Recent breakthroughs in artificial intelligence have dazzled C-suite executives seeking to personalize marketing, juice sales, anticipate customer needs and identify unseen risks.

The explosive spread of Google’s Bard, Microsoft’s Bing chat and OpenAI’s ChatGPT has also triggered backlash. Critics pan AI chatbots as threats to jobs, tools for “deep fake” manipulation and fountains for insights that, although seeming trustworthy, are prone to inaccuracy and bias.

The chatbots pose “profound risks to humanity,” Tesla CEO Elon Musk, Apple co-founder Steve Wozniak, and more than 26,000 other signatories said in an open letter released last month.

AI developers are “locked in an out-of-control race to develop and deploy ever more powerful digital minds that no one — not even their creators — can understand, predict or reliably control,” the open letter says. The signatories call for a six-month pause in developing systems more powerful than ChatGPT-4 and for creation of AI governance structures.

CFOs weighing adoption of AI tools need to look past both the hype and anxiety. They face the challenge of weaving the technology into company operations and reaping immeasurable rewards while not shirking their obligation to limit risk and ensure a worthwhile return on investment, according to AI experts and finance executives.

“The challenge for CFOs right now is that the frenzy around generative AI puts pressure on them to roll this out at scale,” according to Tad Roselund, a managing director at Boston Consulting Group. “You have this commercialization pressure to explore all the benefits of generative AI.”

CFOs need to demystify AI tools — identifying low-risk, high-reward uses — when even the tools’ creators cannot always explain the reasoning behind insights into core strategic topics such as emerging risks, capital allocation and new market opportunities, the AI experts and CFOs said.

To avoid failure when adopting the newest AI, CFOs should try to find a “balance of being urgent but being deliberate,” Roselund said in an interview.

AI for the rest of us

Generative AI and conversational AI such as ChatGPT — both forms of machine learning — widely expand access to advanced computing.

The software can write college essays, computer code, market research reports, jokes, translations, blogs, legal briefs and help in medical diagnosis and drug discovery. They sweep away technical and developmental obstacles and “democratize” AI, offering front-line employees computing power once available to a few, Roselund said.

Broader access has spurred a record adoption rate for conversational AI. ChatGPT hit 1 million users in less than a week, compared with 10 weeks for Instagram and 20 weeks for Spotify, according to DiploFoundation and KPMG.

The market for conversational AI will surge to as much as $20 billion by 2025, or 20% of total AI spending, according to UBS.

The potential market for generative AI may total $150 billion compared with $685 billion for the software industry, Goldman Sachs said. During a 10-year period generative AI may add 7% growth to global gross domestic and push up productivity by 1.5 percentage points.

Use of AI tools has boomed as OpenAI, Microsoft, Google and other AI innovators fight for market share. By providing free or low-cost access, they can vacuum up oceans of user feedback to improve their algorithms and gain an edge.

New AI tools help CFOs analyze data, make financial projections, prepare financial statements, manage risk and more easily supervise treasury and accounting tasks. Employees freed from routine work can turn to more creative, fulfilling projects.

Adobe, Shopify, Instacart and Zoom have adopted generative AI tools. Salesforce in March said it planned to integrate ChatGPT into Slack and meld generative AI into its customer relationship software.

Walmart uses chatbots to inform customers about simple questions including order status and returns. With verbal queries using the “Ask Sam” app, employees can locate products for sale, look up prices and check their messages or work schedule.

CFOs, at the risk of jarring employee morale, can use AI tools to trim headcount. AI automation may eventually shake up to some degree roughly two-thirds of U.S. occupations, Goldman Sachs said.

A list of at-risk jobs underscores the power of the technology to disrupt the workplace.

So-called large language models such as ChatGPT imperil jobs for workers in dozens of professions, including accountants, auditors, financial quantitative analysts, blockchain engineers, interpreters, mathematicians and journalists, according to a study by researchers at the University of Pennsylvania and OpenAI.

The technology over time will streamline at least 10% of the tasks performed by 80% of workers, and half of the tasks done by 19% of workers, the researchers said.

CFOs should not adopt generative or conversational AI without first sizing up its many risks, the financial executives and AI experts said. Some AI tools may end up on the list of much-maligned innovations that, at high cost to early adopters, over-promised and underperformed.

“AI has the potential to be yet another technology in that rogues’ gallery, especially with so much speculation that these AI systems could end up replacing workers,” according to the article describing survey findings by MIT Sloan Management Review and BCG.

AI on the sly

AI tools pose several risks. First, the spread of generative and conversational AI may undermine a company’s ability to manage or catalog AI use.

Employees who retain their jobs after adoption of the new technology will potentially gain access to vast computing power. They may engage in “shadow AI,” or computing without company oversight, and either mistakenly or deliberately leak proprietary or customer data.

Second, companies unable to fully explain how AI tools generate insights may face scrutiny from regulators, lawmakers, shareholders and other stakeholders. The “black box” hazard is especially problematic for asset managers and other AI users with fiduciary obligations.

Third, AI tools expose a company to litigation or a reputational setback by engaging in “hallucination.” They may access flawed or biased data, come to erroneous conclusions and perpetuate inaccuracies or discrimination and stereotyping.

