Gartner Research

Executive Pulse: An Efficiency Push Spurred by Spending Constraints

Published: 04 June 2020

ID: G00730024

Analyst(s): Corporate Strategy Research Team

Summary

Here’s a roll-up of pandemic-related executive sentiment and insights from thousands of functional leaders across the C-suite.

Fast word on tactics and concerns from thousands participating in our conference calls and polls.

More detailed role-specific reports may be available on the website, depending on your subscription.

Though 28% of CFOs said in mid-April that liquidity was a top business concern, that’s dropped to just 4%. That change doesn’t mean they aren’t worried.

They tell us they are still nervous about ...

  • Macro-economic uncertainties over the pandemic and the economy (29% of respondents in our most recent snap polls)

  • Revenue losses and a reduction in customer demand (23%)

  • Business continuity and firm-specific operations, including supply chain and logistics (23%)

And so they anticipate average budget reductions within a range of 4% to 8% in most functions over the course of this year. Marketing continues to be on finance chiefs’ radar as a target for more shrinkage than the rest (11%).

Figure 1: CFO Projected Budget Changes for 2020

Finance leaders predict that marketing’s hit this year won’t save it from a further 1.8% trim, on average, next year. They see another round of cuts for real estate, communications, and supply chain, flat R&D spending and a bump for sales (1.6%) and IT spending (0.8%).

Figure 2: CFO Projected Budget Changes for 2021

To get ready for the shape of things to come, automation and productivity projects are in the works across the enterprise ...

Chief marketing officers (CMOs) have been dialing back on external brand promotion, including media buying and use of external ad agencies.

They are preparing the case to defend or accelerate investments in digital marketing and e-commerce over the next 18 months:

  • Integrating data sources and strengthening data analytics to better understand customer behaviors and needs

  • Working to automate processes

  • Understanding how customers interact with the online purchasing process to guide improvements

  • Reevaluating and building customer segments and personas

The majority (69%) of IT leaders, including chief information officers, report they are moving forward with IT projects selectively — taking care not to overspend. They are also...

  • Shifting IT resources to the most critical business outcomes (48%)

  • Deferring or reducing spending (47%)

  • Investing to improve productivity, digital and IT services continuity (41%)

Figure 3: CIO Cost Management

Corporate real estate leaders are...

  • Deferring new construction projects (89%)

  • Renegotiating vendor/service provider contracts (69%)

  • Renegotiating lease terms with landlords (48%)

  • Deferring rent payments in places where temporary relief is available (48%)

  • Canceling in-progress construction projects (37%)

One hundred forty-five executives responding to a separate financial services survey told us they are planning to manage costs by investing in operational efficiency projects, such as:

  • Accelerated automation initiatives (45%)

  • Redesign of organizational structures and workflows (45%)

  • Tools and training to boost productivity (44%)

Figure 4: Measures to Manage Financial Services Expenses

Compiled by Daniel Ryntjes

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