A Gartner survey of 145 CFOs on 12 April 2020 found 51% of respondents were preparing for a revenue contraction of up to 30% this year due to COVID-19, while 28% of respondents believe the impact to their organisation’s revenue could be higher than 30%.
“Most CFOs have told us they are using the most severe downside scenarios to inform their decisions right now”, said Alexander Bant, Practice VP Research, for Gartner Finance Practice. “This is leading CFOs to consider drastic cost management actions across April and May. When CFOs were asked how these downside scenarios are impacting their ability to fund long-term growth investments, 70% of CFOs said they are now showing caution in this area.”
While 15% of CFOs were planning to completely suspend all or most long-term investments, 50% said they were suspending them on a selective basis. An additional 30% said they had no plans to suspend most investments, and the remaining 5% said they are already replacing previous long-term investments with new investments.
“We know from studying companies that were successful during prior business cycle turns, that investing in growth bets ahead of curve is vital to come out on top,” continued Bant. “Right now, we see CFOs clamping down on funding for these growth bets. The companies that emerge as leaders in their industry will quickly pivot and replace previous long-term growth investments with new ones. Currently though, only 5% of companies appear to be making these changes.”
For CFOs to guide the business through rethinking these investments, they need a solid theory of how their customer is changing. In normal conditions, the most effective CFOs spend between 5-10% of their time with customers. In crisis mode, Gartner recommends CFOs to spend more time on the front line listening to how their key customers are modelling out the recovery and what things will change.