OpenAI acknowledged last month that the accuracy of ChatGPT-4 in business applications is less than 80%. Google says in a disclaimer that “Bard is experimental, and some of its responses may be inaccurate, so double-check information in Bard’s responses.”

Fourth, wrongdoers both within and outside a company could use AI tools to improve deep fakes and other misinformation, or for schemes at phishing, impersonation and intellectual property theft.

Regulators in the U.S., Europe, China and other countries have proposed setting guardrails around AI tools. UNESCO’s 193 member states have unanimously endorsed a framework for averting AI abuses.

“The world needs stronger ethical rules for artificial intelligence,” UNESCO Director-General Audrey Azoulay said in a statement last month. “This is the challenge of our time.”

The Commerce Department this month requested public comment on ways to limit risks of AI. “Responsible AI systems could bring enormous benefits, but only if we address their potential consequences and harms,” Alan Davidson, Assistant Secretary of Commerce for Communications and Information, said in a statement.

CFOs can limit risks and tap the benefits of AI tools, financial executives and AI experts say, by taking four steps:

1. Ensure “responsible AI”

The newest AI tools highlight the imperative of constructing safeguards against abuse, the CFOs and AI experts said.

“You need responsible AI on steroids” and injected at all levels of a company, according to Roselund. “The tone from the top is incredibly important,” he said, underscoring a need to make a senior executive fully accountable for the outcome.

Responsible AI, as described by BCG, KPMG and other consultants, also ensures that the technology serves a broad range of stakeholders; mines high-integrity data; protects against attacks and rogue use; shields user data; avoids harming people, property or the environment; and is explainable, transparent and reliable.

A company adopting AI should create a cross-functional oversight team including data scientists, attorneys and the leaders of the company’s various departments.

The team should uphold standards for testing and quality control and regularly gauge risks, aware that wider use of AI within the company will require agility and shorter response times.

Employees throughout a company should be free to innovate with AI tools and find new uses for the technology but within clear boundaries, Roselund said. They need to “think outside the box but inside the circle.”

2. Widen the conventional concept of ROI

By posing unusually high benefits and risks, AI tools raise the stakes of ROI measurement, the CFOs and AI experts said.

“AI — for all its hype — still has to prove itself,” SymphonyAI CFO Wayne Kimber said in an interview. “It’s got to go from a science project with a data science engineer to something tangible for business.”

So far the payoff from AI is far from universal. While 37% of executives in 100 countries and 20 industries said their companies derive value from AI, 30% said that their businesses do not, according to 1,741 respondents to the survey by MIT Sloan Management Review and BCG.

“Aligning the achievement of individual and organizational value from AI remains a work in progress,” the researchers said, cautioning against burdening employees with the task of serving the machine.

When gauging ROI, CFOs need to recognize that valuable uses for AI tools will unexpectedly crop up as the software analyzes mountains of data, Aible CEO Arijit Sengupta said in an interview.

“People need to flip their thinking, their traditional approach to setting up ROI goals and expectations for projects that were based on a deterministic world,” he said. “Until you have actually trained the AI on the data, you have no way of knowing how to paint a nice, beautiful picture beforehand.”

CFOs derive the biggest payoff from AI tools by focusing first on increasing revenue, which is comparatively easy to measure, Sengupta said. Next, they should aim to cut costs and limit risks.

3. Adjust to AI’s limitations

OpenAI is candid about the weaknesses of ChatGPT-4, the newest version of its software.

“Despite its capabilities, GPT-4 has similar limitations as earlier GPT models,” OpenAI said in a report last month. “Most importantly, it still is not fully reliable (it ‘hallucinates’ facts and makes reasoning errors),” OpenAI said. It suggested “avoiding high-stakes uses” that lack additional context or review by human supervisors.

The creators of AI tools will gradually eliminate hallucination as they work with their clients on focussed applications, Sengupta said, adding that Aible offers software that aims to spotlight errors by double-checking answers from the AI tools.

“The hallucination problem — use-case by use-case — will get solved,” he said. “But it has to be solved before enterprises can use it.”

4. Start small

CFOs should avoid delay in sizing up AI tools given the opportunity to gain a competitive edge — and the risk of losing market share, the CFOs and AI experts said.

“Organizations need to move quickly to have a clear vision and a transformation, program-led approach,” according to Mukund Kalmanker, global head of AI solutions at Wipro.

At the same time, CFOs can maximize returns and avert waste by initially focusing on proven AI tools on a limited scale, according to Kimber. They should “line up a company with sector knowledge,” he said, “not some stealth skunkworks.”

“We’re not saying to customers, ‘Buy our platform and look for the needle in a haystack,” Kimber said. “We’re saying, ‘Hey, retail customer or fintech customer, we’ve already identified use cases that work.’”

CFOs who take an uninformed approach may push the technology into the same “hype cycle” that has disrupted the adoption of innovations for decades, the financial executives and AI experts said.

“The hype cycle in technology is well known,” even within just the AI subsector, Sengupta said, noting the C-suite mood swings over expert systems and automated machine learning.

