Economic disruption remains largest threat to business
New research has found economic disruption continues to pose the largest threat to businesses.
OneStream has announced the results of its Enterprise Financial Decision-Makers Outlook October 2022 survey. The study, conducted by Hanover Research, targeted finance leaders and identified responses to economic challenges and budget priorities for the upcoming year.
The impact of ongoing global disruption continues to impact financial planning. In fact, 85% of financial leaders are re-forecasting in preparation for an impending recession, with only 4% reporting that a recession will not affect their business in 2023. Almost half of the leaders surveyed (47%) identified economic disruption as the largest threat to business in 2023. This is a 57% increase compared to the Enterprise Financial Decision-Makers Outlook May 2022 version of this survey, in which only 30% of respondents reported economic disruption as the largest threat.
When asked about current business drivers and plans for 2023, CFOs and other financial leaders were heavily focused on the following key factors:
Economic Disruption Surpasses Hiring and Supply Chain Challenges as Largest Business Threat
CFOs and finance leaders are not expecting an economic break until the later part of 2023. Most (75%) expect ongoing economic and supply chain challenges to last into mid-to-late 2023 or beyond, and 72% expect that inflation wont recede until the same time frame. To address this outlook, over half of respondents noted they are increasing prices (56%), slowing hiring or reducing operational costs (47%), and renegotiating contracts with suppliers (39%).
ESG Investments and DEI Initiatives Rank High for 2023 Investment Priorities
Increased stakeholder interest in ESG initiatives is putting pressure on organisations to invest in ESG initiatives. Additionally, the proposed new SEC ESG disclosure guidelines are also causing organisations to re-think their ESG strategy. Thus, despite the looming recession, most businesses will invest in ESG and DEI the same if not more in 2023. Almost half (48%) of organisations plan to invest more in ESG initiatives next year, and 47% will invest more in DEI. Thirty nine percent of organisations will be investing the same amount in ESG initiatives as they did in 2022, and 38% said the same for DEI initiatives.
Where are these investments going? Some organisations (43%) are forming internal ESG/sustainability teams to define policies and disclosures ahead of potential mandatory ESG disclosure requirements from the U.S. SEC or other regulators. Meanwhile, other financial leaders are implementing new ESG/sustainability strategies (41%) and investing in software to support the collection and reporting of ESG data (35%). For the latter, extensions of corporate performance management (CPM) software are currently the most used software for supporting the collection and reporting of ESG data.
Problem Solving and Strategic Thinking are High Priorities in The War for Talent
According to the Fall 2022 survey, the talent shortage and great resignation was identified as the #2 concern for financial leaders. When asked about their hiring priorities, problem solving/decision making (68%) and strategic/business-oriented thinking (67%) are considered the most valuable skills for financial leaders. Communication skills and quantitative/analytic skills are also cited as important by half or more of respondents. Finance Leaders Investing in Automation and Digital Technology
The looming recession on the horizon will prompt hiring plans to be conservative in 2023, especially in accounting and finance departments. To balance out the shortage of talent, finance leaders will need to invest in more automation and digital technology to increase productivity. Fifty seven percent are planning to invest more in cloud-based planning and reporting solutions in 2023, and 48% will invest more in predictive analytics. Sixty-one percent are already using cloud-based planning and reporting solutions, while 37% are utilising predictive analytics.
Meanwhile, only one-third of companies (37%) predict investing more on machine learning. This is significantly fewer than predicted both last fall and earlier this year. With AutoML technology poised to reduce the barriers to adoption of machine learning in organisations, half of all financial decision makers say their organisations plan to investigate AutoML solutions. In fact, one-quarter (28%) already have adapted AutoML solutions. Although cost is still an obstacle, 48% of organisations will continue investigating whether or not to invest in AutoML.
When asked about the top use cases for AI and ML technology, 48% see financial reporting as the top opportunity. Finance leaders see sales and revenue forecasting (41%), demand planning (39%), and sales and marketing optimisation (39%) as additional opportunities for these technologies. However, for businesses facing technical and security issues, almost half (49%) say theres a lack of trust for new technology solutions, which is deterring new investments.
"The current economic landscape will continue to challenge finance leaders and organisations well into the new year," says Bill Koefoed, Chief Financial Officer, OneStream.
"Agility will be a key differentiator for businesses looking to succeed in the new year. Financial leaders must ensure they have the correct technology in place to accurately forecast scenarios and plan accordingly," he says.
"OneStream is proud to provide our customers with an intelligent finance platform that helps them prepare for the numerous factors impacting their businesses."
