By Tiffany Ma March 19, 2024
With the increasing frequency and magnitude of economic volatility, FP&A teams have been under more pressure than ever. Traditional processes for quarterly or annual budgets are no longer relevant as the pace of change quickly renders these static budgets stale. Additionally, increasing data sources and exponential growth in data requires data transfer, reconciliation and consolidation before insights can be factored into budgets, forecasts or plans. Fortunately, business planners are in luck. Why? AI transforms enterprise Finance.
That transformation occurs through faster processing of data, increased forecast accuracy and deeper insights. Rapidly becoming an essential tool for enterprises of all sizes, AI streamlines processes, unlocks valuable insights and drives strategic decision-making. Soon, AI will be embedded across all enterprise Finance processes. This blog post therefore explores how AI transforms Finance, setting the stage for a deeper dive into OneStream's innovative Sensible ML solution.
How AI Transforms Enterprise Finance
Enterprise Finance is transformed through AI by enabling a variety of capabilities. Specifically, AI enables the following:
- Predictive analytics and forecasting
- Process automation and efficiency
- Risk management and anomaly detection
Predictive Analytics and Forecasting
AI-powered predictive analytics is revolutionizing financial forecasting for enterprises. By analyzing historical data and market trends, AI algorithms can accurately predict future financial outcomes, enabling organizations to make informed decisions and mitigate risks effectively. These predictive models provide valuable insights into cash flow management, revenue projections and expenditure planning. As a result, Finance professionals are empowered to allocate resources efficiently and optimize financial performance.
Process Automation and Efficiency
Automation is a cornerstone of modern Finance operations, enabling enterprises to streamline repetitive tasks, reduce manual errors and enhance operational efficiency. With purpose-built AI solutions, Finance can automate mundane financial processes (e.g., data entry, forecast creation and reconciliation). Finance teams then have more time to focus on value-added activities. By integrating AI-driven automation tools into workflows, enterprises can thus accelerate decision-making processes, improve data accuracy and achieve cost savings.
Risk Management and Anomaly Detection
Enterprise Finance involves inherent risks, including compliance violations, human error and market fluctuations. To detect anomalies and identify suspicious activities in real-time, AI-driven risk management solutions leverage advanced algorithms. How? AI's ability to process vast amounts of data allows for the identification of patterns and anomalous data points.
This ability facilitates exception handling for Finance processes such as planning, data quality and reporting. Thus, Finance professionals can streamline operations and focus on exceptions rather than sift through entire datasets. This approach ultimately saves valuable time and enhances the efficiency of financial processes.
As Finance continues to embrace AI, a practical and sensible ML approach – one that balances automation with transparency and human insight – has become increasingly important. Effective planning is, after all, critical for businesses to remain competitive and adapt to changing market conditions.
At OneStream, we call this Sensible ML.
Introducing Sensible ML
OneStream's Sensible ML (see Figure 1) is a paradigm shift in leveraging AI for Finance professionals. By seamlessly unifying AI within an enterprise Finance platform, Sensible ML – which is purpose-built for FP&A – creates thousands of forecasts and insights, which were previously impossible to do with manual processes.
Figure 1: Sensible ML Process Flow
Purpose-Built AI for FP&A in a Unified Platform
By integrating AI, Finance teams can seamlessly leverage AI capabilities without having separate tools, systems or teams. No longer are the days of having data scientists create a forecast without understanding the business value. Also gone are the days the Finance team receives the output with no understanding of where the numbers originated.
Instead, with purpose-built AI for Finance and Operations, business planners are independently creating ML-backed forecasts. And these planners are doing so for the entire ML-forecasting process – from data ingestion and quality to model building, all the way to utilization and consumption. Finance professionals can now explain their accurate forecasts with confidence and at scale across hundreds or thousands of forecasts.
Sensible ML also incorporates external factors (e.g., weather, macroeconomic factors) to create highly accurate forecasts and utilizes a unique, groundbreaking concept: the Model Arena.
The Model Arena offers tailored precision by automatically selecting the most performant model for each forecasted line item. In contrast, the one-size-fits-all approach applies a single model for all forecasted line items, failing to account for the characteristics of each product-location combination. The Model Arena approach instead produces a much higher level of accuracy by accounting for the nuances of different forecasted products by locations.
Polaris, a global leader in powersports whose products have vastly different characteristics, offers a good example of the power of Sensible ML. Specifically, Polaris can now forecast for specific products and locations with distinct models across the business. Only a unique ML model tailored for Polaris snowmobiles or off-road vehicles can create an accurate sales forecast. In turn, Polaris can then optimize for downstream processes such as resource allocation or maximize the contribution margin.
Sensible ML's Model Arena automatically selects the most accurate ML model for every product-location combination within differing business units. Ultimately, then, Sensible ML arms Finance professionals with deeper insights into future financial scenarios, enabling better decision-making and strategic planning.
Conclusion
As AI continues to evolve, the impact on enterprise Finance will only intensify. AI will continue revolutionizing traditional practices and unlocking new opportunities for growth and innovation. From predictive analytics to process automation and risk management, AI empowers enterprises to navigate complex financial challenges with confidence and agility. Finance professionals who use OneStream's Sensible ML solution can thus unlock the full potential of AI to drive sustainable business success in the digital era.
Learn More
Want to learn more about how AI transforms enterprise Finance for FP&A teams? Stay tuned for additional posts from our Sensible ML blog series, or download our white paper here.