“People get excited, then they over-invest, then they lose a lot of money, then they get unhappy, then they under-invest,” he said. “Now we’re seeing it with generative AI.”

CFOs at the start of 2023 are holding a tight grip on technology spending as several risks beyond their control threaten profitability.

Forecasts of recession, high inflation, turbulent equity markets, rising borrowing costs, geopolitical tensions and the most aggressive monetary tightening in four decades are compelling CFOs to conserve cash and ensure every dollar spent on technology pays off, according to financial executives and technology consultants.

A recession “is not going to be a surprise to anyone,” Coupa Software CFO Tony Tiscornia said in an interview. “Everyone is battening down the hatches, getting ready for whatever may come in the next year or two years, and most CFOs are hoping for the best but fearing and preparing for the worst.”

Gartner this month cut its projection for 2023 growth in global information technology spending to 2.4% from an estimate of 5.1% just three months ago. It forecasts $4.5 trillion in IT outlays this year, only 2.1% higher than in 2021.

“What every CFO is saying right now is, ‘I don’t want to buy it unless I have a business leader who is sitting in front of me screaming they have to have it,’” Salesloft CFO Chad Gold said in an interview. “It’s this idea of how do you do more with less?”

Weak growth in corporate spending has prompted tech industry giants to slash payrolls. Microsoft, Twitter, SAP and International Business Machines have announced sweeping layoffs in recent weeks. Both Amazon.com and Alphabet plan to cut staff by about 6%, and Meta Platforms in November said it will lay off 13% of its workforce.

Companies outside the tech industry are also coming down from a spending sugar high after years of near-zero interest rates. Focused on growth, CFOs borrowed heavily with a conviction that “profitability is not really what investors are focused on,” Tiscornia said.

Last year the Federal Reserve halted the period of easy money by pushing up the federal funds rate 4.25 percentage points. Fed policymakers have committed to further tightening, and may announce a quarter-point increase in the benchmark interest rate on Feb. 1.

The pullback in stimulus has prompted a change in CFO strategy. During the past six to nine months, “profitability and generation of cash flow have really become as important if not more important than growth to investors,” Tiscornia said.

CFOs in many industries face high stakes as they try to conserve cash without missing out on the newest profit-boosting innovation. Advances in technologies such as artificial intelligence, data analytics and cloud computing can determine whether CFOs lead or lag their peers.

To achieve high ROI from technology, financial executives and technology consultants offer CFOs five tips:

1. Take a technology inventory

CFOs determined to achieve a bigger payback from technology and improve cash flow should start by drawing up a detailed inventory of software, hardware and tech services, the financial executives said. The aim: consolidate and eliminate duplication.

“Take inventory of every piece of technology you have in your company,” Gold said. “Have a list of everything that’s there and sit down with every business leader and ask them what it does.

“You’ll find that there are things and pieces of technology that either one, they don’t know what they have, or two, they can’t even explain what it does,” Gold said.

Many CFOs lack visibility on technology outlays, with scattered groups in the company separately spending without cooperating to find the lowest cost, the financial executives and technology consultants said.

CFOs may find that two or more units in the company bought two different technologies to perform the same task, or purchased the same technology from the same vendor without having negotiated a volume discount.

“Visibility is really key to budgeting during economic uncertainty,” Tiscornia said.

2. Prioritize, postpone spending

Amid increasing forecasts of a brief, shallow recession, many CFOs are reviewing their technology priority list and postponing spending and hiring until the outlook for the economy brightens.

“The stuff that we’re buying right now is the stuff that makes us say, ‘We’ll go backwards if we don’t have this,’” Gold said.

Gryphon.ai, a provider of AI-guided sales intelligence, has decided to continue relying on outside cloud computing consultants rather than add to its current in-house expertise, CFO John Renehan said. It has also postponed buying new back-office infrastructure technology.

“Rather than putting in place new systems this year, we’re really focusing on making sure our Salesforce or Zendesk — they’re all communicating with each other,” Renehan said in an interview. “We’re prioritizing the payback period more than we used to as a component of ROI.”

3. Renegotiate contracts

The prospect of a downturn has added urgency to talks between vendors and buyers over costs, the financial executives and technology consultants said.

“Every negotiation is a little harder these days,” Renehan said, referring to discussions with Gryphon.ai’s customers. “We’re seeing that they’re tightening their belts, some of them have had layoffs, and it’s imperative for us to work with them closely to show how our products are making them more productive.”

Gryphon.ai is also more sharply scrutinizing its costs with “a constant review of every piece of software in the business,” and pushing back against vendors after low returns, Renehan said.

“There’s certain technologies that sales uses where, in my opinion, the providers of these technologies just routinely increase your prices,” he said.

“They’re not in the business like your cloud operator of trying to help you maximize your investment,” Renehan said. “They’re just trying to raise your prices every year.”

Gryphon.ai has identified the best software, and achieved high value in negotiations, by simultaneously running applications from two companies and then choosing the best when the licensing period ends, Renehan said.

When sizing up software, financial executives should pick apart the vendor’s ROI pitch, talking to peer companies selling similar products and contacts at other companies using the software, Tiscornia said.

“Let’s say it’s a lead generation tool for sales,” he said. “I’d want to understand very intimately or have someone on my team understand that calculation of how they arrived at that ROI.”

