While CFOs surveyed recently by Gartner are likely to invest in AI, they need to adopt a different AI approach to reap the benefits of the technology, said Gartner recently.
The firm’s survey of 300 CFOs and finance leaders in May 2020 indicate that 90% of respondents anticipate investing “more, less, or the same amount” in AI since the pandemic.
To get the full benefits, and thus competitive advantage, from such investments CFOs must look beyond projects that only aim to modernise the function, Gartner advised.
“There’s nothing wrong with using AI to modernise the finance function, which is very important work,” said Clement Christensen, director in the Gartner Finance practice. “However, the most impressive rewards of AI will fall to the CFOs who think bigger about how the technology can fundamentally change the way their company does business.”
CFOs’ top priorities when it comes to AI
The top priorities should be to improve the organisation’s data architecture to support future AI goals; to invest in citizen data scientists so that AI production can be rapidly scaled where successful; and to redesign the organisation’s reporting suite so that is best aligned with internal customer needs rather than with traditional finance tasks, Gartner pointed out.
“While most CFOs are aware that they need to pursue more experimental, less familiar digital technology projects in order to reach their functional digitalisation goals, they follow use-case-focused approaches to AI projects that tend to have a bias towards modernising and improving familiar processes to drive easily-quantified ROI gains,” said Christensen.
For example, a common use case of AI is to use machine learning to predict customers prone to late payments and issue earlier payment reminders to such customers or chase late payers automatically, he said.
“While reducing late payments has a clear ROI in that it will improve a company’s cash flow, this is not using AI to do anything new,” Christensen pointed out. “Finance would have chased those payments anyway, albeit less efficiently.”
On the other hand, something truly transformative could be using AI to identify likely late payers at the sales stage, so that sales prospects are prioritised according to which is likely to pay most promptly, he advised.
This has the potential to transform a business’ approach to mitigating late payments and improve cash flow even further while reducing the need to chase for payments in future, freeing up finance function time for higher-value work, he added.
“The transformative option doesn’t have an immediately measurable ROI like the modernisation option, but the ultimate payoff is potentially much bigger,” Christensen said.
CFOs: The right AI approach
To avoid the inherent bias of a use-case-focused approach to AI projects, Gartner experts advise CFOs to start with a problem that needs solving, not a process that needs modernising.
“Just a small shift in mindset in how CFOs think about deploying AI can make that the difference between a project that modernises a business and a project that transforms it, which is where the greatest competitive advantages lie,” said Christensen.