Reimagine Finance Performance With Gen AI

On this episode of the “Gen AI Breakthrough podcast”, the hosts delve into the transformative impact of artificial intelligence on various industries. They discuss the concept of Digital World Class^®, exploring how businesses can leverage AI to achieve operational excellence and enhanced customer experiences. Through insightful interviews and real-world examples, the episode highlights the challenges and opportunities that AI presents in today’s digital landscape.

Welcome to The Hackett Group’s “Gen AI Breakthrough” podcast, where top experts give actionable artificial intelligence (AI) insights, advice and strategies to achieve breakthrough business performance. The conversation today is between Martijn Geerling, managing director with the Executive Advisory Business of The Hackett Group^® in Europe, and Vince Griffin, principal and program leader for the Finance Executive Program at The Hackett Group^®. They talk about the latest trends in finance, the impact of generative AI (Gen AI) on finance and share insight from The Hackett Group’s empirical analysis of finance function performance, along with advice they give clients. 

Vince and Martijn begin by giving context to where finance function performance is for them today versus where it has been. Digital World Class^® performance has been reimagined over time. It used to be a focus on cost control and cash flow liberation. Over time it has shifted to globalization, scalability and more agility between 2011-2014. In 2015 its digital disruption was driven by enterprise cloud adoption and consumer mobile app usage. And then in 2020, COVID drove a reshaping of performance and continuity in scalable work. From 2022 through today, it is focused on large-scale AI foundation models and Gen AI. There are really just unprecedented capabilities for reimagining performance, which builds greater resilience in what seems to be an uncertain marketplace now. There has certainly been an evolution over time.  

Vince then asks Martijn to describe the distinguishing characteristics of Digital World Class^® finance organizations and share some empirical insight. They define Digital World Class^® performance with empirical analysis, and they do that by analyzing metrics on two dimensions – operational excellence and business value. Finance performance is directly correlated to business performance. Finance is a partner to the business in revenue growth, margin improvement, etc. There’s a significant gap in cost performance between Digital World Class^® organizations and the average company. One of the reasons is because of complexity reduction. World class is better at reducing complexity, which leads to better cost performance and contributes to the business value generation. This sets apart world-class organizations.  

Vince says that cost and efficiency can be affected by extracted complexity. This eliminates time spent compiling data, which allows them to be more proactive in decision-making and make more forward-looking analyses. They can even look at the operations of the business in a way that allows them to drive greater working capital – way outpacing the peer group of companies in many metrics.  

The finance function is adopting Gen AI, and a classic metric used is time spent on combining data versus analytics. It’s a combination of AI and process redesign, cleaning up data and that drives a substantial productivity gain. It’s an example of combining Gen AI tools, and we see that they have embedded tools and moved to scaling rather than piloting. It works for forecasting or cost variance analysis, which uses Gen AI to generate the analysis to show where the people should dive deeper. When you scale that up, it’s a massive productivity gain for companies.  

Martijn asks Vince how he answers questions about Gen AI in his conversations with chief financial officers (CFOs). Vince says that Gen AI is a reality, and it’s important to get started. They have plenty of examples of positive returns for companies that have already invested in Gen AI. With the Digital World Class^® organizations, they have an ethos of business partnership and superior analytic capabilities that drive value creation, which ultimately is the CFO’s job. They are supposed to align and proportion resources to where the real value creation opportunities lie. CFOs need to learn how to harness that power and build a team that learns how to collaborate in a world that has both human and agentic teammates. It’s a real value-creation opportunity. 

Vince asks Martijn to talk about what’s changing in the finance industry. Martijn responds that it’s not just the technology, it’s the overall operating model that finance leaders need to be mindful of. Gen AI has been impacting finance as a function over the past decade or so. They have fewer people in the organizations, using more technology, driving more productivity gains and creating better outcomes. They are finding fewer transactional resources but more professional resources, which is a profound shift. What happens is finance goes into a global business service model, which is highly digital, creating a highly automated system. The human in finance handles the exceptions that AI can’t handle yet and interacts with customers. Transformational roles in finance are also increasing. Finance professionals are now doing projects on a constant basis, and it’s happening because of the acceleration of this process enabled by Gen AI.  

Vince points to some of the principles that CFOs in finance organizations need to be aware of. He states that it requires a top-down, enterprisewide view, utilizing and exploiting the technology as a whole. Finance deserves and requires that viewpoint at the table. The opportunity is large high risk, high reward. Vince wants CFOs to ask, “How can we use this tech to drive towards reimagining our existing business? How do we compete within our marketplaces?” There’s an opportunity to establish the company as an industry powerhouse if they learn to utilize Gen AI. Less process oriented, more strategy and analytic oriented, collaboration is key. It helps you to identify where opportunity truly lies. Get those ideas into development, get it working so that you can get it to a point where you can scale it and drive value – from ideation all the way to implementation. At The Hackett Group they have AI XPLR™, which allows people to take a look at use cases and returns that you can get out of utilizing AI agents, and what it looks like to get it up and running. Vince says, “If you’re still hesitant, just get started!” 

To wrap up the conversation, Martijn talks about the role of humans in an AI landscape. He says that finance professionals might be worried that they’re going to replace themselves if they invest in Gen AI or agentic AI. But Martijn explains that if we lean into automating, we are not taking away jobs, we are developing different roles. It’s important to be at the forefront of this to develop as a professional and invest in training education. It is vital to equip people with the skills to operate and use these tools because it’s augmentation, not replacement of roles.  

Time stamps 

0:39 – Introduction of the host and the guest, with a preview of the episode. 

1:41 – Chronology of Digital World Class^® performance. 

3:47– Digital World Class^® finance.  

5:39 – Lowering cost by extracting complexity. 

6:47– Adopting Gen AI. 

9:49 – Gen AI is useful.  

11:40 – The impact of the finance operating model.  

14:43 – Principles that CFOs need to follow.  

18:25 – The role of humans in this landscape and the wrap-up.