By Josh Schauer.

The finance industry is undergoing an incredible transformation this year as it continues to face expanding regulations, ongoing AI dilemmas, and complex markets. In fact, 70% of finance decision-makers feel pressure from market factors like inflation and economic disruption. Finance teams are forced to do more with stretched resources and staffing shortages, and as a result, organizations of all sizes are specifically overwhelmed with data and struggling with how to manage it effectively.

Data rules all for the finance sector. According to recent research, organizations spend $115,856 per developer yearly to tackle common issues like data inconsistencies and performance. Financial organizations are just starting to realize the potential their data holds, using it for guidance in financial planning and analysis, budgetary planning, and more.

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However, much of this data is still siloed, and we have reached the point where these organizations have so much of this data, that they need to start thinking about how it can bring value to the company or risk losing their competitive advantage. The technology these teams invest in throughout the rest of 2024 will have a major impact on these obstacles

As finance teams, and their larger organizations, focus on driving business outcomes to stay ahead of trends and remain competitive, teams must focus on doing more with less while improving data quality, and implementing real-time analytics. Let’s take a deeper look at what will continue to impact finance teams in the second half of the year as they work to overcome their data and analytics challenges.

Generative AI Potential: While ChatGPT entered the market in late 2022, finance teams are slow to adopt the technology. Focused still on manual processes, these are incredibly time-consuming and prone to error, and finance teams need to seek technology that allows them to do more with less. Unfortunately, only 1% of finance functions have adopted or plan on investing in generative AI, most likely due to low-quality data, insufficient use cases, and a lack of technical expertise within the department. To improve this, teams will need to better clean and understand their data to improve AI use cases. Before even considering an AI integration, finance must have a single source of truth that contains clean, organized, and accurate data. This can ensure that when the right AI tool is available, teams will be able to support it with the best data to gain valuable, real-time analytics.
ESG Reporting: Environmental, social, and governance (ESG) initiatives are top-of-mind for finance teams–at 86%, nearly all large companies report on ESG information. ESG holds companies accountable for their impact on the environment, social movements, and corporate governance. In the past year, new regulatory disclosure requirements (including the Corporate Sustainability Reporting Directive in Europe and the SEC’s proposed rule to disclose emissions and risk management practices for US-based organizations) will make ESG more of a focus for finance departments. Teams need to have consistent, accurate reports at the ready to measure progress and advance their ESG readiness and compliance.

Ongoing Cloud Adoption: With worldwide end-user spending on public cloud services projected to hit over $1 trillion by 2027, organizations that have yet to migrate to the cloud risk falling behind. Cloud technology is an opportunity to modernize and transform how data is used within a business. Finance teams need to be prepared for a company’s migration that will allow them to interact with multiple enterprise resource planning (ERP) instances and prevent important data from getting siloed. However, cloud migration can be seen as a staged approach causing reporting to fall behind as teams learn new systems. To avoid this drop in productivity and before they begin a cloud migration, finance teams should pay extra attention to ensure their data can span across systems and they are able to interact with multiple ERP instances.
Cybersecurity and Data Privacy Regulations: Just as new ESG rules are increasing reporting requirements, cybersecurity and data privacy will also need to become a focus. For instance, the SEC guideline change adds an even greater role in regulatory reporting to an already overwhelmed finance team. Finance chiefs from a recent survey from Deloitte cited increasing regulations and working with regulators as one of their top challenges related to managing enterprise risk. With these updated SEC guidelines, teams need to be able to access reports quickly and draw conclusions on potential breach consequences even faster.

The importance of data has been well established and finance teams must start utilizing it appropriately in order to set their organizations up for success. If done successfully, the adoption of new technology and the demand for more immediate, flexible, and robust operational reporting can be faced with well-earned confidence as organizations navigate today’s uncertain markets.

Josh Schauer is SVP of finance at insightsoftware.