The Next Few Steps: Challenges and Opportunities for Finance by Business Sector
The outlook for finance teams in 2023 is positive. On average, finance leaders report increasing budgets and more automation of manual tasks. But the outlook is not equally sunny across all industries.
Digging deeper into the data can help uncover the challenges ahead for each industry.
For our 2023 Finance Leaders Survey, we spoke to over 700 finance leaders about the state of the finance function and their plans for the future. This group represented multiple industries, each of which faces their own challenges:
- Professional Services companies are ahead in automation but face stagnate budgets this year.
- Education companies are also facing flat budgets, but are quickly upgrading their tech.
- Healthcare and Senior Living companies are far behind their peers in terms of automation.
- Construction companies are seeing the fewest challenges, with increased budgets and improved automation capabilities both expected this year.
- Manufacturing companies lead the pack in automation, but they are still in the process of aligning their people, processes, and technology.
Let's take a look at what these differences mean for each industry and what your organization might face this year.
Automation
More organizations are adopting automation into their everyday processes. But the level of adoption varies depending on the industry. While some industries are advanced in their digital transformation, others are early in the process or struggling to start.
Manufacturing and Professional Services lead in automation
One of the most striking findings of our survey was among manufacturing and professional services companies. In these industries, 31% of finance leaders said their departments will be almost or fully automated by the end of 2023. This is an interesting comparison to the average organization, which strives to automate half their processes by the end of the year.
Automating key financial processes like scenario planning, financial reporting and analysis, or operating expense planning frees up time for analysis so finance teams can focus on fulfilling a strategic role to guide the business forward.
Healthcare and Senior Living Services are the least automated
Healthcare and senior living services reported the lowest levels of automation. In fact, fully 16% of respondents expected to have little or no automation in place by the end of 2023.
Optimizing patient care, billing, and staffing are foundational processes for healthcare and senior living facilities. Due to the highly regulated nature of the industry, there is additional reporting needs to meet audit requirements. And as a result, automation is falling lower on the priority list.
Agility
Agility in finance means being able to react quickly to changing circumstances. Nearly all (96%) of our respondents, regardless of industry, said that agility is important. 86% said their team is either “very” or “quite” agile. But differences persist between industries depending on where you are in your digital transformation journey.
Professional Services and Manufacturing are aligning people, processes, and technology
Professional services and manufacturing are ahead of other sectors when it comes to automation, so it’s no wonder that they are focused on alignment. When people, processes, and technology are aligned, data gets into the hands of decision makers faster, so they can pivot if and when needed.
This is especially important given the ongoing volatility in the supply chain and the macroeconomic environment. Disruptions in the flow of materials into factories, delivering products to consumers, and general economic turmoil all require the ability to adjust budgets and forecasts on the fly.
Construction and Education are implementing new technology
Finance teams in construction and education are in the process of upgrading their systems faster than any other industry in our survey. Both industries reported that they expect a higher than average increase in automation technology over the next few years.
Getting the tools in place to automate key finance processes is the first step in becoming more agile. But increasing the use of automation is the beginning of the path towards greater agility, not the end.
Once the technology is in place, these teams will have to learn how to use the tools effectively to generate insights and collaborate across the business to make data-backed business decisions.
Budgets
With 76% of respondents saying they expect some form of budget increase in 2023, it’s clear that executives have confidence in the evolving role of finance. With more resources comes the opportunity to build strong foundations by investing in cybersecurity, planning, and risk management solutions, as well as maintaining momentum for investing in automation and AI. But even those whose budgets will remain flat have plenty to be hopeful about.
Construction is more likely to expect significant budget increases
Cash flow management is what keeps construction projects moving.
The significantly higher budgets that finance leaders in the construction industry expect to see this year will help them get the tools and training they need to elevate the finance function. With advanced tools in place and increased investment in developing skillsets, construction companies will be able to pivot quickly and drive profitability.
Professional Services and Education are most likely to report stagnant budgets
According to respondents, the expected budget increases across the majority of finance departments are not as likely to make it to the finance teams at professional services or education companies.
But finance leaders in these fields still have plenty to work with. The high level of automation for professional services companies mentioned above indicates these companies do not need an increased budget in order to compete on digital transformation. And education companies reported higher than average concern for implementing new technologies, which may indicate their budgets have already factored in these upgrades.
Prepare for anything in 2023
No matter where your finance team is in their digital transformation journey, there is always more to learn. Discover helpful insights from finance leaders across all industries and learn how they are planning for the years ahead in the 2023 Finance Leaders Survey.
