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The Digital CFO: Using the digital finance function strategically

PwC study 2022: Transformation of the finance function

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Ivan Phuah
Finance Transformation Lead, PwC South East Asia Consulting
Tel: +65 9675 4169
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CFO study: Plenty of potential in the digital transformation of the finance function

The current PwC study shows that, for the majority of CFOs, the digitalisation of financial functions is of great importance. Nevertheless, the digitalisation of the finance sector is often still in its infancy in many companies. Large corporations with a turnover of more than SGD14.6bn, on the other hand, find it easier to deal with the issue, as they often have both the budget and the right staff for the job. 

“In Southeast Asia, we are seeing organisations needing help to define their digitalisation strategy. Finance teams’ transformations are being driven by investments technology, but the hardest part is aligning change to the business and driving digital adoption.”

Ivan Phuah Finance Transformation Leader, PwC South East Asia Consulting

In many companies, there is still enormous potential in the digitalisation of finance functions. And for CFOs, the transformation of their field represents a great opportunity. For example, AI-supported forecast models and predictive data analysis in the financial sector can help to strengthen the strategic role of CFOs within the company. 

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. 

The strategy is to transform the financial sector from merely a financial manager and backward-looking observer into a forward-looking partner for the management board. This makes finance functions an enabler for the business of the future.

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.

Digitalising finance functions: strategic opportunity for CFOs

Strategy and priorities

For 73% of the CFOs surveyed, digitalisation is at the top of the agenda. However, it all falls down when it comes to implementing digital finance projects and often actually introducing the company-wide digitalisation strategy into operations. The most important driver for digitalisation in many companies is the CIO/CTO, followed by the CFO and CEO.

Goals and achievements

Digitalisation projects in finance functions generally have two goals: Reducing costs and improving decision making. The CFOs interviewed in the study consider both objectives to be important, but they themselves place greater emphasis on improving decision-making. 

Current status

The financial functions of companies have only been moderately digitised in recent years, but in most cases there is potential for deeper digitalisation. So far, only a few companies are using extensive technologies in their financial functions. Process automation, artificial intelligence and blockchain are rarely used. Exception: two thirds of companies already use dashboarding in management reporting.

Obstacles to digitalisation

The most important obstacle to the digitalisation of finance functions is the lack of expertise both in management and among employees. The second biggest obstacle cited by the financial managers is hesitancy and resistance on the part of employees due to a fear of losing their jobs or losing relevance in the company. However, there is no shortage of financial or technical resources.

The future role of the CFO

Two digitalisation scenarios are possible: CFOs and their finance functions could be largely automated by digitalisation if their focus in the coming years is primarily on administrative and regulatory processes. Alternatively, CFOs and finance functions can gain importance as they develop new analytical skills to help their CEO develop and execute successful business strategies.

"With the help of Artificial Intelligence in predictive analytics and forecasting capabilities, CFOs can further expand their strategic relevance and establish the finance department as a pillar of strategic support for the CEO."

Charles LohDigital Transformation Leader, PwC South East Asia Consulting

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.

Contact us

Ivan Phuah

Ivan Phuah

Finance Transformation Leader, South East Asia Consulting, PwC Singapore

Tel: +65 9675 4169

Charles Loh

Charles Loh

Singapore Consulting Leader, PwC Singapore

Tel: +65 9735 2389

Tristan Hockley

Tristan Hockley

Government and Public Sector Leader, South East Asia Consulting, PwC Singapore

Tel: +65 9753 6736

Dave Chen

Dave Chen

Partner, Workforce Transformation, South East Asia Consulting, PwC Singapore

Tel: +65 8125 7640

Daniel Bell

Daniel Bell

Partner, South East Asia Consulting, PwC Singapore

Tel: +65 9622 5841

Queenie Eng

Queenie Eng

Partner, South East Asia Consulting, PwC Singapore

Tel: +65 9835 2174

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