CFOs view continuing inflation as unsustainable in the long-term
CFOs have relied on raising prices as their primary strategy for combating high levels of inflation, but they recognize that this strategy is unsustainable if inflation persists long-term, according to a survey by Gartner, Inc.
A May survey of 182 CFOs and senior finance leaders showed that CFOs will increasingly turn to cost reductions if above-average inflation continues into the fourth quarter of this year, while also seeking efficiency gains through increased automation.
“CFOs are receiving feedback from customers that the limit to price hikes is near,” said Alexander Bant, chief of research in the Gartner Finance practice. “This reality has already set the planning process in place for other strategies, most notably cost reductions and enhancing digital capabilities for increased use of automation.”
Fifty-four percent of respondents said that price hikes remain their top tool for now, but only 25 per cent expected to continue to rely on price hikes if high inflation remained in Q4 of 2022. The trend was opposite for cost reductions, with just 20 per cent of respondents currently favoring the strategy as their primary tool, rising to 39 per cent if inflation persists.
Automation as an Inflation Strategy
The survey data revealed that automation will remain a consistently viable primary action for about a quarter of CFOs over the short and medium term, with interest in this strategy slightly rising if inflation persists. Notably, automation and price increases were selected by a near equal amount respondents as their planned primary action to combat inflation, if needed, in Q4 of 2022.
“CFOs are increasingly looking to the long-term benefits of digital investments, including automation, that can permanently reduce the cost of doing business,” said Bant.
Previous Gartner research highlights how CFOs can utilize technology investments to drive down the cost of doing business while increasing profitable growth through the process of digital deflation.
