Artificial intelligence (AI) has dazzling possibilities and high expectations, but there are many misconceptions about how it can impact the office of finance. Let's explore four of these myths and their potential to perpetuate limiting beliefs that can impact the ability of a business to compete in the market and attract talent.
Myth #1 “There is no need to alter our current course of action.”
According to Psychology Today, because our brains naturally seek stability and safety, fear of change is something that all people experience. Fear of change, particularly technical change, can also stymie the adoption of artificial intelligence in finance companies. Excel has historically been a tool that many financial professionals have used to generate accurate analyses and reports that have become essential to their organizations. The trust in these institutionalized procedures may discourage attempts to improve them, whether through AI or other means.
The risk of a potential disruption to legacy planning procedures is frequently expressed in relation to the deployment of AI as being simply too great. While this view is understandable, it makes the unproven assumption that AI cannot significantly improve the effectiveness, sophistication, security, and specificity of corporate financial planning and analysis. Adhering to any status quo in today's environment carries its own risks, and businesses who refuse to use the most advanced planning tools at their disposal risk losing their capacity to compete, expand, and scale.
Myth #2 "Due to AI, I will lose my job."
In the past, people have frequently been concerned about losing their jobs to technology. This concern peaked when manufacturing technology started to take the place of manual labor and displace workers. Additionally, artificial intelligence isn't always portrayed in the most positive light in the media and in movies. This worry is legitimate to some extent because workers may be affected if repetitive duties are automated by AI. The crucial distinction is that, despite the fact that many finance occupations may change in scope as a result of task automation, financial experts are unlikely to lose their careers overnight if AI is implemented.
By automating tedious tasks and converting financial planning and analysis specialists from report producers to information analysts, AI has the potential to and will improve finance occupations. Given the fierce competition for talent in today's market, CFOs must think carefully about how to entice and keep talented individuals who could look for more strategic and perceptive work in their financial careers.
Myth #3 "AI is still in the far future and has yet to become reality."
We are completely immersed with AI, and it is already having a significant and exciting impact on our lives. Forbes claims that AI is what removes unimportant and perhaps hazardous items from our inboxes. Our social media feeds are personalized by AI, which also aids Amazon in creating a customized online purchasing experience. The recommendation and personalization algorithms that Netflix utilizes to create and serve engaging and relevant content are powered by AI. To make PowerPoint presentations more accessible, AI fills in the closed captions and subtitles.
From a technology standpoint, artificial intelligence is stable, mature, and ready to support the office of finance. From a strategic standpoint, it is assisting CFOs in offering the sophisticated insights that investors and business leaders are requesting.
Myth #4 "Our existing scenario planning is sufficient."
According to the Harvard Business Review, scenario planning has been used since it was introduced and popularized by Shell in the 1960s:
“Perhaps the greatest power of scenarios, as distinct from forecasts, is that they…introduce discontinuities so that conversations about strategy—which lie at the heart of any organization’s capacity to adapt—can encompass something different from the present.”
Regardless of the planning technique, scenario planning is rarely 100% correct; nonetheless, even a slight improvement in accuracy brought about by applying AI-powered scenario planning is an improvement with undeniable benefits. As a result of the need to account for macroeconomic factors like inflation, rising interest rates, and rising oil prices as well as crises like the conflict in Ukraine and the COVID-19 pandemic, traditional scenario planning techniques may soon become less reliable and, consequently, less desirable.
The demand for forward-thinking insights will only increase as the unprecedented challenges for which we must plan bring into question the limitations of traditional Excel-based planning. AI will become the standard technology required to enable this transformation as the finance function continues to develop into the focal point of a data-driven business environment.