Spending will be cut back by between 4 and 11 per cent with delays to growth investing expected until at least 2021, a new survey of CFOs from Gartner reveals.
CFOs indicated that marketing budgets have already been cut by 14 per cent on average against their original 2020 plans, with plans for an additional 11 per cent cutback in the remainder of 2020, resulting in a 25 per cent spend reduction for the year.
Real estate budgets have already been cut 7 per cent on average, with plans for an additional 8 per cent reduction in 2020. In addition, real estate was also the most targeted expense in 2021, with a 3.4 per cent reduction versus original budget plans for next year.
Further, the data revealed broad and significant cuts of 5 per cent or more already this year to functional budgets including HR, finance, sales, R&D, IT, communications and supply chain, with projections of more cost cuts this year of 5 per cent or more in the remainder of 2020.
Potential spending plans for 2020
However, two areas where CFOs expect to increase spend in 2021 are in IT and sales, with a 0.8 of a percentage point increase expected in IT and a 1.6 per cent increase in sales.
Gartner Finance practice vice-president of research Alexander Bant said CFOs are planning for multi-year impacts to their financial plans as a result of the pandemic.
“It’s notable that real estate topped CFOs’ lists for planned cuts to next year’s budgets, suggesting remote work is here to stay and some level of downsizing is expected,” Mr Bant said.
“As CFOs look out to 2021, they do forecast normalisation in revenues for many industries. However, most CFOs have told us that COVID-19 has illuminated new (more efficient) ways of working, and they will use this as an opportunity to right-size spend in SG&A functions for 2021.”
The Gartner research is based on a survey of 103 CFOs and senior finance leaders taken at the end of May 2020.