4. Gather front-line insights

When scrutinizing technology, CFOs should reach out to ground-level staff, as well as department heads and other members of the executive team, the financial executives and technology consultants said.

“A CFO, especially at a time like this, really needs to have a hand on the pulse of the business,” Tiscornia said.

“Usability of software is of the utmost importance — No. 1 from an employee morale perspective,” he said. “You want employees to have solutions that they feel enable them to do their best work, so they feel like the company is investing in them and you can avoid burnout.”

Close consultation with grass-roots staff can yield big improvements in a company’s products, Renehan said. Gryphon.ai’s sales team was the first user of its AI for customer support and increasing sales. “They understand exactly what the product needs, so they helped make the investment decisions,” he said.

5. Bring cloud spending down to earth

Cloud computing will grow more than any other IT category in 2023 and remain as the No. 1 spending target, Gartner said. It forecasts that worldwide end-user spending on public cloud services will surge 20.7% this year to $591.8 billion.

At the same time, concerns about recession and the availability of broader, deeper data on the value of cloud computing has prompted many CFOs to scrutinize their cloud use, according to CFOs and technology consultants.

CFOs are asking, “‘OK, we moved to the cloud and that was great, but have we really been applying financial discipline to it?’” according to Randy Armknecht, managing director for enterprise cloud and global delivery at Protiviti.

At some companies CFOs are refining key performance metrics, such as cost per sale, and compelling their cloud computing providers to commit to a plan for savings extending two years or longer. They are also tracking how closely costs match forecasts.

“Did we forecast that it was going to cost X and it’s costing 2X?” Armknecht said.

Financial executives at some companies have stepped up collaboration with software engineering teams to gain insights on the strong or weak spots in cloud computing, he said in an interview.

With such data CFOs can determine the cost of a sale down to the cent and predict the cost of a project in the design phase before deployment in the cloud, he said. They can also precisely track whether a project has met its target and refine the customer journey, maximizing the value of time spent with the company’s app.

Cloud providers feel more compelled to show value as competition in cloud computing intensifies and customers master the technology, the CFOs and technology consultants said.

“When we first moved our products to the cloud years ago, we didn’t know what we didn’t know,” Renehan said. “You just bought this big block of time up in the cloud.”

“Now the focus is on reducing the costs and increasing our gross margins,” he said, noting that Google Cloud Platform is helping the company identify savings and increase value.

Cloud computing providers in recent years have recognized that “the onus is on them and their transparency in reporting on your spending within their platforms,” Armknecht said. Instead of losing a customer, “they would rather have a customer that works with them to figure out how to optimize spending.”

While highlighting the need to maximize the value of technology investment, the prospect of recession has also underscored the longstanding imperative for scenario planning.

“Conservation of cash is just something that’s in our blood as a CFO, so you’re always looking at that,” Renehan said. “What we’ve done through our budget process is a lot more scenario testing, including for the worst case.”

As technology innovations accelerate, companies also need to focus on the future needs of their customers, the financial executives and technology consultants said.

CFOs “should be thinking about where the customer is going to be and not necessarily just keep funding where they were,” Armknecht said. “Market alignment and customer alignment — that is huge in driving the strategy for funding tech.”

Sponsored content

By Protiviti

Ask five finance leaders to jot down what their function’s transformation success looks like, and there’s a good chance you’ll receive five different versions. That’s less a knock on finance leaders than a sign of the pervasive need to define what “digital transformation” truly means for the finance group and each of its members.

Two types of misalignments commonly hamstring finance transformation journeys. The first arises when finance leaders fail to convey a consistent definition of transformation or a shared vision of its success. A second but equally pervasive form of misalignment stems from a three-way disconnect between the organization’s strategic objectives, the vision and goals of finance transformation, and the individual behaviors throughout the finance group required to execute and sustain this change effort.

While automation is crucial to finance transformation, the scope of these activities extends well beyond implementing new technology systems and tools. Finance transformation should fundamentally reimagine how the function leverages skills, processes and technology to drive long-term value, improved internal and external customer experiences and ongoing performance improvements. Delivering on the potential value of new technology requires a significant investment in resources and careful attention to communications throughout the effort.

Savvy chief financial officers (CFOs) also recognize that transformation requires a change in culture – one that often fosters innovative solutions, fully optimized processes and new behaviors at every level of the function’s hierarchy.

