The breathless publicity surrounding Gen-AI often makes it difficult for CFOs to avoid the traditional approach of obsessing concerning the costs of Gen-AI adoption or its likely scale of impact within the near-term. Nonetheless, I imagine the time has come for CFOs to interrupt with convention and turn into advocates for the technology inside their organizations, for 3 reasons:
- The role of the CFO is expanding beyond just financial stewardship to strategic leadership
- The business case for Gen-AI adoption in Finance has improved
- Not embracing Gen-AI now may lead to competitive risk, as Gen-AI could in a short time evolve from a novelty to a necessity, very like Cloud did previously
Role of the CFO
The primary reason for CFOs to interrupt with their conventional approach to Gen-AI is the inherent expansion of the CFO’s role in an enterprise. In one recent study, 85% of CFOs said they expect to play a more significant role in shaping business strategy. On average, the study found, financial leaders spend greater than 4 hours every day on nontraditional CFO activities—tech decisions, talent management, strategic planning and more.
CEOs need to CFOs to not only manage the financial health of a corporation, but in addition to drive innovation and transformation. Gen-AI will undoubtedly play a critical role in the following wave of enterprise transformation – each from a productivity and innovation perspective, and it will be helpful for CFOs to realize experience early on with the capabilities of this technology, to play their expanded role more effectively.
Business case for Gen-AI adoption
The business case for Gen-AI adoption has improved recently. The dollar cost of pilot projects today is comparatively low in relation to the advantages of testing Gen-AI’s potential. That is attributable to the massive variety of Finance use cases that Gen-AI is fitted to (e.g., automated data management, contract reviews, forecasting and scenario evaluation, report creation, risk & compliance management), and a proliferation of recently launched tools that address several of those use cases.
While these tools are still nascent, recent surveys show that CFOs which have adopted Gen-AI tools are already seeing significant, measurable impact. In a recent survey of 375 CFOs across multiple sectors, over three-quarters (76%) said they’ve “noted significant gains in efficiency and process speed,” and 68% said they’ve seen “accuracy and error reduction” attributable to the adoption of Gen-AI tools. Finally, greater than a 3rd (36%) said that “generative AI is already adding value and impacting their revenue streams,” and one other 40% said that they were “expecting it to accomplish that inside a yr.”
Risk of inaction
Not embracing Gen-AI now may lead to competitive risk. It’s necessary to do not forget that not all hyped technologies disappoint. Consider cloud, one other technology that was hyped early on but went on to turn into an important component of enterprise computing. In 2010, enterprise concerns around cloud adoption included cost and security. By 2015, nevertheless, the technology was a business staple, “a secure bet.” The pandemic then cemented the adoption of cloud, spurring firms to exceed their adoption schedule by as much as seven years. Gen-AI similarly, could in a short time evolve from a novelty to a necessity, and early adopters will enjoy a competitive advantage.
Recent surveys by Gartner highlight the increased competitive risk of inaction. Of their survey on Gen-AI adoption in 2023 Gartner found that “other administrative functions similar to HR, legal and procurement were twice as prone to be using or scaling AI solutions in comparison with the finance function.” Nonetheless, in the identical survey conducted in September 2024, “the gap is sort of non-existent.” On this poll of 121 finance leaders across industries, Gartner found that “58% of respondents said their teams were using AI, a rise of 21 percentage points from 2023.” Further, Gartner found that “of the 42% of finance functions that aren’t currently using AI, half are planning implementation.”
Next steps
Success aspects for any major tech initiative include motivation and methodology. As outlined above, the expanding role of CFOs, the improved business case for Gen-AI adoption in Finance, and the competitive risk of inaction, should function sufficient motivation. As for a technique to assist start the organization down a productive gen AI path while also performing their traditional role as fiscal steward, there are several steps CFOs can take now:
- Encourage manageable pilot projects: By supporting a small-scale pilot, CFOs can display their grasp of generative AI’s importance—and set themselves up to assist create the budget, adjudicate the project’s success, and, if appropriate, scale the initiative.
- Fund useful innovation: There’s all the time risk that IT groups and others will treat a brand new technology like a shiny toy. Within the case of gen AI, CFOs should ameliorate this risk by rewarding only use cases that genuinely advance the interests of the business.
- Find an experienced partner: A worldwide talent shortage is one in every of the highest inhibitors slowing gen AI adoption. CFOs should consider partnering with a tech provider that may provide the abilities needed to successfully implement the technology; at this point in the event of generative AI, this can likely prove cheaper and achievable than provisioning talent in-house.
Naturally, CFOs should be mindful of their duties to stakeholders—but where generative AI is worried, an unconventional approach can encourage experimentation and innovation, drive growth, and function a bridge for the expanding role of monetary leaders.
