Corporate Financial Execs View AI Spending as a Necessity.
In a recent Grant Thornton’s CFO outlook, company analysts make an interesting comparison when discussing the need for more robust spending on technology in general and on artificial intelligence, in particular.
In GT’s Q2 2023 CFO Survey, technology spending is considered a “priority” by CFOs, and for three big reasons.
• Employees expect to use leading-edge technology on the job and are afraid they will fall behind in their careers if they’re using outdated tools.
• Customers and vendors want to do business digitally rather than on paper.
• The underlying data model of an organization is so integrated that everything has to be digital or processes won’t be compatible.
• Advances in mobility and analytics have made it possible to connect any device to your network and improve your operations.
Company analysts point to the healthcare sector as a vivid reminder of what can happen if businesses go light on AI expenditures.
“Look at the healthcare industry,” says Chris Lilley, principal, of technology transformation for Grant Thornton. “Every single device in a patient’s room is connected to their systems. So you have to be spending on technology to stay competitive with everybody else in the world. And the flip side is, you’re getting a tremendous return.”
Lilley calls technology spending significantly higher than in 2022 (IT/technology is the second highest “spending increase” in U.S. companies in 2023, with 55% of CFOs expecting spending growth to rise through 2024.)
“Spending in this area is strong because integrated technology has become a cornerstone of every aspect of an organization, including finance, supply chain, operations, human capital, payroll, and workforce management,” he says.
That’s especially the case with artificial intelligence, which has “caught the eye” of CFOs in 2023, GT reports. From writing software code to responding quickly and efficiently to customer queries, companies are turning to AI as a “technology of the present and technology of the future,” the report notes.
Pumping the Brakes?
While over half (55%) of the companies surveyed are “exploring new uses” for generative AI, Lilley says he’s “concerned” that AI is “being used in a variety of ways without an integrated solution or coordinated strategy.”
For instance, generative AI poses risks that may parallel the ample benefits CFOs expect to garner with big investments in the technology.
Lilley says one of the larger risks is that what AI “learns” will result in outcomes that could threaten a company’s brand and reputation. That’s due to the fact that, as AI is actually incapable of original thought, the technology “poses a risk of plagiarizing work produced elsewhere and violating copyrights,” the report states.
Consequently, companies will have to establish some formidable guardrails to keep AI “honest.”
“First and foremost, you need to have somebody focused on where and how you’re applying AI and advanced analytics so it’s consistent with your strategy and adding value,” Lilley says.
The Grant Thornton CFO survey reports that while some companies leveraging AI “are addressing those risks,” not all are doing so. Only 52% of those firms using generative AI have “clearly defined acceptable use policies.” Meanwhile, just 44% of CFOs say their board of directors “has taken an active role in understanding governance over AI.”
That scenario needs to shift sooner rather than later, the report concludes.
“Every board is asking about it,” Lilley notes “They want to know what’s going on with it and how it’s being applied. We have to step back and say, ‘We’re going to use it, but let’s make sure we have a policy in place with informed, educated individuals applying that policy and using that technology.’”
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.