If you’re a CFO or finance leader, you’re probably already bracing for the new FP&A technologies currently hitting the market—especially those leveraging artificial intelligence (AI).
Maybe you’re excited about the possibilities AI brings, or perhaps you’re wondering—with some apprehension—how these emerging tools will change the role of finance going forward.
It’s natural for CFOs to be nervous—after all, AI in finance and beyond has exploded quickly in popularity through 2023. Just last year, only 5% of the finance professionals we surveyed for our 2022 benchmark report, The State of Strategic Finance, were prioritizing the hiring of AI and machine learning (ML) skill sets.
In contrast, when we polled attendees at Excelerate Summit 2023, 44.5% saw potential in AI to improve the productivity and efficiency of their financial operations.
“As someone who’s spent their entire career in software engineering and building technology, this has always been in the background. It's something the industry has been working towards for a long time,” Vena’s CTO Hugh Cumming said at Excelerate Summit 2023. “I think every once in a while there’s this step change that occurs.” According to Hugh, the recent advancements in the world of AI signals we’ve officially arrived at that step change.
Panelists at our Excelerate Summit 2023 keynote panel, The New Tech Empowering Finance-Led Innovation—which I had the pleasure of moderating—explored exactly that. The panel brought together Hugh and Microsoft Canada CFO Nicolas Herman to explore the new technologies promising to impact FP&A operations everywhere.
Will emerging technologies such as generative AI reshape FP&A and the role of the CFO more broadly? If so, how should CFOs be reacting and preparing now? Here’s what our panelists had to say.
During the keynote, The New Tech Empowering Finance-Led Innovation at Excelerate Summit 2023, Microsoft Canada CFO Nicolas Herman discussed the biggest challenges facing finance teams today and how new developments in technology are helping to address them. Watch the full session here.
“There's one thing that has not changed,” Microsoft Canada CFO Nicolas Herman declared during the Excelerate Summit keynote panel. No matter what the market brings or the technologies that arise, he continued, “the CFO and the finance organization have the responsibilities to be the stewards of the business.”
But with one challenge after another plaguing the market over the last few years—from the pandemic to disrupted supply chains, rising interest rates and record-level inflation—that’s become more difficult than ever.
“The environment in which we operate, and the complexity of that environment, is just increasing dramatically. And I think that's what is really changing in the field of finance,” Nicolas said.
Understanding how emerging FP&A technology will reshape the field of finance starts by exploring how those technologies can help finance teams deal with the added complexity Nicolas mentioned.
And tools like ChatGPT, Microsoft Copilot and others have already shown they can do exactly that.
So where can emerging FP&A technologies—particularly AI—have the biggest impacts?
The volume of data accessible to finance teams today is both a blessing—offering opportunity for new insights and analysis—as well as a challenge.
As Nicolas put it, finance leaders need to figure out “How do I make sense of that information? How do I even know what’s out there? How do I connect the dots between financial data and the reality of the business? How do I use this data to allow [not just] the finance organization but the business to make an informed decision?”
Technologies like natural language processing, machine learning and AI in finance can make all of that easier—and faster, helping finance teams analyze large sets of data and gain insights from them more quickly.
“It’s not just about having the information. It's not just about analyzing the information,” Nicolas said, adding that these new capacities will help finance leaders do more with their role as a strategic partner to the rest of the organization. “I think that's just going to enhance our ability to get to those discussions a lot faster, and with a ton more relevance.”
As a “steward of the business,” Nicolas went on to say, finance holds much of the responsibility associated with helping their organization navigate the “increasingly complex and increasingly risky” environment around them.
And those risks aren’t just financial. Think about the requirements and responsibilities modern organizations have around privacy, security and ESG, in addition to the economic uncertainties and market ups and downs that have been a reality over the past few years.
“So how do I identify those risks?” Nicolas asked “How do I use technology to understand where my position is in terms of identifying the risks, evaluating them and mitigating them?”
That’s where tools that apply ML, NLP and AI in finance can come in, by helping teams analyze their data faster to better understand the risks relevant to their organization.
“You can have the use of machine learning models that helps you identify, for example, anomalies in a huge volume of transactions, [to show] which transactions are going to be the most risky,” Nicolas said. “And those are probably going to be the ones where we’re going to spend our time and energy to analyze and understand what’s happening.”
CFOs and their teams also have a key role to play in helping their business become as productive and profitable as possible.
Identifying ways to optimize revenue, contributing to growth goals and adding new efficiencies is part of the job of modern finance teams, Nicolas said. “If I have a sales organization, how do I—as a CFO or as a finance team—make sure that we get the best productivity out of that sales organization? If I have a team of developers, how do I make sure that this team is empowered and productive?”
