The Digital CFO: Using the digital finance function strategically

Study overview

The digitalisation of finance functions is still in its infancy in many companies. It offers great opportunities for greater value creation and a stronger strategic role for CFOs. In the global PwC study, 73% of CFOs surveyed said that the digital transformation of finance divisions is a high priority for them. However, implementing a digital strategy is tricky in the day-to-day routine of most companies. One exception is large corporations, where the digitalisation of finance functions has generally progressed further. 

Few modern technologies in use

“The traditional work of finance departments – such as monitoring financial figures, payments and other risks – is largely based on clear rules that are easy to standardise and can be digitised cost-effectively. There is still potential here in many finance departments,” explains Gori von Hirschhausen, Finance Consulting Leader Europe at PwC Germany. 

The automation of simple workflows in finance is on the rise. However, this does not automatically mean a loss of relevance for finance functions. That’s because modern tools based on artificial intelligence and process automation technology create new opportunities. Nevertheless, these are not yet being used to the extent actually set out in the CFOs’ strategy papers. 

Thinking ahead instead of looking back and managing

One reason for the ongoing hesistancy towards digitalisation is that, from the financial managers’ point of view, both employees and management lack digital expertise and skills. It is also difficult to find employees with IT expertise. In contrast, money is not the reason why digitalisation plans fail. Almost half of those surveyed (44%) expect the budget for digitalisation projects to increase by between 10-25%. For many managers in finance functions, it is now a matter of investing the money in a strategic realignment. 

Transformation goal: Data-based decisions

The study confirms that the primary goals of digital finance projects are to reduce costs and improve decision-making through data-based analyses. However, it is clear that CFOs place more emphasis on improving decision-making than on reducing costs. Not least because they were more successful on average with digitalisation projects aimed at implementing analytical decision-making. 

Finance teams and their respective companies therefore benefit if employees are relieved of their workload through the automation of traditional control tasks. The free capacities can be used by finance teams for forecasting and planning projects, as well as data-based forecasts for corporate development. According to the study, almost half of the participating CFOs (45%) assume that the number of employees in their respective companies will remain more or less unchanged over the next five years.

Dashboards widely used

Process automation using chatbots and other AI tools is still a long way off for many finance departments. Many small, medium and large companies are still limited to “Digital Management Reporting” or “Dashboarding”. Software algorithms are capable of evaluating large amounts of data and processing user-specific and context-dependent insights in real time.

CFOs in IT companies have driven the digitalisation of their departments the most: they are already working with chatbots and planning tools based on AI. Utilities and construction companies, on the other hand, report a relatively low degree of digitalisation in their finance sector.

The methodology

For its latest study, PwC worked with the WHU-Otto Beisheim School of Management to survey 522 CFOs of companies in Europe, North and South America, Asia and Africa. For most of the questions, CFOs gave their answers using Likert scales from one to seven, with one meaning “strongly disagree” and seven meaning “strongly agree”. 

The range of interviewees includes small and medium-sized enterprises as well as large companies and corporations from the sectors of industrial production, construction and utilities, information technology, trade, transport and services. One third of the companies surveyed are listed companies, the rest are privately owned companies.