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If the term “AI” catches your eye, it’s highly likely that ChatGPT comes to mind. And you would be absolutely correct in making that association.
The launch of ChatGPT has taken the world by storm. Its success has kickstarted an AI race that has compelled almost every company to embed artificial intelligence and machine learning algorithms into their software architecture to mirror the same level of agility and productivity.
However, does FP&A also play a significant role in this? Is AI adoption merely a convenient tool for addressing a few immediate inquiries, or does it provide a strong mechanism for capitalizing on emerging business opportunities almost instantaneously?
Let’s explore the concept of AI within the realm of FP&A (Financial Planning and Analysis) and examine the potential benefits it offers in terms of generating valuable financial insights.
What Is FP&A?
Financial Planning and Analysis (FP&A) is a process used by analysts to develop data-driven strategies to drive a company’s financial health. By leveraging data-driven insights, FP&A analysts ensure that all strategies are aligned with the outcomes projected in their forecasts. This approach is key to facilitating the company’s progress and enhancing its overall growth.
AI: More than just ChatGPT
While ChatGPT has become nearly synonymous with AI, it is important to recognize that AI encompasses much more than just ChatGPT. Artificial intelligence refers to the ability of machines to acquire knowledge and make decisions through data processing and analysis. AI includes various components such as machine learning algorithms, deep learning, and robotics, which are increasingly being utilized in accounting and finance applications. Business leaders, including CFOs, are well aware of these technologies.
AI-powered software, such as chatbots, web visitor tracking systems, and fraud detection tools, are examples of how AI is currently being implemented. However, with the groundbreaking advancements made by ChatGPT, new opportunities and challenges have emerged that CFOs should consider.
Higher Requirement to Be Agile
In today’s business landscape, the role of CFOs has become increasingly crucial in swiftly responding to valuable insights. With ongoing inflation and a global slowdown in output, unpredictable market dynamics have painted a bleak picture for essential financial factors like raw material pricing, inventories, and credit. The stakes are high, as any delay in decision-making can result in diminished quarterly growth, decreased market share, and potentially jeopardize job security. The need for timely action has never been more paramount.
Rising data volumes
The task of consolidating and controlling data from various sources, technologies, and formats has reached a point where it is exceedingly challenging. As the measurement and enhancement of financial performance extend beyond the confines of the finance department, ensuring the precision of forecasts and financial reports necessitates the inclusion of data from numerous origins, ranging from accounting software tools to CRMs and Web 2.0 applications. Neglecting even a minor modification in the data can lead to discrepancies in the decision-making process, ultimately widening the divide between valuable insights and actionable business outcomes.
Ways AI Is a Game-Changer for FP&A
AI can bridge the data-to-insights gap by putting together data sourced from a variety of formats and condensing it to create financial models and reports. Best of all, it can recommend CFOs on which course of action to follow without any human input.
Unlike situations that are crippled by analysis-paralysis, the self-learning and correcting approach to FP&A, can help you act in near real-time by saving countless man-hours lost in manually searching through each piece of information. With this, you can quickly respond to fluctuating prices, restock inventory levels, and prioritize payroll and operational spends to mitigate any financial performance loopholes.
Solves the Problem of Big Data
AI in FP&A can also help you better manage zettabytes of information. Back in 2020, IDC forecasted that the global data volumes will reach 175 trillion gigabytes or 175 zettabytes. While AWS, Google, and Microsoft Azure cloud platforms have paved the way in how data is stored and managed, converting unstructured into structured and useful data was where most businesses felt incapable to handle.
Not any longer; since ChatGPT-3 ignited the race for AI, companies have quickly hatched to embed and rely on AI and machine learning technologies to harvest and process data to optimize speed and cost-efficiency.
Priya Krishnan, who heads product management for data and AI at IBM, remarked:
“AI is being used to ingest, identify and classify datasets from a variety of sources,” she said. “It continuously mines content to surface unseen patterns and trends, providing organizations with greater visibility and actionable insights to aid in decision-making. Businesses are using AI to automate otherwise manual tasks like data capture, de-duplication, anomaly detection and data validation.”
