NetSuite has announced the CFO’s 2023 Outlook: Cautious optimism amid recession, cost cutting, and workforce challenges.”, published by CFO.com. The report is based on a survey of 500 US-based executives and managers. Three hundred respondents were CFOs, and the rest were senior leaders. The survey aimed to understand three things:
- Expectations for investments and budget cuts in 2023
- Expectations for the US economy and current impacts to the economy
- Top challenges for the finance team, based on company size.
The survey highlights two major concerns from the respondents that will have an impact in 2023. The first is the economy, and the second is the ongoing talent war.
99% of respondents expect budget cuts if a recession bites, and 61% expect cuts in hiring or talent retention investments. Inflation is already a concern for 100% of CFOs as they see costs rise and budgets depleted faster than expected.
The war on talent is an issue on several fronts. 83% believe they will face critical hiring needs. It means that many organisations struggle to hire while they struggle to retain staff.
Talent retention is an immediate challenge, with “quiet quitting” an issue for many. More than half of the managers polled said they actively seek new jobs.
The winners are likely to be those who are investing in retention strategies. 47% are investing in offering opportunities for remote, hybrid and flexible work. 32% are investing in increased wages or salaries. Despite the negativity, many still believe the US economy will expand in 2023 and expect the company to grow. Are CFOs being over cautious, perhaps, but with a volatile economy, is it a safer strategy? What is clear from the report is that cost-cutting is back if it ever went away.
To help solve the challenges ahead, 73% of CFOs will increase spending on IT and Technology in 2023. 84% of CFOs are also becoming more involved in the technology strategy as they see it as a solution to solving the potential crisis. There is strong confidence in the right decisions being made, with 94% of business leaders believing their executive team is taking the right action in a volatile economic situation. In summary, cost-cutting and investment in technology.
What is in the CFO’s 2023 Outlook
The report is based on a CFO.com survey sponsored by Oracle NetSuite and conducted by Wakefield. The initial introduction outlines the state of the US economy during the survey period (November 2022) and the demographics of the respondents. It notes the threat of a recession looms, but one has not yet commenced.
The report is divided into three parts with a brief conclusion. Each section consists primarily of the survey results, presented in appropriate visualisations and text that do little more than explain the graphs. However, there is some comparison to previous reports. There are no qualitative responses or quotes from thought leaders, academics, NetSuite spokespeople or customers. While the survey was conducted across several industries, the results show no breakdown by industry, which might have varied considerably.
A focus on finance CFO responses
This section looks at the responses by CFOs in the survey. Overall they are positive, with 82% expecting revenue growth and 64% expecting the near-term economic environment to positively impact their company. Roughly a third will look to cut costs, and a third will also increase prices, potentially restoking inflation.
If cuts come, marketing (42%) will be hit hardest, with hiring (39%) and product innovation (39%) next. While CFOs are considering cuts, they do not appear to be implementing them yet as more see spending increase across six dimensions, Capital expenditure, Payroll, Operations, Marketing, Sales and Production, with Technology expenditure increasing more than anything else (75%).
Business Leaders as a whole
This reveals the fears of all respondents for the year ahead, with only 30% predicting a recession of some degree. Inflation (27%), Global Financial Disruption (19%) and the US regulatory environment (12%) are seen as the most significant factors hitting the economy.
The report looks at how the office of finance is viewed, and the biggest financial challenges of 2023 -Costs/Budgets (16%), Financial Management (15%) and Inflation/Economic Downturn (14%). Business leaders differ slightly on where to invest in 2023, with technology adoption top (34%) and pay increases (32%) second. However, improving corporate culture is third with 31%. It concludes with a look at the most important factors when investing in digital technology with a fairly even split.
Business Leaders broken down into categories
The final section breaks down the responses by the size of the company. Those will have less than $50m in revenues (small), and those with $50-$250 million in revenues(mid-Sized). It also notes that C-suite, finance, and other management professionals are not necessarily on the same page regarding some key business issues.
One example is that 56% of non-finance executives will positively impact revenues. However, this may be a shortsighted view. Higher prices may see increased revenue, but it may deter customers from buying whose budgets are cut. This is where an industry breakdown would have been inciteful.
Interestingly, the CFO is more likely to increase spending on technology and less likely to cut it compared to non-finance leaders. Considering that Finance leaders often hold the purse strings, it seems the technology sector may be less affected by a recession than others. The lack of qualitative questions fails to answer the why question, though.
The report revisits the talent questions, noting that while managers remain motivated (85%), 50% seek their next job. What isn’t answered is why they wish to move.
Enterprise Times: What does this mean
There are some fascinating statistics from a varied set of questions in this report. While it doesn’t go as deeply into the data as one might hope, there are some interesting findings. One issue is that with the report’s survey conducted in November, four months ago, the economy has moved on. Certainly, the outlook for some will have changed over that period.
The challenges? The state of the economy, the talent war and the application of technology wisely in the business or digital transformation by another name.
