AI technologies are increasingly being applied to finance. The corresponding shift in the role of Chief Financial Officer is accelerating. CFOs are no longer limited to financial reporting and accounting alone, but rather becoming increasingly connected with all company functions to shape growth strategies and lead the implementation of the digital tools that are driving companies forward. Simply put, today’s most competitive CFOs are assuming a more strategic role and helping to deliver real insight around driving growth and expansion.
HOW CAN MORE CFOS EMBRACE THIS EVOLUTION?
A recent study completed by McKinsey suggests that the number of functions reporting to CFOs is on the rise. Also increasing is the share of CFOs stating they oversee their companies’ digital activities and resolve issues outside the finance function.[i] This coupled with AI-focused solutions being built specifically for the finance and accounting function will result in CFOs playing an increasingly pivotal role in driving change in their companies and having a distinct point of view on the future of business.
This same McKinsey survey indicates that digitization and strategy development are progressively important responsibilities for the CFO and that most finance chiefs are being looked at to lead the implementation of new technologies. Put together, this means CFOs are positioned to lead the way toward greater digitization and automation of processes, however there are some challenges.
The McKinsey survey also reports that currently, few finance organizations are taking advantage of digitization and automation. Two-thirds of finance respondents say 25 percent or less of their functions’ work has been digitized or automated in the past year and the adoption of technology tools is low overall. Only one-third of finance respondents say they are using advanced analytics for finance tasks and just 14 percent report the use of robotics and artificial intelligence tools, such as robotic process automation.[ii]
One reason for this might be because survey respondents describe considerable challenges of implementing new technologies. When asked about the biggest obstacles, finance respondents most often cite a lack of understanding about where the opportunities are, followed by a lack of financial resources to implement changes and a need for a clear vision for using new technologies.[iii]
To be able to effectively identify the most useful emerging digital technologies, CFOs need to develop a deeper understanding of the organization’s operations, functional interconnectedness, key markets and customers and generally understand how the company earns revenue. The ability to understand the relationship between each of these different areas and then be able to source AI technology to automate data collection, analysis, and reporting will allow CFOs to develop the competitive edge their companies need.
- The need to be strong relationship builders throughout the organization so they can effectively understand the operations of their companies and yield influence over technology and strategy implementation.
- Managing the growth capabilities of their finance teams.
- Regularly participating in conferences, forums, etc. on emerging digital technologies, understanding when to incorporate them into the company, and leading their implementation.
It is an exciting time for CFOs and financial executives where skills and capabilities will be stretched to their maximum, particularly on the technology front.
As a current CFO or emerging financial executive, how profound is your understanding of digital and AI technologies specific to the finance function? How will you glean a deeper understanding of which AI tools your organization can adopt for a competitive advantage?