New Research Finds Political and Social Factors are Driving 2021 Financial Plans
- Investment , Management
- 12.05.2021 08:30 am
OneStream Software, a leader in corporate performance management (CPM) solutions for the world’s leading enterprises, has announced the results of its “Enterprise Financial Decision-Making 2021 - North America” survey. The study, conducted by Hanover Research, targeted finance leaders across North America and identified the factors driving their budgets and technology adoption plans for 2021.
The COVID-19 pandemic created a heightened need for agile forecasting, predictive planning and digital transformation. With vaccine rollouts happening across North America, many finance executives are evaluating their workforce and supply chain needs for a post-pandemic reality. However, the political and social landscape have also heavily impacted investment decisions, leading executives to prioritize sustainability and diversity initiatives as well.
When asked about key business drivers and plans for 2021, CFOs and other finance leaders were focused on several areas:
Political and Social Initiatives are Dominating the 2021 Investment Landscape
Despite many companies deferring investments until after the election, over half of the finance leaders surveyed report that the election positively impacted their investment decisions for 2021. However, the Biden Administration’s proposed legislation may cause additional business disruption. Most companies surveyed (86 percent) will need to change their financial forecasts in the event of a tax change by the new presidential administration. Similarly, most companies (89 percent) have already made plans to change hiring and staffing to accommodate potential wage increases.
In addition to political impact, social and environmental investments are high on the agenda for 2021. The majority of financial executives surveyed are increasing, or are planning to increase, investments in Environmental, Social, and Corporate Governance (ESG) management and reporting systems (85 percent), as well as Diversity, Equity, and Inclusion (DEI) training (86 percent). Of note, financial executives working in IT (65 percent) and finance (77 percent) industries are significantly more likely to be currently investing in DEI training than other industries (52 percent).
Return to Office Investments are Underway, with Data Privacy Tools Coming to the Forefront
CFOs and other finance executives are optimistic that recovery is on the horizon: three-quarters (73 percent) expect that they will return to normal growth by the end of 2021. In addition to economic recovery, nearly all companies (98 percent) have made budgetary plans for returning to the office. In fact, one-third (36 percent) of financial executives plan on dedicating over 15 percent of their budget to office reopening. Data privacy tools are the most common (18 percent) priority for the earmarked return-to-office budgets, with hybrid cloud technologies and office reconfiguration also being top priorities.
Finance is Embracing New Tech to Support Pandemic Impacts and a Dispersed Workforce
Since the COVID-19 pandemic started, the ability to quickly reforecast budgets and shift workflows has become essential. The rapid adoption of next-generation and predictive analytics to support these needs started last year: OneStream’s 2020 Enterprise Financial Decision-Making Report found that less than half (46 percent) of the finance executives reported using cloud-based solutions regularly, while less than a quarter used machine learning (21 percent) and artificial intelligence (20 percent) solutions.
Less than a year later, our 2021 report found that finance executives have significantly increased their data analysis tool investments and usage. Specifically, companies most commonly invested in artificial intelligence (59 percent) and increased their use of cloud-based planning and reporting solutions (65 percent). Additionally, most companies already use (69 percent) or plan to use (18 percent) low-code development platforms.
“Planning and forecasting has never been as critical to businesses as it is today,” said Tom Shea, CEO of OneStream. “The pandemic demonstrated the importance of enterprises being able to shift quickly via the use of widely accessible data-backed insights to meet changing needs at a moment’s notice. These findings reinforce that while the pandemic may have caused the initial acceleration in adoption of these technologies, these solutions are here to stay.”