How CFOs Can Unlock Value Creation with AI and Emerging Tech

With the rapid innovation in new business models and advancements in technology today, the role of the chief financial officer is changing. The shift demands that CFOs adopt and advocate for cutting-edge technologies to remain competitive and drive profitability. This is especially true in data analytics, where businesses can benefit greatly from the insights gleaned from crunching large amounts of data. It will become even more important for CFOs to understand emerging technologies as companies transition to cloud-based systems to democratize data and make more informed financial decisions.

Given the current economic situation, CFOs today must embrace optimization across all investments and do more with less. Amid warnings of an imminent recession, companies are stepping up investments in IT. However, CFOs must come up with innovative strategies to optimize costs, increase productivity and drive efficiency. Technology is changing rapidly and fortunately, there are many resources available to help CFOs stay on top of it all.

The evolving role of a CFO

In the past, the primary mandate of the CFO was to manage financial risks and report on financial performance. However, CFOs today must also identify new revenue streams, manage costs and maximize shareholder value. Moreover, the CFO is now seen as a strategic partner by the CEO and other members of the C-suite. This means that CFOs must be well-versed in all aspects of business, including data analytics and emerging technologies. As a result, CFOs are now using data to provide insights that can guide executive decision-making. This includes using analytics to identify trends and patterns and forecast future financial performance while also finding new avenues to drive non-linear revenue opportunities.

Additionally, CFOs are using technology to streamline processes and improve efficiencies. For example, they may implement automation tools to handle routine tasks or use cloud-based applications to manage accounting and finance operations.

Emerging technologies for CFOs 

In finance, emerging technologies play a significant role, and CFOs must look for cutting-edge tools and applications to streamline their workflows and make better decisions.

A few emerging technologies that are particularly relevant for CFOs include:

1. Intelligent automation, which can industrialize repetitive tasks, freeing up finance professionals to focus on more strategic work. AI-led automation can analyze data faster and more accurately than humans, helping CFOs make better decisions.
2. Machine learning is being increasingly used to identify data patterns and trends. It can help organizations predict future market movements and find new opportunities for cost savings.
3. Blockchain technology is starting to impact financial transactions. This distributed ledger system can potentially reduce fraud and speed up settlement times.
4. AI-led analytics is becoming increasingly important as organizations strive to make sense of large data sets.

Data can be used to improve forecasting, budgeting and other critical financial processes, so CFOs must be aware and skilled at utilizing these technologies.

How data analytics can aid in improving decision-making

As a chief finance officer, one of your main responsibilities is to make smart decisions that benefit the company financially. To do this effectively, it is imperative to have access to accurate and up-to-date data. This is where data analytics comes in.

Traditionally, financial analysts would pore over historical data to try and predict future trends. However, this approach has several limitations. First, historical data can only tell you what has happened in the past and not what is happening right now. Second, it may not be representative of future conditions. As a result, many financial institutions are turning to new technologies to analyze real-time data, including predictive and prescriptive analytics.

Predictive analytics uses algorithms to identify data patterns and predict future events. On the other hand, prescriptive analytics takes things one step further by providing recommendations about what actions should be taken to achieve the desired outcome. By using these tools, financial institutions can gain a better understanding of both past events and future trends. Consequently, being data-driven is key to being agile and making faster decisions. As a result, organizations can adjust their strategies in real time to market changes.

The role of data analytics and emerging technologies is crucial for CFOs. With the deluge of big data, it is important to have systems and tools in place to make sense of it all and distill actionable insights. By leveraging data analytics, CFOs can gain a competitive edge and improve organizational performance. Data can be leveraged in countless ways to produce business value with the emergence of new technologies like blockchain and artificial intelligence. Therefore, CFOs must stay ahead of the curve and embrace these changes to remain relevant in today's ever-changing landscape.

Authored By: Pratap Daruka, CFO, Tredence