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Cutting Corners: How Tech Helps CFOs Navigate a Financial Squeeze

How established and burgeoning tech and data tools can help CFOs trim costs and operate with tighter budgets

Cutting Corners: How Tech Helps CFOs Navigate a Financial Squeeze

Economic headwinds have forced finance departments at companies of all sizes to make tough cost-cutting decisions, operate with tighter budgets and think creatively about their office use or workforce size. The pressures are even more pronounced for middle-market companies with fewer resources than their larger peers.

“Every company is focused on cutting costs and getting lean. They’re worried about a recession,” says Vikas Agarwal, leader of the Financial Services Risk & Regulatory group at PwC. Against that backdrop, chief financial officers are employing technology and data mining tools to accomplish their goals more efficiently.

This section of the report originally appeared in the Fall 2023 edition of Middle Market Executive.

Whether they’re using older programs like Microsoft Excel or enterprise resource planning (ERP) systems, newer data analysis and visualization tools, or even artificial intelligence (AI), CFOs have a variety of options at their disposal.

The CFO’s Dilemma

“Starting with COVID, rising interest rates and all the economic challenges of late, the asks have never been greater for what needs to come out of a CFO’s office, so it’s about how you can do more with the same or potentially do more with less,” says Josh Schauer, vice president of finance at insightsoftware, a private equity-backed provider of reporting, analytics and performance management solutions.

CFOs working at middle-market companies are grappling with a set of unique challenges. “I see three primary issues that CFOs are facing today: resources, prioritization and data management,” says Richard Jenkins, a Denver-based managing director at Alvarez & Marsal’s Private Equity Performance Improvement practice and leader of the firm’s CFO Services segment.

Concurrent with budget constraints, middle-market companies are particularly hamstrung in terms of resources. “Increasingly, middle-market company CFOs are facing issues that are as complex as some of their Fortune 500 brethren, and yet they don’t have the ability to resource them in the same way,” says Jenkins.

Prioritization comes into play in terms of deciding which strategies and customers to pursue at a time of limited resources. How companies manage and analyze data is also important, especially for roll-up businesses that are common under private equity ownership. Often, companies are juggling multiple ERP systems while tacking on add-on acquisitions.

From Excel to Data Mining

Private equity operating partners, advisors and consultants are looking at ways CFOs can use ERPs to their advantage, tap into data mining and analysis tools, and get comfortable with AI applications.

“There are a ton of different tools available, between ERPs and EPMs (enterprise performance management), and treasury management systems, which are becoming more popular as folks are thinking about liquidity management,” says Chris Duggan, managing director at Alvarez & Marsal’s Private Equity Performance Improvement practice.

There are a lot of layers of risk that you need to look at with AI, including privacy risks, cybersecurity risks and regulatory risks.

Vikas Agarwal


Finance professionals have historically relied on Microsoft Excel, which is becoming antiquated. “We’ve been using Excel for 25 years, and it hasn’t changed. It’s very cumbersome. It’s not repeatable. It’s prone to mistakes when you’re uploading a large amount of information,” says Jenkins.

Newer software that can harness data more effectively is becoming increasingly popular. Sources pointed to companies like Alteryx, a data science and analytics company; Workday Adaptive Planning, which provides EPM software; mindzie, an AI-driven process mining and automation provider; and Tableau, an interactive data visualization software provider, as examples of new data software that CFOs are using.

CFOs Alvarez & Marsal executives work with follow a four-step process: data management, data analytics, data visualization and data mining. These must work well together from step to step and between departments, notes Jenkins. “Whatever you’re using, you have to have buy-in from the entire organization and really understand the requirements and needs across the business, not just in the finance and accounting group,” he adds.

Jenkins says his firm recently worked with a food company on data analytics and visualization. The company had a wide and complex array of products. “The recipes were not resident in the ERP, so the company had a difficult time understanding what its contribution margin was and how rising costs impacted that contribution margin,” says Jenkins. His firm used a data analytics tool to create workflows that helped the company understand its profitability by product and input changes and see how profitability would be affected. “Through that process, we were able to jettison about 10% of the product and stop losing money on those products,” says Jenkins.

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“Whenever you do these exercises, I encourage management teams to have the courage to walk away from bad revenue, and it’s hard to do sometimes,” Jenkins continues. “The idea of turning off a revenue stream is not comfortable, but if you’ve got data to say, ‘Look I’m losing money on this revenue,’ there’s no reason to continue doing it.”

Insightsoftware’s Schauer says his company works with businesses on harnessing data to find areas to trim costs. “All cost-cutting decisions should be made with a great deal of thought, and they should be made only after you’ve established the facts of your business,” he says. “Everything goes back to understanding data. If you don’t understand your data, you could be making a shortsighted decision to remove spend in an area that is detrimental to the long-term success of your business.”

For example, his firm has looked at office space for clients that have shifted primarily to remote work. The software collected data on where all the offices are, how much they cost and how companies can find subletters or eventually end those leases.

For companies that use multiple software applications, insightsoftware helps them cut down on tech spend or move between programs seamlessly. “You need to have a tool that can extract the data from each one and say, ‘Here are the 72 different software programs you have’ and ask, ‘Can we consolidate these? Would it be cheaper to get more licenses for one of these than pay for separate offerings?’” Schauer adds.

Insightsoftware has multiple products that offer financial reporting, budgeting and planning, tax and transfer pricing, and consolidation and analytics services, among others. The company will often extract data from another source—such as Excel, an ERP system, an accounting system or NetSuite—and then use the data to create reports on different functionalities.

“We’re building a platform that will take these different products, and the user interface will look and feel the same, so that you feel like you’re using just one company’s products. But it will allow them to link to the original data source,” says Schauer.

The products allow the company to analyze data and run different scenarios in real time. “Every day, we’re putting in changes and understanding how they affect the short- or the long-term trajectory of the business,” Schauer says.

The New Frontier

Experts are also looking at how AI can assist finance departments.

In a report, PwC said the CFO function offers the most fertile ground for adoption of AI and automation. CFOs can tap into AI to set targets for outcomes and benefits, involve frontline employees to show them how automation can help them in their jobs rather than replace them, select automation opportunities, and implement a governance structure by formalizing an AI strategy and training, testing and monitoring data inputs. CFOs can also prepare the rest of the workforce by engaging them in data and analytics tools across sales, marketing and other departments.

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PwC’s Agarwal says various large institutions have started to work with AI in recent months. Some are setting up their own engines in-house, while others are tapping into an external application programming interface (API). A third option is open-source software that can be added to computers and allow businesses to get some of “the same functionality without as much computing power,” Agarwal adds.

Most companies tapping into AI are still learning how it works rather than using it to make decisions. Agarwal notes that whatever path AI takes, humans still need to be in the loop on decision-making. “A machine can make a recommendation, but it’s very important to have effective challenges, and there are still a lot of problems with algorithms and how they work,” he says.

Going forward, companies will need to add new regulatory and compliance procedures. “You need to develop your framework for responsible AI. There are a lot of layers of risk that you need to look at with AI, including privacy risks, cybersecurity risks and regulatory risks,” says Agarwal. “All of these things are important as you try to figure out how your AI model is operating.”


Anastasia Donde is Middle Market Growth’s senior editor.


Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.