Ready or not: CFOs are coming for AI

A review of the US Bank 2023 CFO Report

Many technology and operational leaders will read the 2023 US Bank CFO report and say – “Cost control is a nail again and technology is the hammer. Nothing new here.” But this would be a short-sighted read and miss the opportunity to partner with the CFOs to leverage the most impactful technology trend in the past 20 years for equipment finance, AI.

This year’s report, while on the surface routine, holds a new message for technology advocates in regard to working with CFOs to solve business challenges and improve competitive advantage with technology. The report describes three core challenges facing the finance leaders:

1. Reordering priorities to a defensive posture: Cost cutting
2. Reordering risk: Talent first then technology
3. Leveraging data: Analysis and reporting

These messages rang true to me based on our experiences this past year with the CFOs of customers of our Tamarack AI Product suite. CFOs may not typically be the authors of company technology strategy, but they have influence on the initiatives undertaken as well as on strategy execution each year. We have observed, firsthand, CFOs advocating and leading the use of data to better understand and operate the business.

A deeper read of the 2023 report reveals that CFOs are effectively telling their technology leaders “I need you to ramp up our AI technology stack and address these challenges with me.”

Top priorities addressed with one word - productivity.

https://ir.usbank.com/news-releases/news-release-details/us-bank-cfo-insights-report-finance-leaders-shift-defense-mode

The CFO’s top five priorities focus on cost control, risk mitigation, and revenue generation – the primary components of productivity.

The survey reinforces that CFOs view technology as a primary tool for cost control, but when the top five priorities are viewed in aggregate the real message is productivity. When talent is scarce, the most strategic application labor is crucial and AI is the technology for the job. Operational AI is a perfect fit for how the CFOs reprioritized efforts in 2023 because it simultaneously enhances the productivity of talent within the organization via prediction and recommendations supporting better, faster decision making. AI automation reduces the costs of the routine and mundane through decision automation and as a result improves the application of talent to the most important needs of the business.

This is an experience we have had with our AI Predictor customers. The CFOs are strong proponents of data-use products – BI and AI alike – because these products improve productivity throughout the organization while also enabling more defined and appropriate risk management. Data analysis and AI are reducing the cost of the mundane, improving the performance of risk management, and increasing the productivity of staff. AI is a one-stop-shop for CFOs looking for technology help with their top priorities.

Managing risk with data: “Worried about where we have been and where we are going.”

The top motivations and expectations of digital transformation for CFOs is business intelligence analysis of both past and future performance.

The report had several pages breaking down concerns CFOs have for the rate of adoption of new technology within their organizations. 40% of those surveyed lamented resistance to change, lack of digital strategy, and lack of new technology awareness within their organizations. The reason for this concern is revealed by the expectations CFOs have as users of data within their finance functions as well as in the performance of their duties helping the enterprise manage risk and meet its objectives.

CFO’s worry about the pace of change because they see digital transformation as a competitive advantage. Again, we have seen this behavior in the CFOs of our Tamarack AI Products customers. Sales is typically the most heavily engaged departmental user of our Data Console business intelligence reporting product, but the CFO is often the heaviest individual user. “I use this every day” one CFO told us during a review. Some CFOs are seeing all of their data in a single construct for the first time and relish the insights and learnings that the analysis of the aggregated data provides. Long time questions are answered, and new experiments facilitated. A unified data platform enables CFOs to use data to measure and forecast risks to the organization. Data analysis helps them explain why both good and bad outcomes are happening as well as mentor the organization on which applications of AI to business workflows and models are working best.

In our experience finance leaders today have an unquenchable thirst for data and analytics. The economic and organizational challenges they see have turned their focus to cost in a world of limited talent. They need productivity and expect their technology partners to provide the solution. AI is purpose built for productivity, both human augmentation and efficiency through automation, and CFOs are encouraging their organizations to go digital.

Expectations driving innovation with AI

The 2023 report described finance organizations as “backing off from innovation” because of the reprioritization of cost controls. But the “backing off” message contradicts how CFO expectations of change through data actually drive operational innovation. Innovation is a change in behavior and as such is more often incremental than sudden. Expectations for data-based risk management and operational cost efficiency apply constant pressure on the organization to become more efficient, competitive, and productive.

In 2024, we can expect CFOs to be driving innovation with AI.