EY CFO Survey: Irish CFOs forecast strong growth in 2024

Irish CFOs are forecasting strong growth in their organisations this year, with a consensus projection of 11% growth for 2024 among the 150 senior finance leaders surveyed for the annual EY CFO Survey.

The survey – launched ahead of EY’s annual CFO Summit on March 20th – reveals that finance leaders are optimistic on overall economic performance this year, with an increasing focus on the opportunities of both M&A and Artificial Intelligence (AI). However, they are continuing to prioritise cost control, with cost reduction and improving efficiency top areas of focus for the year ahead.

The survey findings show that Irish CFOs and finance leaders are poised to significantly increase investment in AI over the next two years; however, many businesses here are still at the discovery stage when it comes to harnessing and integrating this breakthrough technology. In relation to the environmental, social, and corporate governance (ESG) agenda, the picture is mixed. While there is considerable preparedness for ESG requirements through investments in in-house specialists, compliance factors are continuing to primarily drive ESG reporting.

Focus on the bottom line

The majority of respondents (84%) said the top strategic focus area over the next five years is reducing costs and improving efficiency, while talent development and retention are a key focus in the year ahead. Talent remains a key challenge with 50% of CFOs citing lack of talent/talent retention as one of the key challenges likely to affect the desired level of growth, reflecting tight labour market conditions in Ireland at present.

Irish Finance leaders are also focused on the longer-term opportunities for growth through M&A – echoing the findings of EY’s recent Global CEO Outlook Pulse – with triple the number of respondents citing growth through M&A as a strategic area of focus over the next five years (up to 13% from 4% last year).

Derarca Dennis, Assurance Partner and Sustainability Services Lead at EY Ireland, commented: “CFOs and finance leaders are optimistic about strong growth in their organisations this year. This outlook is reflected in the fact that CFOs are again putting their weight behind mergers and acquisitions (M&A), with growth through M&A a strategic long-term focus for three times as many finance leaders compared to this time last year. At the same time, however, cost control continues to be a big focus – an enduring priority for finance leaders in every company since time immemorial.”

ESG reporting readiness

The survey reveals awareness of opportunities presented by sustainability and decarbonisation has increased significantly this year, with 25% citing it as a priority for growth in the year ahead – up from 10% last year. The survey also reveals a relatively high degree of preparedness for ESG requirements. 56% have proactively reported on ESG measures in the past two years. 62% do it for compliance reasons or because of other external push factors, while 38% (21% overall) are doing so because of a focus on sustainability as an organisation.

Building skills in non-financial / ESG reporting is a top priority for 25% over the next five years, while 46% have invested in specialists in-house for future ESG requirements or engaged a specialist independent consultant (21%).

Lack of capital was one of the top four barriers to undertaking effective ESG / non-financial reporting as well as lack of buy-in from leadership (25%) and competing business priorities (25%). Encouragingly, however, 22% said there were no barriers in their organisation to undertaking effective ESG reporting.

Derarca Dennis said: “With growing requirements, CFOs will have even more ESG elements to consider. For example, many will want to know what steps have been taken to ensure human rights are respected in the supply chain in the future and what contractual arrangements are in place to verify suppliers’ credentials in that regard. For many in the finance function, sustainability reporting will be seen as a great opportunity to do something different, broaden their skillset, and add even more value to their organisations.”

AI – Open but cautious

Investment in technology is seen as a top priority for growth in the year ahead for 19% of respondents in 2024 versus 15% in 2023. However, despite the investment in technology, AI still remains a surprisingly low priority for many CFOs.

Usage of AI remains modest with just 26% claiming to have leveraged it for enhanced efficiency, automating manual tasks and risk detection, among other use cases. The use of generative AI (GenAI) is lower at just 15%, indicating that organisations are still at the discovery and use case definition stage. Just 6% of respondents say they will leverage advanced AI to enhance the finance function or acquire AI skills in the next two years, and just 9% say they will integrate AI and advanced AI into the finance function over the next five years.

However, budget allocation for advanced AI (including GenAI) is expected to increase from 1% to 3.2% in the next two years, which suggests an openness to applying the technology as soon as use cases are identified and better understood.

Organisations are adopting a more structured approach to cyber defence, with 31% this year saying they had instituted a cybersecurity task force versus the 8% who said so in 2023; however, just 39% said they have ramped up investment in security tools, compared to 60% saying the same in 2023, which may indicate a degree of complacency in relation to cybersecurity or it could be that investments have begun to plateau following significant increases in recent years.

Derarca Dennis said: “Although it’s promising to see that the findings indicate the adoption of a more structured approach to cyber defence and the rise in cyber investments, it’s imperative that CFOs continue to make cybersecurity a priority to ensure their organisations are resilient enough to sustain and counter relentless cyber onslaughts. And with the upcoming EU NIS2 Directive introducing stricter incident reporting obligations later this year, it is hugely important that cybersecurity remains a core area of focus for CFOs.”

About the EY CFO survey

Research for the EY Ireland CFO Survey 2024 was carried out during January and February 2024. One hundred fifty people working in senior financial and leadership roles across a wide range of organisations responded to the survey. The sectors covered for the survey were broadly representative of Irish business generally and included professional services, manufacturing, retail, construction, healthcare, education, and wholesale. Respondents included CFOs, financial controllers, managing directors, finance directors, operations directors, and business owners.