Finance automation and value creation: A new nexus

For business leaders, Generative AI could change more than just how they collect data or approach customer service: The technology could impact their overall strategy. In a recent survey by Thomson Reuters, 94% of corporate C-suite respondents saw AI as “significantly impacting their strategies,” leading to increased investment.

The CFO occupies a crucial role when it comes to effectively utilizing AI as well as preparing for these shifts, Carter Cousineau, interim head of data and analytics at the Toronto, Canada-based Thomson Reuters said. Finance chiefs stand at the center of their companies’ information flows and are already used to making data-driven decisions, making them well-suited for evaluating AI’s potential benefits and risks on a broad scale. 

“AI is rapidly transforming the business landscape across the different departments and CFOs are uniquely positioned to lead that charge in implementing responsible AI practices,” Cousineau said in an interview.

The AI-driven strategy shift  

C-suite leaders are preparing for a future where AI has vastly changed numerous business models and strategies, Thomson Reuters’ 2024 Future of Professionals report found.

Fifty-nine percent of C-suite respondents said AI would have a significant impact on their operational strategy in the next five years, while 53% said it would impact their product/service strategy, the survey of 2,200 professionals found. Respondents also highlighted talent strategy (40%), risk and compliance strategy (37%) and supply chain strategy (36%) as areas ripe for change over that same period.

With their access and breadth of knowledge across the different aspects of the business, CFOs are “the right folks” to lead responsible AI implementation at the organization in the face of these changes. They are also the executives best positioned when it comes to “mitigating and managing the costs associated with some of these AI technologies,” Cousineau said.

Cousineau joined Thomson Reuters in 2021 as its VP of data and model governance, becoming its interim head of data and analytics this month, according to her LinkedIn profile. She is a member of the AI Safety Consortium at the National Institute of Standards and Technology, and serves as a board member at the Data Sciences Institute for the University of Toronto.

The dawning AI age has, in some senses, only accelerated ongoing shifts inside of business’ organizational structures. Finance chiefs are increasingly being tapped to determine their company’s long-term strategies and to do so with data-driven insights.

As AI use expands, that focus on data analytics — as well as other critical pieces such as its management and security — is only going to grow among CFOs, Cousineau said.

Additionally, as companies mull potential use cases for new technologies, they are turning to their finance teams for deeper understanding, rather than the research and development department, for example, that might have isolated those use cases in the past. That’s giving CFOs a seat at the table when it comes to their company’s AI investment strategies, Cousineau said.  

“You do want them side by side in your (AI) decision making with the business, so that it's led with the ROI and…not just chasing an early investment that might not have the financial stability longer term,” she said.

The risk, reward juggling act  

Finance chiefs are also the executives who are in the best position to manage the short-term challenges of GenAI adoption. 

Businesses have continued to pour millions into AI’s development and use, with optimism about its potential rewards growing. In a recent survey by KPMG, 67% of business leaders reported being confident their planned GenAI investments would produce returns — such as revenue growth or cost savings — in the next one to three years, CFO Dive previously reported.

However, there are almost countless ways AI can be applied throughout a business, with numerous leaders and departments often experimenting with the technology’s applications at once.

That “variation matters to determine the inherent risks associated with AI” as well as the mitigation tactics that can be used to minimize such risks, Cousineau said.

For CFOs, it’s essential to have a holistic view of those use cases and their potential risks both to ensure the business remains stable and that the company’s AI investment is being effectively employed. Finance chiefs need to consider everything from environment factors, upfront storage costs and training expenses to ensure “maintenance” of their investment, she said.

“There's things that we're doing that we could optimize further to help our day-to-day, and I think that's something that CFOs want to keep a close eye on, where we can be more efficient and more productive,” Cousineau said.

Microsoft is using its own artificial intelligence-powered virtual assistant known as Copilot to boost workflows across the software giant’s finance department, which is comprised of about 5,000 people, according to Cory Hrncirik, the company’s modern finance leader.

