For CFOs and their teams – the traditional guardians of “the truth” about the planning and performance of those decisions – the opportunity to forge new strategic partnerships across the enterprise is immense.
The days of the blocking finance function – with a CFO who always seems to say “no” – are long gone. A host of emerging technologies is moving the finance team decisively away from record-keeping and reporting, and into strategic partnership and predictive analysis.
That’s one message from a new Economist Intelligence Unit (EIU) report into the role of the CFO.
The New Bridge-Builders, based on interviews with CFOs and thought leaders across the world, argues that the only way organizations can survive is to adopt technologies such as artificial intelligence to deliver efficiency, agility, universal connectivity – and the ability to forecast with unerring accuracy.
Or as Bhavesh Shah, senior VP finance at Johnson & Johnson, puts it, “Everyone – customers above all – wants everything faster and cheaper. This puts pressure on the entire business.”
It creates two issues for the finance function. First, decisions that deliver agility and efficiency must be based on sound data – and increasingly, on sound forecasting. Finance is now in a position to influence decision-makers across the enterprise with richer, more predictive analysis to give more certainty to those fast decisions. For example, AI can analyze supplier behavior and predict where business units can cut costs by seeking early payment discounts.
Second, finance is often the pioneer for technologies, such as AI, that will permeate the business over time. What’s being used today in finance to automate reporting and analysis, or to capture and interrogate large sets of often fuzzy data – well, tomorrow that’s going to be underpinning faster, cheaper and better operations in marketing, HR, sales and production.
But that presents another big challenge for CFOs. According to a recent Grant Thornton study, “only 12% of CFOs strongly agree that they have an effective system for measuring financial KPIs associated with technology”. As we roll out systems whose dependencies, capabilities and effects are felt much more widely across a connected enterprise, this issue gets more acute.
One of the EIU contributors, James Orpen (finance director for Consumer Products Division UK & Ireland at L’Oreal) issued a warning about this.
Most organizations are probably measuring one or two per cent of the things they are doing because they haven’t got the capacity to be able to measure more
Which means the AI capabilities we’re already seeing become not just nice-to-have, but critical to the most basic function of finance: understanding what is going on.
Whether it’s the business at large or the technology it deploys, the finance function remit is evolving. CFOs have traditionally looked at the past to understand the present. Now they can – and must – look at the present to understand the future.