AI is set to unlock a generational leap in public sector productivity, with research showing it can offer a 40% boost to a knowledge worker’s performance.

Such gains could transform organisations as a whole, but HR and finance stand out as key beneficiaries. These two functions are the guardians of an organisation’s most vital resources: its people and its money – and AI has the ability to vastly amplify human potential within them.

However, there’s a risk that this AI opportunity is missed. Driven in part by concerns about the cost, complexity and risk of change that have characterised legacy systems, public sector organisations often end up in relationships with technology suppliers that are longer than their equivalents in the private sector. Buyers contemplating a change in their HR or Finance software now, or in the next couple of years, need to make sure they inform their strategy with a view of how AI might impact these critical functions, or they risk losing out on the potential productivity gains the technology offers.

Meanwhile, buyers need to be clear that AI is not a silver-bullet solution, and it comes with its own considerations. Principal among them are the roles of responsibility, transparency, reliability, fairness, privacy and security. AI systems must align ethically with the values of the organisations deploying them, and their HR and finance teams, while offering a safe and compliant long-term return on investment.

To understand the opportunity and risks, it’s important to take a closer look at how AI solutions might be used in these departments, and how they can be deployed responsibly.

How AI can transform HR

Over the past decade, HR departments have seen a huge increase in the amount of information available to them. The growing digital transformation of the public sector, onboarding of new collaborative platforms and the sunsetting of legacy systems has led to a data-boom.

Yet until now, the applications of that data have been limited. AI is set to change that by providing a way to turn those vast data pools into valuable insights – whether by alleviating repetitive manual tasks, reducing error, identifying resourcing constraints or expanding candidate pools and opportunity for internal career progression.

There’s a common misconception, though, that AI in HR will dehumanise the role. In fact, it has the potential to do the opposite. By streamlining workflows and improving employee experiences, AI can help teams to focus on the higher-value, people-centric work that drives impact.

Take recruitment as an example. Workday customers globally created 30 million job descriptions a year, taking an average of two hours on each one. Generative AI, particularly when combined with the high-quality structured data held in an HR system, has the potential to reduce this to minutes. Similarly, while nobody wants AI to interview a potential hire, or make a hiring decision, AI is well suited for screening applications while helping talent teams to identify quality candidates with the right skills and who match the person specification for a given role. This is what we call the ‘human-in-the-loop’ approach to using AI. It means AI taking on the labour-intensive tasks but humans remaining firmly in control of the decision-making. As a result, HR teams can do better, faster and more meaningful work.

How AI can transform finance

In a similar way to the HR department, the role of finance in the public sector has expanded over recent years. Finding themselves central to leadership and strategic decision making, finance teams have faced the twin demands of a growing workload, constrained budgets  and increasingly close scrutiny. Like HR, accuracy in financial planning and decision making is vital. For that reason, it’s again essential that humans remain in the driving seat when it comes to any AI implementation.

However, AI can augment human work, by scanning transactional data, such as invoices, automating processing where there is little or no risk, and routing others by priority for human approval, for example. What’s more, given AI’s capability to process vast quantities of data, it’s well suited to detecting anomalies that might otherwise go under the radar – helping teams to rapidly problem solve and bolster compliance. Meanwhile, financial planning and procurement stand to benefit from predictive forecasting and automated risk detection.

With AI applications like these, finance departments can invest more time in the strategic work that supports wider business transformation.

Building an AI foundation

While there are huge opportunities available to HR and finance teams, it’s still early days for AI in the public sector. There are understandable reservations around reliability, transparency, fairness and privacy. All of these concerns are linked to a single broader issue: trust.

Public sector HR and finance data can be extremely sensitive. It’s therefore crucial that before any investments are made, decision makers explore the principles, ethics and practices that govern their potential providers of AI-enabled technology –  which is why providers need to make this kind of information easily accessible to their customers.

At Workday, we’re deeply committed to building trust and transparency around AI and in that spirit, full details on our AI approach are available publicly. We’re also proud to be advocating for responsible AI globally – working with industry leaders and policy makers across Europe, the US and Asia to inform frameworks and regulations from the European Union’s AI Act and the US National Institute of Standards and Technology’s (NIST) AI Risk Management Framework, to the UK’s AI Regulation White Paper. We recognise that for AI to drive impact in the public sector, it has to be built upon a foundation of trust. 

Boosting performance with AI in the years ahead

From higher-performing teams and better use of resources, to improved financial management, AI stands to benefit both public organisations and the essential services they run. While accuracy and data protection is paramount in these applications, deploying AI doesn’t have to be a fraught endeavour.

In fact, with the appropriate ethical frameworks, data protections and transparency, AI is a sensible long-term investment, whereas in contrast, a failure to modernise risks huge missed opportunities. It’s up to decision makers now to seize the chance to take the next step in their transformation – one which will offer the sector a paradigm-shifting boost in performance and set it up for success in the decade ahead.

LeackStat 2024