February 04, 2020
February 04, 2020
Contributor: Jordan Bryan
AI holds great promise for FP&A, but leaders must first overcome three barriers to adoption.
Finance could use artificial intelligence (AI) to cut time, costs and errors in many of its budget, forecast and planning activities, but few financial planning and analysis (FP&A) leaders do. The problem is partly data and partly people.
“AI can accurately analyze high volumes of data and identify patterns and apply decision rules much faster than people using traditional technology or spreadsheet-based solutions, but only 2% of FP&A functions have adopted AI,” says Richard Ries, VP, Advisory, Gartner. “Our research suggests the low adoption rate stems back to three main barriers. Leaders must remove those obstacles to realize the full potential of AI.”
Data trains and runs AI models and drives the quality of the output. FP&A functions today can access masses of financial, performance and operational data, but its quality is uneven. Consistency is a challenge because of the way data is created, maintained and handled.
Financial and operational data is often captured, maintained and monitored without standard definitions, and stored in different locations across business and FP&A systems. To deliver accurate results, AI models require a high volume of data that is consistent and relevant enough to produce meaningful predictions and classifications. FP&A leaders must ensure that data is properly cleaned and standardized.
Learn more: Finance Analytics
Data scientists or data engineers in the FP&A function may be biased by past projections and experiences to select evidence that supports their preconceived approach.
If these biases bleed into the assumptions they program into AI models, the AI could misinterpret data or use inaccurate information to draw conclusions used for business decision making— thus exposing the organization to financial and regulatory risks.
FP&A leaders will also gain business leaders’ trust in using AI outcomes when making strategic, judgment-based decisions by showing that they monitor and remove human bias from AI models.
Read more: Gartner Predicts the Future of AI Technologies
Employees may fear that AI will make their jobs redundant.
FP&A leaders must identify ways to reassure FP&A staff and build digital dexterity to complement AI with human judgment. Building digital dexterity in FP&A staff helps them to embrace AI in the workplace and improve decision making and process efficiency through AI.
Read more: Add Data Science Skills to Corporate Finance Decisions
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Recommended resources for Gartner clients*:
3 Barriers to Adopting Artificial Intelligence in Financial Planning and Analysis.
*Note that some documents may not be available to all Gartner clients.