Good morning. When it comes to finance, the advanced AI and machine learning on the horizon will supersede any current scenario testing and forecasting.
That’s what Joseph Fuller, a professor of management practice at Harvard Business School, told an audience of finance leaders Tuesday at Fortune’s Emerging CFO virtual event, in partnership with Workday. Fuller, also the co-head of the Managing the Future of Work Project at Harvard, explained the emergence of what's being called “decision intelligence” tools.
In decision intelligence, enhanced AI and machine learning make predictions about and create multiple scenarios that include various combinations of choices. AI then makes a recommendation, but it gives the decision-maker a lot more opportunity to judge whether assumptions that drove previous decisions are valid, Fuller said.
“For the CFO," he said, "it does something that I think is absolutely critical: It allows CFOs to harness and combine financial data with operational data."
“If you can get operating data about accounts, inventories, working process, and current pricing, and contrast that using decision intelligence with forecast and budgets, you're going to have the opportunity to detect problems much earlier," Fuller explained. "I think decision intelligence allows us to significantly reduce exposure to operating risk.”
During the session, my Fortune colleague Geoff Colvin and I had a conversation with CFOs from Cisco Systems, ServiceRocket, and Checkr—Scott Herren, Joy Mbanugo, and Naeem Ishaq, respectively—who discussed AI in the finance function.
“AI can obviously increase productivity in significant ways across the board,” Herren said. Cisco has started a series of pilots and proofs of concept, for example, intelligent monitoring to help with fraud detection. And intelligent forecasting, whether that's top-line spend or inventory, which the team already uses fairly frequently, he said. For the next set of challenges that “we don't see today” but will exist, “AI could be a huge help,” he added.
When Checkr was founded 10 years ago, it began “using applied AI in the form of machine learning to hyper-automate the background check process,” Ishaq explained. And with emerging technologies such as generative AI, a la ChatGPT, Checkr is augmenting its processes. "It has dramatically lowered the barriers and cost to access AI in the enterprise," he said.
Mbanugo of ServiceRocket, a tech-enabled services company that provides support for enterprises in areas such as software adoption, is also assessing AI use cases. She said she's currently running financial planning and analysis projects with her team. They’re looking at data from lead generation, comparing conversion ratios with historical data. She also has a data analyst on her team working on predictive analytics for revenue: "We’re looking at a whole host of FP&A tools that have AI features that can do tasks like that."
Herren said AI development in the tech industry will continue to evolve. He compared it to the early stages of the motion picture industry when a camera simply would be pointed at whatever was to be recorded—nothing compared to the tech used today.
“We're currently in the ‘point the camera at the stage’ phase with AI today,” he said.
You can watch the complete Emerging CFO session here. And read additional coverage of the event here.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
