Generative AI: Fundamentals for Finance

Generative artificial intelligence (Gen AI) is revolutionizing financial reporting processes, streamlining operations and empowering finance teams to make more informed, strategic decisions. In this episode of the Business Excelleration^® Podcast, Shawn Fitzgerald and Jim O’Connor discuss the transformative impact of AI in finance. They explore how companies are harnessing these advanced tools to build sustainable competitive advantages, focusing on the actionable insights Gen AI provides for enhancing business operations.

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Shawn Fitzgerald, senior research director for the Finance Executive Advisory practice at The Hackett Group, the experts in AI strategy consulting. Today’s conversation revolves around Gen AI in finance, especially on finance fundamentals and AI strategy. Shawn is joined by Jim O’Connor, principal for the EEA Transformation practice, and the Global Finance and North American practice leader for The Hackett Group.

To begin, Jim discusses Gen AI and AI for business, both hot topics. The Hackett Group has put significant energy into researching Gen AI with surveys and vendors. The definition of Gen AI is the ability to generate new content. Content can be text, images, videos, etc., and is different from other AI. People in finance need to be thinking about and engaging an AI strategy that impacts human resources and sales, and product development, and how it will impact the whole company. The high-impact areas are sales, call centers and product development, and an amped-up call center. There is a lot of technology at a 60% rate, but they are expecting a 40% overall impact to productivity and related cost. In finance, they think the rate will be bigger at 42% savings. Jobs will change and how we will approach things will change. He also states that people in finance need to think about analyzing versus aggregating, and think about financial planning and analysis, and how Gen AI can turn you into a finance advisor. Creating digital assistance can help one to make better decisions. He says to start now and figure out what you want to accomplish. They are already operating at a 50% lower cost of finance than peers and half the full-time equivalents, and Gen AI is going to do the same thing. 

Next, they talk about where and how people should partner with Gen AI for expertise. Jim says that he learns from clients as much as they learn from him. When he first started using an iPhone, he only used it to call people, but now he uses it for all kinds of things. It’s the same with Gen AI – we have to start using all of its capabilities. His three steps are educate, ideate and execute. These steps happen through terms of benefits with incremental, transformational and breakthrough. Incremental is getting used to Gen AI, transformational is when you change the game and breakthrough is when you start doing things in ways that you wouldn’t even imagine. The cost of inaction is really high, and they just finished this internal control study where they found 81% of companies are evaluating AI. They are automating and reducing auto fees per billion dollars of revenue and have three parts in the works.

In closing, Jim advises listeners to stick through this whole podcast series to learn more to educate yourself, and then if you feel you are understanding it, to tap into the other initiatives to get into finance.

Time stamps:

0:49 – Welcome to this episode hosted by Shawn Fitzgerald.

3:03 – What is Gen AI?

5:27 – What should people in finance be thinking about and engaging in in terms of Gen AI?

11:09 – Where and how should people partner with Gen AI for expertise?

18:05 – Advice for listeners.