CFOs are the stewards of investment capital, orchestrating a movement with transformative technology and innovation to evolve businesses, speed up revenue streams and achieve meaningful results.
In the present business environment, CFOs face challenges making decisions in lower than ideal conditions with rapidly changing regulations, lengthy reporting standards, ESG requirements and inflationary pressures. However, the necessity to grow and increase profits stays, and as CEOs look for methods to extend productivity, the CFO is emerging as the brand new technology and innovation advisor. Despite the headwinds, there are tailwinds where we will leverage latest technologies to enable CFOs to meet their role as business partners and increase productivity, cost savings, accuracy, control and business value.
Through latest approaches to financial management that incorporate generative AI, this advanced technology may also help CFOs make more informed, data-driven decisions for his or her business that may have significant financial impact. The IBM Institute for Business Value CEO Study on Decision Making within the Age of AI found that the highest priorities for CEOs are technology modernization and productivity, while the highest three challenges are technology modernization, sustainability and security. That's where the CFO is available in, whose role is more essential than ever in unlocking value and scaling and financing a technology that he still isn't fully trying to grasp.
Read the report: CEO's Guide to AI in Finance
Unlock the worth
CFOs aren’t expected to be technology experts. However, they need to grasp how one can measure the business value created by generative AI across the organization while leveraging the technology to expand their very own skills and talents. This latest technology may also help CFOs do their jobs higher, faster and smarter, in addition to increase productivity and create latest revenue streams.
The IBM Institute for Business Value's recent report, “CEO's Guide to Generative AI on Finance,” states, “Success relies on how quickly finance can turn data into actionable insights.” Generative AI not only opens the door to other revenue streams, but in addition creates added value for the finance employees. The IBM report found that on average, AI adopters attribute 40% of FTE reallocation in finance functions to AI.
By augmenting our every day lives with generative AI and making a digital version of ourselves, AI essentially becomes our assistant. There are advantages to being an AI customer, but far greater advantages to creating value. A generative AI agent or assistant can ingest and aggregate structured and unstructured data from internal and external sources, analyze it, and generate insights and patterns for financial intelligence that may drive business value and discover potential untapped revenue streams. This saves a whole lot of time where financial experts were previously knee-deep in spreadsheets.
According to the IBM Institute for Business Value report, corporations which have already adopted AI have helped reduce revenue forecasting errors by 57%, bad debts by 43%, and monthly close cycle time by 33%. By leveraging these technologies, CFOs can increase efficiency and improve the user experience for internal and external stakeholders.
New operating model, latest skills and competencies
Generative AI is changing the way in which we do business. The CFO's office must adapt to those latest ways of working. The combination of human and digital workforce creates a brand new operating model along with the brand new skills and competencies required for the financial organization. CFOs aren’t expected to be data scientists, but they’re expected to grasp how adopting this technology can drive business value.
While functional skills are still required in finance, latest skills are also required to optimize the adoption and use of digital services. By expanding the workforce with virtual assistants that unencumber capability, finance professionals can focus their time on higher-skilled tasks. Instead of spending a whole lot of time on Excel spreadsheets, you possibly can spend a few of your time developing AI tools that help derive insights and enable higher planning and forecasting.
The excellent news: It's probably easier to show a finance skilled how one can use technology to create value than it’s to show these financial skills to an information scientist. Finance staff needs to be value creators and experience designers, improving their analytical and technical skills to coach and guide their assistants – to refine, adapt and improve the digital service. Additionally, as business partners with CEOs, senior financial managers will need to have higher communication and storytelling skills.
Governance and controls
Trust is paramount for finance leaders, and CFOs must find a way to trust the information they should make essential business decisions and for required financial and ESG reporting. Technologies like generative AI can create skepticism or mistrust in regards to the accuracy of information, especially amongst corporations that depend on manual processes. Data governance is critical to avoid bias or hallucinations, construct greater trust in data, and provides CFOs the arrogance they should stand behind their reporting. The findings of the IBM Institute for Business Value report suggest that constructing governance structures across the financial organization can “(…) close governance gaps and develop ethical guidelines that support the moral adoption of generative AI.”
No matter the duty, corporations deploying generative AI should know that with the precise governance, CFOs and human employees can unencumber their time to innovate somewhat than be averse to the changes ahead.
Getting began with generative AI
It's essential to keep in mind that many corporations are still within the early stages of adoption and a few are hesitant to leap in. However, research shows that the further along corporations are on their AI journey, the greater the added value.
If your organization desires to explore generative AI, consider starting with a labor-intensive task like identifying and fixing errors in your financial reporting. An excellent start line is a hybrid cloud environment. While most corporations are making the switch, cloud infrastructure could be expensive; but with enterprise-scale generative AI, these costs could increase. As the report highlights, FinOps, or financial management for cloud-based investments, “(…) should play a big role in investment decisions within the generative AI space.”
While implementing latest technologies can seem overwhelming, an organization could also be susceptible to losing its competitive advantage if a technology strategy just isn’t in place or adoption is avoided. CFOs are the strategic transformation partners CEOs need to make sure rapid and successful adoption of generative AI.
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