RESEARCH REPORT
CFO Forward: 2024 Edition
Turn disruption into value creation
5-MINUTE READ
April 25, 2024
In brief
- About eight in ten CFOs anticipate disruption will rise this coming year with technology as the #1 disrupter.
- CFOs are under greater scrutiny to transform finance with 86% claiming the speed to reinvent is faster or significantly faster than in the past.
- Companies focused on value creation at the outset of a transformation are two times more likely to achieve the desired benefits and outcomes.
Disruption, a multi-faceted threat led by technology
About eight in ten CFOs say disruption will rise as we look ahead. For companies across sectors and geographies, technology advancements, shifting consumer preferences, new competitors and increasing cost of capital have emerged as the top business disrupters. And more than one in ten CFOs on average expect the level of disruption across these “core four” disrupters to increase versus current levels.
Key among the technology disrupters is generative AI. The good news, generative AI can also deliver value at scale.
We are entering a highly disruptive decade, thanks in part to the quick pace of technological developments.
Michael McMurray / Executive Vice President and Chief Financial Officer, LyondellBasell
CFOs that raise their transformation ambition create value
The annual Accenture Pulse of Change index finds that the pace of change increased by 183% over the past four years. In response, companies are taking bold actions. Over eight in ten (83%) companies surveyed as part of our most recent Reinvention research say reinvention as a strategy for success has accelerated.
Not surprising, CFOs are feeling the pressure to help their organizations capture value from their transformation and reinvention efforts. Over eight in ten (86%) CFO Forward respondents say the speed to deliver transformations is faster or significantly faster than in the past.
Our research finds that CFOs’ transformation ambitions are not aligned to the disruption they face. A majority (74%) are focusing on “the now” and are setting “best-in-class” performance goals as their benchmark. Only 11% of CFOs have a high level of transformation ambition. But companies that raise their transformation ambitions to match the level of disruption are better positioned to create value from their reinvention.
Good news … creating value can be a self-fulfilling prophecy for ambitious CFOs
CFOs with stronger reinvention ambitions are more focused on creating value. Over eight in ten (81%) of these ambitious CFOs begin their transformation with a clear focus on the value they want to achieve, which is nearly double the rate of CFOs with lower or moderate transformation ambitions (see below).
CFOs with stronger transformation ambition are focused on creating value
Thinking about the transformation(s) you lead in your role as CFO, to what extent have they been initiated with a clear focus on the value to be achieved
Organizations focused on value creation at the outset of their transformation are two times more likely to achieve the desired benefits and drive successful outcomes from their efforts. Creating value remains a tough job. But starting any transformation with a clear focus on value can be a self-fulfilling prophecy for ambitious CFOs.
Focus on value creation is core, and how you continuously position your company towards value creation is guided by the finance function.
Rui Barbas / Chief Financial Officer - Zone North America, Nestlé
Future-proofing the business
CFOs who want to create value from disruption need to do four things:
- Use value creation as their North Star
- Move generative AI from the playground of experimentation to the company’s digital core
- Accelerate reinvention with technology + data + people
- Use collaboration to unlock the multiplier effect of any reinvention
The value of a North Star strategy
Our CFO Forward Study shows that CFOs who adopt a North Star strategy clearly focused on the type of value they want to create from their transformation can unlock and create more value. This aligns with findings from our recently completed Reinvention research which shows that companies focused on continuous reinvention outpace their peers. These companies increased revenues by 15 percentage points more than the rest of our research participants between 2019 and 2022, and they are also more profitable. Their average profit margin (EBITDA/revenue) was 5.6 percentage points higher than the rest during the same period. Focusing on value and accelerating reinvention should be an imperative for all CFOs.
Generative AI as a reinvention enabler
Generative AI is truly revolutionary, with a unique and unprecedented ability to impact the entire value chain. It allows users to create, aggregate and synthesize information and insights in a seamless and coherent manner.
So, it’s not surprising that 82% of organizations consider generative AI a primary lever for reinvention. Nor is it surprising that 83% of CFO Forward Study respondents consider generative AI and foundation models (e.g., text-to-image generators, large-language-models) as a priority now or in the next 24 months.
Yet, many CFOs are in the early stages of seizing the opportunity:
- Just over a third (35%) have fully implemented automation and AI.
- Only 8% have fully implemented automation and AI, process and task mining, predictive and advanced analytics within their organizations.
There is plenty of opportunity for forward-thinking CFOs to seize the potential for generative AI to support finance and the business. The key is how organizations use their digital core to tap into the power of generative AI.
Accelerating with technology + data + people
Accenture research has found that by activating the growth combination of technology, data and people, companies stand to gain a premium of up to 11% on top-line productivity—the ultimate driver of profitability and revenue growth. Yet only 5% of large global organizations tap into the value of this combination. Leveraging this growth combination is the primary accelerator for improved financial and non-financial outcomes according to our research.
But, there are also top barriers to delivering value (see below).
Barriers to delivering value
What major barriers/challenges, if any, do you need to overcome to deliver value from the transformations that you lead, have led or are about to lead?
Our research suggests that CFOs focused on value manage these barriers more effectively. What’s their secret? Based on our work with clients, we believe that while they are aware of the importance of building a digital core and connecting data across the organization, they tend to put equal if not more effort into the communication and change management process to shape company culture and enable boundaryless collaboration.
Collaboration is king
CFO-led reinvention will only succeed when CFOs break free of their functional silos. The good news is that this broad perspective is taking hold with 72% of CFOs reporting that the transformations they lead affect three or more different functions. Importantly, generating this cross-functional value requires a collaborative spirit. We also find that CFOs with a strong collaborative leadership style are twice as likely to achieve their organizational objectives than peers.
This mindset needs to be extended to building a strong CEO – CFO partnership. This is essential to an organization’s value creation goals and transformation agenda.
No less important, companies need to also build boundaryless alliances with ecosystem partners and alliances for mutual gain. CFOs can play a key role by institutionalizing how their companies work with ecosystem partners and allies.
The path forward
As CFOs prepare for the challenges and impacts of accelerating disruption and volatility over the next two years, they need to ground themselves on the following realities:
Tech-led disruption
Technology is the top source of disruption and the most important driver of value. Building an integrated digital core is critical to turning this disrupter into an opportunity to pivot to a new performance frontier.
It’s time for bold ambition
CFOs and companies with strong ambitions at the start of their reinvention efforts deliver more business value. This self-fulfilling prophecy should become CFOs’ North Star as they navigate the challenges of a disrupted business environment over the next few years.
Prioritize value to break through the noise
CFOs who maintain a stronger focus on value are 33% less likely to feel paralyzed by the number of decisions and choices they need to make. Focusing on value creation can help CFOs and the C-suite work through conflicting goals and priorities.
Technology, data and people are the differentiators
Human + Machine collaboration allows companies to enter new performance frontiers by leveraging the capabilities and strengths of their people and technologies, including generative AI. Companies that emphasize these differentiators can transform their processes, operations and business models to surge ahead of the competition, drive enterprise-wide innovation and build sustainable revenue streams.
Change is hard, so lead with value
97%
of CFOs anticipate that the wider adoption of AI and generative AI is going to change the expectations placed on their role and how they carry out their work.
81%
of CFOs with strong transformation ambitions begin their transformations with a clear focus on the value they want to achieve.
79%
of CFOs with low or moderate focus on value believe the value generated by their transformation efforts are often underwhelming.
76%
of CFOs expect to generate five or more different types of business value.
72%
of CFOs say FP&A applications play the most significant role in delivering value.
54%
of CFOs now lead or are about to lead two or more transformation initiatives.