Can somebody please explain what AI and ML mean for FP&A?
The implications for FP&A of new data processing tools like AI and machine learning are enormous. Especially as teams are inundated with more data and requests than ever before. Here, we want to explore some of the most common challenges FP&A teams are facing today and explore why AI and ML might provide a solution.
FP&A has been evolving rapidly in the past few years, racing to keep up with the digital transformation of business. And the technology FP&A practitioners use has evolved rapidly too – with the COVID pandemic only serving to accelerate processes that were already in motion.
These changes include evolutions of the methodology used in forecasting, changes to the way that companies create plans, and changes to the role of the wider finance department in operations. But perhaps more than anything else, they’ve been driven by data.
Why a surge in data demands an adoption of new tools
The sheer volume of data available creates a double-edged sword for an analysis and planning function. On the one hand, it creates an opportunity to develop more accurate forecasts than ever before, and accurately simulate the effects of various different scenarios on your organization’s financial health. On the other, it creates a new surge of demand that might threaten to overwhelm your team’s capabilities.
And this demand can only be met by a new generation of intelligent tools. One that allows teams to focus on the value-added work of strategic decision making, modeling, and scenario planning, while leaving data sorting and processing to the robots.
Enter AI and machine learning
“Artificial intelligence” and “machine learning” are – far from being far-flung sci-fi concepts – actually extensions of already existing principles in enterprise software.
They allow tools – like ERP platforms – to “train” against incoming data in order to automate data segmenting, tagging, storage, and recall for a host of different tasks. This further eliminates the need for manual tagging and the time-intensive “cleaning” of datasets before use.
By doing some of the work for your teams (especially the low-value tasks that can’t be automated by conventional means), removing the burden of quality assurance, and guaranteeing a high-quality input for your systems, AI and machine learning can help you do more high value work, and do it faster. All while avoiding the central problem with using technology to create predictive planning models – garbage in, garbage out.
But beyond doing better work to a higher standard of accuracy, AI and machine learning can bring something wholly new to the world of FP&A.
Towards automated forecasting
Imagine that – instead of performing your own forecasts more quickly – you were able to pick the drivers you wanted to explore, apply your data to an AI/ML model, check what happens when you include a new driver or revise an existing one, and then include or exclude it only if it was shown to have a significant effect.
All based on a single, automated process.
This ability would allow you to not just instantly forecast against any number of variables, but create a totally automated model that will deliver continuous improvements to the quality of your forecasting through the ongoing training of the machine learning model as your datasets are updated.
AI and ML mitigate time spent on non-value add activities, ensure data quality, and can deliver analysis that increases your FP&A team’s strategic agility – and its ability to add value to the organization. All while making the job more streamlined without actually changing core functions and skillsets.
Experience what Unit4’s FP&A solutions – and their incorporation of AI and machine learning protocols - can bring to your team for yourself. Join us at X4U this October.
With over 40 sessions on every aspect of business technology from ERP to FP&A, HCM, and financials, including:
- Modern FP&A implementation during COVID
- The evolution of FP&A
- An exclusive look at the achievements of one major retailer across their business using our FP&A platform
- The power of AI enhanced forecasting