Finance Priorities in the COVID Era

Executive Summary

Protiviti’s 2020 Global Finance survey highlighted that finance leader priorities are substantially unchanged from prior year despite a very atypical and extremely disrupted year, courtesy of COVID-19. Enabling technologies, talent management and increased internal customer expectations represent the key themes for 2020 in the UK.

This consistency in messages suggests that leading CFOs are committed to ongoing finance transformation, equipping their departments with the foundational building blocks needed to operate digitally, flexibly and resiliently to support their organisations, regardless of current circumstances or the next crisis.

This is unsurprising - digital transformation, financial planning and human capital management are key in the response to competition and market forces and also to combat the disruption brought by the pandemic. These topics may have not changed significantly, but the CFO’s point of view and approach to some of these priorities have accelerated in light of the pandemic, with new perspectives and ways of working emerging, some of which are destined to remain for the long term.

Interestingly, the survey suggests organisations in the UK have proven to be more resilient, and the overall finance output is less disrupted than counterparties around the globe. In relation to significant or very significant impacts on the following areas, the UK scored generally better than other participants:

  • Financial reporting - was significantly disrupted in 21% (UK) vs 45% (Globally); and
  • Overall disruption or delays of finance operations 49% (UK) vs 67% (Globally)

This is despite both UK and global organisations being moderately to very well prepared to shift to remote working (UK: 85% vs Global: 91%). This may be partly due to lower percentage of UK participants relying on BPO providers (and UK respondents being from global organisations with robust technology infrastructures, proportionally more than other markets).

Other trends observed - cash management, funding requirements and contingency planning were key priorities during the pandemic across the globe. However, the UK seems to have taken a more decisive approach to workforce cost cutting (69% vs 59%) than other markets and a much less significant change in approaching risk assessments (e.g. significant level of concern related to data security/privacy – 29% vs 53%) and risk management (e.g. likelihood of risk assessment response will change - 50% vs 63%). However, there was recognition that financial risk management is required to be addressed in the near term and was noted as one of the top 3 key activities/processes (behind Financial Planning and Analysis (FP&A) ) requiring action by finance leaders.

Digital Finance Transformation

UK Protiviti Perspectives

A significant number of responsibilities across CFO and Chief Information Officer (CIO) are blending through the increased application of intelligent automation and other digital tools. At face value and based on dominance of technology themes in this survey, some aspects which are traditionally part of the CFO role, appears to sit better in a CIO job spec – e.g. predictive analytics driving FP&A forecasting or intelligent automation driven automated controls. This raises the question of “What is the future of Finance? and in the future would we need a finance astute CIO or a technology enabling / pioneer CFO?”

Aside from the provocation above, we believe Finance and the CFO will have an ever increasing role in enabling technology and driving efficiency but it needs to fully embrace digital transformation and rethink processes and activities at its core by distinguishing between forming a digital veneer around finance capabilities and operating in a truly digital manner, and identifying the finance function changes required to achieve the latter.

The responses from the survey highlight the need for Finance to be supported by digital technology and being able to drive digital transformation to ensure resilience, embrace a future with an increased mixed workforce (human workers and intelligent automation) and the need to evolve into a strategic, analytical, data-driven powerhouse that embraces digitisation and drives performance.

The finance function is evolving to meet growing demands from internal stakeholders as they are increasingly expected to take on a value-added, ‘business partnering’ role, in order to help other parts of the business improve their analysis and decision-making. While managing the company’s bottom line and meeting operational finance objectives remain critical business priorities, as companies begin to operate more often in complex, unpredictable, real-time markets, the value of the insights that the finance function can provide to the business is increasing and under certain circumstances may become the differentiator to enable an organisation’s success.

Human Capital Management

UK Protiviti Perspectives

The Impact of COVID-19 on workforce management has been profound. The sudden shift to 100% remote working has required a different blend of skills, alongside knowledge of new enabling technology applications. A range of variables affects remote working arrangements - staff sickness, home-schooling, lack of childcare options and other family responsibilities - have all impacted personal wellbeing and at times, efficiency.

We have also noted that CFOs require more from their teams to address the many business priorities. This has created additional pressure for staff, which demands greater leadership from them. We believe, in this context, several key ingredients are required to human capital management:

  • Culture leading organisations with a strong cultural identity reacted better to the pandemic. The workforce co-ordinating mechanisms in these organisations rely on the cultural values and beliefs that are shared and understood by the entire organisation and not on outdated standard operating procedures designed for on-site rather than remote working. In addition, innovative organisations have embraced the pandemic and used it as catalyst to re-think their approach and increase efficiency.

    Teams need to be empowered to act and take decisions. Not everything can go through the CFO, but Trust is key. Leaders are leaning on their teams more but need to lead by example, communicate more, support team members to earn their trust and enhance their engagement.
  • Training and development of employees is key to ensure they can be supported where required and augment their existing technical or softer skills. Particularly due to the increased demand from technology applications, data analytics as well as the risks associated with them (e.g. cybersecurity).
  • Individual performance management may require adjustments, both appraisal metrics, tracking mechanism and approach.

Forward-looking data-driven Business Partnering

UK Protiviti Perspectives

We believe a future proof Finance function would need to re-evaluate their approach to data – governance, analytics and the ability to make business decisions. In particular:

  • Planning, budgeting and forecasting processes that historically would take a long time to complete (e.g. Budget – up to 4 months) should be re-assessed and more leading practices like driver-based modelling and planning, integrated business planning across the value chain, and rolling forecasts should be embraced.
  • Developing appropriate analytics to assist with scenario planning and decision-making is both a top initiative, as well as a top challenge for most organisations.
  • Cost structure should be challenged using drivers-base or zero-base budgeting approaches.
  • Management reporting and internal customers’ demands requires re-alignment and enabling technologies – e.g. more forward looking and self-serve.

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Scott Bolderson
Managing Director