Achieving that success starts with establishing a compelling finance transformation story via a combination of math (e.g., performance links and key performance indicators) and magic (e.g., narrative and behaviors). If your eyes glaze over at terms like “storytelling,” “behaviors” and “change management,” the requisite magic is far less mystical than you might expect. In fact, composing a successful transformation story deploys skills – rigor, conciseness and specificity – that reside squarely within finance leaders’ wheelhouse. Four actions can reduce the likelihood of transformation misalignment:

1. Set the strategic vision: Start by framing finance transformation as a set of concrete goals that support the organization’s overarching strategic objectives. Finance leaders sometimes underestimate the importance of defining finance transformation in terms of the value and return on investment (“ROI”) it will generate for the company. Financial professionals are more likely to buy into the big picture when they understand how transformation fits with the overall business strategy and, equally important, what’s in it for them.
2. Link guiding principles to KPIs and individual behaviors: Developing a handful of guiding principles establishes guardrails for the project teams tasked with executing transformation initiatives. These directional markers clarify the effort’s purpose and objectives, which can help limit the turnover that often increases as finance transformation initiatives progress. “Leading with innovative processes,” “automating every chance we get,” and “standardizing processes” represent effective guiding principles. If a focus on automation is a guiding principle, related KPIs (e.g., team member capacity) and individual behaviors (e.g., spending more time on consultative, strategic activities) should support that guiding principle.
3. Communicate clearly, concisely and consistently: Straightforward and succinct transformation definitions and objectives help ensure that finance leaders convey a consistent message. Effective communication is two-way in nature. Finance professionals at every level of the function should have easily accessible channels to raise questions and get answers about how transformation affects their roles and work. Finance leaders also should recognize how understanding and empathy can curb resistance. It’s beneficial to acknowledge that the transformation initiative is a big change, and team members may be uncomfortable for a bit.
4. Manage behaviors methodically: Effective behavior management plays a crucial role in reducing friction, limiting turnover and enhancing the value of finance transformation. Behavioral change is difficult to measure, so finance leaders should make it as tangible and real as possible through mechanisms like behavior maps. These straightforward lists, which should address specific finance roles, identify pre-transformation behaviors that are no longer needed and post-transformation behaviors that help drive value. Attrition often is an unavoidable side effect of large-scale transformations. Proactively planning how to fill select positions marks another practical change management action finance leaders should perform.

The results of Protiviti’s annual survey of global finance leaders and managers show that CFOs and other finance executives view the implementation of advanced automation with more urgency than do other finance managers and professionals. That makes it even more important for finance leaders to communicate to their teams that finance transformation is not a destination but rather a continuous journey – one that begins with finance leaders getting their stories straight.

Business adoption of artificial technology tools such as ChatGPT isn’t likely to make CFOs unnecessary in the near or even distant future, according to finance tech experts.

Any notion that finance roles, especially at the senior level, can be completely automated is highly improbable, the experts told CFO Dive.

“Can AI execute tasks that people can do now? Absolutely,” said Mark McDonald, a senior director - analyst at Gartner who specializes in the application of advanced AI technologies to financial processes. “But I’m reluctant to say it’s coming for your job. I think that’s overblown.”

Financial forecasting and contract management are areas where AI has the potential to transform corporate finance work, McDonald said. “We might not have as many people doing the same things, but we still need people to be somehow responsible for the tasks that we’ve set up today,” he said. 

ChatGPT, an AI-driven natural language processing tool created by Microsoft-backed OpenAI, has captured public attention in recent months. The tool can help with tasks such as drafting reports and emails, answering complex questions, and even writing software code.

“If you’re a CFO trying to put together remarks for your next quarterly earnings call, maybe it’s a faster way to get to that first draft,” said Michael Chui, a partner at the McKinsey Global Institute who leads research on the impact of disruptive technologies on businesses and the economy. “That doesn’t mean that somebody in a CFO role goes away.”

Despite its popularity, the technology is also prompting concerns and sparking a national debate about the potential risks of AI-driven automation.

In late March, a group of more than 1,000 AI and technology experts published an open letter calling for all AI labs to immediately pause the training of AI systems to better assess the risks of deploying the technology at scale, including in the workplace, as previously reported by Industry Dive sister publication CIO Dive. Some of the participants were prominent voices in the technology space, including Twitter CEO Elon Musk, who co-founded OpenAI.

A recent Goldman Sachs study estimates, using data on occupational tasks in both the U.S. and Europe, that generative AI technologies such as ChatGPT could automate up to one-fourth of current work in the future. The business and financial operations job category is among the top five areas that could be impacted, according to the research.

“The good news is that worker displacement from automation has historically been offset by creation of new jobs, and the emergence of new occupations following technological innovations accounts for the vast majority of long-run employment growth,” the authors wrote. 

Many jobs, particularly leadership roles like the CFO, entail a variety of everyday tasks that would be difficult — if not impossible — for a machine to completely replace, according to Chui. “It’s very rare that one technology is going to show up and then suddenly everything that anybody does is going to be automated by that technology,” he said.

A CFO role in particular can involve everything from taking part in quarterly earnings calls to reviewing the daily results coming out of business units and interfacing with the CEO and others in senior management, he said.

With the introduction of AI, some roles in the corporate finance department may look different, but they won’t completely disappear, according to McDonald.

“Let’s take a financial analyst for example,” he said. “Instead of doing a lot of guessing and digging through a bunch of numbers to come up with some future revenue figure, what that person will be doing is training and using algorithms to do that task for them. And because they won’t be spending so much time on that, they’ll be able to do other things as well.”

Data entry will look very different as well, McDonald said. “Picking up a piece of paper and typing numbers onto a keyboard — probably not going to happen,” he said. “Instead, you’ll scan a piece of paper, and an algorithm will pick the numbers out and put them in the right place for you. But you’ll still need to have somebody who can double check to make sure the data is clean and the algorithm is not being trained with garbage data. Somebody needs to nurse the process.”

