Good morning.
CFOs are preparing for the opportunities and challenges of generative A.I. But they’re not necessarily in any rush to incorporate the technology.
Deloitte's CFO Signals survey for Q3 2023, released this morning, gauges the views of finance chiefs on GenAI. Almost half (42%) of CFOs say their company is only experimenting with the technology, just 15% say they're incorporating it into corporate strategy. Meanwhile, 17% said it’s too soon to tell how their organization will use it, but 24% say they’re discussing it.
Regarding overall business strategy, 24% said GenAI is important or very important. And 42% said it's not important or not very important. About a third of respondents didn't weigh in on its importance.
Overall, more than half (63%) of CFOs say that less than 1% of their organizations’ budget will be allocated to GenAI next year. Almost one-third expect their company to set aside 1% to 5% of next year’s budget for the technology. Just 3% expect their organizations to allocate 5% to 10% of next year to GenAI, while 1% of CFOs say between 10% and 25%.
What are CFOs most concerned about when it comes to GenAI? Impact to risk and internal controls, data structure and technology needs, and technology and investment needs, according to the report. The finance chiefs are also concerned about ethical issues, the potential legal impact, and governance requirements, but to a lesser extent.
"Companies are looking to strengthen their operations, and many are looking at GenAI as a potential value-add to reduce costs, improve experiences for their customers and clients, and increase margins, as well,” Steve Gallucci, national managing partner, U.S. CFO Program, Deloitte LLP, said in a statement.
The CFOs note the top three goals for GenAI, if their company decides to incorporate it: reduce costs (52%), better customer experience (50%), and greater margins, efficiencies and productivity (45%).
Do CFOs have the necessary data, technology, and talent to implement GenAI? The survey results suggests not yet, according to Deloitte. But for now, CFOs seem to be curious about the upsides and downsides of the technology.
When it comes to ownership of GenAI at companies, 59% say it’s a collaborative effort between the chief technology officer, chief information officer, and chief data officer. And 30% of CFOs say ownership is dispersed among multiple groups at their companies. CFOs would be more prone to GenAI if they could identify the use cases for their company, as well as evaluations of the costs, benefits, and the returns of obtaining and deploying the technology, according to the report.
I recently talked with Michael Schrage, a research fellow at the MIT Sloan School Initiative on the Digital Economy, about strategizing GenAI spend. When thinking of KPIs, a question to keep in mind is: “How do we want to gauge/measure the returns?” Schrage says. “If I’m the CFO, do I defer to the ROI metric that IT wants? Or, do I have something to say about how they should really measure returns?”
Looking specifically at the finance function, CFOs say the top potential uses for GenAI is for forecasting and analysis, automating transactional processes, and increased efficiency and cost reduction. The survey findings are based on a survey of 116 CFOs taken from July 31 to Aug. 20, the majority from public companies with more than $1 billion in annual revenue. Respondents are from the U.S., Canada, and Mexico.
Deloitte's survey also found that CFOs have rising expectations for the North American economy and increasing optimism regarding their own company prospects. However, “lower growth expectations for capital investment and domestic wages and salaries may be linked to interest-rate hikes and a potential uptick in the unemployment rate,” according to Deloitte.
Sheryl Estrada
sheryl.estrada@fortune.com
