CFO’s Role in the Generative AI Era

CFOs are managers of invested capital, orchestrating moves that advance the business through breakthrough technologies and innovations, accelerating revenue streams, and driving meaningful results.

In the current business environment, CFOs face decision-making headwinds under less-than-ideal conditions due to rapidly changing regulations, tedious reporting standards, ESG requirements, and inflationary pressures. But the need to expand growth and profits remains, and CFOs are emerging as new advisors on technology and innovation as CEOs look for ways to increase productivity. Despite the headwinds, there are tailwinds as new technologies enable CFOs to act as business partners and improve productivity, cost savings, accuracy, control, and business value.

With a new approach to financial management that integrates generative AI, this advanced technology can help CFOs make more informed, data-driven decisions for their organizations and have a significant impact on finances. According to IBM Institute for Business Value CEO research on decision-making in the age of AI, CEOs’ top priorities are technology modernization and productivity, with the three biggest challenges being technology modernization, sustainability and security. Meet CFOs, who play a more important role than ever in unlocking value and scaling and financing technologies that we are still struggling to fully understand.

Read the report: A CEO’s Guide to AI in Finance

Unlock Value

CFOs are not expected to be technology experts. This means measuring the business value created by generative AI across your organization while also understanding how to use the technology to enhance your own skills and capabilities. These new technologies can help CFOs do their jobs more efficiently, faster and smarter, in addition to increasing productivity and creating new revenue streams.

“Success will depend on how quickly financial institutions can turn data into actionable insights,” according to a recent IBM Institute for Business Value report, A CEO’s Guide to Generative AI in Finance. Generative AI not only opens the door to other revenue streams, it also increases the value of your finance workforce. According to an IBM report, AI-adopting companies, on average, attribute 40% of their finance function FTE realignment to AI.

By empowering our everyday lives with generative AI and creating digital versions of ourselves, AI could essentially become our assistant. There are benefits to being an AI consumer, but there are even greater benefits to being a value creator. Generative AI agents or assistants can collect and summarize structured and unstructured data from internal and external sources and analyze it for insights into financial information that can drive business value and identify potentially untapped revenue streams. and patterns can be created. This frees up a lot of the time finance professionals previously spent deep in spreadsheets.

According to a report from the IBM Institute for Business Value, organizations that have already adopted AI have helped reduce sales forecast errors by 57%, reduced uncollectible balances by 43%, and shortened monthly close cycle times by 33%. By embracing these technologies, CFOs can deliver efficiencies and better user experiences for internal and external stakeholders.

New operating models, technologies and capabilities

Generative AI is changing the way we do business. CFO offices must adapt to these new ways of working. The combination of human and digital workforces creates new operating models in addition to the new skills and capabilities required by financial organizations. CFOs are not expected to be data scientists, but they must understand how the implementation of this technology can create business value.

Finance function skills are still needed, but new skills are also needed to optimize the adoption and consumption of digital services. By augmenting their workforce with empowering virtual assistants, financial professionals can focus their time on more skilled functions. Instead of spending significant time on Excel spreadsheets, you can spend your time building AI tools that help you derive insights and provide better plans and forecasts.

The good news is that it will be easier to teach finance professionals how to use technology to create value than it is to teach financial skills to data scientists. The finance workforce must become value creators and experience designers, strengthening their analytical and technical capabilities to train and guide assistants to fine-tune, adapt, and improve digital services. Senior finance executives also need to have a higher level of communication and storytelling skills as business partners to the CEO.

Governance and Control

Trust is paramount to finance leaders, and CFOs must be able to trust the data they need to make critical business decisions and essential financial and ESG reporting. Technologies like generative AI can create skepticism or mistrust about the accuracy of data, especially for organizations that rely on manual processes. Data governance is critical to ensuring there is no bias or illusion, increasing trust in the data, and giving CFOs the confidence they need to support reporting. According to the findings of the IBM Institute for Business Value report, establishing a governance structure across the finance organization can “(…) bridge governance gaps and develop ethical guidance to support the ethical adoption of generative AI.”

Organizations embracing generative AI for any task need to know that with the right governance in place, CFOs and employees can invest time embracing innovation rather than avoiding impending change.

Getting started with generative AI

It’s important to remember that many organizations are still in the early adoption stages and some are hesitant to adopt. However, research shows that the further an organization progresses on its AI journey, the more value it delivers.

If your organization wants to explore generative AI, we recommend starting with labor-intensive tasks, such as identifying and mitigating errors in financial reporting. A good starting point is a hybrid cloud environment. While most organizations are making the transition, cloud infrastructure can be expensive. However, with enterprise-scale generative AI, these costs can become more complex. As the report points out, FinOps, or financial management, for cloud-based investments “(…) should play a large role in generative AI investment decisions.”

Implementing new technology may seem daunting, but not having a technology strategy in place or avoiding adoption can put your organization at risk of losing competitive business advantage. CFOs are the strategic innovation partners CEOs need to ensure rapid and successful adoption of generative AI.

Buy the book: The CEO’s Guide to Generative AI