Finance professionals within the company are relying on the tool to more quickly perform routine tasks and deliver data-driven insights, Hrncirik said in an interview.

“Finance has become some of the top users of Copilot in Microsoft,” the executive said. “Along the way, we’ve created great use cases and our own prompt library as well as videos and demos.”

Microsoft’s finance organization has made Copilot adoption a high priority as part of its broader digital transformation push, which Hrncirik is helping to spearhead as the company’s modern finance leader, a role he assumed in 2018.

The software giant is also locked in a race with other big tech companies to dominate the AI market. Since 2023, Microsoft has released several different Copilots, conversational chatbots that have been embedded across the software giant’s portfolio of applications and services to assist users with completing tasks.

Last February, the company unveiled Copilot for Finance, a feature in Microsoft 365 apps such as Excel, Outlook and Teams, introduced with the goal of making financial processes more streamlined and seamless. The tool is still in “public preview” mode, a spokesperson said.

Microsoft has released similar role-specific virtual companions for professionals in sales and customers service.

Top finance use cases

Within Microsoft, one of the top use cases of Copilot for Finance has been reconciling data in Excel, Hrncirik said. “We use [the tool for] reconciliation quite a bit, especially in certain teams,” he said.

In an internal case study, accounts receivable reconciliation capabilities helped shrink the time needed for Microsoft’s global treasury and financial services team to compare data across sources, saving an average of 20 minutes per account, according to results shared with CFO Dive. In another example, a Microsoft financial planning and analysis team was able to reduce the amount of time it spent reconciling data each week from an average of 1-2 hours to 10 minutes.

Microsoft’s finance team is currently testing variance analysis capabilities with promising results so far, according to Hrncirik. Variance analysis refers to a method of comparing projected or planned financial performance to actual results.

Copilot for Finance “just helps you get those insights faster than you could in the past with traditional, manual methods,” Hrncirik said.

On Monday, Microsoft launched what it’s calling “the next wave” of Copilot, including a new feature called Copilot Pages that allows multiple users to collaborate on AI-generated content.

“Over the past 18 months, working with Copilot has become a daily habit for people everywhere, helping them complete tasks faster, hold more purposeful meetings, collaborate more effectively, and streamline business processes,” Jared Spataro, Microsoft’s corporate vice president of “AI at work,” said in a blog announcing the move.

Among other cases studies cited in the post, customer service agents at virtual healthcare provider Teladoc have saved up to five hours each week using Copilot to draft responses to common client questions.

The announcement comes after Salesforce CEO Marc Benioff said in an earnings call last month that “so many customers are so disappointed in what they bought from Microsoft Copilot because they're not getting the accuracy and the response that they want.” 

Salesforce is preparing to launch its own generative AI platform known as Agentforce.

Pushback from Microsoft

Benioff’s remarks drew pushback from Microsoft.

“Every customer is at a different place in their journey, but overall we are hearing something quite different from our Copilot for Microsoft 365 customers,” Spataro said in an emailed statement. “Last quarter alone, we saw a customer increase of over 60%, and daily users have more than doubled — a clear indicator of Copilot’s value in the market.”

The quality of results that Copilot produces has a lot to do with the user’s prompts, according to Hrncirik.

“I think to really become an advanced user, there’s definitely a learning curve,” he said. “The more context you provide, obviously that provides the grounding necessary to give you the best possible response.”

Microsoft has set up a public web page dubbed Copilot Lab with resources, including training videos and sample prompts, to help users navigate the technology.

Meanwhile, Microsoft’s finance department is developing its own finance prompt library, Hrncirik said.

“I think we’ve curated something like 300 [sample] finance prompts, and those have been super helpful in terms of helping people to cut their teeth on doing something more advanced than just a [basic] prompt,” he said, adding that the library is private and internal for now.

