The business world is inherently fast–paced and cutthroat, and rapid technological advances over the past 20 years have only intensified this ferocity. No modern company can afford to rest on its laurels. Old competitors can rise again, or fresh disruptors emerge from seemingly nowhere and at any time if they, rather than you, embrace the new competitive advantages that technology can provide. We've seen it in recent years with retailers that have failed to embrace online but, in reality, this is an ever present threat for businesses in all sectors.
Against this backdrop, one of the most important business challenges the C-Suite and department leaders need to address is creating an environment which is willing, and eager, to embrace new technologies.
One such advancement garnering interest (and grabbing headlines) is artificial intelligence (AI), and one business leader recognising the potential it could play in their organisation is the CFO. The finance department is the engine of the modern business, and sound financial practices are arguably the most important factor for sustained growth. To empower the finance department is to boost the business as a whole.
A split in AI enthusiasm
Whether you fall into the camp that sees AI as a dangerous threat, or the side that marks it a great opportunity, the conclusion remains the same – for better or worse, AI is going to have a significant impact on the future of our businesses and, more largely, our society.
We recently conducted research with Censuswide amongst various members of the finance department into important emerging technologies, and 42% of CFOs stated they saw AI as the most significant technology for finance over the next five years. For context, AI beat out data analytics (40%), cyber security (28%), and blockchain (18%), technologies which, in other sectors, have been heralded as game changers.
Whilst financial heads are more likely to be all-in on AI, the same cannot be said for their workforces. Only 23% of those at the financial coal-face (i.e. accountants) share their bosses' enthusiasm for AI.
There are two possible reasons for this split. For one, the looming spectre of robotic replacements may well be front of mind for others in the finance department. This is, to some extent, represented in the research results. However, all see the importance of AI in the future. In fact, only 7% of accountants believe that AI should not hold any role in the finance department. This compares with just 3% of CFOs. Given accountants make up the bulk of the finance department, this means that there is at least some resistance to AI.
The second, and more likely scenario, rests on CFOs' future vision for the finance function. They are, after all, paid the salaries they are to steer the ship on the right course and to deliver competitive advantage to the business where they see it. As such, their expectations for what AI will be able to achieve in the finance department are more forward-thinking than their employees'.
Where does AI sit in finance?
All members of the finance department we questioned largely agree that AI will be responsible for handling data-heavy, repetitive tasks such as reconciliations. This makes sense, as automation software of this kind already exists and is currently having a significant impact on company accounting practices. The potential of these technologies has yet to be fully tapped though, and difference of opinion emerges when we look at more substantial use cases for AI in the finance function.
The concept of an AI programme having at least some responsibility for strategic financial decisions proves more divisive. Only 30% of accountants foresee this as a realistic expectation within the next 10 years compared to 43% of CFOs. It's no coincidence that this is the same proportion which dubbed AI the most significant technology for the future of finance.
Clearly, CFOs have grand plans for AI's finance function, and recognise its potential industry-shifting significance. If AI can realistically be expected to make strategic financial decisions, it would do so faster and more accurately than any human, gifting even the largest businesses incredible agility. Put simply, it would be an absolute sea change for finance.
However, as with any business transformation project, if this is to happen, CFOs will need to not only gain the support of the rest of the C-suite, but to abate the fears of the men and women who would be dealing directly with the technology. CFOs, it seems, already have a plan for that.
Communicating AI Accountability
We have, thus far, only focused on the benefits of AI in finance, avoiding the fact that it could possibly cause regulatory non-compliance, a fine or a fall in stock price. CFOs, it seems, are not blind to this possibility either, but are keenly aware that a failing AI could put them, and the business, in the firing line.
What's interesting is that CFOs are willing to shoulder the burden in exchange for the competitive advantages that AI could offer. Again, 43% of CFOs believe that the liability for a faulty AI would fall squarely on themselves, rather than having any blame trickle down through the financial hierarchy. Accountants, however, are less sure where the blame would rest, with a fifth thinking it would be the CFO, but the same proportion worried it would come back to bite the accounting department itself.
There's a huge amount of potential good AI can do for finance and businesses as a whole. However, if CFOs want to achieve their AI ambitions they'll need to better communicate to their workforces their strategy for AI, where they fit into it and, if the worst were to happen, who would fall on their sword. Although AI is billed as doing things faster and better than humans, it'll still take a lot of manpower to get any AI initiatives off the ground. And there is nothing that can replace a human, and their intuition in many areas.
Andy Bottrill is regional vice president at BlackLine.