AI in corporate budgeting
Artificial Intelligence (AI) can support decision making in key areas such as budgeting, capital allocation and even corporate strategy and as a result, it is increasingly being deployed in corporate performance management tools (CPM).
In a budgeting process, AI can add value because it can highlight where resources and capital should be increased or decreased such as predicting which product lines will grow and which ones are more likely to underperform. AI can also measure and track the return on investment by product line or entire business units and direct critical decisions at a fraction of the cost of any traditional budgeting processes.
Most businesses tend to allocate their capital the same way year after year, whether that’s due to inertia, unconscious bias, or error, AI removes any emotional rational. It gives businesses faster, better, and more profound insights and these benefits are driving more decision-makers to explore adding AI capabilities to their CPM systems.
Due to its quantitative nature and the high volume of historical data finance is well-suited for artificial intelligence it can add value particularly in predictive analytics and forecasting.
Vendors of this software understand the market opportunity of adding this technology and have either added or are in the advanced stages of developing AI features to complement their budgeting and forecasting CPM. One of the first AI-based processes gaining traction is predictive analytics, this capability improves the accuracy of forecasts, a key element of most performance management implementations.