Originally Published in CFO Magazine ANZ :-

Riding the AI Wave > 5 Priorities for CFOs in 2024

Riding the AI Wave > 5 Priorities for CFOs in 2024

Tariq Munir shares his latest insights with CFO Magazine A/Z on how to create, grow, and lead the Finance function with an AI-First Digital Transformation Strategy in 2024!

It will not be an overstatement if we regard 2023 as a year of ‘AI Tectonic Shift’. The seismic activity shook the entire industries and is reshaping the traditional business landscape. It has questioned some of our most basic assumptions regarding the domains that have previously been exclusively human-dominated — creativity and contextual thinking.

Experts and thinkers believe that this is just a start.

The exponential increase in computing power and the corresponding decrease in cost have made the development, deployment, and widespread adoption of AI models more accessible than ever. In 2006, it would cost around $0.15 to store 1GB of data on Amazon S3…today it costs $0.023 per GB — an 85% decrease in cost.

The Finance function, due to its access to organisational data and systems and its ability to influence key decision-making, sits at the centre of the AI disruption.

CFOs are playing a vital role in, or in some cases even own, the Digital Transformation agenda of the organisation. On top of this, the VUCA world we live in today has created huge demands and expectations from Finance functions to become strategic business partners and value drivers as opposed to being a conventional accounting and reporting function.

A plethora of AI tools will become available, claiming to solve the issues we face from fast close to scenario planning. On one hand, this requires CFOs to make strategic investments in AI, while on the other they also need to cut through this AI noise and look for the ‘right fit’ technologies as per business needs as opposed to the ‘one-size fits all’ approach.

CFOs and their Finance Leadership Teams must set the right priorities for 2024 to address this AI challenge and ride the AI wave successfully.

Here are the Five priorities that every Finance leader should have in their “must-win battles” for 2024

1.Digital Vision and Roadmap

Build a clear vision of what a ‘Best-in-class’ Digitally enabled Finance function looks like and create a well-defined and achievable Roadmap. It is critical to think of an ‘AI-first’ strategy aligning with the broader Business Vision and Digital Transformation Strategy. Divide the roadmap into time-bound projects and focus on 2024 to re-base your AI and Digital efforts. There is, however, no need to go all-in. Tackle small incremental projects in agile iterations and prioritize the ones with the highest return on your roadmap. This will help build the case for digitalization and create excitement amongst Finance teams as they will be able to see tangible benefits.

2.Process Optimization

CFOs need to focus a sizeable part of their functions efforts to optimize the existing processes and remove the underlying complexities. It is like ‘priming’ the surface before painting. For the AI-first efforts to stick, CFOs must prioritize this. Use a combination of conventional approaches to process optimization augmented with tools like Process and Task Mining. Process optimization creates a virtuous cycle where it helps free up time for Finance teams to find that bandwidth to focus on Digital transformation efforts which in turn creates more hours of productivity.

Takeda, a Global Pharmaceutical company, through its “Project Quantum” reduced 75% of manual journals and saved more than 45,000 hours per year globally. Imagine how much time you can get back from removing process complexities and hence in turn enabling you to focus on these priorities.

3.Cybersecurity and Governance

With greater digitalization comes more technical complexities and vulnerabilities. Bad actors continue to manipulate loopholes and cost millions to the organization in cyber incidents. As per Statista, the global average cost of one data breach is approximately $4.5million! Rapid and sometimes rushed implementations can create huge susceptibility of financial systems to cyber-attacks. Another factor is the lack of employee awareness and training. In a recent attempt, an organization’s accounting employee was tricked into transferring nearly $87 million to offshore accounts for fake purchases.

Therefore, a continuous collaboration with CIOs to ramp up investments in Cybersecurity and having a clear Governance framework around Systems and Data should be a crucial priority for CFOs in 2024.

4.‘Re-train’ and ‘Retain’ Talent

Finding and retaining the right talent is one of the biggest challenges that CFOs will continue to face in 2024. The future of talent is not just core Finance skills. It is a reshaped workforce comprising digitally savvy Finance business partners who can invoke a combination of critical thinking, digital mindset, and curiosity to drive data-driven decision-making. Gartner predicts that by 2026, half of new hires in corporate finance will be non-finance and accounting backgrounds.

Upskilling and re-educating the Finance workforce is not a choice anymore. CFOs must invest in providing training and re-training opportunities to build both Digital and Soft skills for their teams in 2024. Again, lead from the front and ensure your leadership team embodies a continuous learning behavior. Apart from classroom style or online training, provide development opportunities by engaging them in exciting AI and Digital projects. Create a best-in-class experience for your finance teams which will not only create engagement but also increase retention as employees increasingly find a purpose and meaning in the work they do.

5.Culture of Psychological Safety

Psychologist Carl Rogers coined the term “Psychological Safety” in the 1950s. Rogers defined psychological safety as “the freedom to express oneself without fear of negative evaluation.” If I had to pick only one priority, this is it. A 2017 study by Google found that psychological safety was one of the key factors that distinguished high-performing teams from low-performing teams.

Digital Transformation is not possible without experimentation with technologies, incubating new ideas and more importantly — Failing! As finance leaders, building a culture of psychological safety ensures that new ideas are encouraged, experimentation is cherished and failures are seen as an opportunity to learn. Lead from the front by celebrating failures and rewarding ideas. Create a culture of safe space within team meetings so bringing out new and fresh ideas is seen as a rewarding experience.

Mustafa Suleyman, co-founder of DeepMind, in his book “The Coming Wave”, refers to AI as “the greatest force amplifier in history”.

As Finance Leaders we must recognize that this current wave of technology is not a discussion point of the future anymore. It is already here and a need to set the right priorities in 2024 is imperative to ride this wave successfully. That is the only way we can unlock technology to its true potential and build a finance function that is a true driver of business growth.