These days, it’s hard for CFOs to escape conversations about technological innovation and artificial intelligence. More and more, they don’t want to.
A recent survey from SAP and Concur found that chief financial officers are feeling less concerned about the “threat” AI poses to their future employment. In fact, just 27% feel threatened by AI now, compared to 68% a few months ago. Instead, most CFOs are embracing the potential of AI. As a result, financial leaders have increased their investment in AI dramatically, from 15% in 2023 to 51% in 2024.
The question is, why are CFOs embracing AI now? The same SAP/Concur survey shows it’s not because they have mastered the technology themselves: 58% of CFOs say they understand only a little about AI, and just 4% say they have strong knowledge.
Instead, finance leaders understand the power of AI to impact the efficiency, growth, and sustainability of their organizations. They also understand that there are some uniquely human aspects of the CFO role that AI can’t replace.
CFOs are strategic leaders
Artificial intelligence supports CFOs in many important ways. First, it enables time, cost, and resource savings through the automation of new and existing processes. It gives CFOs access to a larger and more reliable data set and generates data-fueled predictions, scenarios, and recommendations – all of which inform the decision-making process for CFOs. AI also helps mitigate risk, allowing CFOs to detect problems earlier than ever before.
One thing AI cannot do: lead.
CFOs design financial roadmaps that guide the future direction of the business. CFOs engage with departments across the entire business and have an in-depth understanding of how each contributes to the success of the whole. CFOs mitigate risk and ensure compliance, and their decisions protect an organization’s health and promote long-term success and sustainability. While AI may make certain processes and tools more effective, CFOs are essential as strategic leaders within complex and dynamic organizations.
Jeremy Smith, a member of the FocusCFO nationwide team of fractional CFOs, has experienced this firsthand. “AI tools can help me analyze vast amounts of data quickly, even help me quickly learn or understand nuances of a new industry, but it’s my responsibility to interpret that data and make decisions that align with a company’s strategic goals,” Smith said. “For example, AI can flag potential risks, but I must decide if they represent true risks or the best way to mitigate them based on the context of the business.”
CFOs bring the EQ factor
Emotional intelligence (EQ) is the ability to perceive, interpret, demonstrate, control, evaluate, and use emotions to communicate with and relate to others. A strong EQ allows us to interpret facial expressions, body language, and tone of voice and facilitate effective communication among individuals and teams. It is also a uniquely human quality. While artificial intelligence can analyze content and data, it cannot read a room, nor can it understand the nuances of team or organizational dynamics.
The EQ factor is part of what makes a CFO a trusted advisor to an organization and an essential part of the leadership team, whether they serve on a full-time or fractional basis. It is vital for a strong CFO to understand the finances of an organization. It is equally essential to understand the people who power that organization, to manage interpersonal complexities, and to communicate effectively across teams and departments.
“While AI can crunch numbers, organize thoughts, even summarize complex information, it can’t replace the human touch required to build trust and navigate team dynamics,” Smith said. “For example, during budget reviews, I use AI to help me prepare, analyze, organize, even help with model solutions, but I rely on my human ability to connect with the owners and communicate results.”
CFOs exercise ethical judgment
Artificial intelligence is, on its own, not an ethical creation. Machines do not intuitively understand right from wrong, nor do they have value systems to guide decision-making and behavior. While AI can be trained in these areas, its ethical abilities will only ever be as good as the information we put into it, which takes a heavy investment of time and money.
CFOs, on the other hand, are highly trained in the ethics of financial management within organizations. They understand where the boundaries lie, and they know how to protect the organizations they serve from allegations of financial impropriety. AI can empower them with data and insights to fuel their ethical decision-making, but it cannot bear the responsibility on its own.
The takeaway
Artificial intelligence is a powerful tool for CFOs, with an ability to streamline processes, generate new data and insights, improve efficiency, and save businesses money. But AI alone cannot take the place of trusted financial leaders. Their work requires skills and strengths that are unique to strategic financial experts with in-depth experience doing the kind of work only humans can do.
Interested in learning more about our organization and the role of a fractional CFO? Check out this video featuring our founder and other members of our team, partners and clients.
