Finance’s transformational moment

Timing is one of the trickiest aspects of any investment: commit too early or too late, and nothing else you do counts for much.

Artificial intelligence presents just such a challenge. Should you dive in now, while the technology is still developing, or wait a year or two, until it’s more mature? After all, when it comes to new technology, second movers sometimes do have an advantage – would you rather be Napster or Spotify? Friendster or Facebook?

In fact, buying in too early is no longer a risk with Gen AI. The front- and mid-office are already seeing gains in revenue growth, customer satisfaction, and more. Now, the time is ripe for the back office to follow. After evaluating the scale of the Gen AI opportunity, the staggering range of use cases in which it is already proving valuable, and the speed with which it is emerging, we believe that the right time to begin to invest in Gen AI is now. Indeed, delaying further will put an organisation at risk of competitive disruption.

The real question now is what will you do with this once-in-a-lifetime opportunity? In the finance function, the Gen AI applications that matter most serve one of two roles: either as an assistant or a coach.

The opportunity

Of these two, the assistant applications are the most mature. Over the next 12-18 months, you can expect that the applications you already use every day will become distinctly more helpful to you and able to handle a variety of tasks, from taking care of repetitive steps in preparing a budget to due diligence of an M&A target.

Such assistants are likely to represent a substantial gain for your team’s reach and efficiency. It’s hard to say how much more efficient they could become, but The Hackett Group has estimated that over the next four years, all SG&A processes will be as much as 40% more productive than they are today, and your SG&A staff 44% more productive.

These digital assistants will be followed in short order by digital coaches, specialised domain-specific systems that will not only optimise what you do now but give you suggestions about a wide range of opportunities you may have never even considered before – and of course, warn you of risks you may have overlooked.

While your new assistants will be extremely useful for optimising your current workstream, we believe that digital coaches will offer the most radical potential, with abilities to invent new offerings and propose targeting new market segments.  Imagine, for a moment, a coach that understands all the nuances of your industry’s vocabulary, your company’s business strategy, and its operational realities.

This is why it’s a mistake to view this technology as simply a labour-saving opportunity. Yes, Gen AI will be able to streamline many processes and cut some costs, but that’s only the beginning. It will also enable you to be both more analytical and more creative than ever before, with the upper bounds dependent on how well you learn to work together. With Gen AI, expect to see opportunities for revenue growth, greater employee satisfaction, and greater customer/stakeholder satisfaction as well.

Preparation for your transformation

AI adoption is an investment that demands much more than hitting a buy button. Gen AI extends our capabilities in many different directions, but its usefulness to your team will depend on how well you learn to work with it. Achieving that will require you to commit your team to a new way of operating and a new way of thinking. Here are five key steps you need to take to get started:

1. Educate your colleagues. Help colleagues both within your department and beyond understand ways Gen AI could affect them. Include details about the risks and the potential rewards.

2. Think boldly. Working with your team, examine use cases that are already succeeding at other companies. Rank them according to the ideas you think would be most useful for your company. But bear in mind that fortune is likely to favour the brave: fewer than 10% of companies have experimented with the kind of breakthrough Gen AI use cases that can create competitive advantage.

3. Make a plan. Think about when and how you want to set up your Gen AI programmes. Develop a formal plan detailing how you will roll out solutions, in which order and train your staff to use Gen AI responsibly.

4. Find the talent. Think through the new skills you will need (such as more data-savvy analysis) and make sure you have a plan in place either to retrain colleagues, hire new staff, or partner with outside experts.

5. Spruce up your data. All kinds of artificial intelligence, including machine learning and Gen AI, are only as good as the information they consume. It should be noted too that by quality we don’t mean only whether the data is accurate and complete, but also whether its provenance is defensible. Do you have the legal right to use it? If you’re working with a partner, have you verified its ability to keep your data secure?

Recent research by The Hackett Group has forecast that all SG&A processes are vulnerable to disruption by Gen AI.

How well the adoption goes depends on how successfully we learn to collaborate with this new technology. For the finance function, the opportunities are likely to be especially dramatic as they include both incremental improvements in how familiar tasks have been handled and entirely new capabilities for analysis and invention. But to succeed, you will need to lead.

Matthew Cartwright is a Director within the EPM-Business Intelligence Practice of The Hackett Group. John O’Mahony is Head of Finance Transformation at The Hackett Group, Europe.      

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