The global economic landscape in 2022 has created challenges for CFOs and finance teams around the world. New Covid variants, ongoing supply chain disruptions, and the war in Ukraine pressures impacting individual consumers and enterprises alike according to the May 2022 Financial Decision-Maker Outlook survey that indicates how finance executives are planning for the remainder of 2022 and 2023.
As they continue to navigate the uncertainty of the current economic landscape, 30% of finance leaders identified economic disruption as the largest threat to business in 2022. When asked about current business drivers and plans for the coming 12-18 months, CFOs and other financial leaders were heavily focused on economic disruption and other key factors.
Economic disruption surpasses cybersecurity as largest threat to business in 2022
The current financial climate has CFOs and finance leaders predicting inflation and supply chain challenges will extend through mid-2023, forcing organizations to implement new practices to manage the impact on business. About half of respondents polled noted they are increasing prices (51%), leveraging new sales initiatives and campaigns (48%, a 13% increase from the fall 2021 survey) and expanding their supplier network (47%, a 12% increase from the fall 2021 survey) as a result.
Tax reform and planning is on the radar of almost all finance decision-makers as potential new U.S. global tax policies are on the horizon that may impose a minimum tax rate. Half of the organizations polled will need to update their 2022 strategies, including tax planning and provisioning processes (64%), and 45% said tax changes would significantly alter their 2022 forecasts.
Organizations are prioritizing DEI initiatives and ESG investments
With ESG reporting guidelines converging and new mandatory disclosure requirements being proposed by the US SEC and regulators in other countries, Investments in ESG and DEI remain a priority. These findings align closely to the spring 2021 survey, as 60% committed to investing more in DEI and ESG initiatives this year. While two-thirds of respondents report uncertainty around planning for new ESG guidelines and disclosure requirements, almost all (95%) are preparing for this change either by implementing new ESG/sustainability policies, engaging consultants or investing in software to capture and report ESG data.
CFOs investing in talent
The Great Resignation and war on talent continues to support an employees’ market, challenging organizations to revisit their approach to talent acquisition and retention and expand recruitment practices to remain competitive. In the quest for talent, finance leaders are investing in training and employee development (56%), improving internal and external workspaces (52%) and building company culture (47%), among other efforts. When asked if they plan to make a career change of their own this year, almost half confirmed yes, but within their existing organization.
Increased investments in predictive technology
With almost half (47%) of organizations planning to increase investment in ML this year, and the majority (63%) already seeing a return on their investment. Eighty-seven percent of respondents have either adopted, or are in the process of adopting, an AutoML solution to support intelligent process automation, data center optimization, customer service and sales/marketing optimizations, among other benefits.
Cloud-based solutions and predictive analytics are also popular among the majority of finance leaders, with one-third saying they use the technology regularly. These solutions will receive increased investment in 2022 than in previous years, with 22% of respondents planning to invest more in cloud-based software and 21% investing more in predictive analytics. When asked about roadblocks to technology investment this year, 42% responded that cost was a factor, in addition to cybersecurity concerns (38%) and the technical skill gap of employees (38%).
Inflation and supply chain disruption are here to stay in 2022 and most finance executives expect them to continue into 2023. The mandatory ESG disclosures being proposed by the US SEC are driving many organizations to invest in their ESG processes and software to help not only with reporting compliance, but also with planning and managing ESG and DEI initiatives.