CFOs need to make three mindset changes to achieve autonomous funding

To fully embrace the digital transformation of their function, CFOs need to make three important mindset shifts to achieve fully autonomous funding. According to market researcher Gartner.

During the opening keynote at the Gartner CFO & Finance Executive Conference, Gartner experts outlined the path to autonomous financing. Gartner defines autonomous financing as “a finance function that is partially controlled and largely managed by machine learning software agents that optimize front-, middle-, and back-office operations.”

“The most common obstacles we hear from CFOs about the journey to an independent role are things like inadequate budget or an unprepared data environment or lack of skills,” said Dennis Gannon, vice president of research at Gartner Finance. “These are all very real challenges, but they are fundamental to tackle. Without the right management mindset, however, it does not matter how much talent or budget CFOs commit to digital transformation.”

Finance departments have been automating their processes for many years. This actually involves a lot of useless baggage because automating a function is different than giving a function autonomy.

Patchwork of tasks

“Automation in the financial sector is reminiscent of simplified machine iteration,” says Gannon. “It’s not usually associated with full delegation of a process, but is seen as the automation of the easy stuff. It leaves a patchwork of tasks that need to be performed by a human to keep the whole process running.”

While most CFOs believe that autonomous financing will become a reality within the next six years, few of them are making progress. Financial decision makers need to speed up their journey to self-financing or risk falling behind. In this context, they need to make three important mentality changes in order to succeed with autonomous funding.

Shift 1: Experiment broadly

“The finance function sees itself as the gatekeeper for responsible consumption, and this often translates into limited experimentation with technology: waiting for documented use cases before scaling up,” Gannon said. “But the best way to realize value from technology investments that lead to self-financing is to experiment broadly from the start.”

For example, organizations with the highest number of pilot programs in the first 12 months of AI investment generate twice the number of AI applications in subsequent years. Pilots do not all have to be big efforts, but broad experimentation provides unexpected benefits and synergies and realizes value faster than a more cautious approach.

Shift 2: Put more trust in the technology

“CFOs tend to see technology as a tool, but trust people to make decisions,” Gannon continues. “Even when the evidence shows that technology makes better or more accurate decisions, people are still reluctant to trust it.”

‘Algorithm aversion’ often manifests itself as keeping technology at a higher standard than humans. For example, CFOs report that the maximum acceptable deviation for a traditional man-made accounting forecast is 10 percent. Still, the maximum acceptable variance for a technology-generated prediction is 5 percent.

Shift 3: Leads from the front

“Finance associates see their CFOs announce exciting new technology investments and highlight their transformation potential,” Gannon said. “But they also see that CFOs show some practical knowledge about the uses of these technologies and keep their distance from using them.”

Fewer than one in three CFOs said they invest very personal time in learning about autonomous finance technologies and their applications. What managers say has far less of an impact on employee behavior than what they do. Employees do not change because managers ask them to. They change because of the way leaders behave.

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