CFOs: Focus on gen AI’s potential, not its cost or near-term impact

January 09, 2025

CFOs: Focus on gen AI's potential, not its cost or near-term impact

Here are three reasons CFOs should take a nonconventional approach to generative AI, encouraging experimentation and innovation rather than focusing solely on costs and returns.

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This content was originally featured in a Unite.AI article in December 2024.

The breathless publicity surrounding generative AI poses a difficult choice for CFOs: break with the traditional approach of obsessing about the costs of gen AI adoption or its likely scale of impact in the near-term or break with convention and become advocates for the technology within their organizations.

I encourage CFOs to take the latter approach. Three factors lead me to this conclusion:

1. The role of the CFO is expanding beyond just financial stewardship to strategic leadership
   
   
2. There's a growing business case for adopting gen AI in the finance function
   
   
3. Failing to embrace gen AI now could lead to competitive risk as the technology could very quickly evolve from a novelty to a necessity, much like cloud did previously

The increasingly strategic 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, including technology 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. CFOs who gain experience early on with the capabilities of this technology will be in a position to fulfill their expanded role more effectively.

The growing business case for gen AI adoption in finance

The business case for gen AI adoption has improved recently. The dollar cost of pilot projects today is relatively low compared with 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 (such as automated data management, contract reviews, forecasting and scenario analysis, report creation, and risk and compliance management), as well as the proliferation of recently launched tools that address several of these use cases.

While these tools are still nascent, recent surveys show that CFOs who 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 increased accuracy and error reduction due to the adoption of gen AI tools. Finally, more than one-third (36%) said generative AI is already adding value and impacting their revenue streams, and another 40% said they were expecting it to do so within a year.

The increased risk of inaction

Businesses that don't embrace gen AI now could face 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. Similarly, gen AI 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 its 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

Motivation and methodology are crucial success factors for any major tech initiative. 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, there are several steps CFOs can take now to start the organization down a productive gen AI path while also performing their traditional role as fiscal steward:

• 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 a 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 deliver the skills needed to successfully implement the technology. At this point in the development of generative AI, doing so is 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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