The world of finance finds itself in the midst of a technological revolution—and it’s happening fast. Generative AI tools like ChatGPT, CFOChat, and Copilot are rapidly upending the finance function and re-ordering strategic priorities, according to panelists on a recent Linkedin Live event.
“Instead of looking at it from the traditional productivity lens of, ‘How do we do the same thing with less people?’ now it's thinking about, ‘With the talent that I put together, how can I maximize the value of the people, the resources, and the workflows to really align my finance function with the strategy that the business wants to head in in the future?’” said Marko Horvat, VP and CFO of research strategy at Gartner,in a conversation with Tom Hood, EVP of business engagement and growth of the Association of International Certified Professional Accountants, for his #FutureReady…Live webcast.
Whereas other digital technologies developed in recent years have allowed organizations to create efficiencies and streamline processes, generative AI is different in that it eliminates much of the non-value add work for human employees, according to Horvat. Eliminating that work gives finance the opportunity to focus on supporting and growing organizational strategic advantages.
“Generative AI is so disruptive that it really will give CFOs a good chance to pause and look at the entire structure of their finance function and try to get out of that sort of non-value added trap that we’ve been in for the last 15–20 years,” Horvat added. “Where do you have strategic advantages that you want to enhance and build, and how can you use this as a tool to really change the way you work?”
Horvat recommended that CFOs approach and use generative AI tools differently than other recent technological advances because of the speed at which they are developing and their potential transformative power, especially as more commercial business software providers embed AI into their products.
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“It gives [CFOs and other finance professionals] an opportunity to realize that goal that we’ve been talking about for the last 20 years of transitioning your finance function from one being purely transactional, to one that really adds value to their business,” Horvat said on the webcast.
McKinsey researchers recently found that some companies are starting to adopt these technologies to strategic advantage. In one instance, McKinsey researchers cite a mobility company using AI to adjust its financial planning based on pricing patterns it sees in the marketplace. Deloitte recently found that financial services firms are using AI to detect fraud, process payments, and break down functional silos within organizations.
Another panelist, Alexander Bant, chief of research for CFOs at Gartner, said his research found four ways that finance departments are unlocking the potential of generative AI: hiring AI talent that can tactically implement AI tools, experimenting with the technology, buying AI-embedded technology, and fostering C-suite savvy around AI.
“The idea is to really understand how the technology is going to impact your strategy going forward, staying strategic, and making sure you have good tactical people underneath you to execute on that vision and not get bogged down on ‘This lets me do this piece better,’” Bant said.
This rapid transformation is coming at a time when boards are demanding more return on digital investments, Bant said. This will likely change the funding priorities for many organizations.
“Boards are tired of funding, ‘Let's move the close from five days to three,’” said Horvat. “What they want to do is they want to invest in things that add value to the business.”—DA