The breathless publicity surrounding Gen-AI often makes it difficult for CFOs to avoid the conventional approach of obsessing about the costs of Gen-AI adoption or its likely scale of impact in the near-term. However, I believe the time has come for CFOs to break with convention and become advocates for the technology within their organizations, for three reasons:
- The role of the CFO is expanding beyond just financial stewardship to strategic leadership
- The business case for Gen-AI adoption in Finance has improved
- Not embracing Gen-AI now could lead to competitive risk, as Gen-AI could very quickly evolve from a novelty to a necessity, much like Cloud did previously
Role of the CFO
The first reason for CFOs to break with their conventional approach to Gen-AI is the inherent expansion of the CFO’s role in an enterprise. In one recent study, 85% of CFOs said they expect to play a more significant role in shaping business strategy. On average, the study found, financial leaders spend more than four hours each day on nontraditional CFO activities—tech decisions, talent management, strategic planning and more.
CEOs are looking to CFOs to not just manage the financial health of an organization, but also to drive innovation and transformation. Gen-AI will undoubtedly play a critical role in the next wave of enterprise transformation – both from a productivity and innovation perspective, and it would be beneficial for CFOs to gain experience early on with the capabilities of this technology, to play their expanded role more effectively.
Business case for Gen-AI adoption
The business case for Gen-AI adoption has improved recently. The dollar cost of pilot projects today is relatively low in relation to the benefits of testing Gen-AI’s potential. This is due to the large number of Finance use cases that Gen-AI is suited for (e.g., automated data management, contract reviews, forecasting and scenario analysis, report creation, risk & compliance management), and a proliferation of recently launched tools that address several of these use cases.
While these tools are still nascent, recent surveys show that CFOs that have adopted Gen-AI tools are already seeing significant, measurable impact. In a recent survey of 375 CFOs across multiple sectors, over three-quarters (76%) said they have “noted significant gains in efficiency and process speed,” and 68% said they have seen “accuracy and error reduction” due to the adoption of Gen-AI tools. Finally, more than a third (36%) said that “generative AI is already adding value and impacting their revenue streams,” and another 40% said that they were “expecting it to do so within a year.”
Risk of inaction
Not embracing Gen-AI now could lead to competitive risk. It’s important to remember that not all hyped technologies disappoint. Consider cloud, another technology that was hyped early on but went on to become a crucial component of enterprise computing. In 2010, enterprise concerns around cloud adoption included cost and security. By 2015, however, the technology was a business staple, “a safe bet.” The pandemic then cemented the adoption of cloud, spurring companies to exceed their adoption schedule by up to seven years. Gen-AI similarly, could very quickly evolve from a novelty to a necessity, and early adopters will enjoy a competitive advantage.
Recent surveys by Gartner highlight the increased competitive risk of inaction. In their survey on Gen-AI adoption in 2023 Gartner found that “other administrative functions such as HR, legal and procurement were twice as likely to be using or scaling AI solutions compared to the finance function.” However, in the same survey conducted in September 2024, “the gap is almost non-existent.” In this poll of 121 finance leaders across industries, Gartner found that “58% of respondents said their teams were using AI, an increase of 21 percentage points from 2023.” Further, Gartner found that “of the 42% of finance functions that aren’t currently using AI, half are planning implementation.”
Next steps
Success factors for any major tech initiative include motivation and methodology. As outlined above, the expanding role of CFOs, the improved business case for Gen-AI adoption in Finance, and the competitive risk of inaction, should serve as sufficient motivation. As for a methodology to help start the organization down a productive gen AI path while also performing their traditional role as fiscal steward, there are several steps CFOs can take now:
- Encourage manageable pilot projects: By supporting a small-scale pilot, CFOs can demonstrate their grasp of generative AI’s importance—and set themselves up to help create the budget, adjudicate the project’s success, and, if appropriate, scale the initiative.
- Fund useful innovation: There’s always risk that IT groups and others will treat a new technology like a shiny toy. In the case of gen AI, CFOs should ameliorate this risk by rewarding only use cases that genuinely advance the interests of the business.
- Find an experienced partner: A global talent shortage is one of the top inhibitors slowing gen AI adoption. CFOs should consider partnering with a tech provider that can provide the skills needed to successfully implement the technology; at this point in the development of generative AI, this will likely prove more affordable and achievable than provisioning talent in-house.
Naturally, CFOs must be mindful of their duties to stakeholders—but where generative AI is concerned, an unconventional approach can encourage experimentation and innovation, drive growth, and serve as a bridge for the expanding role of financial leaders.
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