Unlocking Gen AI Potential in Finance – Transcript

Kevin Church:  

There’s other skill gaps, and it’s really saying, well, how can we leverage this tool to fill in these gaps that we have today and make sure that we can scale as we need to as we go forward? I think that as CFOs look at their needs and their staffing challenges, that you need to say, well, let’s look at how we build the team of the future and how does AI support that.

Announcer:     

Welcome to The Hackett Group’s “Business Excelleration Podcast.” Week after week, you’ll hear from top experts on how to achieve Digital World Class® performance.

Vin Kumar:      

Hello and welcome to The Hackett Group’s “Business Excelleration Podcast.” I’m your host, Vin Kumar. I lead our AI and Digital Operations practice at The Hackett Group. Today, we are focused on the impact of Gen AI in the finance function, and how finance leaders are addressing Gen AI and how it’s going to impact their functions. My guests today are Kevin Church and Ramiro Ortiz, both are principals and our finance leaders in our Finance Transformation practice. Welcome, Kevin and Ramiro.

Kevin Church:  

Thanks, Vin.

Ramiro Ortiz:   

Thanks, Vin.

Vin Kumar:      

First question to you, Kevin, is what are you seeing as you are talking to the CFOs and leaders of the finance organization? What is the initial take on how they’re looking at Gen AI?

Kevin Church:  

Sure, Vin, so the big hype in the media right now is with Gen AI and so boards, most companies are going to their CFO and saying, “What’s our plan?” CFOs not necessarily savvy in these areas, are looking for answers to help support their organization. Generally, finance owns GBS, and so there’s a huge opportunity in that area for Gen AI, and so they get tagged as the lead for this area. Certainly the automation and RPA that have started is usually in GBS, so this really drives the motivation to give it to finance to take on this journey.

Vin Kumar:      

So you would say that starting with some sort of education and then trying to get into some sort of a deliberate experimentation or establishing a POC?

Kevin Church:  

Correct. There’s so many misconceptions of what generative AI really is. One of the things that we make sure that we do is the very first step is bringing the key stakeholders that will be involved with this type of exercise and really make sure we’re on the same plane as far as definitions, objectives, benefits, and our tools are equipped with that to make sure that as we roll out these types of initiatives, everyone’s working to the same taxonomy and nomenclature.

Vin Kumar:      

I know Ramiro, you are working actually with clients to help them identify opportunities within the finance function, and I know you’ve done a couple of, or you worked with a couple of clients to identify this. What are you seeing and how are they approaching to identify these opportunities, Ramiro?

Ramiro Ortiz:   

Well, it actually arranges, depending on the client, where they are on their current journey with AI solutions. The ones that have currently RPA-type solutions in place, they have a perspective of what’s possible, but they need to have some type of additional knowledge of what are these other types of technologies that could sit on top of RPA. So as we talk to them, it helps generate ideas of where they can see this is a good application for a process. In comparison to those companies who haven’t deployed any type but have chosen to go down this path, the education session is really helpful for them to look at their process, and as we go through the discussion, we can highlight specific areas.    

For example, in cash application, there’s an issue in cash application, for example, that a lot of customers are sending their payments via ACH electronic payments, but the detail is not available. So it’s a manual process to get that to match up the payments to invoices. And so as we go through the discussion – whether it’s a small company or large company – they all have the same type of issue. So we are seeing some commonality across organizations of where these solutions are applicable. But I think the foundation is really the education for them to understand what is possible.

Vin Kumar:      

And Kevin, when they’re trying to do this, and where you and Ramiro have been working with clients, who and which organization is working on this with you? Is it a team within finance? Is it someone in the automation COE or in the GBS organization or IT? Who do you work with to help companies identify this for the finance organization?

Kevin Church:  

The importance of doing these things is engaging stakeholders that understand the organization in many views – whether it be the technology readiness, whether it be the complexity of the processes, the complexity of the current technology landscape. So you need to engage with all those stakeholders to make sure that as you’re developing solutions, it’s going to fit into their environment. And I think the key here is as you go forward, is you make sure that the plans you go after, we have our tools to help allocate where the biggest benefits are, but it’s making sure that people are aligned and engaged to make sure they agree with the road map that you end up creating.

Vin Kumar:      

One thing, Ramiro, as you are doing these workshops, identifying is there risks or challenges or apprehensions from the teams that you’re working on – the client organizations to adopt it – any key thoughts that you may have on that area?

Ramiro Ortiz:   

I think the reactions that I’ve received so far is that it’s been a positive. Everyone recognizes that there is the benefits to AI solutions, of generative AI, but they don’t really know how to deploy it. And so as we work through it, they’re open and receptive, and they have some goals that they’re trying to achieve internally. One could be that they’re trying to reduce costs, so they want to improve the efficiency of their teams. Another objective could be is that they want to increase capacity so they can devote their teams to more higher-value activities. And then the third that I’ve seen is that it’s a way for them to institutionalize the knowledge in these tools. Some of these companies have senior staff that are either close to retirement or they have a high attrition, and they see this as a way to capture that knowledge. So it really depends on the objectives of these teams, but they all are open to identifying where they could deploy these solutions.

