Published on the 14/05/2020 | Written by Jonathan Cotton

Investment in digital the key to meeting the Covid-19 challenge say CFOs…

Whether you’re fighting for the edge in the post-Covid-19 future, or fighting for survival in the short term, everyone’s trying to figure out what the global Coronavirus pandemic means for their business.

The negative social and economic impacts will be significant, of course, but even amidst the unavoidable economic collapse it seems there are still reasons to be hopeful.

PwC has been tracking global CFO sentiment via its COVID-19 CFO Pulse, which reveals confidence in the ability to manage short-term business continuity needs, and optimism that current spending can be leveraged for long term advantage.

“Our survey reveals optimism among CFOs as businesses around the world bring employees back to physical worksites or plan to reopen.”

“The pandemic has underscored the need for new skills.”

According to the report, three quarters of those surveyed report feeling ‘very confident’ about meeting customers’ safety expectations, and 70 percent say they are very confident about the ability to provide a safe working environment.

“The majority of CFOs are making plans focussed on tactical measures to protect staff, followed by strategic measures around remote work and automation,” says PwC.

Nearly 50 percent of those surveyed say remote work will be a permanent option for roles that allow it, almost three quarters saying that the work flexibility they have created in response to the crisis will benefit their company over the long term.

“Many CFOs cite work flexibility (72 percent), better resiliency and agility (65 percent), and technology investments (52 percent) as crisis-driven developments that will improve their companies in the long run.”

There’s plenty to worry about of course. An inevitably long and difficult period of unstable supply chains and interrupted markets is already here. More than three quarters of CFOs say are bracing for a reduction in revenue and/or profits for this year.

“Although 42 percent of CFOs believe their company could return to ‘business as usual’ within three months if COVID-19 were to end today,” says the report, “there is a growing sentiment in many territories that recovery may take much longer.”

As it stands, half of CFOs expect a decrease of up to 25 percent in revenue as a direct result of COVID-19. After health and safety obligations to staff and customers are met, cost containment is therefore, the order of the day.

“As they settle into stabilisation, CFOs favor a strategy of cost containment, with 81 percent saying they will consider it in response to the crisis.”

“Sixty percent of finance leaders say they will defer or cancel planned investments, with facilities and general capex (83 percent), operations (53 percent) and workforce (49 percent) topping the list of potential cuts.”

According to PwC however, those cuts won’t affect investments in digital nearly as much.

“With an eye perhaps towards what measures will be necessary for success in the post-crisis world, only 16 percent of CFOs are considering deferring or cancelling investments in digital transformation.”

“Even fewer are likely to cut investments in customer experience (11 percent) and cybersecurity or privacy (3 percent).”

Going further, nearly half plan to accelerate automation, says PwC, with almost a third of those surveyed saying they intend to invest in automation to improve the speed and accuracy of their decision-making processes.

“The pandemic has underscored the need for new skills, including empathetic leadership, resilience and agility, collaboration and digital skills, and technical and trade skills such as design, manufacturing, and cyber and supply chain management,” says the report.

“Leaders may need to ramp up efforts in this area when possible, to ensure that their technology investments continue to benefit the company and that the resilience they created is built to last.”