CFO INSIGHTS:
ADAPTING THE ROLE
OF FINANCE TO UNLOCK
BUSINESS VALUE
Midsize organisations are counting on finance to drive digital transformation
and growth.
Introduction
Finance executives are in a unique position with responsibilities that have expanded
to include parts of the business not traditionally associated with their role, such
as technology strategy, market volatility management, cybersecurity, ESG and
sustainability. These executives have real opportunities to have a far-reaching
impact and continue to grow the business if they focus on innovating products,
services and business models, and harnessing emerging technology to create
processes that launch them forward.
Yet creating a business strategy that captures 1. The finance function has transformed.
the full potential of technology remains a Finance leaders have a wide range of new
work in progress for many finance executives. responsibilities and are figuring out what
They must develop, update and execute these needs to be prioritised. They are the new
strategies, while navigating changing regulations right hand for the CEO and need to keep
and customer preferences. New players enter up with the changing landscape to make
the market almost daily, and for midsize smart decisions. Our survey found many
organisations, innovation becomes increasingly are still figuring out how to balance their
important to keep up with a changing industry. new responsibilities.
Compounding these problems, finance 2. Compliance clouds the vision. Finance
processes are slow and consume valuable decision-makers face operational challenges –
resources. Spending extra time on tasks that including expanding regulatory requirements
could be accelerated (or automated) takes and emerging ones, such as ESG. These
time away from critical strategy planning – operational hurdles can force shorter-term
where executives can construct blueprints thinking among finance executives, putting
for how to harness technologies that enable things like innovation and AI implementation
innovation, employee empowerment and on the back burner. Compliance failures can
customer satisfaction. lead to a loss of brand reputation and access
to ESG programme funding.
To better understand the challenges facing
the finance function, Oxford Economics 3. Finance executives need the right
partnered with SAP to survey 600 executives tools in place. Many of our finance
who have financial decision-making authority – respondents’ biggest concerns could
300 finance executives, 200 CEOs and be eased with the right technology.
100 accounting executives – from midsize Their existing systems are not up to the
organisations around the world and across challenge: complying with regulations,
multiple industries. The survey revealed these operating efficiently, ability to take action
key takeaways: on information in a timely manner and
security threats still prove difficult.
The future of finance is here, but are
executives prepared?
For a long time, finance executives looked for Taking on these new responsibilities proves
the opportunity to improve operations while difficult when existing finance software works
making finance a more strategic business against them. Almost two-thirds say their
partner to the C-Suite. The opportunity is finally current system will not scale to support growth,
here. Their responsibilities now include volatility is not cloud-supported, is not able to easily
management (49%), technology strategy and aggregate data for reporting or that the supplier
road mapping (49%), sustainability and ESG no longer maintains their system (Figure 1).
(45%), and cybersecurity (44%). They are But while underperforming software or changes
increasingly becoming a key stakeholder and to management processes present a great risk,
have a broader range of responsibilities and organisations are perhaps most at the mercy
priorities to balance. of outside market disruption.
Figure 1: Financial software needs an upgrade
To what extent is your organisation limited by its current finance software in the following ways?
Select one per row.
Not at all limited Minimally limited Moderately limited Significantly limited
Our current system will not scale to support our growth
11.5% 28.8% 31.2% 28.5%
We outsource a lot of our finance function and want to bring it in-house
7.3% 39.2% 29.7% 23.8%
Our system is inflexible or lacks important finance capabilities
8.5% 38.7% 33.2% 19.7%
The supplier no longer maintains our system, or it is at end-of-life
8.5% 26.8% 45.7% 19.0%
We are concerned about the security of our current system
14.3% 34.2% 35.3% 16.2%
Our current system is not cloud and we want to move to cloud
8.0% 33.2% 43.5% 15.3%
Inability to easily aggregate data for reporting
15.0% 32.2% 37.7% 15.2%
Uneven functionality in existing software inhibits
innovation and efficiency across the board.
Many feel they are working with outdated
Finance and HR
processes around financial closing, receivables/ working hand in hand
payables management, accruals management,
Driving innovation in the finance function
revenue accounting, and consolidating and
is not exclusively about access to capital
reconciliations (see Figure 2). Unless these
and technology; it’s also about managing
impediments are lifted, finance executives
one of your greatest assets: the workforce.
will not be able to live up to their new role.
Finance executives recognise the need
for a strong HR department to drive
Figure 2: Time-consuming processes
innovation and efficiencies for their
Which of the following finance processes require organisation. Over a third (37%) say that
the most amount of time to complete? Select all the ability to retain talent is a top-three
that apply. risk over the next two years.
