Among the enterprise functions set to be transformed by artificial intelligence (AI) over the next five years, finance is not typically the first that comes to mind. We know the CFO will be called upon to provide the all-important signature to financially authorize large-scale AI implementations, but the introduction of AI into the finance department itself is rarely seen as top of the priority list.
Yet, the finance department should be one of the first ports of call for AI across many large enterprises – and not just to sign checks for projects elsewhere in the business. Whether CFOs are ready or not, AI must become an important part of how they do their job to hit their targets.
Although the introduction of AI can cause apprehension, for CFOs this is good news. It will expand their role and influence in the organization, while generating savings across the P&L. AI could be the most significant opportunity to overhaul and streamline company finances since the invention of the spreadsheet.
Enhancing the process
One of the most obvious benefits of integrating AI into the CFO’s role is the opportunity for efficiency. If CFOs can rely on algorithms to do modeling, analysis and forecasting – or at least to expedite the process – it frees up a significant amount of time that the CFO can spend on more strategic priorities. With more time, the CFO can integrate with the broader business much more closely.
AI also has huge potential to trawl much greater volumes of data, more quickly, enabling the CFO to make robust conclusions that will stand up in the boardroom. This will be critical when creating forecasts. For example, consider an enterprise that is looking to expand into a new market. With AI, it can create a much more detailed forecast about potential cashflow, assimilating internal and third-party data to dynamically predict where income and losses are likely to come from. Used well, AI is going to significantly enhance a finance department’s ability to offer predictive analysis based on all the information available.
Although CFOs need to be mindful of the potential for error when using AI, conversely its ability to identify and eliminate error is the second key opportunity. AI has numerous applications in improving the compliance and reliability of a finance team as it can identify when manual calculations have gone awry, detect when analysis has omitted key inputs, and uncover potential fraud.
Where to start
With these opportunities in front of them, what is the first step for CFOs looking to introduce AI in the near future? The short answer is exactly as they would any other investment: establishing a business case that is rigorously linked to KPIs and business outcomes. There is no one in the enterprise better placed than the CFO to lead the integration of AI, because they are used to managing similar investments and ensuring that they deliver a measurable return for the business. In practical terms, this means starting small, identifying areas to experiment with AI, and then scaling what works.
What’s more, the CFO has a chance to be the standard bearer for the entire business when it comes to tapping the potential of AI. CFOs should lead by example, showing every other department both that AI can deliver measurable benefits, and that a well-constructed business case will be seriously considered by the people needed to approve it.
The future CFO
Greater use of AI marks the next step in the evolution of the CFO’s role, from one of simply managing finances, to taking a frontline strategic role in the growth and digital transformation of the enterprise. It will be a key stepping stone for CFOs to emerge out of the finance silo to become the ‘Chief Future Officers’ which some have already started to do.
Increasingly, CFOs need to see AI not just as a future possibility, but something they should be experimenting with in the present day. Very quickly, the technology is going to become a core part of competitive advantage, in both operations and the ability to recruit the best digital-native talent. AI in finance is not just about how your business runs, but its image to the outside world. The risk is that you fall behind the curve in both efficiency and reputation.
CFOs who approach AI cautiously are right to be conscious of the pitfalls of rushing into an investment whose business case is still in the process of being proven. But they must also recognize that this is a technology which is here to stay and find ways to explore its use. CFOs are on the verge of a transformation that will reimagine both their role and the departments they oversee. Progress towards that eventuality needs to start now.