Scandals in the early 2000s brought drastic reform to corporate finance practices when the Sarbanes-Oxley act was passed to stop companies from “cooking the books.”
This marks the genesis of the agile CFO. Companies needed trusted finance leaders, which accelerated the career path for Controllers to enter the C-suite with their CPA credentials—a new requirement from boards adhering to SOX compliance.
To meet the demands of the complex SOX endeavor, finance leaders sought tools that would simultaneously increase efficiency and control amid the great recession. Budgets were slashed and limited resources required creativity with automation.
Today, we’re facing similar challenges as economic turmoil impacts businesses across the US. Companies are balancing low margins, layoffs are consistently in the headlines and audit and accounting shortages are negatively impacting shareholders.
The difference between the beginning of the 2000s and now brings optimism. Finance teams have twenty years of automation experience under their belt and the CFO tech stack has evolved to new productivity heights.
The three waves of the CFO role
According to Bain Capital Ventures, there are three decades of notable transitions the CFO role has experienced in the 21st century. The first wave was triggered by SOX reform, then technology-driven processes matured during the second wave and CFOs went from the safe set of hands who satisfied auditors to forward-thinking leaders who not only manage risk but also focus on positioning companies for long-term growth.
In 2023 finance leaders wear many hats and continue to increase oversight over key areas of businesses, especially technology adoption. As machines go beyond basic number crunching, entering the realm of decision-making via artificial intelligence (AI), finance teams are tasked with developing trust in machine “colleagues.”
Trust doesn’t come easy and rightfully so, for finance leaders who must guard their budgets and sustain crucial controls. With the exponential growth of AI tools on the market, how do CFOs make sense of countless options? Many leaders wonder if AI can live up to the hype and address their problems when they’ve seen disappointing results from tools that claimed they had AI in the past or haven’t explored the technology before.
According to Deloitte, enterprises that have an AI strategy are 1.7 times more likely to achieve their goals than those without. To not only survive but thrive throughout economic uncertainty, finance leaders must consider where their company will be in one to five years from now if they don’t invest in simplifying cumbersome and costly processes.
Finance leaders need to act now to meet the new market challenges. Here are four steps to reach your goals with an AI strategy.
1. Define the outcome
No matter what business function you’re looking to improve, automation could actually increase costs if you don’t take the time to make a business case and articulate the outcome you want to achieve. Do you want to increase efficiency? Is your goal to reduce costs and stop relying on offshore teams to manage manual data entry? Define the problem you need to solve, then create key metrics to measure the performance of whatever tool you choose.
2. Assemble a buying team
Answer these questions to help you gather the right people for this journey.
Who will manage the project?
Who needs to be involved with vetting the tool and providing their opinion?
Who has the capacity and the knowledge to make your AI strategy successful?
Do you have a partner or need outside expertise?
3. Ask the right questions
Collaborate with your CIO to ask the right questions for appropriate due diligence. Create a thorough software requirement document and don’t stray away from the core competencies and goals your team has defined.
4. Look past the buzzwords
Be cautious of technologies that advertise a one-stop shop to solve all of your needs with rules and templates. Solutions that rely on rules and templates are not AI. If you currently use an existing ERP or automation tool that is advertising a new AI feature, make sure it's not just RPA (Robotic Process Automation) and/or OCR (Optical Character Recognition). While these technologies are beneficial in their own right, they rely heavily on your team and their hidden costs are often overlooked during initial evaluations. True AI is autonomous - it does not require human maintenance and works for you silently in the background.
Follow these steps to successfully carry out your AI strategy and reap the benefits in processes and workflows across all business functions.