AI-driven technologies can help with that as well, hugely impacting the productivity of finance teams—and in turn, aiding their ability to contribute to the rest of the organization. Rather than digging through data manually, for example, a generative AI tool like ChatGPT would allow users to ask a question using natural language prompts to identify trends and correlations, build out reports and create data visualizations.
During the keynote, The New Tech Empowering Finance-Led Innovation at Excelerate Summit 2023, Vena CTO Hugh Cumming discussed how generative AI can be useful to finance professionals—with the proper controls. Watch the full session here.
“One of the things that is cumbersome around what consumes time is just simply responding to questions about financial positions, responding to questions about current status and forecasts,” Hugh said. “This is one of the use cases that we see will come quickly with the assistance of technologies like ChatGPT, which is the ability to just simply respond to stakeholders.”
Time will tell, however, how much finance teams should rely on tools like ChatGPT—which Open AI themselves admit is not perfect, as “it ‘hallucinates’ facts and makes reasoning errors,” the company writes. That’s why using generative AI as part of an existing business software will be especially valuable, so that your prompts can be "grounded" with additional business context (this is what the highly anticipated Microsoft Copilot professes to do).
Faced as they are with an evolving list of risks and uncertainties, finance teams today need to be able to work with agility, pivot quickly when faced with unexpected market changes and make informed decisions faster.
That means you can’t afford to spend months pulling data together or building out plans.
“Finance organizations have always been under pressure to produce updated forecasts, and I think as cycle times compress there's just more need in the broader organization for finance teams to be able to produce not just retrospective, but also prospective, views of what’s happening in the business,” Hugh said.
For FP&A technology providers, layering AI into their platform represents a significant opportunity for delivering on these much needed capabilities.
Research from Dresner Advisory Services found that in 2023, 77% of companies surveyed said they expect their enterprise performance management software vendor to provide AI capabilities in future releases of their software, with 36% prepared to be early adopters.
“The move to integrate large language model ChatGPT-type capabilities into [FP&A] products will just make those capabilities more accessible,” said Hugh.
So, as it turns out, finance leaders and FP&A professionals who are afraid AI will change the way they operate aren’t wrong. But, according to our panelists, that’s not something to be worried about. Some finance teams are already seeing success with AI, using it for tasks like reforecasting.
“It’s just changing the way that finance teams interact with their stakeholders, giving them a new tool to be able to respond to multiple stakeholders with different slices of information very, very quickly—which is something that could [previously] take weeks to do,” Hugh said
But these technologies aren’t infallible, Hugh pointed out, which means it’s just as important that Finance approaches AI, ML and NLP tools with the right checks and balances in place. For instance, understanding what data is safe to share with AI solutions and “keeping in mind that all of the rules still apply” around data security and privacy will be critical, he said.
Finance teams will play an important role in governing these technologies, the panelists also predicted. They’ll help ensure that new solutions and uses around data are aligned with strategic goals and corporate expectations, and that processes are in place to make sure every tool is used wisely.
As for the CFO—well, their role could change most of all.
“There's been quite a lot of evolution of the finance function over the years,” Nicolas said during the panel. “I think what we're seeing right at this moment is just another acceleration of that transformation.”
No longer are CFOs just keepers of the data or producers of the business’s financial statements, Nicolas added. Rather, they’ve been taking on a deeper role. “We need to be able to tell the business story through the lens of financial information,” he said.
By enhancing productivity and enabling finance teams to extract insights from large data sets more quickly, ML, NLP and AI in finance empower CFOs and their teams to eliminate some of the tedious work that prevents them from spending time on business partnering.
“We'll start to really equip and enable these teams to spend more time on strategic analysis, more time on strategic partnering—which is, I think, really going to create some interesting moments and some interesting change in the industry,” Hugh added.
With the time savings and data analysis capabilities AI provides, CFOs will be able to further center their value-add around guiding their organization and being a better business partner. That means expertly facilitating the decision making that drives their business forward, and contributing even more valuable insights to shape the goals and mission of the organization.
But to take advantage of the opportunities for innovation emerging FP&A technology offers, CFOs also have to introduce a culture that supports it.
As Nicolas put it: “What we’re going through is of course a technological evolution, a revolution. It’s about the tools, it's about the technology, it's about the processes. But I think for a finance organization, it's just as much a cultural journey.”
And for finance leaders, that journey starts now.
Melissa Howatson, Chief Financial Officer at Vena, has a wealth of experience in financial and consulting roles, ranging from EdTech, automotive and Big Four accounting firms. She was CFO and board member at D2L—a global learning technology company—and led its successful initial public offering in 2021. Prior to that, she held finance leadership positions at Bend All Automotive, Qwalify and Primal. Melissa is a CPA-CA, having obtained her designation while working in KPMG's assurance practice. With her combination of scale-up and start-up experience, Melissa has an impressive track record of building and leading successful finance teams that drive the business forward.
