Automation » 2024 Priorities: Balancing the basics amid human-centric transformation

2024 Priorities: Balancing the basics amid human-centric transformation

From orchestrating digital transformations to mastering strategic foresight, discover the ten pivotal priorities shaping finance leadership in 2024

2024 Priorities: Balancing the basics amid human-centric transformation

2023 was the year of the ‘evolving CFO’. The turn of phrase, arguably now overused, suggests the role of the CFO has transformed into something different – but what if C-Suite roles were continually adapting, and the recent shift was just the start of a bigger evolution within the finance function?

The days of backroom number crunching are most certainly gone – for most companies at least – allowing modern CFOs to be almost alchemists, turning market chaos into strategic gold. In this ever-fluctuating economic landscape, punctuated by relentless technological innovation and market shifts, CFOs are not just navigating, they are pioneering.

But what will be at the top of their agenda this year, in comparison to 2023?  From driving sustainable growth to navigating regulatory complexities and leveraging data for strategic decisions, The CFO outlines 10 priorities for CFO’s this year.

Chapter 1: Embrace the changing landscape

As the complexity and scope of the CFO role grow, finance leaders must embrace their new mandate. The CFO is no longer confined to financial reporting; they are expected to possess a diverse skill set that includes financial expertise, strategic decision-making, risk management, and stakeholder management. In addition, with technology powering business innovation and transformation, CFOs must navigate a packed agenda that requires equal parts business savvy, strategic insight, and tech experience.

Looking ahead, the value of a strong CFO cannot be overstated. CFOs have a unique bird’s-eye view of a company’s financial health, and their ability to harness the power of modern data, predictive analytics, and financial intelligence is crucial. By fostering cross-functional alignment and enabling data-backed decision-making, CFOs can position their companies for successful outcomes in the year ahead.

Chapter 2: Unlock the ROI of reinvention

Top-performing CFOs recognize the need for a self-funding budget to drive enterprise transformation. Strategic investments, such as introducing new revenue streams, entering new markets, and integrating new technologies like Generative AI, can improve performance and productivity while maintaining or reducing costs. However, CFOs often struggle to capture value from their technology investments, with 88% of CFOs and business executives facing this challenge.

To fund investments and accelerate adoption, CFOs should collaborate with their Chief Information Officer (CIO) and Chief Transformation Officer (CTO) to align budget priorities, integrate strategic planning decisions, and respond swiftly to market changes. By leveraging technology to enhance productivity and reduce costs, CFOs can unlock the ROI of reinvention and drive successful business transformation.

Chapter 3: Take action on climate

Growing environmental, social, and governance (ESG) reporting requirements have created a sense of climate urgency among executives, including CFOs. Delivering reliable ESG reporting is just the beginning, as nearly a third of CFOs are analysing how climate change scenarios could impact financial performance. CFOs should utilise their unique view and forecasting tools to integrate sustainability into their business strategy, analyse risks, and explore opportunities for growth through sustainable products and solutions.

In addition to meeting sustainability commitments, CFOs should consider leveraging tax incentives, renewable energy, and green financing to fund their sustainability strategies. By prioritizing climate action and embracing sustainable strategies, CFOs can drive growth, viability for the future, return on investment, and positive societal impact.

Chapter 4: Modernise the finance function

As the role of the CFO expands, so does the influence of the finance function. With data volumes exploding, finance leaders are becoming data stewards. CFOs can leverage advanced analytics and cloud technology to drive strategic insights, improve forecasting, better manage cash, and rethink organizational structures. However, finding talent with the necessary strategy and tech skills is becoming increasingly challenging.

Successful finance transformations start with people. CFOs should reimagine roles and reskill staff to hone analytical capabilities. Technical upskilling is important, but investments in non-technical capabilities such as data-driven storytelling, communication, and innovation are equally critical. CFOs should also consider attracting specialized talent or exploring a managed services model to bridge the talent gap and ensure a modernized finance function.

Chapter 5: Practice trust as a discipline

As primary points of contact for investors, analysts, and stakeholders, CFOs should effectively communicate financial performance and the company’s strategic direction. In an environment of increasing risks and uncertainties, practicing trust as a discipline becomes crucial. By prioritising funding for risk management, cybersecurity, governance, and controls, CFOs can drive a culture founded on transparency, accountability, and trust.

