AI dominates CFOs’ 2024 budget hike plans

Dive Brief:

Technology tops the list of areas where CFOs are planning to increase their budgets in 2024, thanks largely to the frenzied demand for artificial intelligence tools, according to a recent Gartner survey.
Of 302 finance leaders surveyed, 82% said they were looking to boost their tech-related investments this year compared with the prior one, with 90% of respondents projecting higher AI budgets, and none planning a reduction, according to the research, which was detailed in a report for Gartner clients and highlighted in a press release.
“On one hand, you’re seeing economic pressures that are placing some uncertainty on budgets overall, but you also have some upside pressure for organizations to spend more on technology — specifically for generative AI and cybersecurity,” Alexander Bant, chief of research in Gartner’s finance practice, said in an interview.

Dive Insight:

Technology overtook compensation as the highest priority for increased spending, with 71% of CFOs planning to spend more in the latter category this year, according to the report, which was shared with CFO Dive.

The annual study attempts to gauge how CFOs are adjusting their coming year’s budget allocations, which are often developed in preliminary form by as early as August or September, according to Bant.

“This is kind of a gut check on how those budgets are materializing in light of CFOs gaining better visibility into the coming year’s performance,” he said.

The latest survey, conducted in December, shows a jump from a year earlier in the number of CFOs willing to increase their tech budgets by 10% or more. Half of finance chiefs polled said they were planning such an increase in the coming year compared with 43% a year ago, the report said.

CFOs and other C-suite leaders are particularly focused on recent advancements related to generative AI, which refers to technology that can generate high-quality text, images, and other content based on the data it’s trained on. Gartner found that 81% of CFOs expect to increase spending in this area.

The findings come amid recent improvements in the economy. Throughout much of 2023, inflation and higher interest rates drove organizations to focus more on near-term profitability and cash flow, according to Bant. “Now, we’re seeing kind of a return to the next phase of the business cycle, where it will be more about balanced growth,” he said. “CFOs know that they need to make strategic technology investments in order to set themselves up for profitable growth going forward.”

In December, confidence among CFOs and other financial executives across North America rebounded as the economy avoided a downturn, according to the Association of Chartered Certified Accountants, as previously reported by CFO Dive.

Still, the economic outlook remains uncertain, which could ultimately complicate CFOs’ plans for increased tech spending, Bant said. Other potential hurdles include geopolitical challenges and regulatory risks, he said.