How can dynamic steering improve financial forecasting accuracy for modern CFOs?

Why are manual budgeting processes failing compared to AI-driven predictive analytics?

Discover how replacing rigid budgeting with “dynamic steering” helps CFOs increase productivity by 30%. Learn to implement AI, predictive analytics, and data automation to secure a competitive advantage in financial planning.

Ready to move beyond sluggish spreadsheets and embrace real-time agility? Read on to master the three implementation steps of dynamic steering and future-proof your financial strategy.

Recommendation

Many CFOs are weighed down by cumbersome, rigid approaches to budgeting, financial planning, and forecasting. CFOs who leverage the potential of AI systems to “turbocharge” these processes can dramatically boost productivity while benefiting from more accurate predictions. Gain insights to help your firm navigate its digital transformation, and gain a broad view of the steps you must take to embrace “dynamic steering,” harnessing powerful algorithms, driver-based calculations, and data automation to ensure your firm stays competitive, as new technologies disrupt nearly every sector.

Take-Aways

• CFOs who leverage AI insights can “turbocharge” planning and forecasting.
• Unleash the power of “dynamic steering” by embracing its three key components.
• Prioritize behavior change, starting small, and the right tech solutions.

Summary

CFOs who leverage AI insights can “turbocharge” planning and forecasting.

At many companies, financial planning, budget creation, and forecasting processes can be sluggish, manual, and inflexible. Sometimes, creating an annual strategy can even take several months, which means planning does not reflect real-time data, making organizations less agile and adaptive. AI systems can “turbocharge” firms’ planning and forecasting processes, helping companies become faster and more responsive, while making predictions more accurate.

“When CFOs have a clear picture of the current business performance and future trajectory, they can help the organization navigate change and quickly adapt to new circumstances.”

Organizations that leverage a process known as “dynamic steering” integrate powerful AI and machine-learning algorithms, driver-based calculation, and data automation to accomplish the following: run multiple potential scenarios simultaneously; improve the accuracy of financial predictions; and regularly update data inputs to ensure insights remain relevant. Organizations that leverage this process tend to see a productivity uptick of between 20% and 30%, improve the accuracy of predictions by between 20% and 40%, and execute planning cycles 30% faster.

Unleash the power of “dynamic steering” by embracing its three key components.

To switch to dynamic steering, take the following three steps:

1. Establish data infrastructure — Ensure your company has a fully automated planning and forecasting system in place, “piping data out of source systems, feeding it into a driver-based calculation engine, and implementing a digital tool for fast analysis, iteration, and scenario building.”
2. Incorporate predictive analytics — Create predictive models, using data from multiple sources, such as consumer spending, to shape financial plans and forecasts.
3. Generate data-driven insights — Emerging technologies, such as generative AI (GenAI), can help your finance team rapidly glean actionable insights, while analysts can conduct variance and root-cause analyses to uncover more comprehensive, strategic insights.

Prioritize behavior change, starting small, and the right tech solutions.

When shifting to a dynamic steering approach, prioritize the following:

1. Behavior change — If you simply invest in new digital tools, without an effective change management strategy, you’re not likely to leverage the full potential of emerging AI and machine learning technologies. The success of your digital transformation hinges upon whether you take a structured change-management approach that clearly communicates the ways in which employees’ roles and everyday tasks will change, as well as the broader impact change will have on your organization.
2. Starting small, but moving quickly — Don’t try to do too much at once. Instead, consider launching pilots to test out new approaches, creating opportunities to learn what changes align best with your organization’s unique needs. This enables you to refine your approach and build momentum over time with a “test-and-learn” mindset.
3. Smart investments in technology — CFOs must carefully consider whether it makes sense to leverage existing solutions and platforms, or whether building AI models with more niche applications better serves their company’s needs.

About the Authors

Aaron Arnoldsen, Mike Beyer, Hardik Sheth, Michael Demyttenaere, Anna Oberauer, Shervin Khodabandeh, and Rajesh Yanamandra are professionals with Boston Consulting Group.