Financial closing
That transformation starts with stronger
56.7%
data practises. A majority of finance
Receivables/payables management
executives (75%) recognise that integrating
48.3% processes and data across the business
Accruals management will help them collect and use employee
productivity data to improve efficiency.
45.8%
They also understand that integrated
Revenue accounting processes and data can positively affect
45.3% the employee experience, with 85% of
respondents saying it helps organisations
Consolidating and reconciliations
achieve consistent employee experiences.
44.3%
Budgeting and forecasting Integrating processes and data is not
39.2% the only step organisations can take
to improve employee retention and
Report generation
innovation. Finance executives see the
39.2% potential of emerging technologies, like
Cash and liquidity management AI, having an impact as well. Roughly two-
thirds (65%) of finance executives say AI
34.2%
will have a moderate to significant impact
on HR. Other enterprise technologies, like
workforce management solutions, are
How will you stay competitive? currently in use (46%), and many (40%)
expect to use them in the next 12 months.
“Keeping up with new innovations By connecting people and finance data,
is the key to staying competitive organisations can create more accurate
dashboards, with more informed predictive
in this market.”
insights.
A Direct Report to the CFO at a US banking
organisation.
Executives still have numerous operational
hurdles to overcome
While finance executives are adapting to their Figure 3: Compliance compounds operational
transformed role, they are also balancing hurdles
various operational challenges. Roughly two- To what extent do the following compliance
thirds of finance function respondents say that areas present a challenge to your organisation?
an inability to scale processes and systems to “Moderately” and “Significantly” challenging
match organic business growth (68%), relying responses.
too much on manual, low-value tasks to work
around deficiencies in legacy systems (58%) Significantly challenging Moderately challenging
and an inability to adjust or replan based
Security and data privacy
on new information or shifting priorities (57%)
46%
are the most formidable barriers in their search
for scalability. 25%
Revenue recognition
In addition, the finance function is adapting 31%
to constant evolution and increased regulatory
33%
complexity on top of increasingly scrutinised
corporate oversight. Compliance has caused ESG disclosures
an avalanche of concerns for finance executives, 28%
with most reporting global accounting 34%
standards, security and data privacy, new
Tax and electronic filing mandates
mandates from geopolitical conflicts, revenue
27%
recognition, tax and electronic filing mandates,
ESG disclosures and AI ethics as major issues 35%
for their organisation (Figure 3). In the current New mandates resulting from geopolitical conflicts
geopolitical environment, compliance is more 24%
difficult than ever, and finance executives are still
39%
figuring out how to keep up with shifting targets.
AI ethics
ESG is a new concern for the function, and there 23%
is unprecedented demand from consumers 40%
for transparency. While respondents cite ESG
Global accounting standards
disclosures as a major issue to their organisation,
21%
they are not prioritising sustainability to the
same extent. Over the next two years, improving 51%
sustainability is ranked the least critical Trade compliance (Imports/Exports/Business Partners)
strategic priority. Instead, finance executives’ 20%
view the sustainability dilemma as a tactical 38%
concern: one-quarter of finance respondents
cite tracking sustainability as a top challenge Lease accounting
to their organisation. 16%
45%
Finance leaders may want to reconsider where
sustainability falls in the organisation’s strategic
pecking order. Rapidly changing legislation
Embracing ESG
creates a moving target for midsize organisations, As ESG becomes increasingly integral
and failure to comply with ESG standards may hit to business operations, finance executives
finance executive where it hurts most: the bottom are also stressing its importance. They
line. Fines, sanctions and a loss of stakeholder are figuring out how to best prioritise
trust could damage profitability metrics – and and meet their ESG and sustainability
avoiding these missteps may be the difference goals, while remaining compliant in the
between competing with larger organisations process. Sustainability is one of the top
or ceasing operations. three areas where finance executives are
expanding their role, and it is also one
of the top three compliance challenges.
Successfully balancing these could mean
meeting broader stakeholder expectations
and regulatory demands, as well as
creating long-term value. In fact, our top
performers are already pursuing this as
a best practise – they are slightly more
likely than non-leaders to say sustainability
is a priority – emphasising that leading
organisations recognise the potential
How will you stay competitive? benefits an increased focus on this could
potentially yield.
“Gaining knowledge and adhering
to regulations on a global scale to So where should finance executives start?