In the case of FP&A, legacy, Excel-based financial planning, budgeting and reporting are already limited by the size of data volumes it can process. CPM solutions, in contrast, have enabled companies to be more adaptive in ingesting data from CRMs, spreadsheets, accounting software tools, and more to process and visualize data on tools using Power BI and Excel. With AI, CFOs can supercharge forecasts based on gigabytes of financial inputs cascading into various internal and external information.
How Acterys Powers FP&A Processes using AI
Acterys offers CFOs a comprehensive cloud-based CPM solution that empowers them with a consolidated platform for executing FP&A tasks and conducting highly precise financial forecasts. By utilizing a virtualized SQL data warehouse as its foundation, Acterys seamlessly integrates with a diverse range of data sources, such as CRMs, accounting tools, ERP solutions, SaaS applications, and numerous others, enabling unparalleled data connectivity and functionality.
Acterys comes with a ChatGPT AI chatbot as part of its xP&A Suite that can bring a number of solutions to make your financial planning effortless in a number of ways:
Solution 1: Answer data-related questions in seconds: Want to know answers to questions such as ‘What is the predicted growth rate for product A vs. product B’ or ‘What is the gross profit margin across regions US, EMEA, and APAC?’ The AI Chatbot can quickly scan your reports and provide answers in natural language, speeding up your time to insight and reporting.
Solution 2: Provide knowledge-based recommendations: Losing man-hours sifting through every database or report? Acterys’ AI functionality can help save you the trouble of losing sight of key trends found across multiple data points and suggest insights that reflect internal business data and external financial research.
Solution 3: Run ‘what-if’ scenarios on the fly: As a CFO, any decision you’re about to implement must accurately reflect the information that underpins it. But when market dynamics change unexpectedly, running ‘what-if’ analyses based on new information can be time-consuming.
Acterys, in this case, offers prescriptive planning to create ‘what-if’ scenarios when required. Just provide the chatbots with prompts based on the changing market data and you can construct and obtain insights for actionable strategy in near real-time.
For more information on how Acterys leverages ChatGPT, read: Planning Insights with Chat GPT
AI for financial planning and analysis (FP&A) presents CFOs with multiple advantages in managing the increasing influx of data, swiftly addressing market opportunities and risks, and meeting essential requirements for competition in a post-pandemic world marked by financial impacts.
Through the implementation of CPM solutions such as Acterys, which incorporate prescriptive AI functionalities, CFOs can streamline the laborious aspects of financial planning and analysis. As a result, they can focus on implementing actionable insights that propel business performance to its highest potential.
Start your free trial now to see how Acterys can streamline your FP&A processes with its AI capabilities.
- While ChatGPT is a prominent AI model, AI in FP&A extends beyond it, encompassing machine learning algorithms, deep learning, and robotics, with applications in accounting and finance.
- CFOs play a crucial role in rapidly responding to valuable insights due to unpredictable market dynamics.
- Timely decision-making is essential to avoid negative impacts on growth, market share, and job security.
- AI helps in consolidating and analyzing data efficiently, reducing minor data discrepancies which can hinder decision-making.
- AI can bridge the gap between data and insights by automatically processing data from multiple sources to create financial models and reports.
- AI aids in handling vast amounts of data, converting unstructured data into structured, actionable information.
1. How does AI benefit FP&A?
AI in FP&A provides benefits such as faster time-to-insight, handling large data volumes, answering data-related questions, providing knowledge-based recommendations, and running ‘what-if’ scenarios.
2. How does AI assist in managing data in FP&A?
AI helps manage data by identifying, classifying, and processing datasets from various sources, automating tasks like data capture, de-duplication, anomaly detection, and data validation.
3. What are some challenges faced in FP&A?
Challenges in FP&A include the need to be agile in responding to insights, managing rising data volumes, consolidating data from various sources, and making accurate forecasts in volatile markets.
4. How can CFOs benefit from AI in FP&A?
CFOs can benefit from AI in FP&A by gaining faster access to insights, efficiently handling large datasets, making informed decisions based on AI recommendations, and quickly running scenarios to adapt to changing market dynamics.
5. Can AI in FP&A handle unstructured data?
AI in FP&A can handle unstructured data by converting it into structured and useful information, making it easier to process and analyze.