AI is no longer a futuristic dream but a present-day reality reshaping the business landscape in all industries.
Post by Aleksey Krylov Photo by Freepik on Freepik
Gartner's survey paints a vivid picture of how budget allocation for AI will skyrocket. A staggering 90% of CFOs agreed to allocate more budget than the previous year. An astonishing 71% of CFOs want to boost the spending budget by 10% or more from the previous year.
This budget allocation on AI spending reflects a growing understanding of AI’s importance, efficiency, and usability. It signals that AI has the potential to boost productivity, enhance efficiency, improve decision-making, and drive innovation across industries. But amidst these exciting benefits, a question arises: “Are we ready for the AI revolution?”
This is not about spending the money on the latest tech to harness its benefits. Ambitions and policies about AI must be taken into consideration. The vision of executives must be clear: Is AI just a useful tool to enhance productivity or is it a catalyst for disruptive innovation? Will it transform the internal operations or will it engage customers? The answers to these questions are paramount before investing in AI.
On the other hand, as they say, “With great power comes great responsibility.” CFOs must recognize thoughtful leadership besides AI. As Chief of Research at Gartner’s Finance practice, Alexander Bant emphasized: “Increased spending on AI must be complemented by critical C-suite discussions about the organization's AI ambition.” So, what will be the future of AI as CFOs put a vote of confidence in favor of AI and whatever it brings?
Here are some key predictions on how the AI landscape will unfold in 2024:
Prediction 1: AI Democratization: In the Age of Tech Giants
The AI landscape is for everyone, not just for tech giants. With the accessibility of cloud platforms and user-friendly tools, AI will be democratized. It will empower businesses and encourage them to leverage AI to enhance their businesses by providing better services.
Since any business would be able to integrate AI, the business landscape will transform drastically. From marketing campaigns to optimizing logistics, AI will become the most sought-after tool, blurring the lines between early adopters and laggards.
A recent example of this is the utilization of Open AI’s ChatGPT which can take on customized datasets of any business to generate models that can enhance productivity and efficiency. For businesses, the democratization of AI will not only reduce entry barriers to the market but also reduce costs along with better service to customers.
Revisiting the history of automation, when Excel came in 1985, every accountant thought his job was extinct now. But, these professions grew with 75% progress over the course of a decade. AI will likely do the same: It will downgrade the required technical skills in the accounting and finance professions but will uplift standards of social/ethical skills. This will democratize the job market and barrier to entry into accounting and finance professions. According to CFODive, 52% of firms believe that incorporating AI in accounting and finance will attract more potential workers.
Prediction 2: Effects of AI on Skill Gap
With the evolution of AI in the workplace, some jobs will shrink. This will be the cause of job loss for millions of people. According to ResumeBuilder, more than one-third (37%) of business owners say AI can replace workers. According to Asana, 29% of employees admit that their work is replaceable by AI. That is why, the World Economic Forum predicts the reduction of 83 million jobs from the market due to AI in the next five years.
But fear not, there is hope as a new wave of opportunities awaits. According to Goldman Sachs, AI could raise global GDP by 7%, almost US $7 trillion. It will bridge the talent gap and ensure a smooth transition to an AI-powered future. Specifically, the demand for AI specialists, data scientists, and ethicists will skyrocket.
The CFOs of savvy organizations may be investing in employees' learning, training, and upskilling to enhance productivity and efficiency to yield better results. The bookkeepers, accounts payable and receivable specialists, payroll processors, inventory and fixed asset receivers - the traditional entry-level finance and accounting professionals on the CFO office team - with the help of AI, can do their job faster and deliver on a larger scope of work. This in turn would enable them to learn and take on more high-level or strategic planning. While we are discussing this, it also becomes important to mention that a CFO’s own tech knowledge will help him grow and excel. Especially, the CFOs in Life Sciences Industry need to stay updated with the latest technical trends. You may also check out A CFO’s Roadmap to Tech Agility in Life Sciences to get some important tips.
Prediction 3: AI Governance
As AI embeds into businesses across the board, the need for AI regulation will become more imperative. Policies, practices, and guidelines for the safe and ethical usage of AI technology will bring stability to businesses as it will help avoid any mishaps that can harm humans or businesses in any form. AI regulations must be implemented to protect user data and privacy.
Transparency in how AI algorithms operate and make decisions should be at the center of AI governance.
The AI’s ability to process large amounts of data makes it more viable to generate compliance solutions that are valuable to society or corporations. It can also help in controlling financial assets by helping enhance security and compliance as AI reduces the risk of regulatory breaches in real-time.
According to McKinsey, 80% of financial institutions have already begun incorporating machine learning solutions. The real-time compliance and regulation implemented through AI can control the costs of goods and services in the market leading to fairer market rates. CFOs can rely on AI for compliance to manage fraud and data breaches in real time, thereby reducing the operating costs for their organizations.
Prediction 4: Mergers and Acquisitions
In the age of megabanks, small businesses are acquired by already established bigger businesses. We have seen this scenario from time to time in the tech world, like Meta acquiring Instagram and WhatsApp, Google acquiring YouTube, and Microsoft acquiring LinkedIn. This tradition is likely to continue in the AI landscape as well. Fractional CFO can leverage AI in the M&A context.
Traditionally for mergers and acquisitions, CFOs rely on manual analysis of target companies and subjective judgment. It is not only less efficient but also tedious. AI can be trained to derive conclusions using the vast data on the companies, market trends, and social sentiment. AI is able to predict the future of a company by understanding these insights and industry trends, allowing CFOs to prioritize the top candidates for mergers and acquisitions.
Post-merger, AI can also help in merging the company’s financial data which is tedious and error-prone work for humans. AI will also analyze vast volumes of contracts and legal documents to identify potential risks and harmful clauses involved in a merger transaction, requiring negotiation. It saves time and mitigates the potential risks with the additional benefit of a lightning-fast analysis of the company.
Conclusion
The AI Landscape of 2024 presents exciting opportunities and daunting challenges for businesses. CFOs are willing to adapt and move with this new technology. Now, using AI technology for the betterment of businesses by both employees and business owners is imperative for future growth. A clear AI vision and strategy to embed AI in business and transparent development of AI models is mandatory for any business in 2024.
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