Top Finance Execs Will Increase Sales Function Budget To Target Top-Line Growth
CFOs who are planning significant shifts in function budgets for 2023 have listed sales, corporate IT, and supply chain as the most likely categories to get increases this year, according to a survey by Gartner, Inc.
“CFOs remain cautious about their 2023 outlook and have reduced most budgets heading into this year,” said Alexander Bant, chief of research in the Gartner Finance practice. “This data shows us where CFOs will first allocate incremental budgets as we get additional clarity about inflation, Fed policy, strength of the consumer, and shifts in corporate spending across the coming quarters.”
According to a Gartner survey of nearly 300 CFOs in November 2022, sales is the function most likely to see a budget boost this year, with 73% of CFOs reporting planned increases, and nearly half of them by 10% or more. Twothirds of CFOs plan an increase for corporate IT, with 29% planning to increase by 10% or more. Supply chain is the third most likely area to see increases with 61% of CFOs, although the increases tend to be more moderate.
“Chief Sales Officers (CSOs) feel increased pressure to run leaner and improve productivity of their teams as most 2023 budgets were scaled back,” said Bant. “However, CFOs know that to drive profitable growth into the next phase of the business cycle they can’t be late turning back on additional funding for sales. They are armed and ready across the coming months and quarters to accelerate this spend as they gain viability into the outlook.”
2023: A Year of Efficiency
Corporate IT is the second most likely function to see a budget increase. Digital transformation is seen by executives as strategically important even in the face of rising costs. “Executive teams must enhance profitability and cashflow quarter-to-quarter across 2023, and they continue to embrace technologies that will simplify workflows, reduce people costs, and enhance overall productivity,” said Bant.
CFOs, CEOs, and boards of directors are demanding better returns from technology investment dollars. “The corporate IT investment narrative is now far more focused on sure-bet digital projects with immediate and certain payback,” said Bant.
Supply Chain Shocks Driving Increased Budget Intentions
After a series of supply chain shocks in recent years that caused serious issues for many businesses, Gartner experts said that it’s not surprising to see the function as the third most prioritized spending initiative in 2023.
“Leading executives are working on rightsizing (likely reducing) their organization’s supply chain surface area to limit the number of costly disruptions while inflation is forcing 78% of CFOs to budget more for cost of goods sold,” Bant said.
Marketing Spending Intentions Mixed
Ninety percent of marketing functions reported cuts at the height of the pandemic. Even as recently as July 2022, most CFOs (79%) were either planning to maintain or reduce their marketing budget through the first half of 2023. But this data suggests pandemicdepleted marketing departments may be in line for a boost in many firms.
“CFOs are most polarized in this area with one quarter planning large increases in marketing of 10% or more, another quarter planning cuts, and the remaining half sitting somewhere in between,” said Bant. “CFOs do not want to scale marketing down at the wrong time in the business cycle.”