Today’s changing economy is driving new spending priorities as organizations look to boost operational fundamentals.
Businesses want technology to help them be strategically proactive with growth in the face of macro headwinds. They are turning to data-backed insights around return on investment (ROI) to do so.
This, as according to 2023 PYMNTS data, more than 90% of chief financial officers (CFOs) expect a global recession within the next year.
“It’s very tough to change habits … historically in the minds of CFOs any new systems meant a long deployment, a lot of cost, and it was much more difficult to calculate the ROI before starting the project,” Mesh Payments CEO Oded Zehavi told PYMNTS this month. “Now, there is a new breed of solutions that are much more cost effective, where the deployment takes a relatively shorter time … so the ROI is much more clear.”
Organizational investments in modern technology solutions have remained durable in the face of a projected economic downturn, with CFOs planning to implement improvements across key areas like accounts receivable (AR) and accounts payable (AP), as well as working capital management and procurement systems.
According to findings in the PYMNTS report “Digital Payments: Changing Economy Sparks New Priorities for Systems Spending,” at least three in five CFOs surveyed said their investments in digital payment processes have successfully resulted in improvements to business operations.
“As a CFO right now, I’m focused on creating the foundation that will be put in place to allow for the scale that we’re trying to achieve,” Nathaniel Katz, CFO at eCommerce software provider Rokt, told PYMNTS in a January interview. “And that comes down to data, that comes down to systems, it comes down to processes.”
The unprecedented change in recent years has proven that business and macroeconomic disruptions can come from nowhere and happen at any time, making it crucial for internal leaders to be prepared for whatever may come next.
PYMNTS research found that savvy businesses are directing a larger share of their technology investments toward solutions geared to help them meet long-term goals like maximizing efficiency and expanding the company’s operations.
Having a modern operational foundation capable of integrating and leveraging the latest technology makes a business nimble and equips it to respond appropriately to unexpected changes in its operating environment.
Meaningful shifts in investment priorities based on business-specific cash flow, working capital and liquidity strategies are increasingly being grounded and validated with contextual data.
Hicham Oudghiri, CEO of Enigma Technologies, told PYMNTS this month that if data, and “in particular, the right data” is harnessed effectively, “it can help create a half-operational, half-financial setup where companies can fine-tune their day-to-day operations to run more efficiently.”
“We’re really focused on data analytics … our decisions tend to be rooted in really rigorous analysis,” Jerry Fadden, CFO of direct-to-consumer (D2C) insurance provider Kin told PYMNTS during a discussion at the end of last month.
“A lot of what the CFO job entails is helping the rest of the business move fast by making informed decisions that leverage trusted data,” Rokt’s Katz said in January.
In challenging macro environments, investments in process optimizations that take aim at lingering technical debt are moving beyond just enhancements to working capital management systems and modernizing accounting and financial processes.
“Nobody wants to spend a lot of money on efforts that won’t provide a return in a downturn,” Bas Brukx, CFO at Allego, said in an earlier conversation with PYMNTS.
Increasingly, operational investments are about having the proper protocols in place to provide organizational leaders with the right insights to succeed in the face of the unexpected.
Companies across industries tell PYMNTS that modernization efforts are among the most important reason for their investing in digital technologies and integrated enterprise solutions.
Those entrenched legacy systems that can’t provide holistic, mission critical information to organizations at speed will find themselves soon put to pasture and replaced by next-generation digital alternatives.
The challenge for CFOs is always managing enterprise growth with spend, and in an economic downturn it becomes extremely important for business leaders to have a transparent, high-level view of their own operations that informs where to continue to invest, where to pull back spend, and how to leverage modern technology to provide an optimal ROI.
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