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The role of the CFO is evolving to embrace a more strategic position of tech-savvy innovator responsible for driving business transformation. According to a recent survey by Gartner, leading digital modernization efforts in the finance function is the top area of focus for CFOs.

For the office that sits at the heart of business-wide decision-making, that means finding ways to improve the speed and accuracy of financial analysis and reporting with transformative technologies.

So, what does finance transformation look like for the most successful modern finance leaders?  

It begins with targeting the manual and time-consuming processes that burden teams across FP&A, audit, tax and accounting. These repetitive processes are the most promising opportunities for using automation and AI-powered analytics to improve efficiency and performance.

There are five valuable and cost-saving benefits that are driving CFOs to prioritize automation as the centerpiece of their digital modernization efforts.

Time Savings

Moving from manual spreadsheet work to automated workflows significantly reduces the time spent prepping and blending data, building finance reports and communicating insights. The time saved can be used on higher-value activities, like uncovering deeper insights that improve top-line growth.

Higher Accuracy

Automated solutions remove the unintentional but inevitable risk involved in manual processes. It can also improve data quality and accuracy with at-scale validation of data that can be performed automatically and visually.

Repeatability

Finance departments have long been bogged down in repetitive and mundane, but necessary activities like transaction processing, audit and compliance. Automated analytic workflows are reusable and enable finance professionals to update data on a consistent schedule with no additional work.   

Scalable and Flexible

The limitations of legacy tools like spreadsheets can prevent analysts from scaling data insights from large datasets. Modern analytics solutions can take advantage of on-demand cloud computing to process datasets quickly, without limitations on size or data format.

Available to All

Traditional data automation is done through coding, usually using SQL or Python. The resource-heavy method relies on developers or coders who lack the business domain expertise to know the problems that need to be solved. Most automated analytics solutions are no-code and self-service, allowing finance professionals to run and modify their own queries and reports.

To fully realize the benefits of automated analytics, finance leaders should focus on finding the right metrics to evaluate digital innovation, improve data storytelling in self-service environments and adopt a company-wide approach to data and analytics in which finance acts as a champion of technology-driven governance.

With increased pressure on CFOs and an ever-changing market landscape, it’s never been more important for finance teams to be able to process and analyze data at the speed of business. Automated solutions are no longer a ‘nice to have’, but a critical tool for shifting the finance function away from tedious number crunching to finance analytics and forecasting, strategic risk and compliance optimization and better data-driven financial management.

Large companies adopting artificial intelligence may boost operating profit margins 2% during the next five years, equivalent to about $55 billion in annual cost savings, Bank of America said Thursday.

Artificial intelligence will likely spur profit gains among 23 out of 25 industry groups worldwide during the next five years, with semiconductor and software companies yielding revenue increases of 34% and 25%, respectively, Bank of America said, reporting on a survey of more than 150 of its equity analysts and economists.

“Skeptics declare that GenAI’s revenue potential doesn’t justify the current level of AI infrastructure investment,” Bank of America said. “But remember that far more significant than the internet’s initial consumer use cases were the thousands of use cases and companies that emerged because of the internet.”

The proportion of U.S. companies investing $10 million or more in artificial intelligence will nearly double from 16% this year to 30% of businesses in 2025, EY forecast based on the results of a survey.

Companies are piling money into generative artificial intelligence with the expectation of achieving revenue growth and productivity gains within the next three years, KPMG said in an August report on a survey. Seventy-eight percent of C-suite and other senior business leaders voiced confidence in yielding a solid return on investment, KPMG said.

Nearly half of early adopters of generative AI (48%) expect investment returns of 100% or more over three years, according to a report on a survey by MIT SMR Connections.

Companies use several yardsticks to gauge the pay-off from the emerging technology, MIT SMR Connections said after surveying 1,000 executives, including C-suite leaders, senior vice presidents, vice presidents and directors.

Measurements for ROI include the number of newly inspired products, operational savings, improvements in existing products and services, more finely customized marketing, sharpening sales strategies, streamlining tasks such as customer care, MIT SMR Connections said.

