Artificial Intelligence: Finance Chiefs Tackle Thorny AI Math --- Executives weigh benefits against the costs while keeping those costs in check

"Finance chiefs are making sure their companies' investments in generative artificial intelligence generate a return.

The stakes can feel enormous and nobody wants to be left behind by rivals. Companies across industries are testing generative AI, exploring ways to make workforces more productive, communicate with customers or improve financial forecasting.

"In the spirit of the unknown, organizations are taking a leap of faith," said Todd Lohr, U.S. technology consulting leader at KPMG, adding companies are gauging returns using metrics such as productivity gains and employee satisfaction, as well as revenue. "This might not be the traditional ROI," he said.

Companies, he said, "don't fully appreciate all the benefits yet, but we think from a disruption perspective, we need to invest in" AI.

But the technology can come with a multimillion-dollar price tag for companies spending money on infrastructure, staff and partnerships with software providers. In the next 12 months, 43% of U.S. companies with at least $1 billion in annual revenue expect to invest at least $100 million in generative AI, according to a survey of 220 companies published Friday by KPMG.

Companies can pay to use proprietary models from providers such as OpenAI, or fine-tune those models as needed. They can build their own generative AI tools using open-source models, such as Meta's Llama 2 AI model. Few companies build large language models from scratch; for most, the costs involved in such an endeavor would make the math on AI completely out of the question.

Copilot for Microsoft 365 -- a product that uses generative AI to do things such as summarize emails and create documents -- costs $30 a month for each user. For companies that want to build tools on top of OpenAI's GPT models, the price varies based on the volume of content fed into and generated by the models.

"Understanding where the highest and best use is around these investments that we are making, and will continue to make, is an important role for finance and the CFO," said Jason Winkler, chief financial officer of Motorola Solutions, which makes technology for emergency responders and other public agencies and companies.

Motorola is testing potential applications for generative AI using models the company purchased from software providers. Among the most promising so far: summarizing complex industry contracts and helping software developers with tasks such as writing first drafts of code.

Winkler, along with Chief Technology Officer Mahesh Saptharishi, this year developed a framework designed to evaluate benefits from the investments by tracking the hours it takes to complete a task with an AI tool and without it.

Ellie Mertz, CFO at Airbnb, said she is working with her CTO to help the company prioritize among possible experiments with generative AI. Airbnb is using conversational AI tools to improve customer service, a critical area for the company. It is using computer-vision models to help automatically identify things like room type, view and amenities in millions of listing photos, and using machine learning to help guests find listings that match their needs.

"That's an area where we've been leaning in to see where we can leverage AI to just make the kind of matching of problem and solution more straightforward, more efficient and get to better outcomes," Mertz said.

Intuit, which owns financial software brands such as TurboTax, QuickBooks and Credit Karma, is using and testing generative AI across its product lines to help answer customer questions or generate invoice reminders. 

The company uses generative AI models from external providers, such as OpenAI and Anthropic, as well as large language models that it is building using open-source models and training them on its own proprietary data.

Intuit declined to say how much it is spending on generative AI. But one way it keeps the costs under control is by querying its own models, rather than by sending queries to third parties, which costs money, said CFO Sandeep Aujla.

Some of the AI-driven features Intuit introduced for its customers are expected to provide the company with pricing power over time, Aujla said.

Intuit is testing whether Mailchimp customers receive a higher return on investment from email marketing campaigns they create themselves, or campaigns created by Intuit's AI tools. If the AI-assisted marketing produces a better result for customers, "you have now all of a sudden built the case to upcharge for it," Aujla said.

Some CFOs are deliberately moving slowly on using generative AI in the finance function.

Cisco Systems identified possible uses for generative AI on its finance team, such as accessing data and generating reports, but hasn't applied them yet, CFO Scott Herren said.

"We're not there today," he said. "I think we need to define it well enough and then understand both the cost and the benefit before we head too far down that path." Last Monday, Cisco closed on its acquisition of cybersecurity and analytics company Splunk, a bid to use AI to simplify complex tools for nontechnical people.

Companies could face additional costs if they had to switch from an AI platform that didn't pan out, particularly if they have a high volume of contracts. "If it's an AI tool that's reviewing every single contract and you have to go and retrain the AI, the cost is probably very high," said Sarah Spoja, CFO of Tipalti, a finance automation company. "That's the fear."" [1]

1. Artificial Intelligence: Finance Chiefs Tackle Thorny AI Math --- Executives weigh benefits against the costs while keeping those costs in check. Broughton, Kristin; Maurer, Mark.  Wall Street Journal, Eastern edition; New York, N.Y.. 25 Mar 2024: B.4.