The Steady Rise of AI Adoption in Corporate Finance: Insights from Gartner
AI in Finance: A Year of Consistency
In a recent report, Gartner unveiled interesting revelations regarding the adoption of artificial intelligence (AI) within corporate finance teams. Surprisingly, the adoption levels for this year have remained steady when compared to projections for 2024, despite a surge of optimism surrounding AI technology.
Poll Results: CFOs Embrace AI
A poll conducted by Gartner among 183 CFOs and senior finance executives highlighted that 59% of respondents are already utilizing AI within their departments. This figure shows only a modest increase from 58% in the previous year. While the overall adoption trajectory may appear slow, an impressive 67% of those currently integrating AI expressed greater optimism about its potential than they did last year.
Overcoming Challenges in AI Adoption
Marco Steecker, Senior Director of Research in Gartner’s finance practice, emphasized the growing confidence within organizations employing AI. He noted that although progress has been hampered by complexities such as data quality and talent shortages, companies that successfully navigate these hurdles are enjoying significant rewards. "As AI’s performance enhances and the technology adapts to various use cases," Steecker explained, "CFOs are likely to experience a virtuous cycle of opportunities."
Projecting AI Spending: A Multitrillion-Dollar Market
Looking ahead, Gartner estimates that global spending on AI will surge to approximately $1.5 trillion by 2025, with projections indicating it will exceed $2 trillion by 2026. This robust growth is particularly evident among major tech companies that are not only investing heavily in AI but also experimenting with the technology within their own operations.
Practicing What You Preach: Internal AI Initiatives
During a recent virtual conference hosted by Financial Executives International, Danielle Fontaine, an Assistant Controller at ServiceNow, aptly described her company’s approach to AI as "drinking our own champagne." This expression underscores the importance of employing AI to enhance internal processes while demonstrating its benefits to clients.
Caution Among Industry Leaders
Despite widespread use of AI among many of the nation’s top tech firms, leaders remain deliberate in employing the technology. Numerous speakers at the conference highlighted a measured approach to integrating AI into workflows, ensuring well-defined use cases and appropriate guardrails.
Leaders Take a Thoughtful Approach to AI
Fontaine noted that many in finance and accounting are being especially prudent about how to incorporate these innovations into their operational landscapes. This level of caution indicates a robust understanding of the implications that AI could have on existing processes.
Key Use Cases for AI in Finance
Gartner’s research identifies three significant use cases currently leading in finance departments. The most popular use case is knowledge management, which empowers organizations to better organize and leverage information for improved decision-making, standing at 49% adoption. This is followed by accounts payable process automation at 37%, and error and anomaly detection at 34%.
Growing Impact of AI Code Generation
Steecker also pointed out that some less-established but high-potential use cases are emerging in the finance sector. Notably, code generation—an area identified by finance leaders as having the highest impact—holds promise. Organizations that tap into this avenue are discovering tailored opportunities for enhanced automation and insight generation.
Factors Hindering Adoption
Despite these positive trends, Gartner’s study indicates a slowdown in AI adoption, citing two main factors. Firstly, a segment of finance departments remains skeptical, with 16% indicating no plans for AI implementation in the upcoming year. Secondly, a significant portion of finance organizations, about 25%, lacks clarity on transitioning from planning to piloting AI initiatives.
Data Quality and Skills: The New Bottlenecks
The research specified that data literacy and technical skills, coupled with inadequate data quality and availability, continue to stand as the largest obstacles to AI implementation across organizations. Overcoming these barriers is key for firms wanting to maximize the benefits of AI technology.
Realizing Gains: The Timeline for Impact
Once organizations embark on pilot projects, the journey to reaping substantial benefits can be protracted. According to Gartner, 91% of finance leaders reported experiencing low or moderate impact initially. However, companies that reach a more advanced stage of AI integration demonstrate over twice the likelihood of witnessing moderate impact and nearly three times the chance of achieving a high impact.
Acceleration: Focusing on Promising Projects
Steecker stressed that the most transformative effects of AI are realized when the technology is integrated into production environments. He encouraged finance leaders to expedite promising AI initiatives through early development phases, allowing organizations to find value sooner.
A Bright Yet Challenging Future for AI Adoption
As corporate finance teams continue to ride the wave of AI adoption, they face a paradox: while optimism is on the rise, practical hurdles remain. The increasing familiarity with AI’s capabilities, combined with ongoing data-related challenges, points to a future filled with both opportunities and obstacles.
Striking a Balance: Trusting the Process
Finance leaders will need to strike a delicate balance between cautious optimism and proactive experimentation. As the landscape evolves, those who can navigate these complexities successfully will be well-positioned to harness AI’s transformational potential.
Conclusion: Embracing AI with Caution
In summary, while the corporate finance sector sees consistent levels of AI adoption, the journey is far from complete. As leaders embrace this technology, they must remain vigilant about challenges while staying committed to exploring the myriad possibilities that AI offers. With mindful implementation and strategic foresight, the promise of AI can indeed be realized in transformative ways.
