Hindsight is 2020, as the saying goes, but 2020 is just starting, so we need some foresight. What will be the top 2020 trends for finance executives? If you manage finance for a business, there are a number of issues that should keep you calm and confident, along with a few that might cause you concern. 2020 promises to be an interesting year, either way.
Overview: The US economy is pretty healthy
The good news is that you’re starting out in a year when the American economy seems to be doing well. GDP growth is projected to between 2% and 3%, which is considered good. It’s not too fast, which would imply inflation, nor is it low enough to indicate an oncoming recession. The unemployment rate is low, but this does not appear to be translating into demand for higher wages. Business and consumer confidence seem to be high.
Become more operations-oriented
The finance executive’s role is changing. No longer just “the numbers guy” (or girl), today’s CFO is playing a larger part than ever in business operations management. In some companies, the Chief Operating Officer (COO) role is being eliminated. In its place, the CEO and CFO now divide operational responsibility.
There are a variety of reasons for this shift, but one big driver of the CFO as operations executive comes from the centralization of software for business and financial management. Modern businesses seldom have the old-fashioned sort of separate, never-the-twain-shall-meet systems for accounting and operations. Rather, with sophisticated cloud-based Enterprise Resource Planning (ERP) solutions, which include accounting and finance, companies are running on unified software platforms. This trend is ongoing and likely to accelerate in 2020.
Get ready to run IT, too
One outgrowth of the unification of business software is a trend where the CFO’s office is now in charge of IT. Such a change may not be complete. There could still be a CIO and CTO, but increasingly the CFO is expected to be one of the senior IT leaders. This makes a great deal of sense. The finance executive is almost always a key contributor to the business requirements of an IT solution. He or she should thus play a role in managing IT.
Another aspect of this shift, and the general 2020 trend it portends, has to do with the rising importance of data in business management. Financial and operational data are driving business decisions. The finance executive is at a nexus of control and influence regarding the visualization and reporting of both of these data types. After all, the data comes from the same unified finance/operational systems the finance executive oversees.
Take on more security and compliance responsibilities
This is not a new trend, of course, but 2020 seems likely to bring more responsibility and accountability for security and compliance to the finance executive. It may not be fair, but it’s reality. Malicious actors in cyberspace target financial systems. If the finance exec is the system owner, then he or she has a role to play in defending it. Even if the financial executive is not directly on task for security, he or she should guide the security team in prioritizing risks and digital assets to protect.
Prepare for instability
2020 may prove to be a rollercoaster ride, in business terms. While things seem calm now, a few landmines are lurking beneath the surface. These comprise unexpected impacts of the trade war with China, an actual war e.g. with Iran or other politically-driven instability. America is on edge about the 2020 election. Fears and uncertainties may affect business conditions.
Software and data analytics tools can help you model potential risk scenarios and prepare for them. We have helped many businesses in such processes. If you want to learn more about how we can work with you to make the most of 2020 as a finance executive, let’s talk.