Technology-enabled cost optimization drives process improvements, the adoption of cloud-based applications, enhancements to advanced analytics, and even upgrades to routine reporting and closing activities – all of which figure as top focal points for finance leaders in the next 12 months, according to our study.

Our survey results also suggest that many finance groups, particularly those within private companies, need to elevate their cost optimization efforts. When asked to assess the degree to which their organizations have achieved meaningful, measurable cost optimization progress in different areas, only two were cited by a majority of respondents – technology rationalization and the use of cloud-based systems. Areas including third-party spend risk assessment, AI and machine learning, and RPA and automation were cited by less than half of respondents.

Achieving meaningful cost optimization improvements involves a combination of process- and technology-related actions. CFOs often start this work by identifying and then leaning into the institutional knowledge of employees who have valuable experience and insights regarding inefficiencies and potential improvements related to transactions, processes and capabilities in their domains. Other steps CFOs should pursue include the following:

• Pair cost optimization with technology enablement: Investments in AI, machine learning, automation, cloud-based systems and other advanced tools improve finance performance. For example, 58% of organizations using generative AI have achieved meaningful and measurable progress in their cost optimization efforts. Leading CFOs develop roadmaps to implement these technologies.
• Reduce technical debt and accelerate cloud migration: Before investing in cloud-based systems and other advanced finance technologies and tools, finance groups often need to perform technology rationalization to reduce technical debt.
• Recognize the connection between advanced technologies and skills: The value delivered by investments in generative AI applications, process mining and advanced analytics that generate powerful cost optimization insights depends on whether CFOs can access the skills needed to leverage these technologies fully. That’s why CFOs regularly assess the finance group’s technology talent and skills and then map this inventory to competencies required to achieve the finance function’s short- and long-term technology enablement–related objectives (and, in doing so, the career objectives of the members of their finance team).
• Focus on vendor management: Scrutinizing vendor relationships, negotiating better terms and prices, and even consolidating or rationalizing vendors can optimize costs, so long as this work is performed in a holistic manner. Finance groups are working closely with sourcing and procurement teams to help identify opportunities based on market dynamics, performance metrics and other data analytics. Other elements of a strategic sourcing approach center on improving how suppliers are identified, onboarded and managed by sourcing data, as well as on developing new KPIs to strengthen supply and demand forecasting, inventory management and supply chain risk management activities.