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https://www.bloomberg.com/news/newsletters/2024-07-28/ai-s-promise-is-being-put-into-practice-by-cfos?cmpid=cfo-briefing&utm_medium=email&utm_source=newsletter&utm_term=240728&utm_campaign=cfo-briefing

Artificial intelligence has been a driving force of technology and markets, especially since the emergence of ChatGPT more than a year ago. Lately, though, investors have questioned whether AI’s promise will actually pay off anytime soon, causing a pullback of the rally that drove tech shares to records this year. 

Ask any CFO about working with AI, and the common refrain is that it’s early days. But most also acknowledge that the fast-growing technology will shape the future. And so many are already testing or using it – in their finance teams, or across the business more broadly.

About 22% of CFOs queried in a recent survey said they have utilized AI to automate tasks in the past 12 months. That percentage is forecast to grow, with 32% of respondents stating they plan to rely on AI, according to the survey, which was conducted by Duke University’s business school in conjunction with the Fed banks of Richmond and Atlanta.

Executives see an opportunity to free their staff from manual and repetitive tasks and make better forecasts and predictions — and potentially better decisions. Block, the company behind Square and Cash App, uses AI and automation to help prepare its financial statements, create a rolling forecast that’s updated on a continuous basis and improve billing and procurement, Chief Financial Officer Amrita Ahuja said.

Beyond corporate finance applications, AI offers commercial opportunities, with the potential to generate entirely new revenue streams and profits, as well as improve operations.

Cereal-maker General Mills, for example, is using predictive AI tools to help limit waste in the production process at its factories, said CFO Kofi Bruce. “In plants where we’ve employed these tools, we’ve seen a 20% to 30% reduction in waste,” he said, amounting to almost $20 million a year in savings. The Minneapolis-based company uses technology to run more than six million data models a month, up from a handful, which spew out 500 million different predictions for different parts of the organization, Bruce said. These help improve operations.

CFOs also have started thinking about how to reflect AI in their financial statements, especially in those businesses that apply the technology to enhance their products. That’s “a point that every CFO is working on, the monetization strategy,” said Cisco’s CFO Scott Herren. The networking company has already built AI into several of its products, but it doesn’t break out AI’s contribution into separate line items. “It’s quite difficult to discern exactly how much revenue you can attach to that as a percent of a product that you are selling that has AI capabilities,” Herren said.

Adobe is working through similar issues. While the software maker for now doesn’t pull out AI in its statements, it is a topic of conversation, said CFO Dan Durn. Adobe is carefully reviewing how to present AI-related revenue, “because it’s going to be a metric that a lot of people are going to rely on,” Durn said.Adobe’s performance has benefited after the company incorporated AI into its products. Photo credit: Bloomberg

Some CFOs are reluctant to hand over too many tasks to AI just now, as they continue to weigh questions about the reliability of the technology. In finance, a lot depends on having accurate forecasts and figures, and CFOs – who are typically known for adopting a cautious attitude – don’t want to take unnecessary risks.

Others cite issues they need to turn to first, for example revamping or streamlining software systems that are used to steer processes such as human resources and procurement. Shutterstock, the digital-content firm, has a laundry list of things “that are lower-hanging fruit than AI,” and that don’t introduce potential risks the way AI might, said Jarrod Yahes, the company’s CFO. Automating repetitive tasks is one of them, he said. 

Regardless of the financial benefits of AI, having demonstrable experience with it will likely become more important for CFO candidates. While some consultants point to growing mentions of AI in job searches, others haven’t seen it – yet. “We have heard about the importance of understanding AI and its implications for efficiency, but have yet to include a specific bullet point on AI in our formal specifications,” said Josh Crist, co-managing partner at recruitment firm Crist Kolder. “We do expect that to change.”