Indeed, companies during the next three years will probably automate most customer centers, aiming to cut the $118.6 billion in annual costs paid to 2.9 million U.S. customer service agents, Bank of America said.

“Investors frequently overestimate the magnitude of tech disruption in the near term and underestimate it over the longer term,” Bank of America said.

Even though generative AI may herald a “revolution” in technology and business, “app development and enterprise adoption will take time,” the report said. 

“GenAI-driven disruption will take time, but will likely occur far more rapidly than” investors anticipate, Bank of America said.

Still, the technology will probably achieve mainstream adoption quicker than other disruptive innovations, including radio, television and email, Bank of America said.

AI adopters may slow their own progress, EY said. Many companies that adopt artificial intelligence fail to build an essential foundation, including a data structure and the cultivation of employee knowledge in emerging technologies, according to EY.

As the CFO’s set of responsibilities morphs into driving the business’ strategy as well as acting as its financial steward, their teams are under increasing pressure to keep up. But with an ongoing accounting talent shortage — and with many companies planning to hold their finance staffing levels steady — finance professionals are swiftly becoming overburdened.

The majority — nine out of 10 — of executive leaders described their finance teams as either “lean” or “overextended,” according to a recent survey by Paro, which offers an AI-enabled marketplace of finance and accounting solutions.

However, while the accounting shortage is putting pressure on CFOs when it comes to finding skilled talent, it’s not “necessarily true that finance teams are smaller than they were pre-COVID,” said Michael Burdick, Paro’s founder and interim CFO. Rather, the volatility of the macro economic environment means it’s “very difficult for teams to adapt to all of the changes that are occurring,” he said in an interview.

Unraveling fixed costs  

High interest rates, a tight labor market and geopolitical pressures have left CFOs racing to find a clear path forward in a murky economic environment, which requires high-level insights and support from their teams.

Much like finance chiefs themselves, however, finance teams which are “constantly getting whiplash” from one headwind or the next are going to be less effective “because their focus is going to drift, or they're constantly going to be changing gears,” Burdick said. An alum of Big Four firm Deloitte, Burdick founded the Chicago, Illinois-based Paro in 2015 and has served as its chief strategy officer and interim CFO for three years, according to his LinkedIn profile.

An overworked finance team switching from one task to the next with little warning or support is likely to be less productive, Burdick said. Failing to support the team can also contribute to employee burnout and high attrition, as well as bump up the risk for errors that could nip at the company bottom line. For example, overextended teams could increase the likelihood of late filings with the Securities and Exchange Commission, which can lead to a drop in stock price or concern investors, Ro Sokhi, an audit partner for UHY, previously told CFO Dive.

Moreover, overworked finance teams lack the time and resources to contribute to strategic initiatives, halting both the company’s ability to move forward on future projects as well as finances’ evolution as a strategic leader, according to Paro’s study.  

Navigating these challenges requires CFOs to shift some of their fixed costs — the greatest of which is typically headcount — to variable costs, Burdick said. That doesn’t necessarily mean having fewer employees but having the elasticity to “flex up and down depending on needs,” he said.

“As opposed to having maybe 10 full time employees as your base team, maybe you have seven, and then you flex up and down with...fractional experts and projects based upon the needs of that specific time period,” he said, by way of example. 

Reducing fixed costs can give CFOs crucial flexibility especially in an uncertain macro economic environment, allowing them to contract certain processes or costs without having a large impact on already-stretched teams, he said. Adding that flexibility includes bringing in both fractional talent and new technologies to lighten the load.

“We're seeing certainly a tailwind there whereby it's sort of, ‘I have my core team and let me supplement them with experts and skills and resources to keep them focused on their core day to day…make sure they don’t burn out,’” Burdick said.

