95% of tech CFOs believe generative A.I. will enhance productivity, while only 5% anticipate its use in finance this year.
95% of tech CFOs believe generative A.I. will enhance productivity, while only 5% anticipate its use in finance this year.
CFOs at Tech Startups Prepare for the Impact of Artificial Intelligence
Image Source: Fortune
Technology and media companies are constantly pushing the boundaries of innovation, often relying on artificial intelligence (AI) to transform their operations. CFOs at tech startups, being at the forefront of these advancements, are keen to understand how AI can be utilized within their own finance functions. To gain deeper insights, CFO Daily conducted a survey with over 100 CFOs at growth-stage tech companies from SoftBank Investment Advisers’ global portfolio. SoftBank’s Vision Fund, with $98.6 billion in total commitments, has invested in 473 companies, including ByteDance, Cameo, and Sorare[^1^].
CFOs Assess the Impact of Generative AI on Finance Operations
The survey revealed that 95% of the CFOs believe generative AI will enhance productivity, with 69% planning to invest in the technology. However, CFOs were divided on the timeline for when generative AI will have a notable impact on their companies’ finance operations. Only 5% anticipated an impact within the next six months, 25% expected it within the next year, and 43% predicted it within the next two years. Interestingly, 27% of CFOs did not foresee any immediate impact on finance operations. These results indicate a mix of early adopters and cautious observers within the industry[^1^].
Geographically, 30% of surveyed CFOs in the United States anticipated a major impact from generative AI in 2023, compared to 13% in Asia and the Middle East, 12% in Europe, and 7% in Latin America. When categorized by sector, CFOs in consumer companies expressed the highest expectations, with 44% believing generative AI would greatly impact their companies this year. In contrast, only 7% of health tech companies’ CFOs held the same viewpoint. Fintech companies showed an 18% expectation, while enterprise companies had a 16% expectation for a major impact from generative AI[^1^].
Despite the split opinions on the timing of the impact, CFOs recognized the potential of generative AI and its role within the broader AI landscape. Navneet Govil, the executive managing partner and CFO of SoftBank Investment Advisers, highlighted that several portfolio companies have already embraced predictive analytics, using tools like DoorDash and Uber. These companies leverage predictive analytics to stay ahead of market trends and drive growth[^1^].
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CFOs Adapt to Shifting Priorities Amidst Market Turbulence
Apart from grappling with the transformative potential of AI, CFOs also have to navigate other pressing concerns. The survey found that inflation, the financing environment, and market volatility still occupy the minds of CFOs across the industry. However, there is growing optimism as companies adapt to higher interest rates by increasing their use of money market funds, as reported by 64% of respondents[^1^].
Interestingly, several challenges that were previously significant are now fading in importance. Supply chain issues concern only 10% of CFOs, while geopolitical concerns trouble 11% of them. In terms of hiring challenges, 21% of CFOs cited this as an ongoing issue. However, with major tech companies having reduced their workforces this year, more talent is available, according to Govil[^1^].
The collapse of Silicon Valley Bank in March 2023 prompted changes in banking partnerships for many high-growth companies. To mitigate risk and diversify their banking partners, 67% of companies modified their approach to treasury management. This change was particularly prevalent among CFOs in the United States, with 83% adapting their strategies accordingly[^1^].
Mid-Sized Business Owners Embrace Digital Strategies
Image Source: Bank of America
As the digital landscape evolves, mid-sized business owners (MSBOs) are actively incorporating digital strategies to optimize their operations. The inaugural Bank of America Mid-Sized Business Owner Report, based on a survey of over 300 MSBOs with annual revenues ranging from $5 million to $50 million, revealed that 90% of them have implemented digital strategies in the past year[^2^].
The adoption of digital tools has enabled MSBOs to achieve various benefits. These include time savings (48%), increased customer satisfaction (43%), improved cash flow management (43%), better organization (41%), and expansion into new customer segments (37%). Recognizing the potential of automation and AI, 87% of MSBOs plan to further integrate these technologies into their businesses. The objectives include standing out from competitors (45%), streamlining payroll and bookkeeping (43%), and assisting with hiring (45%)[^2^].
However, cybersecurity remains a key concern for MSBOs, with 88% viewing it as a threat to their business. Consequently, 65% of MSBOs are investing in digital security systems to safeguard their operations and data[^2^].
Insights from Wharton Professor on Employee Valuation
In a recent episode of Wharton’s “Ripple Effect” podcast, Professor Peter Cappelli explored the concept of valuing employees as financially valuable assets. This perspective can greatly impact management practices and lead to improved outcomes. By recognizing the value of employees, companies can foster better relationships and create an environment that promotes growth and innovation[^3^].
Prominent CFO Appointments
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Armelle Poulou has been promoted to CFO at Kering, a global luxury group that owns renowned brands like Balenciaga, Bottega Veneta, Gucci, Alexander McQueen, and Yves Saint Laurent. She will assume the role on September 1, building on her experience in corporate finance, treasury, and insurance within the group. Poulou previously held positions at esteemed companies such as Procter & Gamble, Hewlett-Packard, and EDF[^3^].
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Francis Lee will take on the role of EVP and CFO at Sleep Number Corporation, a wellness technology company. Lee, previously CFO at Wyze Labs, brings his extensive experience with Nike and Gap Inc., where he held various finance and strategic positions[^3^].
Gen X Faces Retirement Challenges
As Generation X approaches retirement, they grapple with the realities of a changing landscape. Given that they entered the workforce after the shift away from defined benefit pensions, they are less likely to enjoy the same level of retirement security as previous generations. A report from the National Institute on Retirement Security (NIRS) highlights this concern, stating that most Gen Xers will not have access to secure retirement income typically provided by pensions[^3^].
In conclusion, CFOs in the tech industry are assessing the impact of generative AI on finance operations. While opinions on the timeline differ, the majority recognize the potential and are either early adopters or taking a cautious approach. CFOs are also adjusting their strategies amidst market uncertainties and focusing on digital transformation. These developments, along with significant CFO appointments and insights on employee valuation, showcase the evolving landscape of technology and finance[^1^][^2^][^3^].
Published by: ANBLE Media
