By Alessio Lolli.
Budget season is in full swing, and this can be the most significant – and resource-intensive – period in the year for finance leaders and their teams.
When kicking off the 2025 budgeting process, CFOs will need to revisit and pressure-test the scenarios, assumptions, and decisions that were employed for the previous year. While this is always the case, CFOs face a year of huge uncertainty, which may make this budget season a greater challenge – although there is also opportunity.
From geopolitical volatility to the transformative business impact of AI, many uncertain factors impact economic forecasting for 2025. Finance teams will need to determine which economic scenarios they projected have been realized and are still relevant for this upcoming budget cycle. They will also need to develop new projections and planning based on the emerging economic context for the next year.
3 priorities for CFOs for this year’s budget season:
#1 AI takes center stage
This budget cycle marks the first time that AI is deeply embedded in the process. The key to budget forecasting success is deriving actionable insights from a massive volume of data to enable evidence-based financial scenario planning to inform budget decision making. Precedent-based budgeting, for example, requires CFOs to delve into historical data and extrapolate critical insights for the future. This is where we are seeing the transformative power of AI coming to life and enabling CFOs to both access and analyze vital data inputs to support the budgeting process.
Wolters Kluwer’s recent research showed that more than two-thirds of finance professionals surveyed confirmed that they were in the exploratory stage of implementing an AI initiative within their finance function, and 60% of respondents who had already deployed an AI-related Finance project characterized the deployment as successful.
During budget season, AI can help finance leaders sift through data efficiently – transforming the risk of being overwhelmed by data into an opportunity for deeper insights.
#2 Managing uncertainty
This is an extraordinary year for CFOs leading budgeting processes into 2025. With a record year for national elections across the globe in 2024, CFOs are seeking to forecast and balance potential economic volatility with potential economic opportunity as the backdrop for the 2025 budget cycle. Alongside the role of Chief Financial Officer, CFOs could also be considered “Chief Forecasting Officers” when leading the annual corporate budget.
Against this uncertain context, employing advanced technologies, including predictive intelligence, enables CFOs to see the cross-functional impacts of budget plans, drill into profitability drivers, play out what-if scenarios, and produce accurate, easy to explain forecasts to support decision making throughout the budget process. This is critical to ensuring CFOs can forecast with confidence against an uncertain economic backdrop.
#3 Legacy IT can mean future challenge
While we may hear noise about the innovation-budget paradox, the reality is that legacy IT solutions in the office of the CFO have the potential to negatively impact business growth and efficiency and impact ability to meet shifting compliance requirements. And this can be felt keenly during the annual budget cycle.
Strategic investment in advanced technology solutions can enable CFOs to manage and control massive datasets with unprecedented speed and automation and unlock hidden insights from this data. This can lead to both gains in terms of efficiency and depth of insight for CFOs leading the annual budgeting process.
Budgeting for and driving the right investments in technology continues to increase productivity. The automation of time-consuming tasks yields a strong return on investment, particularly during this intense season. In addition, advanced technologies can support CFOs in deriving accurate insights from multiple sources that can enable high quality scenario analysis. In contrast, relying on legacy IT can become a competitive disadvantage, slowing down decision-making and strategic responsiveness.
Transformative opportunity
In summary, the 2025 budgeting process represents a turning point for CFOs. Navigating through uncertainty will demand both strategic foresight and technological investment. Still, those who adapt quickly will find opportunities to gain a competitive edge and shape a successful financial future for their organizations.
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Alessio Lolli is vice president, Corporate Performance Management, North America, CCH Tagetik.
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