The AI, risk balancing act

Today’s CFOs also need to balance changes in how the accounting industry wants to operate in the face of emerging workforce trends and new technologies. For instance, artificial intelligence is an “incremental tool that [the] traditionally conservative department needs to figure out how to integrate and adapt,” Burdick said of finance teams.

Adding in new technologies such as AI is only adding more complexity for CFOs to juggle as they deal with transformation in their own roles, Burdick said, leaving finance chiefs “trying to find low risk ways for their teams to test AI.”

The most successful CFOs have managed a “balancing act” where they’ve enabled their teams to take small, low-risk opportunities when utilizing AI — allowing them to gain familiarity and ease with the tool without opening the company up to massive risk with a still-nascent tool, he said.

Many companies store large amounts of data in “unstructured” formats such as emails and audio or video files, hampering their ability to extract full value from artificial intelligence investments, according to data management software provider Komprise.

Nearly half of organizations are storing more than 5 petabytes of unstructured data and almost 30% have more than 10 petabytes of such information, according to the findings of a Komprise survey published Tuesday. Fifty-seven percent of respondents said the top business challenge for unstructured data management is AI preparation. But only 30% said they plan to increase their IT budget to support AI projects.

“Our latest survey reveals a pivotal moment in enterprise IT as organizations grapple with the transformative potential of AI while balancing fiscal responsibility,” Komprise CEO Kumar Goswami said in a press release. 

Getting ready for AI can involve a laundry list of costs, including for upgrading data storage and computing infrastructure, cleaning and preparing data, training or developing custom large language models, acquiring new IT skills, and beefing up security tools, according to the Komprise study.

“Paying for this will be tough, with only 30% saying they will increase the IT budget for AI,” the report said. “Strategies will in most cases involve carving out existing budgets — such as cloud, according to 34% — to fund AI.”

The study was based on a survey of 300 global enterprise IT leaders in June.

Meanwhile, an Ernst & Young survey unveiled last month found that  30% of companies are planning to invest at least $10 million in AI next year, up from a current level of 16%, as previously reported by CFO Dive. But many of these organizations are failing to also invest in necessary infrastructure for AI, jeopardizing the technology’s potential impact, EY said.

“As we move into the next phase of full-scale AI integration, leaders will need to develop a holistic strategy that completely re-imagines the entire enterprise system to create an AI-centric business that best harnesses the transformative power of the technology,” Traci Gusher, EY Americas AI, data and automation leader, said in a press release at the time.

For business leaders that need to fill crucial talent gaps, implementing new technologies isn’t a new trick — but it is one that requires a careful balancing act. On top of weighing the cost, leaders need to carefully consider the current needs and skills of their teams, as well as how to train or up-skill their staff to effectively utilize the new tools.

As the executive responsible for managing risks, costs and value creation, the CFO plays an essential role in meeting this challenge, said Terrance Wampler, group general manager, office of the CFO for finance and HR software platform at Workday. Finance chiefs provide a critical, outcome-focused perspective on new technologies, looking in terms of return on investment, CFO Dive previously reported.

“As a CFO, I'm looking at technologies that may help me with productivity, I'm looking at technologies that may help me with insight,” Wampler said in an interview. “And I'm looking at technologies that helped me manage risk, usually with control.”

Getting the right technology fit

While taking point on their business’ technology initiatives heaps more responsibility onto an already full plate for CFOs, “at the end of the day, the CFO has responsibility for the risk and controls of all those processes,” Wampler said. “And so this is an opportunity for them to actually take a lead and voice their opinions.”

To find the right technology fit for the needs of their business, however, finance chiefs will need to work closely with other members of the C-suite, most notably the chief information officer. CFOs need to have a good understanding of the technology, data and people they have available before making a decision on new solutions or initiatives, and “you will definitely have to partner with the CIO on this to figure out where you start,” Wampler said.

As such, there’s a growing ability among CFOs and their finance teams “to really move more into a partnership position with the CIO, and to elevate themselves into a more strategic role as not only an adviser to the business around how the business operates…but also to actually help shape the future of how the company leverages technology,” he said.

