Corporate finance budgets are shrinking, according to new data, but for good reason. According to findings from consultancy firm Hackett Group, businesses are taking greater advantage of technology that helps save money and reduce costs.
Hackett Group released the results of an analysis of 170 global firms with at least $1 billion in revenue. The research found that finance budgets are set to reduce by 0.1 percent after increasing by 0.8 percent in 2014.
But these budgets are shrinking, analysts found, because companies are looking at ways technology can help them operate more cost efficiently. “Companies are not just putting in the newest, shiniest technology,” said Hackett Senior Research Director Lynne Schneider. “They’re also looking at their legacy systems and exploiting them to the greatest extent.”
According to researchers, some of the world’s largest conglomerates like Verizon Communications are turning to new bookkeeping and accounting software to help automate their processes. Hackett also found that many companies are slowing hiring in their accounting divisions and instead turning towards new hires with expertise in Big Data and analysis.
Researchers also found that corporations are increasing their spending on IT, with budgets in this department expected to inflate by 3.1 percent this year, compared with just 0.3 percent growth seen in 2014, reports said.
Verizon, for example, was found to have reduced its finance department spending by 20 percent over the last three years through job cuts and office closures. Facebook, meanwhile, is looking to increase capital spending by up to two-thirds this year to invest in data centers and other IT infrastructure.
A separate study conducted by Cashfac found that while financial Software-as-a-Service companies are focusing their efforts on small businesses in need of more robust cash flow management capabilities, large corporations can similarly benefit from automated treasury tools.