A growing number of companies are beginning to offer ChatGPT-style tools tailored to finance teams. Software provider Datarails, for example, is testing out an AI-enable financial planning and analysis platform, as previously reported by CFO Dive.

Still, while AI can help with tasks such as generating forecasts or ensuring that financial statements are produced in a timely fashion, a human being ultimately must be held accountable for the results, McDonald said. “If the AI breaks and says something wrong, a regulator is not going to fine the algorithm,” he said.

If you’re a CFO, ChatGPT wants you to know that it’s not coming for your job — at least for now.

CFO Dive decided to engage the popular artificial intelligence tool in a conversation about both its potential and limitations in the area of corporate finance. Like experts who have weighed in, ChatGPT concluded that it can assist CFOs but is currently not capable of completely replacing them.

ChatGPT, an AI-driven natural language processing tool created by Microsoft-backed OpenAI, has been catapulted into the public spotlight in recent months. The tool has the ability to interact in a conversational way, producing responses to questions across a number of subject areas. It can also assist people with a variety of tasks, from drafting reports and emails to writing software code.

ChatGPT quickly gained attention after it was launched last November. It generated one million users in less than a week, surpassing both Instagram and Spotify as the fastest-growing consumer application in history, according to DiploFoundation and KPMG.

Despite its popularity, the technology is also prompting concerns and sparking a national debate about the potential risks of AI-driven automation.

The following is a Q&A between ChatGPT and CFO Dive’s Alexei Alexis.

CFO Dive: Do AI tools like yourself have the potential to replace corporate CFOs someday?

ChatGPT: While AI tools like myself can perform many tasks related to financial analysis, forecasting, and reporting, I don't think we have the potential to completely replace corporate CFOs anytime soon.

The role of a CFO is complex and multifaceted, requiring a deep understanding of finance, accounting, and business operations. CFOs are responsible for overseeing a company's financial strategy and performance, managing risk, making strategic investments, and ensuring compliance with regulatory requirements.

While AI tools can assist with many of these tasks, they cannot replace the strategic decision-making and leadership skills that a CFO brings to the table. Additionally, CFOs often serve as a bridge between the finance department and other areas of the company, such as marketing, operations, and sales. They need to be able to communicate financial information and insights to non-finance executives and stakeholders, which requires interpersonal skills and emotional intelligence.

Overall, AI tools can certainly help CFOs do their jobs more effectively, but they are not capable of replacing the unique skills and expertise that CFOs bring to their organizations.

CFO Dive: Can you please elaborate on what you mean by "anytime soon"?

ChatGPT: "Anytime soon" is a somewhat vague term, so let me clarify what I mean in the context of AI tools potentially replacing corporate CFOs.

While AI technology is rapidly advancing and becoming more sophisticated, I believe that it will still be some time before it is capable of completely replacing CFOs. It is difficult to predict exactly when this might happen, as it will depend on a variety of factors, including the pace of technological development, changes in the business landscape, and the willingness of companies to adopt new technologies.

However, based on current trends and the limitations of AI technology, I think it is safe to say that it will be at least several years, and possibly decades, before AI tools are advanced enough to take over all of the responsibilities of a CFO. In the meantime, AI will continue to play an increasingly important role in finance and accounting, and CFOs will need to be comfortable using and managing AI tools in order to stay competitive.

CFO Dive: Can you say more about your capabilities and limitations in the context of corporate finance work?

ChatGPT: As an AI language model, I have a number of capabilities that can be useful in the context of corporate finance work. Some of these capabilities include:

1. Data analysis and processing: I can analyze large volumes of financial data and identify patterns and trends that would be difficult or time-consuming for humans to detect.
2. Financial modeling and forecasting: I can create complex financial models that take into account multiple variables and can be used to forecast future financial performance.
3. Risk analysis: I can identify potential risks and opportunities in financial data and provide recommendations for managing those risks.
4. Reporting and visualization: I can generate reports and visualizations that make it easy to understand complex financial data and communicate insights to stakeholders.

However, there are also some limitations to my capabilities as an AI tool. Some of these limitations include:

1. Lack of domain-specific knowledge: While I have access to a vast amount of information, I may not have the domain-specific knowledge required to fully understand the nuances of certain industries or financial instruments.
2. Inability to make judgment calls: While I can analyze data and provide recommendations, I am not able to make judgment calls that require a deep understanding of business operations, company culture, or industry trends.
3. Lack of emotional intelligence: I am not able to read nonverbal cues or understand the emotional context of a situation, which can be important in certain financial decision-making processes.
4. Inability to take into account external factors: While I can analyze financial data, I may not be able to take into account external factors, such as geopolitical events or natural disasters, that can have a significant impact on financial performance.

Overall, while AI tools like myself can be extremely useful in corporate finance work, they are not a replacement for human expertise and judgment. It is important to use AI tools as a complement to human skills and to be aware of their limitations.

CFO Dive: Some warn that relying on you for corporate finance projects could present data privacy and security risks as well as potential data accuracy issues. Any comments?

