Finance departments are betting that new technology will close efficiency gaps created by budget and staff cuts spurred by the next economic slowdown.
Ninety-one percent of executives rated digital transformation and maintaining a competitive cost structure as either highly important or critical to their finance team’s objectives in 2019, according to a survey of 150 finance, information technology, human resources and procurement executives by consulting firm The Hackett GroupInc.
Almost half of CFOs said a recession would hit the U.S. economy by the end of 2019, according to the Duke University/CFO Global Business Outlook survey released in December. Those fears were shared by economists surveyed by The Wall Street Journal in January, who put the chances of a U.S. recession in the next year at 25%.
The prospect of a slowdown is prompting companies to focus more on cost optimization, said Nilly Essaides, senior director of research for finance and enterprise performance management at Hackett’s advisory practice.
“They’re going to put pressure on all of their business-services functions to cut budget and head count, and traditionally, finance always gets hit the hardest,” Ms. Essaides said.
Survey respondents predict that the number of full-time staff in their finance function will be cut by 2% in 2019 while the operating budget will be shaved down by 0.2%, according to Hackett. By contrast, revenue growth is projected at 5.7%, leading to a 5.9% efficiency gap, the survey found.
Filling that gap means turning to new technologies that can increase the scope of automated finance activities. Some finance teams, for instance, are turning to robotic-process automation to automate the process of retrieving financial data from multiple systems to help a business unit set a budget faster, Ms. Essaides said.
The technology also frees up finance employees to work on analysis, so that they can mine for insights that inform decision-making, she added. “The experience of going through the budget, it’s going to be faster, less painful, demand less time for the business function,” she said.
In other areas, companies are using artificial intelligence and optical character recognition to transpose information from external order slips into the system to ensure orders are filled correctly. “Customers get what they actually ordered every time, and there are no mistakes,” Ms. Essaides said.
The increased reliance on new and emerging technology comes as companies seek to cut costs, but not at the expense of reducing the level of service they provide to their customers.
“That’s where digital transformation comes into play,” Ms. Essaides said, “because using digital tools, technology platforms, companies generally—and in finance specifically—can answer these cost challenges but at the same time maintain high levels of service quality.”