Two statements about artificial intelligence's incorporation into the FP&A function sound almost incompatible.
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How AI Will (And Won’t) Change FP&A
Two statements about artificial intelligence's incorporation into the FP&A function sound almost incompatible. The first, as pointed out by IBM's Monica Proothi at last week's CFO Leadership Conference, is that the finance function that will get the most value out of AI will be FP&A. GenAI tools will deliver a “huge” bang for the buck for FP&A and can scale quickly, according to IBM's global finance transformation lead.
The second statement? Despite any gains in productivity and outcome quality produced by AI, it will never be a substitute for "the nuanced human capabilities essential in FP&A roles." That quote comes from The FP&A Market Guide, co-authored by Paul Barnhust, "The FP&A Guy," as he is popularly known (see photo).
Three drivers will shape the integration of AI into FP&A, according to Barnhurst and his co-authors Anders Liu-Lindberg and Wouter Born:
Increased reasoning capabilities. In reality, these capabilities are “TBD.” But ask Microsoft Copilot, and you’ll get a rosier outlook: "AI systems have improved in tasks that require higher levels of understanding and problem-solving, going beyond mere pattern recognition," says the LLM. Write Barnhurst and his co-authors: The rapid increase in GenAI capabilities thus far "heralds a future where AI could increasingly tackle complex analytical tasks, enhancing strategic decision-making processes.”
Exponential increase in data. According to Gartner, by 2025 half of FP&A leaders will be responsible for enterprise-wide data strategies due to data's importance in strategic decision-making. The power of AI will allow FP&A teams to tap many more data sources, “everything from detailed business plans and project evaluations stored in PDFs and PowerPoints to rich insights captured in AI-generated transcripts of management discussions," according to the FP&A guide. Proothi's clients are already ingesting "external and internal, structured and unstructured data" to create CFO playbooks, she said.
A changed culture willing to adopt AI. For AI to improve decision-making and operational efficiencies, organizations must "embrace innovation and trust in AI-driven insights" to harness the technology’s full potential, write Barnhurst and his co-authors.
All three drivers have people behind them. "Great FP&A is the balance of technical skills and translating that into actionable plans through communications with the business," said Winnie Aoieong, former head of FP&A at Mozilla, on a recent edition of Barnhurst's podcast, FP&A Tomorrow.
Low-hanging fruits in FP&A make it a popular starting place for AI in finance. However, while it's tempting for CFOs to jump on FP&A use cases, they first need the answer to a critical question, said Proothi: "When I apply AI, will it fundamentally help me make a different decision, and is that decision going to drive value?"
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We asked Intekhab Nazeer, CFO of WEKA, a data platform for enterprises running next-generation workloads like AI, to describe the systems and software used by the Silicon Valley-based startup.
We have come a long way in the last four-and-a-half years. We moved from QuickBooks to NetSuite. We added a lot of integration, automated quotations from our CRM system, Salesforce and commission tools for 100-plus people. We are at present going live with a budgeting tool, Adaptive Insights. We’ll be able to run multiple what-if scenarios in seconds.
What’s your joy, and what’s your headache?
In any organization, my joy is aligning processes, systems and people to drive scalability and success for the business. Process costs nothing; a system is a one-time cost, but you invest in your people every day. The more you can optimize this combination and get the balance right, the better the business will be positioned to scale and meet its goals.
For example, to speed up our monthly financial close at WEKA, we adjusted the timing of closing journal entries (a change in the process), moved from QuickBooks to NetSuite (a change in the system) and hired FP&A teams (an investment in people). Our month-end close used to occur on the twenty-fifth of each month, and now it’s done on the seventh.
My headache is one I think all CFOs share: companies use multiple technology solutions, each with multiple users, and it’s a challenge to monitor the tech stack. It can be very complicated to figure out the ROI of numerous solutions, keep track of active users and regularly audit licenses to ensure you don’t have inactive phantom users or under-used technology systems that are silently siphoning money.
If you could wave a magic wand, what would you make software companies do for you?
I’d love to have a user-friendly universal software connector that integrates any finance system to any other system seamlessly and allows users to reconfigure reports and extract results in real-time.
What’s your best piece of tech advice for others in your job?
First, talk to your peers at other companies and create a collaborative CFO sounding board. Other CFOs face the same technical challenges you encounter, and you can help each other find smarter ways to optimize your businesses.
Second, a rule of thumb: never implement a technology system without getting cross-functional feedback from within the organization. Doing so provides extremely valuable insights for making better decisions. You may be surprised by what type of feedback you’ll get from R&D teams on an FP&A system.
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Have news to share? Drop us a line at vince@CFOlc.com — Vince Ryan, editor
Apple unveiled Apple Intelligence, an AI platform for iPhone, iPad and Mac that combines generative AI and a user’s personal context to perform tasks like transcribing phone calls and voice memos, sorting through email and prioritizing notifications.
Insightsoftware acquired FXLoader, a U.K.-based company whose automated exchange-rate loading software streamlines financial and tax reporting by populating FX rates to buy and sell goods and services internationally.
Sirion, developer of AI-native contract lifecycle management software, acquired data extraction and AI governance company Eigen Technologies. Eigen’s products analyze complex documents across insurance, financial services, law and engineering.
SAP agreed to acquire publicly held digital adoption platform WalkMe for $1.5 billion in cash. WalkMe Copilot, an AI tool in development, uses contextual awareness to suggest the next step for any workflow.
Vertex launched Vertex Accelerator+, a tax management tool for SAP customers that simplifies global tax automation by streamlining reporting and simplifying tax compliance.
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Have news to share? Drop us a line at vince@CFOlc.com — Vince Ryan, editor
Paycom Software appointed a trio of new executives, naming 20-year veteran Randy Peck as chief operating officer, Matt Pague as chief legal officer and Jennifer Kraszewski as chief human resources officer.
Certinia (formerly FinancialForce) named Raju Malhotra its new chief product and technology officer. He joins Certinia after serving in the same role at PAR Technology.
Mike Lynch was found not guilty of fraudulently inflating the revenue of U.K. software company Autonomy before its sale to Hewlett-Packard in 2011. The San Francisco court also acquitted former Autonomy finance executive Stephen Chamberlain.
Zone & Co. named Joe Vayalattu as its first chief experience officer. Vayalattu, former head of client services at Enfusion, will head up Zone’s professional services and customer success teams.
Travel and expense company Navan appointed Amy Butte as its new CFO. Butte joined the Navan board of directors in April and is a director on the boards of Stash, Bain Capital Specialty Finance and Digital Ocean.
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Stock performance is as of the market close on June 12, 2024
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