Why Modern CFOs Should be AI Experts

In today’s rapidly evolving business landscape, the role of the CFO has undergone significant transformation, with one crucial aspect being the necessity for modern CFOs to become AI experts.

The economic uncertainties caused by various crises are making it harder for CFOs than ever before. As a CFO, you aren’t only an important figure, but you’re also becoming more and more of a strategic partner. You’re responsible for profitable growth, and sales development, and are vocal co-decision makers on the organisation’s technology and innovation course. This includes creating new sources of income, such as online channels and services. You need to, among other things, stay up-to-date on market trends and understand customer behaviour in the digital landscape, which, in turn, requires a solid understanding of digital marketing and technology. You must adapt to rapid technological change and be an AI expert. This knowledge is key in realising goals like improving efficiency, reducing time to value, and ultimately achieving economic growth, even under difficult conditions.

Especially in times of a downturn, you need to invest wisely. Primarily, companies are seeking technologies that enhance efficiency, especially when budgets are constrained, while also providing long-term cost savings, added value, and a strong return on investment.

In addition, technology investment can lead to significant growth in revenue – both in new and existing revenue lines. How can companies make the right technology investments during a downturn to deliver long-term benefits? 

Dawn of a new era

2023 marked the dawn of a new era of AI and automation, redefining the way companies work and interact with their customers. This wave of generative AI will be more revolutionary than any technological innovation before. It is clear that companies need a digital strategy that strengthens today’s resilience, increases productivity, and boosts efficiency. You need to have a forward-thinking mindset, keeping up with industry advancements and meeting the increasing expectations of customers and employees.

A recent internal Salesforce survey* revealed that approximately half of CFOs are currently investing in AI, and many others are evaluating its potential. The evolving AI landscape is changing the role of CFOs expecting them to carefully consider integrating AI into their organisation. 

As a CFO, you now need to take a close look at AI as the adoption curve is rapidly growing. As organisational changes occur, understanding AI is essential. Companies need to employ the potential of AI to benefit from enormous opportunities to differentiate themselves from ‌global competition, increase productivity and achieve economic success.

No AI without data quality

AI will ultimately affect all departments and workflows. Once large language models (LLMs) go beyond their current use cases in content creation and analysis and start being widely used for decision-making and workflow automation, a significant advancement will be made.

While basic LLMs will form the backbone of generative AI, companies will also adopt a combination of smaller, domain-specific language models for cost, performance, and latency reasons. All of this is only possible when AI is supported by accurate, comprehensive data. Investing in data harmonisation will therefore be a top priority for CFOs. Added to this is defining data governance protocols and maintaining a strong data culture in cross-functional teams.

In 2024, the democratisation of data and analytics through AI will continue to gain momentum. Data and analytics become more proactive by automatically identifying unusual patterns in business data, offering insights in plain language, and allowing users to ask questions and receive prompt answers without needing a data analyst’s assistance. Given the projected increase in total data volume by an average of 23 percent over the next 12 months, it is of utmost importance to ensure data quality as a basis for using generative AI, as quickly as possible.

Questions CFOs should ask about AI

To develop a successful strategy in the era of AI (and the data revolution!), here’s a checklist of questions that provides initial, well-founded guidance:

• Financial Modeling for AI Investments: How can we develop sophisticated financial models to accurately predict the ROI of AI investments, incorporating dynamic scenarios like changes in market share and operational efficiencies?
• Advanced Risk Assessment Techniques: What advanced analytics can we employ to assess risks associated with AI, including model, operational, and strategic risks?
• Economic Value Added (EVA) of AI: How can we evaluate AI initiatives in terms of Economic Value Added to prioritise investments that align with shareholder value maximisation?
• Impact of AI on Corporate Finance Operations: In what ways can AI revolutionise traditional finance functions such as accounting, auditing, and compliance, and what are the implications for workforce restructuring and upskilling?
• AI in Financial Forecasting and Planning: How can AI enhance the accuracy of our financial forecasting and planning, and what are the methods to use AI for identifying trends and patterns in large datasets?
• Integration with Advanced Analytics and Big Data: How can we ensure that our AI strategy is tightly integrated with the organisation’s broader analytics and big data strategy?
• AI in Competitive Strategy: How can we utilise AI as a strategic asset in gaining competitive advantage, such as through personalised customer experiences and advanced market analytics?
• AI Governance and Ethics Framework: How can we establish a governance framework that includes ethical AI use, ensuring standards for fairness, transparency, and accountability?
• Sustainable AI and Environmental Considerations: How can we incorporate sustainability into our AI strategy, considering the environmental impact of data centres and AI training?

Recap and Reflection

By identifying the right use cases and integrating your data, AI can help you make informed forecasts and automate tasks. This unlocks the capacity for you to focus on productive, creative, and profitable activities, leading to greater success, growth, resilience, and adaptability, especially in uncertain times. As a modern CFO, understanding the potential of strategies like automation and platform consolidation allows you to make a decisive contribution to the future viability of your company.

*Source: FY24 Salesforce quantitative survey among n=250 Chief Financial Officers across AMER (US, Canada), EMEA (UK, Germany, France), Japan, APAC (Australia) and LATAM (Brazil)