In the years since the financial crisis, cutting costs has been one of the primary concerns of the CFO, as they look to both recover from the crash and position themselves to not take the same hit they took last time. And they are seeing success in the their attempts. Consulting firm the Hackett Group has revealed that corporate finance budgets are set to shrink 0.1% this year, following a 0.8% increase in 2014.
Much of this fall can be attributed to the adoption of new technologies that cut costs - primarily staffing costs - with the Cloud, in particular, enabling the automation of many of the more routine accounting and bookkeeping tasks. There was a 3.1% increase in spending on IT by the finance function this year, compared to 0.3% in 2014.
Of the roughly 170 global companies with at least $1 billion in revenue who were surveyed by the Hackett Group, a substantial number of executives said that they had cut jobs in accounting and bookkeeping. They had also geared their hiring policy towards employing people with higher-level backgrounds in data analysis and technology who have the capabilities to exploit the technology. The Hackett Group also found that since 2004, the median number of full-time employees in the finance department at large firms has fallen 40% to about 71 people for every $1 billion of revenue, down from 119.
Perhaps unfortunately for those who have lost their jobs, the automation of their roles has brought with it dramatic efficiency gains. An example of a firm to have cut its costs considerably over the last few years is wireless telecommunications provider Verizon. Verizon has reduced its finance department spending by 21% over the last three years through a combination of job cuts and office closures. They reached $127.1 billion revenue in 2014 as they cut a quarter of their manual Excel entry employees from 14,000 to 10,500. The company also intend to reduce its number of manual workers by 1,400 by the end of this year to reach an overall reduction of 35%. It has used the money to build a new hub for finance operations in Lake Mary, Florida, and renovated another in Tulsa, Oklahoma, which should help further reduce costs in the long term.
It is not just a case of new technologies being introduced either. Legacy systems are also being better exploited. Hackett Senior Research Director Lynne Schneider noted that ‘companies are not just putting in the newest, shiniest technology. They’re also looking at their legacy systems and exploiting them to the greatest extent.’ For those in the finance function whose jobs are being replaced by robots, it may be of cold comfort that their companies are now more efficient as a result, but there is also a huge opportunity to resell, with a shortage in the number of data analysts needed by companies as competition is now so intense.