Vague promises of artificial intelligence’s potential are beginning to wear on finance chiefs waiting to see that potential reflected in their companies’ balance sheets.

“We've been hearing it for over a year now, the skepticism of a CFO that will call us and say, ‘we're a year and a half into our AI journey, and I have nothing to show for it,’” Connor Augustyn, managing director and partner at consulting firm West Monroe told CFO Dive. He cited a conversation with a CFO at a client company who noted AI was a constant part of town halls at their business but that they could not point yet to the technology and say, “AI is making a difference in my P&L,” he said.

Sweeping generalizations about the return on investment AI could provide are failing to sway CFOs: today, “when we say ROI, you have to be very specific about what the ROI metric that you're trying to influence is,” Augustyn said in an interview. “If it is days to close, or it's your [days sales outstanding], you have to get more specific about what [key performance metric] you exactly want to track as an output of that AI use case.”

Establishing the KPI baseline

In Augustyn’s view, many executives and businesses are not taking as structured an approach as they should when it comes to AI spend, leading to frustrations down the line when they look for the quantifiable results of that spending. The AI use case needs to be “prescriptive and precise: it can't be a broad, ‘I'm going to throw AI at this big problem and hope it fixes it,’” he said.   

Augustyn has spent six years at West Monroe, and was promoted to his current role as managing director and partner in late February, according to a post on his LinkedIn profile. Prior to joining the Chicago-based company, he served as a manager for Clerestory Consulting and in numerous top finance and strategy roles at Conagra Brands.

Clients that Augustyn has seen have more success with their AI deployments have taken that disciplined approach, he said, which starts with asking if the existing vendors or technologies the business works with already can solve the use case where they are contemplating adding AI.

For instance, if one’s ERP provider has already begun to roll out AI-powered solutions, CFOs which have already procured that tool need to ask, “can you just get more out of the tools themselves?” he said.

Identifying the “KPI baseline” or specific metric they are trying to influence is a crucial part of that more disciplined AI strategy as well, Augustyn said.

“That's the piece that I think a lot of CFOs are getting frustrated about because either the KPI that they chose was wrong or they didn't even choose a KPI,” he said. “As they headed down the AI path, they were just getting immensely pressured by their board and the rest of the C-suite to do something about AI and here they are a year later, and the board's asking where the savings are.”

Pressing pause

For CFOs who are still waiting to record quantifiable results from their AI integrations or spend, Augustyn advocates for pressing the pause button.

It may not be necessary to completely rehaul one’s AI strategy, but “if the direction that I've been giving you is every quarter, I'm running a competition to see who comes to me with the best AI use case, and I'm five quarters in, and nobody has given me a good AI use case, we're pausing, and we're going to be taking a different approach,” he said.

That could be as simple as shifting to examine AI through a “value chain lens,” he said, or breaking up one’s processes to see where the best opportunity to use the technology lies — whether that’s in order to cash, financial planning and analysis, or working capital.

A good way to shift one’s strategy may also be to start with the “boring,” but tried-and-true areas where AI has had a definite effect, such as bringing into invoicing or reconciliations. That can help leaders  “prove to the organization that, hey, AI, can influence how we operate differently,” he said.

Pressing pause now to be able to identify critical use cases and better track AI ROI is essential, especially as AI and all its unanswered questions aren’t likely to disappear any time soon.

“No CFO is coming to me today saying, AI, I'm not even going to worry about it anymore,” Augustyn said. “Every CFO has to care about it because every shareholder is demanding that they care about it.”