Artificial Intelligence (AI) is the top area where CFOs plan to increase their budgets this year, and for good reason.
Not only are businesses at the heart of the AI ecosystem seeing their own valuations soar, but AI-driven companies are even bucking otherwise deflated venture capital (VC) investment trends as 2024 ramps up.
As a result, despite facing rising tech and material costs—alongside continued inflationary pressures—CFOs are actually increasing their AI budgets this year, according to 90 percent of finance leaders recently polled by Gartner.
But where are CFOs funneling these AI investments to maximize their returns?
While many of the most prominent recent use cases for AI in the enterprise hinge on increasing productivity, recent studies have shown that the largest ROI for SaaS companies actually lay in using AI tools for product development.
In this blog, we’ll break down where and why CFOs are investing in AI to improve operations, productivity and ideally profitability in the short- and long-term.
Increasing AI budgets despite downward earnings projections
More than 70 percent of the 302 finance leaders polled by Gartner are actually anticipating at least a 10 percent increase in their AI spend this year, while none of the professionals surveyed plan to reduce their AI budgets.
In particular, 81 percent of CFOs are looking toward investments in generative AI for their 2024 roadmap.
Source: Gartner (February 2024)
“As AI spending increases, CFOs have a unique role to play both in determining how it will impact finance department structure, and—given their holistic understanding of core business value drivers that this technology could put at risk—in establishing proper enterprise-wide governance that balances opportunity and oversight,” said Alexander Bant, chief of research in the Gartner Finance practice, in a statement.
The TL;DR of that statement? CFOs have to become the frontline decision makers in bringing AI into the business.
This also goes beyond leveraging AI just to transform the finance arm of the business. While there are powerful AI-driven solutions that finance teams can leverage to bridge gaps in expertise and capture non-dilutive funding, for instance (more on that later…), many of the most powerful applications of late have involved using AI to derive more innovative R&D,
Generative AI to build new products
A recent survey conducted by SaaSCan at the end of 2023 polled early-stage-to-mid-market SaaS leaders, investors and lenders across Canada and the United States to gauge the Metrics that Matter Most when it comes to funding their business and achieving growth in 2024.
By and large, both investors and lenders who took part in the survey report that generative AI is transforming how SaaS companies build products more than their general productivity.
Some supporting anecdotes from the report include:
- Development teams can leverage ChatGPT to correct code, complete small tasks that would otherwise take weeks to months to find resources for, implement new frameworks, and generally significantly accelerate progress at higher reliability and less cost.
- One developer tripled his productivity using ChatGPT and Copilot.
- A CTO reported that Copilot was the most impactful development tool he had seen in over 20 years of coding.
While more teams viewed generative AI as transformative for product development (31%) versus general productivity (20%), the findings still showed that CFOs and business leaders are wise to encourage AI adoption wherever possible to increase agility and efficiency.
“If you aren’t pushing your team to use AI to increase their efficiency and performance, you’re going to be left behind,” one SaaS lender said in the SaaSCan report, while investors warn about avoiding “superficial trends and ensuring a balanced approach to AI adoption.”
This all goes to show that just by demonstrating your willingness as a business leader to explore cutting edge tech, you’re making yourself more attractive to potential investors. But generative AI could also be key in helping you tap into non-dilutive sources of capital to achieve growth and capture larger market share.
Stretching your AI investments (and product runway) further
With 91 percent of SaaSCan survey respondents viewing generative AI as at least “somewhat transformative” in building new products, there’s likely significant innovation being driven by generative AI today that’s untangling Technological Uncertainty.
And where Technological Uncertainty is being addressed, there could be SR&ED tax credits waiting in the wings.
If teams are leveraging AI to address challenges that could not be overcome using techniques or procedures commonly available today, they are driving the “unique innovation” that’s at the heart of SR&ED qualification criteria.
And while the use of generative AI on its own wouldn’t be considered unique, it could be used as a powerful tool in the Systematic Investigation that’s required for any successful SR&ED claim and advancing “the company’s knowledge base” to address Technological Uncertainty.
At Boast, we even leverage our own AI-driven platform to help improve and streamline the SR&ED application process for customers. Our platform seamlessly integrates all of a client’s relevant project, payroll and financial data into a single system-of-intelligence that classifies and categorizes SR&ED-worthy activities, ensuring every facet of innovation that our customers are driving is accounted for.
So if businesses are able to accelerate the success and speed of their R&D using generative AI, they may also be unlocking the ability to re-invest in their product roadmap through SR&ED. All they need to do to begin is sync the systems they already use to track R&D and payroll with Boast to see our R&D tax credit experts start working their magic.
To learn more about the latest AI-driven enhancements that underpin Boast’s R&D tax credit services, check out our product feature enhancements.
