What are shaping up to be the biggest business issues in 2017? We posted this question to Workday executives, customers, and partners, and then checked in on what leading industry analysts and researchers are predicting for the coming year. With U.S. unemployment at a nine-year low of 4.6 percent on the one hand, and on the other, political discord and uncertainty on a scale most people have never seen, 2017 is going to be one of the most interesting years in decades.
Overall, we heard a very common theme—change is the new constant. “2016 was a year of political, social, and economic disruptions,” says Neil Shastri, leader of global insights & innovation at Aon. “Economic slowing in China, Brexit, and a surprising U.S. election will all have lasting impact on the business environment in the years to come. The pace at which organizations are being hit by changes is accelerating as a result of all of these global disruptions.”
While there’s plenty to think about in the coming year, we found that most predictions pointed to several forces impacting finance, human resources, and IT: Legislative change, taking action on data and analytics, resiliency planning, and keeping up with the changing workforce. In part one of this two-part blog series, we’ll look at the first three and what they mean for CFOs and CIOs in 2017.
The legislative and regulatory environment is a top issue for organizations heading into 2017, with particular focus in the U.S. on the Affordable Care Act (ACA) and upcoming global revenue recognition changes.
While all U.S. businesses are impacted by the uncertainty around ACA with a new administration coming in, the healthcare and insurance industries in particular are watching what happens next. “The election just happened so it’s hard to predict much until we know what will happen with the Affordable Care Act, but the result will probably have a significant impact on healthcare,” says Louis Salamone, CFO at CityMD, which operates 68 urgent care clinics in the U.S.
“Regardless, there’s going to be continued pressure on the rates insurers are willing to pay,” Salamone says. “At the end of the day, healthcare providers are going to be reimbursed for the value they create in their segment.”
“2017 will be the year companies commit significant resources and time to prepare for new revenue recognition standards.”—Betsy Bland
Across all industries, U.S.-based public companies will see big changes coming to revenue recognition standards in January 2018, notes Betsy Bland, vice president of financial management products at Workday. “Corporate finance teams are feeling the pressure to get ready,” says Bland.
According to a 2016 PwC survey, more than half the companies that responded had yet to determine an adoption method for revenue recognition at the time of the survey, and 22 percent had yet to start their assessments. “2017 will be the year companies commit significant resources and time to prepare for new revenue recognition standards, including reevaluating their finance systems to ensure they have the data and capabilities to adopt these changes in an efficient, accurate, and cost-effective manner,” says Bland.
Taking Action on Data and Analytics
Most companies recognize the incredible opportunities that come from using data and analytics, and this year they’ll be doing even more in this area. Finance teams in particular will be more focused on data and analysis, leading to insights that help their organizations navigate change and plan for the future.
“As the pace of business accelerates, the pressure increases for finance leaders to think on their feet, look forward, and address questions across the organization at a moment’s notice,” Bland notes. “In 2017, we’ll see CFOs and their teams leverage data and analytics even more as they move from reporting the numbers to providing deeper context and insight behind them.”
“In 2017, companies without a data strategy will no longer have a hall pass.”—Joe Korngiebel
The demand for greater insights will also impact the auditing profession. “Today’s consumers and businesses are producing more data in a year than prior generations produced in their lifetime,” says Marc Macaulay, U.S. cognitive technology audit leader, KPMG LLP. “In 2017, the auditing profession must continue to focus on developing and deploying advanced technologies to harness this explosion of data and use the insights embedded within it to advance audit quality and provide a deeper understanding of business and financial reporting risks, processes, and controls.”
While data is clearly the new business currency, it has to be good data. “Unrefined data is nearly useless,” says Joe Korngiebel, senior vice president of user experience at Workday. “Today’s organizations are rapidly accumulating massive amounts of untapped wealth—and doing nothing with it. In 2017, companies without a data strategy will no longer have a hall pass. A huge arbitrage opportunity exists in enterprise software today, and to effectively compete, business leaders must be able to navigate that chasm and consistently move from insights to measurable action.”
Korngiebel also notes that we are at a critical inflection point with the machine learning side of artificial intelligence (AI)—which has the potential to help companies understand and use their wealth of data more effectively. “Companies have a treasure trove of data and can utilize machine learning applications to solve complex problems, recognize patterns, discover new knowledge, and make more intelligent decisions based on that data,” he says.
Cliff Condon, chief research and product officer at Forrester, writes that next year will be “a year of action” when it comes to cybercriminals. Condon notes that many firms will experiment with more advanced technologies like AI and virtual reality; “But there will be at least one fatal misstep from a business technology novice trying to keep pace—in 2017, we predict that a Fortune 1,000 firm will go out of business due to poor resiliency planning following a security breach.”
A clear-eyed, well-rehearsed and communicated disaster recovery plan can be a huge boon to your company. Whether it’s from a cyberattack or natural disaster, David Dodd, the CIO of Stevens Institute of Technology, agrees that IT leaders need to focus on how to ensure their organizations can be resilient in the face of adversity. “Institutions can no longer assume that any sort of disaster will leave them intact to function. And yet financially, the majority of institutions have to continue to function,” Dodd says.
“There’s a new element that involves the need to operate virtually; of realizing that it doesn’t matter what happens to your institution, you have to continue operations,” he adds. “This is a lesson that came out of Katrina and was huge for us with Superstorm Sandy. Wherever you are, you need to be able to continue to function or the financial impact can be enormous.”
Bobby Riggs, CFO at Collaborative Solutions, notes that when it comes to resiliency planning, location is becoming an increasingly vital variable.
“Globalization is adding complexity to the role of the CFO,” he says. “As companies rely increasingly on the global economy, CFOs will need to consider the balance between national and multinational operations and keep risk mitigation a priority in a foreign environment. This is why it’s so important to remain tech-savvy and leverage predictive analytics as much as possible—to determine the patterns and trends of different threats and opportunities.”
In part two of this blog series, we delve into what HCM, technology, and higher education leaders are saying about how the changing workforce will shape the year ahead.