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9 in 10 CFOs making decisions on inaccurate data - research

New research from Pigment has revealed that 89% of CFOs are making decisions based on inaccurate or incomplete data.

The report, titled “Office of the CFO 2024: Expectations vs. Reality,” surveyed over 500 finance leaders, revealing a concerning trend in the finance industry.

Despite the increasing reliance on data for decision-making, the quality of this data is often questionable. This has led to a situation where a significant majority of CFOs are knowingly making decisions based on flawed data.  A 2019 Gartner report estimated that poor data quality costs businesses an average of $15 million per year.

“Finance leaders are over-extended as they try to meet the expectations placed on them,” says Eléonore Crespo, co-CEO and co-founder, Pigment.

“They often don’t have access to the right data or technology, they’re spending far too much time on low-value tasks, and they aren’t able to upskill or evolve their roles. Without changes, they’re being placed in an impossible-to-win scenario.”

At crisis point

Finance leaders are grappling with a profound crisis of confidence. The ability to navigate strategic decision-making, forward planning, risk mitigation, and guiding businesses through unpredictable scenarios is increasingly becoming a challenge for professionals across various sectors.

A significant majority of these leaders, approximately 60%, express assurance only in their decision-making capabilities for the imminent quarter. Alarmingly, a mere 28% feel confident in their planning abilities for a year or more.

This predicament stems from a blend of relentless external and internal pressures. Externally, the unpredictable economic climate and the need to stay competitive are major concerns.

Internally, over half (56%) of finance leaders face the daunting task of making decisions and forecasts for departments where they have limited insight. Compounding this challenge is the fact that 53% of these leaders lack the essential tools required for effective long-term growth planning, further undermining their confidence and strategic effectiveness.

Competing priorities

Mounting expectations are clashing with mundane tasks, creating a bottleneck that hinders the ability of finance leaders to pivot towards more strategic roles.

Despite the evolving nature of the finance function, over half (54%) of these leaders are still ensnared in non-strategic, routine work, preventing them from dedicating time to initiatives that could add significant value to their organisations. This diversion of focus is not just a loss of potential but a direct impediment to enhancing the strategic impact of their roles.

Further compounding the issue, 43% of finance leaders find themselves unable to nurture team culture and worker happiness due to their preoccupation with these low-value tasks. This neglect not only impacts team morale but also reflects a missed opportunity in fostering a more dynamic and engaging work environment.

Additionally, a concerning 42% of leaders are sidestepping the development of new skills and capabilities. This neglect directly affects their ability to attract and retain the talent necessary for driving innovation and competitiveness in their organisations.

Amidst these challenges, finance leaders are also being thrust into roles that demand decision-making across various business facets. They are expected to provide broad strategic guidance and oversee emerging areas such as Environment, Social, and Corporate Governance (ESG).

A notable 68% of finance leaders acknowledge that ESG considerations have become a critical focus for their teams, adding another layer to their already expanded responsibilities.

Can AI really help?

AI-enabled technology tools are set to revolutionise the future of finance, with an increasing reliance on AI, particularly sophisticated large language models.

According to a recent report, an overwhelming 92% of finance leaders have already recognised the benefits of AI in their operations. Furthermore, a significant two-thirds (68%) of these leaders are open to considering AI-generated insights when making business decisions or recommendations.

A key advantage underscored by finance leaders is the facilitation of engagement with non-finance stakeholders. This inclusion broadens the scope of the conversation, allowing contributions from a diverse group.

Generative AI platforms, with their ability to process and analyse data in natural language, play a pivotal role here. They democratise data accessibility, enabling individuals who may not be analysts or experts in financial planning tools to effectively participate in financial discussions.

“Despite the challenges, finance leaders remain committed to their role and are eager to make impactful contributions to their businesses,” says Vanessa Brangwyn, Global Head of Customers at Pigment.

“With a team of skilled individuals and access to clean, accurate data, finance leaders are not just meeting but redefining expectations. They are cementing their role as key architects shaping the future of their organisations.” This statement underlines the transformative potential of AI in empowering finance leaders to navigate and excel in their evolving roles.

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