Perspective changes everything. Think of the different reactions a cloud provokes to a sun-worshipping holidaymaker or to a farmer whose precious crops have been starved of water. Clouds of a different kind are fast appearing on the horizon for CFOs but their arrival is welcomed.
When Adaptive Insights surveyed 377 global CFOs earlier this year, they estimated that one third of their IT infrastructure will be hosted in the cloud in the form of software as a service (SaaS). Within four years, they expect this to grow to 60 per cent of their infrastructure.
They gave three main reasons for this trend: increased collaboration (24 per cent), less reliance on the IT department (21 per cent), and significant cost savings (17 per cent).
Specifically, cloud delivers new technologies such as dashboards and analytics that support a CFO’s strategic finance activities and gives them added agility. As the Adaptive report put it:
“Big data and analytics, combined with scenario planning, are driving their overall confidence and guiding performance. Whether it is the changing regulatory environment or uncertain economy, CFOs are remaining agile through multiple scenario planning, enabling their organizations to rapidly respond and change course, as necessary. And they are embracing technology to model these potential changes, with an eye toward cloud-based technologies.”
This plays to a trend we referred to in our previous blog post about the role of the CFO becoming more strategic in nature.
The trick to managing in turbulent times is to have sound planning and strategy. Almost half of the CFOs surveyed by Adaptive Insights (48 per cent) said they’re planning for multiple scenarios, and 30 per cent said they are using analytics to turn real-time data into insights that drive decision making.
Adaptive’s report talks about ‘technologically savvy, cloud-friendly CFOs: Having evolved from a traditional accounting-based function, the strategic finance organisation – led by the modern CFO – has emerged as a technology-enabled, analytics-driven function providing a 360-degree view of the business.
Two-thirds of the CFOs in the Adaptive survey said economic uncertainty was the greatest financial risk for their company. The poll predates Brexit and the U.S. elections but if anything, the unpredictable conditions look set to persist for some time to come.
The UK Government’s recent Autumn Statement was the first since the June vote to leave the European Union and the headline was lower GDP forecasts for 2017-2019 than the pre-vote forecasts in March. Weaker business spending is one of the pillars for the revised figures. For CFOs, this uncertainty places even greater importance on the need for agile forecasting.
What’s clear to us at Miagen is that companies that can react to sudden or unexpected changes will have a strong competitive advantage.