Dive Brief:

• Forty-three percent of finance leaders are optimistic about the economy and plan to increase budgets in 2021, OneStream Software’s “Enterprise Financial Decision-Making” survey, released Wednesday, found.

• The survey, conducted among 212 North American finance leaders and decision-makers by Hanover Research, covered present financial challenges and attitudes as well as plans for investments, hiring, upskilling and technology adoption in 2021.

• Looking ahead, 40% of finance leaders are focusing 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 organization’s recovery, followed by cash flow, gross profit margins and working capital.

Dive Insight:

Ninety-eight percent of respondents stated they experienced financial challenges stemming from the pandemic. While only 22% of respondents were forced to shut down operations completely, more than a third (34%) had to reduce headcount to absorb the impact. 

Aside from the pandemic, the U.S. presidential election will also carry significant weight on investment and business plans. Fifty-eight percent of finance leaders said they are either somewhat or extremely likely to defer investment or business plans until after the election, such as M&A activity, hiring and launching new products or services.  

Most companies (61%) are also deferring investments and business plans, such as hiring and new service launches, until after the 2020 elections.

“Elections bring changes in tax policy and other policy trends, based on whoever's occupying the presidential and congressional offices,” OneStream Software CFO Bill Koefoed said. “We’ve certainly seen that over the past 20, 30 years. As CFO, tax policy, and how you react to that, is critical.”

Of those not currently using cloud-based planning and reporting tools, 56% plan to invest in 2021. Respondents are also interested in predictive analytics, machine learning and artificial intelligence solutions, with more than half of respondents planning to invest in these tools in 2021. 

Two in five respondents expect to increase budgets across the organization next year, naming IT and cybersecurity, followed by accounting and finance, as major focuses. Fifty-six percent of companies are planning to increase their remote work enablement budgets in 2021. Additionally, 38% plan to increase their capital investments and 34% plan to increase their day-to-day operating expenses next year. 

“I was a little surprised accounting and finance was the number two investment, behind IT and cybersecurity,” Koefoed said. “It’s the reverse of Maslow’s hierarchy of needs. You need IT and cybersecurity first, and publishing financials is second.”

“The pandemic has highlighted the importance of IT and finance teams at enterprises worldwide,” OneStream CEO Tom Shea said. “Every organization’s success will depend on their abilities to quickly gather, normalize, analyze, re-forecast and pivot strategies to drive bottom-line results.” 

Among the finance leaders surveyed, 57% said their companies have reduced hiring due to financial challenges, and many have also reduced temporary/contract staff (41%) or implemented layoffs/furloughs (34%).

Financial decision-makers are divided when it comes to their current read of the near future economic and regulatory atmosphere. Forty-two percent of respondents are optimistic, anticipating budgetary increases, while 38% are pessimistic, anticipating decreases.

“Optimism varies by industry,” Koefoed said. “I think, during this time, as we talk to customers, there are some industries, like travel and leisure, that are more impacted than something like Apple, which just passed its $2 trillion market cap.”

ML and AI are comparatively less common, seeing occasional use among fewer than half of respondents (46% each). But they are also the tools companies plan on investing in most (19% and 20%, respectively).

“That didn’t surprise me at all,” Koefoed said. “We’re certainly seeing that among our customer base at OneStream. “These areas are emerging as capabilities improve. Not just finance execs, but also other parts of the organization, all believe it’s a when, not an if.” 

As far as business recovery tactics go, Koefoed advises CFOs to pick a handful of key drivers that will most impact their business, and “laser focus” on them.