Q&A with Mark D. McDonald
ChatGPT has drawn the attention of executives across the enterprise, and CFOs should cut through the hype and provide their unique risk-focused perspective in evaluating opportunities with this emerging technology.
ChatGPT is a generative AI application; that learns from data, which it then uses to generate original artifacts, such as an answer to a question, an essay mimicking a particular writer’s style or a snippet of programming code. This will play a significant role for CFOs who implement an autonomous finance function.
In advance of the Gartner CFO & Finance Executive Conference, taking place May 31 – June 1 in National Harbor, we sat down with Mark D. McDonald, senior director analyst with the Gartner Finance practice, to discuss what generative AI and autonomous finance means for the function, and its employees.
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Q: Interest in ChatGPT and generative AI continue to grow across industries. How should CFOs address this technology that is receiving so much attention?
A: CFOs should use their unique risk-focused perspective to push for, and help, shape a policy at the organizational level that mitigates the risks posed by unrestricted use of ChatGPT, including output quality risks, data security risks and regulatory risks, as well as their downstream implications.
They must prioritize prerequisites for future use of ChatGPT and similar technologies within the finance function, including identifying appropriate potential use cases and discussing how ChatGPT and other large language model-based applications could fit within the function’s technology strategy, as well as how employees view this technology.
Q: What are some ways that ChatGPT will impact corporate finance?
A: ChatGPT is an excellent example of the value that AI can bring, but as it is now, it has some limitations for practical use in finance. For example, using it to help a finance leader generate software code or SQL statements is a great use; however, asking it questions about their financials won’t work.
That’s because algorithms such as ChatGPT can only answer questions that they have been trained to answer. Without the detailed data of a CFO’s organization, they aren’t able to provide accurate feedback. Moreover, ChatGPT will try to provide an answer even if it doesn’t have the ability to answer it correctly.
Eventually, we can expect to have secure ChatGPT-like services that are focused on specific organizations, but this will take time. For now, leaders should focus on transitioning culture and skills towards using advanced technologies and making sure that their teams have the right capabilities as technologies advances.
Q: There is a fear among some people of ChatGPT, and other forms of AI, taking away jobs in corporate finance. Is this fear justified?
A: Most people employed in a finance function will tell you there is no shortage of work to do. In many cases, finance is just about keeping pace with the bare minimum of running the business and meeting regulatory requirements. AI creates an opportunity to raise that bar, amplifying human productivity so that rather than just being a back-office bureaucracy keeping the lights on, finance can be a strategic lever in the business.
So, it’s true that many roles may shift, and some roles will be lost, but some new jobs will be created. AI won’t replace people per se, but it will replace people who don’t use AI as that becomes the most productive way to do business.
Rather than seeing automation in the finance function as reducing the number of staff needed, look at it as a way to increase the scope of what it can achieve with the same headcount.
Q: What risks are there for finance leaders who transfer too much control to AI?
A: There are a lot of risks in giving too much control to any machine, and moreover there is a risk in expecting perfection from it too.
Finance leaders tend to hold AI to much higher standards than they would a human employee. If that expectation is leading to insufficient oversight or controls, therein lies an enormous source of risk. This is especially the case in a tightly regulated function such as finance where an error in an earnings announcement, for example, could lead to very substantial penalties for the business.
More than just expecting perfection, expecting too much is also a risk. When starting out on an AI journey, finance leaders should pick a very narrowly-defined task after which humans need to look at the outcomes, and make changes to the processes and machines involved as errors and exceptions arise.
Mark D. McDonald will be exploring AI in the context of the finance function in several presentations at the Gartner CFO & Finance Executive Conference 2023, starting May 31 at National Harbor, MD., including “The Emerging Technologies of Today That Drive the Future of Finance” and “Building Finance Teams for the Future.”
Gartner clients can read more in: Use Artificial Intelligence to Supercharge Your Finance Staff; Quick Answer: What Should CFOs Do Now About ChatGPT? and How Leading Finance Organizations Achieve AI Success. Nonclients can watch the webinar: Move Towards an AI-Forward, Autonomous Finance Future.
About the CFO & Finance Executive Conference 2023
Gartner experts will provide additional insights on how CFOs can address slowing growth, persistent high inflation, scarce expensive talent and global supply constraints during the Gartner CFO & Finance Executive Conferences 2023, taking place May 31-June 1, in National Harbor, MD., and September 18-19 in London. Follow news and updates from the conferences on Twitter using the hashtag #GartnerFinance.
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