This CFO’s Advice on AI Implementations? Simplify

Don’t over-complicate your artificial intelligence strategy – or your AI budget.

A recent study by Rootstock Software, a cloud software provider, states that 82% of global manufacturing companies plan to boost their artificial intelligence budgets over the next two years, with 24% of executives saying their AI budget increases will be “substantial.”

“We are witnessing the dawn of a new era powered by AI, and manufacturers are eagerly embracing these tools as they’ve seen its potential to unlock powerful data insights across critical functions such as inventory, production planning, supplier collaboration, and more,” says Raj Badarinath, chief product & marketing officer at Rootstock Software. “While AI is not a new concept in the industry, we’re still just scratching the surface of what is possible.”

The reality of only “scratching the surface” may seem problematic to chief financial officers tasked with managing those upcoming AI budgets, as the relative newness of artificial intelligence (at least to most companies) can make artificial intelligence budgets difficult to sell across the company.

In a recent Forbes interview with Vivek Jetley, executive vice president and analytics head at New York City-based EXL, a management consulting company, Jetley lays down a few practicing principles for senior executives to cover when handling AI budgets.

“A lot of our clients who are CIOs and CTOs have looked at generative AI saying, ‘It’s massive and the scope of this can be huge, but it’s just one more thing that I’m going to have to worry about in terms of the overall agenda,” Jetley says. “In an environment where funding was constrained, it’s created an additional thing [and leaders are] saying, ‘OK, I’ve got to fund that now, in addition to everything else that needed funding, and still fit it into my overall cost constraints.’ So it has led to a little bit of reprioritization.”

Plan Ahead and Have a Balance

Jetley advises C-suite execs to be ready with good answers when other company leaders ask questions about the AI budget.

“When you’ve got the board asking you questions, saying, ‘What are we doing with the AI agenda,’ that usually then opens up at least a little bit of funding for the CIO to say, ‘Here’s what I need to be able to do,” Jetley notes.

For CFOs who are trying to “move forward” with an AI budget, Jetley advises finding a balance between what AI offers and what it can actually produce in the confines of a budget.

“CFOs have a pretty challenging task right now because they keep reading about all the possibilities, and 40% [to] 50% productivity improvements [from AI], yet when they actually start talking about, ‘OK, what are we doing and is any of that really getting realized?’ it tends to be either too small for it to make a material difference, or it tends to be too localized,” Jetley says.

As CFOs “are not seeing” AI benefits produce revenues yet, CFOs may start viewing AI as an “incremental cost” rather than a “big revenue uplift.”

“That’s the challenge, because CFOs have to hold the pen in terms of saying, ‘OK, let’s treat this like any new investment. Let’s create gating criteria,” Jetley adds. “The company does want to experiment with a lot of new technologies, and they need to do that in order to stay competitive, but I also need to make sure that I have the ability to control those experiments and especially manage the return on investments.”

Fortunately, CFOs “have seen that script play out” with technologies like the blockchain and the metaverse. “With that real-world experience, CFOs have the ability of actually saying, ‘Look, here is my methodology for gating. This is my methodology for trying to constrict the number of experiments. And here’s how I’m going to see what becomes successful or not,” Jetley says.

“That’s the playbook that they have to lean towards,” he adds.

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