Optimizing Artificial Intelligence for Maximum Business Value: A Financial Officer's Strategic Guide
In the AI-driven business world, CFOs are faced with a unique challenge: leveraging AI to boost productivity while ensuring ethical governance, financial cautiousness, and strategic alignment. I recently chatted with Monica Proothi, a renowned finance transformation expert at IBM Consulting, about the ever-evolving role of CFOs in the AI era.
Our conversation delved into the major hurdles in maximizing AI's Return on Investment (ROI), the significance of ethical AI and its governance, as well as the ways CFOs can use AI to amplify - not replace - human judgment.
Overcoming AI Integration Hurdles: Staff, Culture, and Governance
AI's success is not merely about technology; it's about people. Monica emphasized that one of the biggest challenges organizations face in realizing AI's full potential is its integration into standard workflows.
"AI stickiness is crucial," Monica pointed out. "It's not just about installing the technology; it's about making it user-friendly, embedding it naturally into daily routines, and fostering trust."
Governance plays a vital role in AI adoption. "AI capacity is largely determined by how companies manage, select, and utilize data across their operations," Monica stated. "CFOs must integrate data governance into every AI development stage to ensure AI systems are both effective and ethical."
Weighing Ethics and Governance in AI
Many CFOs express more worries about AI ethics than governance. Monica highlighted the importance of unbiased data and robust governance structures to maintain trust.
"AI is as good as the data it's taught on," Monica said. "Companies need to prioritize data governance, transparency, and accountability to ensure AI-generated insights are accurate and trustworthy."
Ethics and governance go hand in hand - strong governance minimizes bias, promotes trust, and ensures AI is employed responsibly.
AI's Impact on CFO-CEO Synergy
AI is changing leadership dynamics at the highest levels, fostering closer collaboration between CFOs, CEOs, and the entire C-Suite.
"Leaders are overwhelmed with responsibilities, making it easy to lose sight of human connections," Monica explained. "AI can automate repetitive tasks, freeing teams to focus on strategic thinking and interdepartmental collaboration."
Financial reporting is one area where AI is making a difference. Instead of spending hours gathering data from multiple sources, CFOs can use generative AI to analyze trends and generate reports, leaving more time to collaborate with the CEO and business leaders to transform insights into actionable strategies.
IBM's Approach: AI-Powered Forecasting
IBM has integrated AI to revolutionize financial forecasting, traditionally a laborious and time-consuming process.
"Achieving AI success comes down to organizing and standardizing data throughout the organization," Monica said. "At IBM, we've implemented strong data governance, enabling us to create touchless forecasting with 97% accuracy. The result is faster, accurate financial insights that empower smarter decision-making."
AI Investments: Striking a Short- and Long-Term Balance
CFOs must adopt a balanced approach when investing in AI, spreading investments across short, medium, and long-term timeframes.
"AI is not only about quick wins; it's about laying the groundwork for lasting success," Monica said. "That's why it's essential for CFOs to get involved in IT strategy early, work with cross-functional teams, and connect technology investments to quantifiable business goals."
Rather than viewing AI as just a cost-cutting measure, Monica emphasized its potential to drive efficiency and growth simultaneously. "CFOs should see AI as an enabler of long-term innovation-via repeatable and scalable assets-rather than just a means to cut expenses."
Reskilling and the Future of Financial Talent
As AI automates traditional finance and accounting tasks, CFOs must concentrate on reskilling their teams to stay competitive.
"The finance function is shifting towards strategic advisory," Monica said. "CFOs require teams with a technology-oriented mindset, combining financial expertise with AI literacy and data science skills."
IBM has embraced this shift by upskilling finance professionals within its own organization, training staff in AI and integrating data scientists into finance teams.
Victory in the War for Talent
In a cut-throat talent market, CFOs must brand their organizations as AI-driven and tech-focused to draw top talent, particularly from younger generations.
"The talent war isn't ending anytime soon," Monica said. "To stand out, companies must have a clear AI strategy and foster a digital innovation culture. Young professionals want to work for companies that embrace technology and offer career paths aligned with AI advancements."
However rare the unicorn candidates may be, companies can build powerful teams by assembling diverse skill sets that span finance, technology, and data analytics.
Cybersecurity and Data Privacy: The AI Adoption Hesitation
Despite AI's potential, CFOs remain cautious due to cybersecurity and data privacy concerns.
"CFOs recognize AI's strategic potential, but are also aware that a single cyber breach can negate all AI benefits," Monica said.
A recent IBM study found that 60% of CFOs and CROs say their approach to managing AI risks is either ad hoc or nonexistent.
To mitigate risks, organizations must treat data governance and cybersecurity as fundamental business necessities, not afterthoughts. "Companies that manage data effectively and establish strong governance realize almost double the AI investment ROI compared to those that don't," Monica said.
AI during Tumultuous Economic Times
With ongoing economic uncertainty, companies must find a balance between cost efficiency and innovation.
"AI is not just a tool for cutting expenses; it can also fuel growth," Monica explained. "By automating repetitive tasks, companies can reinvest the cost savings into innovation and position themselves for long-term success."
A CFO's Initial Steps: What to Do
For uncertain CFOs, Monica offers three key recommendations:
- Bold steps - Begin utilizing AI in high-impact areas, such as FP&A, forecasting, and cash flow optimization.
- Champion AI adoption - Cultivate a culture of innovation by encouraging teams to see AI as a strategic ally.
- Focus on governance and trust - Implement strong data governance and cybersecurity measures to ensure AI adoption is both ethical and effective.
As AI continues to reshape business, CFOs have the opportunity to spearhead digital transformation and shape the future of financial strategy. Those who seize this opportunity today will be best prepared to drive value, growth, and long-term success.
- Monica Proothi, an expert in finance transformation at IBM Consulting, emphasizes the importance of making AI user-friendly and integrating it into daily routines to foster trust among users, ensuring its success in standard workflows.
- CFOs must prioritize data governance, transparency, and accountability to ensure AI-generated insights are accurate and trustworthy, thus maintaining ethical AI practices throughout the organization.
- IBM has implemented strong data governance to create touchless forecasting with high accuracy, using AI to revolutionize financial forecasting traditionally known for being laborious and time-consuming.
