The COVID-19 pandemic has had an impact on the personal lives of everyone around the globe. It has also had a significant impact on how business gets done. Many professionals have been forced to work from home, losing face to face interactions with colleagues, customers and partners. As such, the crisis has also affected many organizations’ financial decisions as they navigate 2021.
With COVID-19 as the catalyst, organizations and their finance teams prepare for the new age of business and finance post-COVID. Wherever the “new normal” lands, finance teams are thinking beyond the disruption of responding to such challenging times. Recent research illustrates how finance leaders have responded to the challenges of this year in the face of almost 30M unemployed Americans. The data shows that leaders are still optimistic that they will increase budgets organization-wide in 2021.
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Emerging from 2020, finance executives are closely tracking important economic trends and internal metrics, re-tooling their workforces and supply chains, and carefully considering critical investment and budgeting decisions. When it comes to key business drivers and plans for 2021, CFOs and other financial leaders are focused on a few key areas.
Business volatility accelerated the need for data and tech with IT & Finance a major focus
The Hanover research found that the pandemic’s impact is felt across every region and industry, with 98% of finance leaders stating they experienced financial challenges as a result. While only 22% of respondents had to shut down operations completely, more than a third (34%) had to reduce staff to absorb the pandemic’s impacts.
These challenges have drastically increased the frequency at which finance departments must access, analyze and forecast data. Beyond this challenge, there is now a global workforce working remotely, which requires secure, cloud-based technology. The research shows that of the respondents not currently using cloud-based planning and reporting tools, 56% plan to invest in these tools in 2021. In addition, organizations have an increased interest in predictive analytics, ML and AI solutions, with more than half of respondents planning to invest in these tools.
Though the pandemic has presented many uncertainties, 40% of respondents are optimistic they will increase budgets next year, with IT and finance as a major focus. These two departments are also strategic hiring areas for 2021, especially as organizations continue to abide by social distance and work-from-home guidelines. In 2021, 56% of respondents are planning to increase their remote work enablement budgets. With this, 38% are also planning to increase their capital investments and 34% plan to increase their day-to-day operating expenses.
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Consumer spending and the new administration are driving plans for 2021
Despite skepticism, 43% of finance leaders are either somewhat or very optimistic about the economy’s outlook. Research shows that 40% of finance leaders are assessing consumer spending while 60% are focused on manufacturing activity, wage growth, unemployment and consumer sentiment. Internally, 47% of respondents are highly focused on signals from sales volume and revenue as indicators of their own organization’s recovery.
According to respondents, the U.S. Presidential Election also carries significant weight on investment and business plans, with 58% of finance leaders either somewhat or extremely likely to defer investment until the new administration.
The future of finance & IT departments
The impact of the global pandemic has tested many industries, enterprises and finance leaders, and has accelerated the need for digital transformation. With the backdrop of a nearly 33% drop in GDP and many organizations withdrawing earnings guidance, executives are carefully considering critical investment and budgeting decisions to help navigate this new normal. The pandemic has highlighted the importance of IT and finance teams at enterprises worldwide. Recent data indicates that there is a need for unified cloud-based planning, reporting solutions and advanced analytics that help finance leaders make intelligent business decisions during the rapidly changing business conditions.
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