Advanced analytics, RPA and AI as key foci for technological transformation in the next 12 months
China CFOs have become more optimistic about the economic outlook, as the global economic upswing which roughly began in mid-2016 has become broader and stronger. However, one-third of the respondents have expressed a certain level of pessimism towards the economy, specifically with regards to the fast-moving and unpredictable development of global geopolitical events, according to the latest edition of the CFO Survey from Deloitte China CFO Program.
Every six months, Deloitte conducts a survey to gauge the views of CFOs in China towards the economic climate, as well as to engage them to discuss other key issues impacting their businesses. In addition to reflecting CFOs’ economic sentiment, the latest survey also seeks to analyze their perception towards different types of emerging technologies, the innovative transformation of their organizations, as well as the challenges they encounter in adopting new technologies. The survey was conducted from February to March 2018, with 138 valid responses.
“China’s economic resilience, underpinned further by new governmental strategic measures such as the Belt and Road Initiative and ‘BRIC Plus’, has boosted market confidence towards the business outlook,” said Sitao Xu, Chief Economist of Deloitte China. However, he added that survey respondents seem to be unsettled about the increase in trade tension, with 14 percent of CFOs citing trade protectionism as one of the potentially high impact risk factors.
According to the survey, “detrimental government policy/regulation” remains the dominant risk factor in the eyes of CFOs, who were also unnerved by the stronger likelihood of the rise in capital costs as a result of the anticipated U.S. interest rate hike. Meanwhile, receding anxiety towards geopolitical issues among CFOs may have contributed to the overall optimism in economic outlook, as only 9 percent of survey respondents indicated this as an important risk factor, versus 23 percent from the previous survey.
In an era of unprecedented innovation, organizations around the world and across different industry sectors have proactively sought to explore and adopt disruptive technologies in order to reinvent how they do business, engage with customers and drive efficiencies across the value chain. Based on the survey, CFOs on the whole understand that technological transformation has become a pervasive trend, with 68 percent of respondents indicating that over 50 percent of their finance processes will be significantly altered by technology in the next 5 years. However, the strongest obstacles for CFOs in driving technological adoption point to concerns about cost and obtaining internal buy-in. In many cases, this has slowed down the pace of their internal transformation efforts. To address these challenges, 87 percent of survey respondents acknowledge the importance of being more proactive in embracing emerging technologies, which they agree would help their organization overcome cost pressure, cope with increasingly complex business demands, and more confidently lead through times of economic and regulatory uncertainties.
CFOs also indicated that “Cloud” is now the most widely adopted emerging technology for their organizations. Looking forward, however, survey results show that there would likely be a shift of focus from “Cloud” towards “Advanced Analytics”, “RPA/Process Robotics” and “Artificial Intelligence” in the next 12 months.
“It is encouraging to see that CFOs and finance leaders recognize the significant potentials driven by new technologies. However, they continue to face internal barriers, such as obtaining buy-in and convincing other decision-makers about the long-term benefits of technological transformation. In addition to their role of measuring financial impact, CFOs should take on the responsibility of driving the strategic planning of technological transformation, as well as creating the mechanism for effective managing its implementation throughout the organization,” said David Wu, Finance Transformation National Leader, Deloitte China.