By fostering a culture of trust and resilience across the enterprise, CFOs send a clear message that they have risk considerations versus profitability well in hand. This culture of trust not only strengthens relationships with stakeholders but also enables the finance function to navigate challenges and drive successful outcomes.

Chapter 6: Manage the next normal

The future is unpredictable, and CFOs must navigate a rapidly changing landscape. The Next Normals, as defined by McKinsey, will continue to impact businesses, requiring CFOs to build agility and resiliency. Strategic leadership becomes paramount as CFOs drive the conversation on business model transformation and guide the management team in making the right strategic choices.

CFOs should harness their financial expertise and collaborate closely with the C-suite to navigate economic headwinds, political instability, and other challenges. By managing the Next Normal effectively, CFOs can position their companies for success in a rapidly evolving business environment.

Chapter 7: Drive Growth

The economy is at a crossroads, and CFOs must find smart ways to drive growth. Whether facing a potential recession or back-to-normal growth scenarios, CFOs should explore business model transformations, mergers and acquisitions, and other strategic initiatives. CFOs should evaluate cost and investment decisions through an enterprise-first lens of profitable growth and digital transition.

By driving growth amid economic uncertainties, CFOs can position their companies for success in a highly competitive market. Embracing innovation and strategic opportunities will be key to unlocking growth potential and maintaining a competitive edge.

Chapter 8: Drive debt-levels down

The era of “free money” is coming to an end, and CFOs must manage debt levels effectively. With interest rates remaining above typical levels, CFOs should prioritize efforts to drive debt-levels down and optimize costs. Refinancing may come at a steep cost, making it more beneficial to free up cash for debt repayment.

By actively managing debt levels, CFOs can mitigate financial risks and create a solid foundation for future growth and investment. Strategic debt management will be crucial in navigating a changing economic landscape and ensuring financial stability.

Chapter 9: Continue digital transformation with Generative AI

Generative AI (GenAI) has emerged as a transformative technology for CFOs. CFOs should embrace early experimentation and implementation of GenAI capabilities to drive impactful change. From fraud detection to customer journey optimization, GenAI has the potential to revolutionize finance operations and decision-making.

To fully leverage the power of GenAI, CFOs should not only focus on technology adoption but also consider the impact on processes and people. CFOs should set up a control tower or steering committee to direct resource allocation, force discussions on process improvement, and encourage experimentation with GenAI. By integrating GenAI into existing systems and processes, CFOs can unlock its full potential and drive positive outcomes.

Chapter 10: Better financial planning

In a volatile world, financial planning becomes increasingly important. CFOs should ensure visibility into the future by building machine-learning models that accurately predict outcomes. This enables effective action planning and interpretation of results for strategic decision-making.

To improve financial planning, CFOs should consider investing in advanced analytics and leveraging data-driven insights. By enhancing cross-functional collaboration and adopting integrated business planning, CFOs can drive better financial planning and position their companies for success in a rapidly changing business landscape.

Will the crystal ball hold true in 2024?

The anticipated trends of 2023, notably the proliferation of cloud technology, the acceleration of automation due to labour shortages, the expansive growth in AI and analytics, and the cautious embrace of blockchain indeed materialised. The cloud’s omnipresence reshaped operational models, offering agility and resilience in the face of ongoing global challenges.

Automation, a response to the labour crunch, has evolved from a necessity to a strategic enabler, enhancing efficiency and allowing human talent to focus on higher-order tasks. The integration of AI and advanced analytics into our decision-making processes has provided us with unprecedented insights, driving strategic, data-informed decisions.

Moreover, the cautious yet growing adoption of blockchain and cryptocurrency has signalled a new era in finance and transactions, although with a watchful eye on regulatory evolutions.

As CFOs and strategic leaders, understanding and reflecting on these shifts is crucial as we step into 2024. These developments have set a foundation for new strategies and innovations. The accuracy of last year’s predictions provides us with a framework for forecasting and planning in the ever-evolving business landscape. With this hindsight, we are better equipped to anticipate future trends, adapt to new challenges, and seize opportunities as we continue to guide our organizations towards sustainable growth and success.

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