AI streamlines budgeting, but human oversight essential

AI Outperforms Humans in Tactical Budgeting, Vlerick Study Finds

Research from Vlerick Business School reveals that AI consistently outperforms human decision-making in corporate budgeting—when strategic guidelines are clearly defined. Businesses that leverage AI for budget allocation see significant gains in accuracy and efficiency, especially in tactical financial planning.

The study, conducted by Professor Kristof Stouthuysen, an expert in Management Accounting and Digital Finance, along with PhD researcher Emma Willems, aimed to evaluate AI’s effectiveness in corporate budgeting and its alignment with long-term business strategies.

Tactical vs Strategic Budgeting: Where AI Shines

The researchers examined two types of budgeting:

• Tactical budgeting focuses on short-term, data-driven decisions—such as adjusting expenditures based on market trends or managing operational costs.

• Strategic budgeting, by contrast, involves long-term planning that aligns financial decisions with broader business goals and visions.

According to the study, AI excels in tactical budgeting, optimizing resource allocation and cost management with remarkable efficiency. However, human judgment remains critical when it comes to broader strategic planning, particularly in situations where goals and KPIs are not tightly aligned.

Inside the Study: AI vs Human Decision-Making

The research was based on a controlled management simulation. Experienced managers were tasked with allocating budgets for a fictional automotive parts company. Their decisions were then compared to those generated by an AI algorithm using the same financial data.

The outcome was clear: AI outperformed human managers when working within well-defined strategic frameworks. However, when key performance indicators (KPIs) were misaligned or vague, the AI struggled—highlighting the continued need for human insight and adaptability.

The Case for Collaboration Between Humans and AI

The researchers emphasise that while AI has the potential to handle tactical budgeting autonomously, a balanced approach is crucial.

“As AI continues to evolve, companies that combine its strengths in tactical budgeting with human oversight in strategic planning will gain a competitive advantage,” said Professor Stouthuysen. “The key is knowing when to let AI lead—and when human intuition is still indispensable.”

The findings challenge the common belief that AI will fully replace humans in financial planning. Instead, they suggest a hybrid model, where AI and humans work together—each focusing on what they do best.

Takeaway for Businesses

Companies looking to maximise financial performance and long-term growth should:

• Clearly define their strategic goals and KPIs.

• Deploy AI for tactical budgeting tasks, such as cost control and resource allocation.

• Maintain human oversight for high-level financial planning and when interpreting ambiguous data.

In short, AI is not a replacement—but a powerful partner. When used thoughtfully, it can elevate the budgeting process and empower businesses to make smarter, faster, and more aligned financial decisions.