CFOs are concerned about artificial intelligence because of its potential effects on the finance function and their personal responsibility in integrating it throughout the company. It was, in fact, the World Economic Forum’s most talked-about topic this year. In general, optimism about AI outweighed risks. As a company, we observe that we are still very busy working with clients through our AI, Data & Analytics Practice in all industries and hiring consultants through our On-Demand Talent team to assist organizations in determining their level of readiness for AI and launching their AI strategy. CFOs and leadership teams are still interested in knowing where the competitive edge is, how to execute it, and—perhaps most importantly—where to locate the talent needed to incorporate AI.
In response to these problems, Heidrick & Struggles and McKinsey & Company organized an invitation-only conference in Rome where CFOs from various industries gathered to talk about the ownership of AI strategy inside their companies, prospective applications for the technology in the finance function, and the skills gap that exists today.
Greater Ownership Clarity For AI
CFOs are well aware of the benefits that artificial intelligence (AI) can bring to the finance function in terms of problem-solving and decision-making. According to a Heidrick poll of finance officers worldwide, 68% of them are now utilizing AI for at least one task, and 92% of them anticipate employing it in some capacity within the next two years. In spite of this, just 11% of CFOs surveyed felt that their company owned the AI strategy, and 20% said there was no owner at all.
The variety of ways that generative AI might be used blurs the ownership issue. According to a CFO present at the event, “different functions of the organization make different uses of GenAI, and some are more advanced than others due to the drive of individual managers.” Another said, “Where ownership lies depends on the business itself.” “Any strategic issue that crosses functional boundaries in my organization eventually reaches the executive level.”
Artificial Intelligence Within The Finance Sector
One person who attended the session stated, “I see great potential for AI applications in FP&A, strategic planning, and budgeting.” “I think the sector with the most potential is finance.” Potential is the key word here. Just 12 percent of the financial officers questioned by Heidrick presently utilize AI for auditing, 17 percent for accounting and reporting, and 12 percent for FP&A. Two years from now, projected utilization is expected to soar, with 69% in accounting and reporting, 44% in audit, and 50% in FP&A—a significant rise over present numbers.
Naturally, there are many more applications for the finance function than just accounting and auditing. GenAI can help with shareholder management by producing preliminary versions of internal and external financial reports. AI is also capable of extracting data from complicated documents, which makes it possible to automate the matching of contracts and invoices in order to look for possible inconsistencies.
Although the focus of the talks was on internal finance uses of AI, one participant brought up the fact that the CFO function is also affected by how external parties utilize AI, citing the consequences of a news release about their company’s recommendations on turnover. Because artificial intelligence now reads press releases instead of individuals, it had a greater than anticipated effect on our stock price. The way we transmit financial information needs to change since we are now speaking with machines.
The Aptitude Index
The attendees shared the belief that skill is essential for deploying AI, regardless of the use case. Susie Clements from Heidrick summed up what was needed to “upgrade finance teams and enable digital adoption: people who can interpret data strategically; have interpersonal skills and drive influence; and who are able to understand and embrace technology and bring it into the finance function.”
However, there is a general lack of skill in the field; according to 39% of financial officers, there aren’t enough people with AI experience at all levels. Nearly half (45%) stated that working with outside technology partners and vendors was the cornerstone of their company’s strategy for gaining access to that expertise.
CFOs must assemble a cross-functional team with expertise in technology, business, and analysis in order to use AI successfully. Heidrick & Struggles suggested, “Bring in people with business and leadership skills first, who will be capable of interacting with technical experts.” “And there are other approaches to fill in the technical talent, like providing data science and analytics training to a specific group of finance people.”
The necessity for tech heroes who can act as reverse mentors for members of the finance team was also emphasized by Heidrick & Struggles. “Technology is developing at a rapid pace,” stated one more guest. In order to encourage conversations on the proper use of these technologies among both younger and older generations, we must establish a learning organization. Organizations that practice continuous learning are ones where change is continuously demanded of the status quo.
As The AI lead, The CFO
Since they are in charge of allocating resources and large-scale implementation of these technologies necessitates significant expenditure, there is a strong case to be made for the CFO to be at the forefront of adopting AI throughout the company.
In this field, leadership positions are changing quickly, therefore the CFO must approach AI from a different angle than just finances. The CFO has a role to play in ensuring that the AI strategy is in line with the business strategy and purpose, that it is being used ethically, that it complies with legal requirements, and that security, privacy, and bias risks are being managed. The CFO leads the entire organization and is second in command to the CEO.
The CFO learning curve appears to be steep but intriguing, as 42% of respondents to Heidrick’s survey on AI and financial officers stated they are unsure of how to accomplish these tasks currently.