ChatGPT: As an AI language model, I can understand why there may be concerns around data privacy and security risks, as well as potential data accuracy issues when using third-party services like myself for corporate finance projects.

Regarding data privacy and security risks, it's essential to recognize that I do not have access to any private or confidential information unless it is explicitly provided to me by the user. That being said, it's crucial to ensure that sensitive data is adequately protected and only shared with trusted and reputable service providers.

As for data accuracy issues, it's important to acknowledge that my responses are generated based on patterns in large datasets and are not a substitute for human expertise or judgment. While I strive to provide accurate and helpful information, my responses may not always be entirely relevant or accurate for a particular situation. It's therefore crucial to approach my responses with critical thinking and to seek expert advice where appropriate.

Overall, AI language models like myself can be valuable tools for corporate finance projects. However, it's crucial to weigh the potential risks and benefits carefully and to use caution when sharing sensitive data with any third-party service. Ultimately, the most effective approach will involve a combination of AI technology and human expertise to achieve the best possible outcomes.

With the hype around AI and other technologies still buzzing, digital transformation remains a top priority for CFOs. But in order for companies to make real headway on their digital transformation initiatives, they need to put data governance and skills first, said Sharon Bhalaru, partner in consulting at accounting and consulting firm Armanino LLP who specializes in technology issues.

“The area where I would put a lot of focus on for our clients is around getting the data right,” she said in an interview. “The ability to use all the new features with AI are really going to be bottlenecked by bad data.”

If firms lack data governance or if their systems are cluttered — clogged with duplicate customers and addresses, for example — then the insights they gain from their predictive analytics are “not going to be very valuable,” she said. Going back to the basics and understanding one’s data structure is key, said Bhalaru.

“Do you know, what are your strategy and your firm goals, and are you connecting the dots back to your project goals and what you're trying to achieve with the digital transformation?” she said. “That's really going to be key in order to move to the next level, to be more forward looking.”

Digital transformation relies on data understanding 

CFOs take on a key role when it comes to driving their firms’ digital transformation goals forward — while chief technology officers or other executives can offer essential insights, ultimately, accountability goes back to the CFO because such initiatives are “a significant investment into their business,” Bhalaru said.

Having a complete understanding of one’s data governance strategy is therefore crucial for finance chiefs. Bhalaru pointed to the example of companies taking steps to become global entities, where companies may have to make choices where different sites may not have “what they’re used to in terms of their data and the structure of their data,” she said.

“Having that CFO, a decision maker at the executive level, who can make those decisions globally, will speed up the digital transformation journey,” she said.

Gaining a more holistic understanding of their data structure and brushing up on those skills can also help leaders be prepared when it comes to tapping new technologies. Exploring AI’s potential, for example, is becoming a must for companies — something that is especially true in the current economic environment.

Continued uncertainty means the “wait and see” approach leaders were taking in regards to digital transformation is no longer viable, according to Bhalaru. Companies that fail to upgrade their systems in time won’t be able to take proper advantage of emerging technologies like AI to ride out economic headwinds, she said.

AI can be pared with existing platforms, tying into one’s ERP system, for example. Companies can use ERP systems to aggregate key information into one place, and then tap emerging technologies like AI to better parse through that data and find the key insights needed to drive the business forward.

“What our executives and CFOs are looking to do is recognize the signal from the noise, and figure out, ‘what do I need to focus on?’” she said, with CFOs looking to find the right reports, dashboards or key performance indicators that will help them not only make the right decisions, be forward-looking in their business, empower their teams and retain skilled employees.

Data skills can aid talent retention

Putting an emphasis on data can also aid finance chiefs when it comes to talent retention, as upskilling one’s existing employees in these key areas can help both save companies funds and to allow them to push forward on their digital transformation initiatives.

“What we're also working [on] with a lot of our clients is helping to teach them to empower their workforce to learn new skills,” Bhalaru said.

While the most recent data from the Labor Department shows job growth may be slowing — the ratio of job openings fell to 9.9 million at the end of February, with the number of hires remaining relatively unchanged — cost optimization still remains high on CFOs’ priority list, with headcount and compensation emerging as two main spaces where financial leaders may look to reduce expenses.

Forty-two percent of financial leaders highlighted these two areas as a way to slash costs, according to a recent study by Grant Thornton, with the number of CFOs who are unsure they can meet their labor needs plummeting to an all-time low of 7%.

Upskilling existing employees not only means that businesses don’t have to hire new workers, but it can also help with employee retention, Bhalaru said, especially as workplace demographics continue to shift.

“More and more millennials and generation Z want to be able to learn and grow at a firm and if they're not getting that, they're happy to leave and go to another firm,” she said. “So by investing in their training, you're also getting stickier employees; a workforce that is willing to continue to invest in the business.”

Finance leaders are still prioritizing investment into artificial intelligence or other digital transformation areas, but in the face of persistent economic headwinds they’re rethinking their spending on these tools, and reassessing their potential return on investment.

One of the main challenges is the nascent nature of the technology itself. Finance leaders looking to spend on new technologies will need to make investments into unknown areas, which necessitates more risk, said Angela Pierce, CFO and president of data science and machine learning platform Anaconda.  

