Most corporate finance teams are lagging behind other departments in the adoption of tools powered by artificial intelligence, according to a recent Gartner report.
The survey found that 61% of finance functions either had no plans for AI implementation or were still in the initial planning phases. Only 9% of finance organizations were in the scaling and using phases, compared to 20% of other administrative support functions, such as human resources, legal, real estate, information technology and procurement.
“CFOs want to be sure they can trust the technology, and part of that trust is understanding how it works and where it fits” within the finance function, Marco Steecker, a senior principal in Gartner's finance research practice, said in an interview.
Jack McCullough, founder and president of the CFO Leadership Council, said that most of his members are intrigued by the potential of generative AI in particular, even if they are moving cautiously. “It’s adapt or die, and they are aware of this,” he said in an email.
Generative AI refers to tools capable of producing new content, such as text or images, based on what they’ve learned.
Revenues of generative AI offerings across a broad range of categories are forecast to reach $3.7 billion this year and expand to $36 billion by 2028, according to S&P Global Market Intelligence.
Software vendors big and small are racing to capitalize on the popularity of ChatGPT, a generative AI tool created by Microsoft-backed Open AI.
“We are rapidly infusing AI across every layer of the tech stack and for every role of business process to drive productivity gains for our customers,” Microsoft CEO Satya Nadella said during an earnings call last month.
This year, Microsoft has unveiled AI-related initiatives impacting many of its products and services, including its Bing search engine; its suite of office software products like Word, Excel, PowerPoint, and Outlook; and its Azure cloud computing platform.
Microsoft is also incorporating AI capabilities into its Dynamics 365 enterprise resource planning platform for automating business functions in areas such as finance, sales and human resources. As part of that effort, the software giant is developing an AI-powered financial planning and analysis tool.
Georg Glantschnig, Microsoft vice president of Dynamics 365 Finance, told CFO Dive in July that the FP&A tool was being tested with selected clients in a “private preview” phase.
“The biggest thing for us is, of course, that it has to live up to Microsoft security standards,” Glantschnig said at the time.
Gartner’s research shows that CFO sentiment towards AI in general is largely positive, with 85% of finance leaders expressing optimism about using it within the finance function, according to Steecker. Yet, when it comes to adoption, most finance departments are taking their time compared with other teams, the study found.
However, this may change in coming years, according to the survey. Four out of five finance leaders said they expected to devote more money and effort into deploying AI over the next two years.
In the meantime, the most frequently reason cited by finance leaders for not using AI was “other priorities” (76%).
“It kind of shows a misunderstanding of how to think about AI,” Steecker said. “Those finance leaders who are citing other priorities are maybe misunderstanding or not seeing the full picture when it comes to AI,” which has the potential to support many of the same priorities, he said.
Other barriers included: lack of technical capabilities (58%), low-quality data within the organization (35%), and insufficient use cases (32%).
Issues such as cost and data security ranked as lower concerns. Only 11% of finance leaders said the technology is too expensive. Sixteen percent said that data security and ethics concerns were a frequent challenge to their AI efforts.
“This is somewhat surprising given the discussion about security, but it does show that perhaps these security issues are easier to resolve once finance leaders better understand and familiarize themselves with the technology,” Steecker said. Also, the survey looks at AI in general rather than narrowly focusing on generative AI, which presents greater data security risks, he said.
The research is based on a survey earlier this year of 130 finance leaders and 91 associates in administrative support functions.