The rise of AI in the Office of Finance

How AI in Finance is Transforming Corporate Performance Management

AI is rapidly changing the game in the CPM landscape. It promises improved efficiency and decision-making, for example, by automating recurring and repetitive tasks such as data collection, crunching, and reconciliation. On top of that, AI in finance generates better insights into data and trends. All of this leads to a significant role shift in the office of finance, impacting finance and CPM functions. What AI developments are we talking about? What benefits do they have when integrated into performance management solutions for Finance teams? And can we trust AI at all?

Who could have thought ten years ago that AI would take such a big flight and turn the world upside down? In the blink of an eye, AI has evolved from a new and exciting gadget to a genuine business driver. Offering overwhelming possibilities to work more efficiently and obtain in-depth access to data and performance trends, a CPM tool with integrated AI applications is now a must-have to stay ahead of your business.

Integration of AI in CPM tools

Many software companies are integrating AI technologies in their CPM solutions, enabling users to profit from the full range of AI benefits, particularly in the context of AI in the office of Finance. Below, you will find four examples of AI technologies integrated into CPM tools:

  • Generative AI: This AI technology uses algorithms to generate content, like images, text, code, or concise reports. Let’s say you want to obtain peculiarities about budgets, P&L, or other financial statements. Just ask, and AI will extract the required information and convert it into a graph that is ready for you to analyze.
  • Machine learning: the power of this AI technology is that it teaches computers to recognize and apply patterns with minimal human intervention. Moreover, it can create its algorithms and use feedback to refine them. It can provide reliable, valid, and non-biased data and insights if trained with carefully selected data sets and models.
  • Natural language processing: this AI technology takes real-world input and translates it into a language computers can understand. Trained by large language models defined explicitly for your business, the computer will not only know what you want but also return a reply conveniently adapted to your natural way of speaking or writing.
  • Predictive analytics: AI-driven data analytics help you predict the future by identifying patterns and insights based on current and historical data. Compared to traditional data analytics, AI-generated forecasts are more accurate, agile, and real-time or near real-time — provided on high-quality data — thus enabling faster and better decision-making. This makes AI perfect for dynamic environments.

Key applications of AI in CPM

In general, most CPM tools offer the following AI applications:

  • Predictive Analytics: forecasting future performance based on historical and actual data, real-time or near real-time.
  • Automated Analytics: generating financial and performance analytics, thus saving time and effort on data crunching and report collection.
  • Anomaly Detection: identifying and possibly eliminating irregularities and potential issues in your performance data, making it more reliable.
  • Scenario Planning: creating and analyzing various business scenarios to prepare for future uncertainties and enable accurate decision-making.
  • Resource Allocation: optimizing resource distribution and allocation based on AI-driven insights, such as workforce, materials, equipment, time, or budget.

Challenges and considerations: can we trust AI in finance?

Finance professionals have been slow to trust AI for a range of reasons, for example:

  • A lack of awareness or understanding of how AI works.
  • Concerns about data security and privacy.
  • Perceived risks and issues around reliability.

Black box

Because people cannot see behind the curtain and understand how calculations are made, some people tend to call AI a “black box.” This concern was fed by AI solutions like ChatGPT displaying “hallucinations”: misinterpreted output based on factually or contextually incorrect information.

Let us emphasize that AI is more like a glass box: how an AI system makes decisions, predicts, and executes its actions should be visible and explainable. Only then can it provide the rationale for the decision-making process, surface its strengths and weaknesses, and provide a sense of the system’s future behavior.

Human control

Another reason for distrusting AI is that finance people like to be in control and want to understand what’s happening. AI should serve as a powerful tool that makes undiscernible information discernible, not as an autonomous decision-maker. This makes it crucial to keep finance teams in charge. It is essential to equip them with the information to assess any assumption, prediction, anomaly, report, or other AI-generated output to ensure AI grasps a realistic understanding of financial data.

Before you start with AI

 It’s true that AI has its challenges, risks, and downsides, just like other technological innovations. Before starting with AI, you must carefully consider data privacy, security, implementation costs, and the required resources.

Defining a clear strategy and change management plan when adopting AI is equally important for successfully implementing and using AI. This should also cover the need for skilled personnel and proper training in the AI application to prevent biases and hallucinations.

Improve your CPM strategy with AI in finance

At cpmview, we understand that sustainable growth is important for your organization. Keep up with the developments and demands that add value to your business. Get the job done with fewer people in a labor market that’s more challenging than ever. And draft an ambitious yet sustainable finance strategy for the years to come. AI can be a business driver for this. This is done by providing technological solutions based on AI and helping you turn AI into an invaluable driver of your CPM strategy.

Do you want more information? Please do not hesitate to contact us. We are more than happy to share our thoughts and experiences with you. And find out together how AI can help you improve your corporate performance.