Pierce has served as president and CFO for the platform for three years, and has held other CFO and financial executive roles at companies including Airstrip Technologies and Trillion Partners, according to her LinkedIn profile. She began her career at Deutsche Bank.

Moving into the dark woods

Finance chiefs, tasked as they are with managing their companies’ funds responsibly, tend to be relatively risk-adverse. This mindset can be a help and potentially a hindrance when it comes to rapidly changing technologies like AI, where CFOs must quickly determine just how much risk they are willing to take on with potentially unproven technologies as they look to remain competitive. 

Many businesses are reorienting their tech spend to stay disciplined on business needs first and transformation second in a contracting economy, but AI’s long-term potential is still captivating businesses and their executive leadership.

Tools such as ChatGPT, a free language model powered by OpenAI, have spurred AI initiatives forward at large-scale companies including Microsoft and Google, according to a recent report by sister publication CIO Dive.

Pierce herself is anticipating a kind of AI gold rush, she said.

“You’re going to see this mass of people that have never thought about AI before, or maybe they thought about it but they didn't know how it fit, and there's going be this huge rush for people to say, ‘how can I get it?’” she said. “I want to be in the movement, right? I don't want be left behind in five years like, ‘everyone has an AI strategy, I don’t.’”   

This, however, means CFOs that do want to stay ahead of the technological curve need to get comfortable with some level of uncertainty, Pierce said.

“If you want to be one of the players in that space in five years, if you want to be a name, you're going have to go into the dark woods,” she said. “And CFOs don’t like that. We don't like dark woods — we like well-lit areas.”

Pierce, who is also in charge of Anaconda’s sales, marketing and revenue, does not view herself as a conservative CFO.

Anaconda is already experimenting with ChatGPT for some of its SOPs, Pierce said, as well as utilizing it for things like the company’s travel and reimbursement policies, she said. They are also going to begin testing out the tool for certain written and quarterly reports. 

Opening space for education, collaboration

It’s unlikely AI’s evolution will slow down in the near future. CFOs who are making investments in these uncharted areas must therefore prioritize education in this space in order to make the best decisions possible, Pierce said.

“I think there's a huge opportunity … for CFOs to be kind of a champion, to challenge organizations on how they can use and view frameworks that are out there to get better cost structure, to have better reporting, get better results,” Pierce said.

It is also important for financial leaders to be able to lean on their team when it comes to these decisions, including those outside of the finance department, Pierce said.

At Anaconda, Pierce will have one-on-ones with engineering leads to discuss different solutions or potential partnerships, she said, which can help to make such decisions even if both parties are stepping out of their areas of expertise.

“You can't be afraid to collaborate with the seasoned people outside of your comfort zone,” she said.

Efforts by CFOs to reach a state of “autonomous finance” within the next three to six years will require significant reshaping of finance team structures, with 40% of finance roles to be completely new or reshaped by 2025, recent research from Gartner found. 

Of the headcount growth to take place by 2025, over 80% will be in new subfunctions, and not in traditional accounting and financial planning and analysis roles, according to the research. 

There may be a new style of leadership needed to support these new roles as well. “Expertise in traditional finance topics, while valuable, does not prepare leaders to train staff to execute on capabilities, such as deploying bots, machine learning, and AI algorithms,” said Shannon Cole, senior director analyst of research at Gartner.

The rise of digitalization in business operations and the growing availability of new technologies has both proven to increase efficiency within the finance function as well as shown why a new form of leadership — an operating or “wartime” CFO — is needed to charge the process. 

“CFOs that effectively lead and navigate transformation will add roles to their leadership team to address analytics and decision support, finance IT and global process ownership,” said Cole in a statement.

The goal of “autonomous finance” refers to the idea of organizations being able to deliver finance capabilities through “processes and activities that are partly governed, and majority operated by self-learning software agents that optimize front-, middle- and back-office operations,” according to Gartner. 

“Mindset is the hardest barrier to overcome in achieving autonomous finance — followed by talent (or expertise),” said Cole in an emailed response to questions.

The role of the CFO has been changing drastically in recent years, with their responsibilities especially creeping into technology and IT-related spending. 

Both inflation and labor market shortages have pressured CFOs to justify labor-based models, the survey said, with such economic headwinds pushing organizations away from the growth-at-all-costs mindset. 

“As more finance resources are directed towards digital transformation, it becomes apparent there is a need for deep process expertise, and for project management offices to provide governance and coordinate these initiatives,” Cole said in the statement.

Meanwhile, technology spending can offer much “greater reliability and efficiency for scalability than the labor-based method traditionally used to deliver finance capabilities,” the research found.

By 2025, over 30% of finance roles will be aligned “horizontally”, a major shift from the current organizational structures that are in place at companies today, according to Cole.

“Currently, most enterprises have traditional organization structures that were designed for the industrial era. They are designed for efficiency in a production or manufacturing context and are organized “vertically” in functional silos such as finance, product development, and IT,” she wrote to CFO Dive. 

This structure is in direct contrast to the digital era, which is characterized by collaboration, data-orientation and disruption, “so we see businesses adapting to ad hoc, agile and cross-functional work groups to achieve better alignment and responsiveness to customer and market signals,” wrote Cole.