CFOs play it safe on AI spending
March 19, 2024
Dive Brief:
A majority of CFOs are planning to spend modestly on generative artificial intelligence next year as they struggle with challenges such as measuring the technology’s real business value, according to a survey by Big Four accounting firm Deloitte.
Close to two-thirds (62%) of respondents anticipated an allocation of less than 1% of their organization’s budget for GenAI next year, according to the results of Deloitte’s Q1 2024 CFO Signals survey, released Monday. Another 37% expected between 1% and 10% of their 2025 budget to be earmarked for GenAI, while only 1% of CFOs expected an allocation of 10% to 25%.
“By taking a cautious approach to GenAI, CFOs may be waiting to see what the technology can do for their business before they commit precious time and money,” Steve Gallucci, global and U.S. CFO Program leader at Deloitte, said in a report on the findings.
Dive Insight:
Interest around GenAI in the business community is exploding, with Gartner projecting that more than 80% of enterprises will have used some form of the technology by 2026.
McKinsey predicts that GenAI could enable automation of up to 70% of business activities across almost all occupations between now and 2030, adding trillions of dollars in value to the global economy.
Still, many companies are wrestling with a host of risks and challenges associated with GenAI as they weigh potential investments, according to Deloitte.
“As both stewards and strategists, CFOs have a critical role to play to help their companies determine how best to use AI, whether for competitive advantage, greater productivity, or some other goal — and with the appropriate guardrails in place,” Gallucci said in the report.
Seven out of ten finance chiefs responding to the Deloitte survey said they anticipated a 1% to 10% increase in productivity from using GenAI, with 13% of respondents expecting the technology to yield even greater productivity.
But the research showed mixed views regarding how CFOs intend to measure the value of GenAI. Those responding to that question most often cited the category of “workforce impact, productivity, and efficiency” (40%), followed by “cost savings and expense reduction” (29%) and “return on investment and growth indicators” (16%). Thirty percent of respondents indicated either uncertainty about the appropriate metrics to use for gauging the value of their investment in GenAI or a lack of current measurements.
“The uncertainty may stem from the nascent stage of GenAI adoption, where historical data is limited,” Gallucci said in an email response to questions. “As such, while CFOs can anticipate productivity benefits based on their understanding of the potential of GenAI, they may still be exploring how to best measure specific outcomes of GenAI in these early stages.”
Finance leaders responding to a question about top barriers to GenAI deployment within the finance function in particular cited technical skill gaps, adoption risks, and culture and trust issues, among other concerns.
Deloitte polled 116 CFOs from public and privately held companies across the U.S., Canada and Mexico in February.
[CFO Dive]
