KUALA LUMPUR (Aug 8): Real estate/facilities management and finance functions are the most likely to face budgets cuts in the next 12 months, according to Gartner Inc.

In a statement last Thursday (Aug 4), Gartner said a July survey of more than 200 chief financial officers and finance leaders identified information technology and sales as the functions most likely to be getting increases.

Gartner finance practice research vice-president Marko Horvat said given that 72% of CFOs want to trim their organisations' real estate footprint by the end of 2022, it’s to be expected that facilities management is looking at budget reductions.

“This makes sense for many organisations where a large share of employees is working from home at least part of the time.

“However, it’s also interesting to note the 9% of companies that are differentiating by increasing their real estate spending in the next 12 months,” said Horvat.

Gartner said IT is the most popular function for increasing spending with 40% planning increases in the next 12 months, and this sentiment is holding steady from a similar survey in May, when 46% of CFO respondents said they plan to scale up enterprise digital initiatives in the next two years.

Horvat said CFOs see digital technology as a smart long-term bet, but it’s also a critical part of their plan to tackle the effects of rising inflation on corporate margins.

“Nearly a quarter of CFOs think greater automation will help to combat inflation, and this aligns with chief executive officers who are even more bullish on tech, with 85% planning to increase spend over last year,” he said.

Gartner said sales and research and development are the second and third most likely functions to see increases in the next year, with 31% of respondents planning increases for sales and 29% for R&D.

Horvat said the investment in sales and R&D shows that companies are not abandoning their growth bets at the current time, and they are turning to the two functions to drive growth in difficult conditions.

“This is broadly consistent with our surveys through May and June, where CFOs and CEOs selected these areas as being the most likely to protect from cuts,” he said.

Gartner noted that “efficient growth” companies — those which used spending to differentiate themselves from competitors during times of economic difficulty, rather than relying on cuts — tended to achieve better sustained growth and margin improvements in the long term.