Many CFOs are turning to artificial intelligence to help them glean the more transformative insights they’re being pressed to deliver, but finance chiefs are also aware that AI is only as good as the data that underpins the model. Unfortunately, many CFOs have concerns about the data they might be bringing to the AI table: a recent survey by accounting cloud software provider BlackLine found that 37% of finance chiefs don’t fully trust their organization’s financial data.

Without timely, accurate data, finance chiefs aren’t able to take advantage of “sexier” digital transformation elements like AI or predictive forecasting, said Michael Polaha, senior vice president of finance solutions for the Los Angeles, California-based software provider. Crucially, putting bad data into shinier new models means finance chiefs are “just going to get bad analytics faster,” Polaha said in an interview.

Shining a light on data governance  

Ensuring access to clean, streamlined data has shot up on CFOs’ priority lists as finance chiefs scramble to take advantage of new generative AI technologies — and as regulators take a second look at how such technology can be utilized with the least amount of risk. As companies look to hit the balance between innovation, safety and compliance, “there's a renewed emphasis and rigor around setting up a data governance support organization” among businesses, Polaha said.

“You can't apply a technological fix if you have a governance and a process problem,” he said. “It's not going to play out very well.”

Many organizations might be bringing in relatively new positions such as a chief data officer to tackle this challenge, but the CFO offers a key perspective in the data conversation, Polaha said, pointing to his own experiences during his near two-decade tenure at Johnson & Johnson, where he served in a variety of financial roles including as SVP, financial solutions and technology.

The finance chief understands that the company will not “get or derive the benefits from any technological investment, without setting up a focus and a vigor around data, data quality, and data governance,” Polaha said.

CFOs need to work in tandem with the chief technology or information officer to present a united front to the CEO when detailing plans to improve one’s data processes. However, finance chiefs can often face challenges when it comes to uncovering the data they need, as BlackLine’s survey indicated.

This is partially due to the sheer volume of information finance chiefs are tasked with managing; of the 42% who said they didn’t fully trust their organization’s financial data, 31% said that distrust is due to the data originating from too many sources.

Moreover, senior financial officials often have less confidence in their organization’s data than those at lower tiers. Fifty percent of senior finance and accounting professionals admitted they don’t fully trust the data they’re working with, compared to the 37% of finance professionals overall, BlackLine’s survey found.  

That’s partly because “the ability to harmonize that data as it moves up the data supply chain, to the point that it gets to the corporate office, is fraught with potential challenges,” Polaha said.

Unraveling data ownership  

Failing to effectively manage their data can have other consequences for businesses than just missing out on AI. An opaque data process can hamper companies’ abilities to respond swiftly to market changes, a necessity especially in a still-uncertain economic environment.

CFOs highlighted numerous concerns that could potentially impact their businesses today, including cybersecurity and disruptive technologies, according to BlackLine’s survey. Seventy-eight percent also said they were worried about another global financial crisis, and only 38% said they have a strategy in place to steer their organizations through such an event.

This puts rising pressure on business leaders to provide “deeper and actionable insights in a more timely way,” Polaha said.

One of the major pain points highlighted by CFOs is getting an accurate picture of their cash flow; nearly all (98%) of finance professionals surveyed by BlackLine stated they don’t have complete confidence in their cash flow visibility, with only 2% indicating otherwise. Thirty-seven percent admitted that having that insight is critical to being able to respond to market changes.

Creating a transparent data governance process is key to enabling more visibility in critical areas like cash flow, which means not only putting new technologies into place but determining who ultimately has responsibility and ownership of the company’s data. While it’s easily argued that finance data is owned by the CFO, other areas like commercial or supply chain data could be owned by other executives, for example, Polaha said.

“That's why it gets a little bit complicated in terms of data ownership, and why at times there is a chief data officer identified within that C-suite, because oftentimes, elements of the data overlap between the functions,” he said.

Still, all roads eventually lead to finance; CFOs still need access to information that might be owned by others, such as inventory data, to ensure the financial health of the business. That puts them in a unique position to take point in a company’s data conversation.

“I do think that the CFO is well positioned to be the champion, because they understand, first off, what the business leaders are looking to get out of the data,” Polaha said.