CFO at Sidetrade, Philipe Gangneux, explains why AI needs to be adopted by finance directors and how it will change the face of business
Financial directors, once seen as the guardians of the company accounts, now play an increasingly bigger role in the development of global corporate strategy. With things like ‘Uberisation’ and the rise of new business models, new analytical tools, artificial intelligence (AI) and predictive analytics, FDs have become strategists who are involved at every company level.
Because of this strategic influence and the need to support growth FDs are increasingly having to handle technical complexities and ensure cost control while driving forward the use of new technology and incorporating it into their own finance functions to drive efficiencies and support strategic goals.
Artificial intelligence is reshaping the business landscape
In today’s fluid business environment, companies are becoming increasingly more agile. This agility requires financial directors to develop news skills and in many aspects the role is being overhauled. Many of the functions of FDs can now be automated and overseen by Cloud computing. This transformation is now set to go far beyond the limits of Cloud Computing. Smart technologies – like artificial intelligence – can help regenerate their position, change organisational structure and alter the way companies work.
In a recent study of C-level executives at more than 3,000 companies, it was revealed that ‘AI has the potential to accelerate shifts in market share, revenue, and profit pools.’ Yet, the report, carried out by McKinsey, also highlights that while around $30 million was invested in AI technology in 2016, only 20% of companies have deployed this technology. This key figure points out ‘a growing gap between digitised early AI adopters and others.’
‘Early AI adopters that combine strong digital capability with proactive strategies have higher profit margins and expect the performance gap with other firms to widen in the future.’
Artificial intelligence appears to be far more than just one more layer in the technology stack. It ushers in a new era of company collaboration, decision-making and customer comprehension. This will allow decision-makers to gain intelligence and speed – necessary assets to remain competitive in a fast-moving market. With reams of value-added data at their fingertips, companies are now able to analyse and interpret this to predict and boost customer engagement.
In a world more connected than ever before, artificial intelligence is no longer a subsidiary for companies willing to grow sustainably. As McKinsey’s report underlines, ‘Companies cannot delay advancing their digital journeys, including AI.’
The CFO must be the ambassador of innovation within this new structure as these are unavoidable changes and are already being embraced by companies.
Artificial intelligence in finance departments
In a recent study, Accenture strategy estimates that 90% of the CFO’s time and efforts will be spent on data by 2020. The transformation of the finance function is becoming one of the first core issues for CFOs, according to the survey “Chief Financial Officers – priorities in 2017” by PwC. However, today only 20% of CFOs are considering using predictive models to process their data.
If CFOs can be reluctant to change, financial services are amongst the highest AI adopters; PwC considers that 48% of CFOs will have made the move to AI and robotisation by 2020. According to Accenture’s study, only about 3% of organisations have reached this stage and in 2020, the CFO role could almost merge with chief data officer.
Today, artificial intelligence allows businesses to analyse their data and benefit from high added-value information that can be used to make data-driven decisions, rather than feeling-driven choices. At a time when customer experience is a deciding factor and extended knowledge of each account can be strategic, data-driven decisions are an absolute prerequisite. This is where CFOs will have to play a key role within the digital revolution.
Challenges ahead for the finance function
For businesses, the opportunities are clear. Leaders should embrace the transformation to benefit from opportunities hidden behind their data. They should leverage analytics and digitisation, as well as the rapidly evolving opportunities in AI, robotics, and automation, to optimise performance. However, as much as artificial intelligence promises benefits, it also poses urgent challenges – for example, the workforce needs to be reskilled to exploit AI, rather than compete with it.
Nonetheless, McKinsey observed that ‘early-adopting firms are looking across multiple AI tools when they begin to adopt, rather than focusing on a particular technology.’ The report adds: ‘The results of survey analysis show that early AI adopters are driven to employ AI technologies in order to grow revenue and market share…the more companies use and become familiar with AI, the more potential for growth they see in it.’
While AI’s great potential has been proven, companies now have to work on AI adoption in their structure. The CFO is well-placed to democratise innovation within the company and connect the business with data science.
Without data, getting the AI engine started is impossible. Data is now being recognised as an increasingly critical corporate asset that is crucial to businesses, not just to find new markets and new segments for revenue generation, but also for understanding, variabilising and controlling costs.
Artificial intelligence and processes robotisation will, inevitably, become mandatory to manage data. Today, only 2% of finance departments are willing to use robots to accelerate cash generation and improve performance. By 2020 the CFO will build strategy using precise data analysis to predict customer behaviour and accelerate sales cycle, the PwC report suggests.
The McKinsey report concludes: ‘Significant gains are there for the taking. For many companies, this means accelerating the digital transformation journey. They will have to put the right digital assets and skills in place to be able to effectively deploy AI.’
The challenges to make this shift a success can be summed up as follows:
Optimizing risk management
Technology leads to greater complexity but also greater opportunities for the finance department. The security of data will have to be constantly improved, calling for highly skilled risk management processes. This means the CFO will have to manage an increased level of risk disruption, data control and competition benchmarks as these stakes become crucial for finance functions by 2020.
Defining and developing skill sets
Further PwC research also identified that 54% of CFOs named talent management as a top priority in the transformation of their job. With an increasingly strategic role, finance directors are increasingly interested in managing the people surrounding them and the skills they have. In theory, the three main pillars could become training (58%), team building (38%) and peer exchange (29%).
Leveraging all data sources
Websites, social media, marketing campaigns, CRM – companies generate vast amounts of data each day; far more than what we can currently process. Artificial intelligence will allow businesses to analyse this data and use it to inform the decision-making process, driving choices based on customer experience.
Defining an efficient organisational structure
The finance director of the future will drive talent acquisition and retention to define a structured competencies framework. If 65% of CFOs are still looking for technical competencies in their teams, 42% of them are already prioritising soft skills.
Tomorrow, competencies related to data and talent mobility will become highly valued. By breaking down silos within the company, the FD will have to make sure they’re surrounded by talented multi-taskers, capable of handling business problematics, as well as designing strategic plans. Their mission is focused on investment politics for growth. The digital evolution is an opportunity to launch a profound organisational transformation to create value.
By 2020, CFOs will take part in technology investment appraisal and business development via data-driven indicators to uncover sales opportunities. They will build the strategy on a precise data analysis to predict customer behaviour and accelerate sales cycles. Artificial intelligence will be an undeniable asset for long-term value generation throughout businesses.
Philipe Gangneux is the CFO of Sidetrade, a global business specialising in providing AI solutions to the finance industry, with over 120,000 customers that include Expedia, Nespresso and Adobe.