The top initiatives finance respondents are
ensure that the business operates
realising value from are 1) benchmarking
in accordance with international their own operations for cost and value
standards and legal requirements.” drivers, 2) complying with regulations,
and tied for 3) building a circular economy
– CFO, Australian bank and collecting data for ESG. To jumpstart
these initiatives and reap their benefits,
“By looking into how artificial data integration into software will
intelligence can be used to be especially important to monitor
benchmarks, build dashboards and
automate tasks.”
generate predictive insights.
– CFO, Chinese retail company
Embracing ESG and adopting emerging
technology go hand in hand, and the
best-performing organisations prioritise
that union.
The right technology can help ease
the finance function’s woes
With the right technology solutions in place, whose solutions are not in the cloud. They are
finance executives could overcome their biggest also more willing to take on new responsibilities
barriers and sustain growth and innovation into such as technology strategy/road mapping and
the future. In fact, 81% of finance executives say sustainability/ESG than those respondents who
AI will have a moderate or significant impact are not leveraging the cloud.
on strategy and corporate finance, and 73% say
the same for managing financial risk. They even Many finance leaders are also opting to integrate
see its promise in revenue generation for their their processes and data. Those who have
organisation – most say it will have a moderate or cite benefits such as the abilities to keep data
significant impact on areas, such as new offerings, accurate and up to date (78%) and to create
sales, marketing and networks (Figure 4). innovative business models at scale (81%),
likely staying ahead of market trends, while
Yet executives do not have to look far when it also reducing financial and security risk. Almost
comes to leveraging technology to overcome three-quarters note integration has helped them
challenges. Existing technology, like cloud, can deliver real-time insights on key performance
do the job. Respondents that have cloud-based indicators either to a significant or moderate
solutions are more satisfied with their flexibility, extent. Live intelligence on key business metrics
finance capabilities and ability to aggregate often leads to more efficient, agile and optimal
data for reporting than those respondents decision making.
Figure 4: Finance executives see the AI opportunity
To what extent do you believe AI will have a positive impact on the following business areas?
“Moderate” and “Significant” impact responses only.
Significant impact Moderate impact
40%
42%
39% 43%
50%
46% 41% 39%
26%
44% 39% 34% 30%
23% 18% 22% 23% 22%
Products Strategy Marketing Sustainability Risk HR Procurement Supply Manufacturing
and and and sales and Chain
services corporate networks Management
finance
Conclusion
In a complex digital landscape, the best- 3. Engage in continuous strategic
performing organisations will embrace workforce planning: Building a
technology and innovation strategies with competitive workforce means assessing
intention. Finance executives are looking to current and future organisational needs
increase their confidence in their changing role so that you can plan for growth and
and leverage their investments strategically in changes in the market.
other parts of the business. To maximise impact,
we recommend the following actions: 4. Be adaptable and agile: Foster a culture
of innovation and agility to respond quickly
1. Define clear goals and values: Midsize to challenges.
organisations must orient business priorities
to align closely with stated needs and make By implementing these strategies, growth-
employees understand and align with these focused organisations can create a competitive
principles. and dynamic workforce that is motivated,
skilled and aligned with the company’s goals.
2. Leverage technology: Adopt relevant
technologies like cloud and ERP to remain
competitive and stay up to date with
industry trends.
About SAP About
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Respondent breakdown
This report focuses on the responses of ■ Organisation size:
600 executives that handle finance decisions
from the following segments:
■ Executive titles: Chief Financial Officer,
19%
Chief Executive Officer, Chief Data Officer,
Chief Operating Officer, Chief Customer
36%
Officer, Chief Information Officer, Chief
Purchasing Officer, Chief Digital Officer and
the aforementioned titles’ direct reports
■ Sectors: Banking, high-tech software,
23%
professional services, consumer products,
mill products, wholesale distribution,
public sector, travel and transport, high- 22%
tech hardware, industrial manufacturing,
automotive
Between 200 and 499 employees
■ Revenue (USD):
Between 500 and 999 employees
41% Between 1,000 and 2,499 employees
Between 2,500 and 5,000 employees
32%
27% ■ Locations covered: United States, India,
Brazil, Saudi Arabia, France, China,
Japan, Canada, Italy, Netherlands, United
Kingdom, Australia, Germany, Singapore,
South Korea, Mexico, Malaysia, Switzerland,
Austria, Taiwan, New Zealand, Indonesia,
Ireland, Philippines, Spain
Less than Between Over
$100 million $100 million and $500 million ■ Dates fielded: October – November 2023
$500 million
