Technology investments are rising as chief financial officers face an uphill economic climb.
Grant Thornton is out with its Q1 2024 CFO Survey, tracking business, technology, and economic sentiments in 2024.
In the report, CFOs are relatively bullish on the U.S. economy, providing that interest rates decline. Most corporate financial officers expect that scenario to happen, the survey says.
“The expectation that the Fed may lower interest rates continues to have a positive effect on some of our clients, and obviously that’s good from the perspective of the overall economic outlook,” said Jim Wittmer, Grant Thornton’s national managing partner for Tax Growth. “The confidence reflected in the CFO survey is very consistent with the client and prospect interactions we’re having right now.”
Trap Doors Ahead
Even so, the road ahead holds “ample challenges” for the corporate finance suite, as high business costs have CFOs turning to AI to curb financial outlays, hopefully with no loss of operational performance.
“Controlling costs remains a priority for CFOs, with more than half (55%) of respondents identifying cost optimization as a top focus area, Grant Thornton reports.
Another 50% of finance leaders said operations costs will increase within the next year, up 12% from the previous quarter. “This upward trend is driven by inflationary costs — including a rise in the cost of global shipping — rather than a big investment in operations,” notes Paul Melville, Grant Thornton, national managing principal of CFO Advisory services.
Add rising real estate and facility costs into the mix, and it appears CFOs are counting on automation, data analytics, and artificial intelligence “to enhance efficiency.” AI utilization rates are at an all-time high of 47% of U.S. companies, which mirrors the 10% boost in AI spending CFOs say they’re building into their budgets in 2024.
More Protection and More Transparency
Finance leaders are also pushing for more cash into technology, digital transformation, and cyber security this year, with CFOs increasing spending by 10% on the latter, according to Grant Thornton.
“These figures indicate that CFOs recognize the potential of technology to produce better results at lower costs,” the study notes.
With more technology spending, especially on AI, CFOs also prioritize responsibility and transparency with their tech/AI investments. Of firms already using generative AI, a “record-high 64% have established clearly defined acceptable use policies,” Grant Thornton adds.
Firms are currently focused on using AI internally as a “test case” before merging into external, customer-facing uses. That’s especially true for data analytics, business intelligence, and financial operations and processes.
“Companies are using this technology internally before deploying it in customer-facing processes because it’s easier to control internally,” Melville notes. “If they roll technology out to their customers and something goes wrong, then it’s more challenging to manage.”
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.
