The functions CFOs are targeting for budget cuts, increased spending

By Kevin Brewer

The real estate/facilities management function is the most likely to face budget cuts over the next 12 months, according to a July survey by Gartner Inc. of more than 200 CFOs and finance leaders.

About 35% of respondents said the real estate function is most likely to face budget cuts. The finance function was next with 22%, followed by operations at 20%.

"This makes sense for many organizations where a large share of employees is working from home at least part of the time," said Marko Horvat, vice president, research, in the Gartner Finance practice, in a news release.

The results track with the findings in Gartner's Digital Worker Experiences Survey from April 2021:

  • 72% of CFOs aim to reduce their real estate footprint by the end of this year; and
  • 70% of workers now spend at least part of their time working from home.

Meanwhile, IT is the most popular function for increased spending, with 40% of CFOs planning increases over the next 12 months. The sales function was next with 31%, followed by research and development at 29%.

"CFOs see digital technology as a smart long-term bet, but it's also a critical part of their plan to tackle the effects of rising inflation on corporate margins," Horvat said.

Despite talk of a possible recession, CFOs remain confident in digital initiatives, as they did in a second- quarter poll by Gartner, which found that:

  • 46% of CFOs planned to increase enterprise digital initiatives in the next two years; and
  • Almost 25% of CFOs said greater automation is the main step they'll take to combat inflation.

Respondents are also turning to sales and R&D to drive growth, which is in line with the goal of many companies to protect product innovation for growth: 37% of CFOs and CEOs selected this investment as one of their top two to protect in Gartner's Inflation Response Survey earlier this year.

"The investment in sales and R&D shows that companies are not abandoning their growth bets at the current time, and they are turning to two functions to drive growth in difficult conditions," Horvat said. "This is broadly consistent with our surveys through May and June where CFOs and CEOs selected these areas as being the most likely to protect from cuts."

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.

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