remote work and are able to analyze scenarios will have a crucial impact on business continuity and recovery.”
A balanced portfolio of measures can help balance the needs of short-term continuity management with more strategic long-term transformational visions. Ability to seize opportunities fast and simplify processes is crucial, so that the CFO function can support the business and create new business models as efficiently as possible.