Vin Kumar:      

One thing that our research is showing is we identified and created a size of price opportunity in finance, and we had our dataset, there’s about a 42% opportunity for finance to improve its performance by using in all aspects of Gen AI. And as we see this, Kevin, Ramiro, from your perspective, what is the expectations from the boards or the executives coming to the CFOs who are reluctant to embark or even explore this opportunity? What’s the guidance that we are providing the CFOs from that perspective?

Kevin Church:  

The first point is we have to establish the point of view, and I think that they need a plan, and they need to understand at least initially how to get started. I think that’s to Ramiro’s point is the technologies out there, but people don’t know how to adopt it. So the CFOs are going back and saying that we need to get a point of view – we need to have a plan. You’re not going to turn the organization into an AI organization overnight.     

So it becomes what is the first step so we can basically get our feet wet and make sure that we are on board to adopting this new technology and at a pace that suits our culture. And some industries are going a little faster than others, so that certainly drives some of the activity and the speed of the activity. But the reality is they want to come back and say, we have a plan. We have an objective. We know we have goals that we see great benefit to the organization and we’re moving. That’s the win the board needs to hear to make sure that they’re keeping up with the pace of AI – Gen AI.

Vin Kumar:      

It’s interesting because one of the things we are seeing in the larger organizations –more mature – is that the whole Gen AI team is kind of, there are two dimensions that companies are moving into. One is focused on the R&D, the product development, more the revenue side. And there’s another organization focused more on sales, commercial operations, as the other G&A functions to do that finance, HR. And this team is supporting most of the COE being created to support all these operational functions and G&A functions. And they feel that, OK, as they become more and more mature and Gen AI becomes more embedded within the functions that the functions have to develop their own capability to support and operate that. And it’s slightly different than what we are seeing in the smaller companies – midmarket companies – where most of them are just adapting or trying and understanding, OK, what is Copilot? Can I use Bing Copilot? And more in the experimentation and POC, is that something that you see as you work with your clients, Ramiro or Kevin?

Ramiro Ortiz:   

Yeah. One of the things that I’m seeing, Vin, is that in the smaller organizations is that they’re starting to experiment, but they’re experimenting more in the R&D – in the product development areas. And so they’ve either developed some internal skills or they have some third parties assisting them. As we move into the finance area, they recognize that this is a direction that they want to go, and they’re starting to leverage some of those newly developed skills in these other areas and either try to redeploy some of those resources or actually use third parties to help them on their journey. Whereas at the large organizations, they’re more mature as far as resources, but they may not have access to some of the newer technologies. They have the RPA, for example, in-house and expertise and move it into either some of these virtual assistants – the chatbots, these other types of technologies. They just don’t have those skills that they have to acquire internally or purchase those from third parties.

Vin Kumar:      

And we’re seeing more and more where Gen AI is not just seen in isolation. So Gen AI use cases are incorporated into and integrated with the rest of the AI technologies – be it RPA process mining or predictive AI, or even conversational assistance. So you see them getting more and more integrated to do that. So it’s not just standalone with a Gen AI perspective, but Gen AI is also enabling and accelerating the adoption of the others. So that’s the group – the intelligent automation COE group – which has adopted Gen AI and looking for building out solutions for each of these use cases is something that we are seeing more and more mature companies adopting to do that. As you step back, Kevin, what do you think you would say to finance leaders who are kind of stuck in neutral or in a wait and watch approach? What would your advice/counsel be for them?

Kevin Church:  

It’s certainly, as I said earlier, it is that point of view that every organization needs to have – every CFO needs to have a point of view. And as we talked earlier, it starts with education. We always tell it’s not only the CFO that needs to be educated, but his entire team needs to be educated. But it’s also identifying areas where you have gaps today and the organizations understand there’s compliance gaps, there’s risk gaps of that nature, there’s other skill gaps.     

And it’s really saying, well, how can we leverage this tool to fill in these gaps that we have today and make sure that we can scale as we need to as we go forward? CFOs look at their needs and their staffing challenges that you need to say, well, let’s look at how we build the team of the future and how does AI support that so that we become less transactional and less dependent on some of these transactional manual activities that are driving the work today. And I think when you say that and you start putting in that perspective, the lights go on as far as where we need to get going and how do we need to get started, and I think that’s what the message that a lot of the CFOs are absorbing.

Vin Kumar:      

Thank you, Kevin and Ramiro for sharing your insights with the listeners this wonderful afternoon. Thank you.

Announcer:     

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