Digital transformation is top priority for corporate finance in 2022, but obstacles including inflation, growing productivity and efficiency gaps may limit finance’s ability to succeed
Hackett Group’s Key Financial Issues Research Identifies Priorities and Challenges for 2022
MIAMI & LONDON, May 05, 2022–(BUSINESS WIRE)–Digital transformation is now the top priority for finance in 2022, according to a new Finance Key Issues study from The Hacket Group, Inc. (NASDAQ: HCKT). But finance executives’ confidence in their ability to meet business expectations is low, in part due to complex technologies and processes and skills gaps. The increased finance workload combined with declining budgets and headcount will also create productivity and efficiency gaps that may limit finance’s ability to meet its 2022 goals.
The full research, “The Finance Agenda: 2022 Key Issues”, is available free of charge, upon registration, from The Hackett Group® on this link: http://go.poweredbyhackett.com/22finkey2201sm. Key research findings include:
Inflation a major concern – With inflation accelerating to 7.9% in February 2022 and expected to persist for the foreseeable future, many companies have been taken by surprise and are now scrambling to understand the impact on their business and develop responses to manage risk. In the Hackett Group’s Finance Key Issues study, conducted in the fourth quarter of 2021, 31% of respondents cited inflation as a major concern and 53% cited it as a moderate concern. The current inflationary environment has been triggered by a confluence of factors that can be attributed to the pandemic: pent-up demand, supply chain disruption, labor market disruption, accommodative monetary policy and fiscal stimulus. The ongoing conflict in Ukraine has added additional uncertainty to economic conditions and could accelerate inflation due to rising energy and commodity prices. Organizations that are agile and well equipped to respond to disruption can turn their advantage into real economic gain. This will require good analysis and coordination.
Digital transformation is now the top priority – Digital transformation has now become finance’s top priority, with many of the function’s top priorities dependent on the ability to accelerate it. But executive confidence in the ability to meet business expectations is low, with specific challenges cited that include technology and process complexity, skills gaps and organizational resistance to change. Finance leaders emphasize improving analytics, modeling and reporting capabilities, with 86% of organizations citing this as a critical or high priority. Additionally, finance must be prepared to invest in technologies such as cloud, robotic process automation, analytics, and others to reduce costs and create new capabilities. About two-thirds of all financial organizations are also developing process automation, while more than half have an initiative to expand the use of self-service tools.
Budgets and headcount continue to tighten – Finance organizations must continue to focus on greater cost efficiency in 2022, with workload expected to increase by nearly 5% while budgets and headcount decrease by 0.7% and 0.6 %, respectively, according to the study. Finance relies on technology and service delivery model improvements, including centers of excellence and global business services, to close productivity and efficiency gaps. Overall, cost reduction slipped four spots on the priority list to sixth place in 2022 as companies weathered the pandemic and realized cost savings. But it remains a major priority and could regain importance if inflation continues to pick up in 2022.
Three critical areas for development – In three of the top 10 priority areas, there are significant gaps between their importance and the ability of finance to meet expectations. The three priorities with the largest gaps are: accelerating the digital transformation of finance; train and retain financial talent in the face of the “Great Resignation”; and enable financial agility by fostering an agile mindset.
Talent / Development on the rise – In the face of the “Great Resignation,” finance organizations are thinking critically about building the next generation workforce. If finance is to achieve its goal of becoming a more effective strategic advisor to the business, it must acquire or develop new skills in areas such as teamwork and collaboration, and evolve its business acumen and industry. The goal of aligning skills and talent with changing business needs has moved up several places in the 2022 Top Financial Challenges survey. Nearly half of all companies plan to acquire new new skills and new talent, far more than other planned workforce initiatives. Given the difficulties companies face in finding candidates with the right skills and at the right cost, there will also be a premium for retaining existing employees. The disruptions triggered by the pandemic and the acceleration of digital transformation are also triggering a reassessment of the finance operating model, with 30% of the finance workforce expected to work from home by the end of 2022, and An additional 52% relying on a hybrid arrangement.
Strengthening business partnerships – Acting as a strategic advisor to the business is now the second highest priority for finance, requiring a focus on business partnerships, according to research. Nearly 60% of finance organizations have a 2022 initiative designed to improve the interaction model between finance and business stakeholders, making it one of the most widespread finance initiatives of any type. Between one-third and one-half of finance organizations also have initiatives to build individual business partnering capabilities, and almost a third plan to dedicate full-time staff to business partnering. The focus on business partnerships will be key to achieving other financial priorities, including optimizing working capital and improving control and compliance capabilities. It is also essential for managing inflation risk.
ESG accounting is a growing concern – The environmental, social and governance (ESG) agenda is rapidly becoming a strategic priority for many companies, which has far-reaching implications for financial organizations. The study found that while more than 60% of respondents rate the need to develop and support an ESG strategy as important, only 32% rate their ability to meet the company’s needs in this area as “high”. As reporting and disclosure standards continue to emerge, finance must assess how ready it is to meet future demands from a people, process and technology perspective. Finance also has an important role to play in helping their companies understand the financial implications associated with ESG-related programs and initiatives. Finance organizations should make their expertise in financial planning and analysis (FP&A), forecasting, compliance and statutory and management reporting available to the organization to support ESG strategy and the execution of operational plans.
The Hackett Group’s 2022 Key Issues research is based on findings collected from over 250 executives in IT, finance, human resources, procurement, supply chain and global business services in a global group of medium and large companies.
About Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading company comparative analysis enterprise to global enterprises, delivering digital transformation, including the implementation of leading enterprise cloud applications, workflow automation and analytics that enable Digital World Class™ performance.
Leveraging our unparalleled IP from nearly 20,000 benchmark studies of the world’s largest companies – including 97% of the Dow Jones Industrials, 94% of the Fortune 100, 70% of the DAX 30 and 51% of the FTSE 100 – captured thanks to our leading benchmarking platform, Quantum Leap® and our Digital Transformation Platform (DTP), we are accelerating the implementation of best practices.
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Gary Baker, Director of Global Communications – (917) 796-2391 or email@example.com