the health strategist
institute for strategic health transformation
& digital technology
Joaquim Cardoso MSc.
Chief Research and Strategy Officer (CRSO),
Chief Editor and Senior Advisor
November 6, 2023
What is the message?
A survey by Gartner, Inc. reveals that both CFOs and CEOs consider growth as their top strategic business priority, with 45% of CEOs and 62% of CFOs ranking it in their top three priorities.
While they share this focus on growth, CFOs and CEOs differ in their emphasis on other priorities. The survey also indicates increasing interest in AI among both CFOs and CEOs, with AI seen as the technology most likely to impact their industries.
Furthermore, CFOs are exploring alternative responses to inflation beyond raising prices.
What are the key points?
- Growth remains the top strategic business priority for both CFOs and CEOs, with 45% of CEOs and 62% of CFOs ranking it among their top three priorities. However, there are differences in emphasis on other priorities between the two groups.
- CFOs prioritize corporate actions such as mergers and acquisitions (M&A) and restructuring (41%), which ranks fourth for CEOs (27%) in their list of priorities.
- AI is identified as the technology most likely to impact their industries in the next three years by both CFOs and CEOs, despite the fact that many finance functions have only recently started using AI.
- Concerns about inflation and a potential recession have led CFOs and CEOs to explore alternative responses beyond raising prices. A significant percentage of both groups (84% of CFOs and 68% of CEOs) consider inflation one of the top factors impacting their businesses.
- CFOs are becoming more open to cost optimization strategies as they realize the need to go beyond raising prices to tackle inflation. Customers’ price sensitivity and the inability to pass pricing on to customers are contributing factors to this shift in approach.
- The survey highlights that both CFOs and CEOs are facing pressure to deliver results, protect their organizations, and comply with responsible generative AI regulations.
- Gartner experts will provide further insights on addressing challenges in the finance industry at the Gartner CFO & Finance Executive Conferences 2023, focusing on slowing growth, high inflation, talent scarcity, and global supply constraints.
- The Gartner Finance practice aims to support senior finance executives in achieving their priorities, offering content and best practices to drive business impact across finance functions.
Infographic
Figure 1: CFOs and CEOs Prioritize Growth, While Other Priorities Differ Slightly
Figure 2: CFOs Moving Towards Cost Optimization Over Price Rises
Source: Gartner (July 2023)
DEEP DIVE
Gartner Survey Reveals Growth as Top Strategic Business Priority Shared by CFOs and CEOs
Gartner
July 25, 2023
Majority of CFOs and CEOs Still Rate Inflation as a Top Factor Damaging Their Organization, but Are Less Likely to Favor Raising Prices Than in 2022
Growth remains the top strategic business priority for both CFOs and CEOs, according to a survey by Gartner, Inc. Forty-five percent of CEOs surveyed ranked growth in their top 3 strategic priorities, down from 53% in 2022, while 62% of CFOs put it in their top 3, up from 59% in 2022.
While CFOs and CEOs agree on growth as their top priority, their emphasis on this and other priorities differ, according to the Gartner survey of 422 actively employed CEOs, CFOs, and other senior executive business leaders conducted through December 2022 (see Figure 1). For instance, CFOs’ second top priority is corporate action such as M&A and restructuring (41%), which ranks fourth for CEOs (27%).
“Balancing future growth investments and CEO expectations, while still tightly managing cost and cashflow, is the tightrope CFOs must walk in the back half of 2023,” said Alexander Bant, Chief of Research with the Gartner Finance practice. “The top questions CFO should be educating the CEOs and the board of directors on as the business cycle begin to turn more positive include: How should we sequence funding for organic and inorganic growth bets? How best do we secure capital? What does it look like when we model out the impact on margin and ROIC?”
Figure 1: CFOs and CEOs Prioritize Growth, While Other Priorities Differ Slightly
Source: Gartner (July 2023)
CEO and CFO Interest in AI Increasing
When asked which new technology will most significantly impact their industry over the next three years, both CFOs and CEOs named AI as their top pick. For CFOs, this is especially notable because they likely do not have much direct experience with AI yet, given that 80% of finance functions using AI just started in the past two years.
“Five forces are driving CFOs and CEOs to prioritize conversations about AI in the third quarter. First, boards and CEOs expect C-suite leaders to protect the organization while driving broad use case adoption. Second, customers continue to leverage generative AI in their daily life, moving their expectations for user experience. Third, employees are concerned about job loss yet may eventually leave organizations where they can’t fully leverage generative AI. Fourth, regulators expect all organizations and their leaders to comply with responsible generative AI regulations. Lastly, investors expect new sources of growth and much better margins, placing pressure on leaders to deliver results,” said Bant.
CFOs Explore Alternative Inflation Responses, Bringing Them in Line with CEO Thinking
As CFOs and CEOs face concerns about the effects of inflation and a potential recession, they’re pursuing options beyond the typical approach of raising prices, with CFOs joining CEOs in demonstrating a new open-mindedness towards other tactics (see Figure 2).
Figure 2: CFOs Moving Towards Cost Optimization Over Price Rises
Source: Gartner (July 2023)
A large proportion of both CFOs (84%) and CEOs (68%) rank inflation as one of their top three most damaging factors impacting the outlook of their business. Raising prices has been a go-to tactic, but many CFOs are realizing they need to expand that playbook. There was an 11-percentage point drop relative to last year in the share of CFOs who cited that increasing prices was one of their top two actions to respond to inflation, driven at least in part by signs that customers are tiring from consistent price rises.
“Rising rates are forcing more customer price sensitivity, and CFOs are less able to pass pricing on to their customers,” said Bant. “We see CFOs asking teams the tough questions about how they will use resources and headcount even more efficiently in the remainder of 2023 and into 2024. With budgeting right around the corner, CFOs will attempt to force higher levels of productivity by clawing back resources while asking their teams to achieve more.”
Additional information is available to Gartner clients in the report Where CFOs and CEOs Agree and Disagree on Current Strategic Business Priorities. CFOs can benchmark their current approach to these priorities, as well as understand Gartner’s best practices for managing them. Nonclient can download the report Gartner Survey Results: How CFO and CEO Priorities Differ for 2023 and 2024.
About the CFO & Finance Executive Conference 2023
Gartner experts will provide additional insights on how CFOs can address slowing growth, persistent high inflation, scarce expensive talent and global supply constraints during the Gartner CFO & Finance Executive Conferences 2023, taking place September 18-19 in London. Follow news and updates from the conferences on Twitter using the hashtag #GartnerFinance.
Originally published at https://www.gartner.com