Fostering such a partnership could give CFOs a clear look at how they could potentially slot emerging technologies into their existing finance teams and processes at a time when finance chiefs continue to grapple with talent shortages across the sector.

While many finance chiefs plan to hold their staffing levels steady, competition to attract and retain skilled talent such as controllers still remains fierce as experienced staff departs and the number of incoming accounting graduates shrinks, CFO Dive reported.

“The finance leaders of today are recognizing that they're going to need tools and things to replace what people have been doing, and they're going to need to empower the people they do have to be able to do more,” Wampler said.

Directing effective experimentation

It’s also important for finance leaders to make sure they have a voice when it comes to technology implementation, even if some of them may be hanging back from new solutions, because their employees are not.

“We're seeing finance departments use those tools in creative ways at a bootstrap, groundswell level,” Wampler said. “And then that makes its way up to the controller [or] CFO who then says, ‘Well, we better understand this technology, we better harness it, because it represents a risk for me.’”

Though generative AI adoption has been slow-going among business — just one in five CFOs saying they had implemented GenAI, according to a recent McKinsey survey — employees and individuals are busy playing around with the new tools, because “they have the access, and they're trying to make their own job easier and more efficient,” Wampler said.

However, that can open up businesses to potential risks, such as the inclusion of confidential information in public AI models: “Nobody wants you taking your internal financial analysis and putting it into ChatGPT” or a similar tool, Wampler said.

Taking a lead role now in how to experiment with and implement such solutions among one’s team is essential for CFOs, especially as adoption of these tools is set to expand in finance. The growing role of AI or automation in finance is likely going to change how CFOs look for and source future talent, as well as shift the focus of many university or college accounting programs to have a much more technical influence, Wampler said.

“There will be a lot of training on how to understand analysis of data, how to manage that in association with risk and how to be an advisor,” he said.

The number of U.S. companies investing $10 million or more in artificial intelligence is expected to almost double next year, according to a survey by Big Four accounting firm Ernst & Young. 

Thirty percent of respondents said their business is planning to invest at least $10 million in AI next year, up from a current level of 16%, according to a report on the findings, released Monday. But many of these organizations are failing to also invest in necessary infrastructure for AI, jeopardizing the technology’s potential impact, the report said.

“AI is clearly moving out of the hype phase and firmly toward being a viable means of productivity for organizations,” Traci Gusher, EY Americas AI, data and automation leader, said in a press release. “As we move into the next phase of full-scale AI integration, leaders will need to develop a holistic strategy that completely reimagines the entire enterprise system to create an AI-centric business that best harnesses the transformative power of the technology.”

The EY report is the latest in a series of recent studies showing that business leaders are launching larger scale AI projects, while also focusing on return-on-investment metrics for the technology.

A survey unveiled last week by Big Four accounting firm KPMG found that ROI metrics for generative AI are rapidly evolving with revenue overtaking productivity as a chief priority.

“GenAI strategies have hit a new inflection point,” KPMG said in an accompanying press release. “As we reach the midpoint of 2024, C-suite and business leaders are no longer just investing in the technology, they are aggressively scaling GenAI to unlock new revenue streams, maximize ROI and cement their competitive advantage.” 

Organizations that are devoting 5% or more of their total budgets to AI are seeing higher rates of positive return on average, the EY research found.

However, the study cautioned that efforts to maximize AI’s full potential will fail unless organizations take steps such as building a scalable data infrastructure and fostering a workforce fluent in emerging technologies.

“While its ability to revolutionize the workplace is without question, AI is only as good as the underlying infrastructure, the governance framework it operates within and the talent development needed to properly use the technology,” the report said. “Without a strong foundation from which to harness the power of AI, leaders risk their investments cracking and crumbling beneath them.”

EY surveyed 500 senior business leaders across various industries in the U.S. from April 29 through May 6.