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The challenge with elevating FP&A to be focused on higher value tasks through adoption of technology has been talked about for many years. This has been hampered by challenges with existing tooling, and the constant business change unsettling progress. AI is however a major enabler to get this mission back on track.
In this article we explain the road-map for how AI adoption in FP&A is and will continue to unfold. Putting you ahead of the game.
Technology available to date has allowed most manual work to be removed off of FP&A's plate - that is data collection, cleaning, aggregating and the generation of reporting.
However with the acceleration in the adoption of AI, and a new wave of tooling available to support FP&A this is going after other tasks in the value chain. (See below diagram). Those that embrace this will open up a multitude of opportunities to further their impact in their role of FP&A & Finance, and their own career.
As AI becomes more sophisticated, FP&A professionals will be able to focus on even more strategic tasks, these include
- Optimising financial performance and strategy
- Assessing risk & opportunities and performing scenario analysis
- Identifying and evaluating new market opportunities
- Advising senior management on more strategic decisions
But what is the state of the technology available today? Here we breakdown what can be realised today
AI to support the on-boarding of technology solutions faster
One of the challenges with adopting tools in FP&A is, unlike Excel, not everyone knows how to use them. While there has been a reduction in the on-boarding and learning process required to adopt them, the power of these solutions has brought with it in the need for new skills, and risks associated with those skills subsequently walking out the door, leaving the organisation with a hole which often is then filled with expensive specialist consultants.
One of the ways that AI is being adopted is by helping organisations to onboard new technology solutions more quickly and efficiently and bring new personal up to speed on their use. AI-powered tools can significantly reduce the adoption and learning curve required, thus getting customers value and return on their technology investments far quicker, meaning the barrier to entry and payback is considerably reduced, as is the risk with becoming stuck without the knowledge and having to revert to Excel.
Providing a new way for you, and business users to interact with your data
We've seen the birth of chat based interfaces this year through ChatGPT. But how about putting that on top of your data to perform analysis and creating a whole new way to put data into the hands of your business users?
Letting leaders directly answers their own questions through conversing with the business data, rather than needing clicks and manual work by analysts to produce routine or ad hoc reporting.
Providing insights directly to the users for routine questions, meaning Analysts and FP&A partners role becomes validating of the reports, more challenging analysis and supporting the “what does this mean?” and "what do you do about it?" conversation.
This includes being able to provide data in appropriate formats through visuals and tables, as well as producing initial commentary which can be developed and advanced through human intelligence. All through a simple text based interface.
Data driven forecasting through Machine learning
ML algorithms can be used to create more accurate and detailed forecasts based on huge amounts of data, which would be impossible or impractical through traditional, manual forecasting methods. Eliminating forecasting bias, and manual collection of sentiment data from the business.
Machine learning can take into account a wider range of factors and can learn from historical data to improve their predictions over time. Leaving FP&A to challenge the forecast outputs, assess risk and opportunity and overlay unknown factors that are not considered in the data.
FP&A in supporting change throughout the organisation
As well as internally within the activities that FP&A perform, its clear AI will also have far reaching implications on the wider organisation. Supporting this change programme is a massive opportunity in driving business value from the unique standpoint in which we occupy.
People typically represent 70% of the cost within an organisation. This wider workforce is going to shift rapidly, as the investment in “bot” becomes a larger slice of the pie. As well as the AI investment itself, the necessary skills of the people must also shift, either through retraining, redeployment or replacement across large populations of the workforce. This links the people, to processes and technology adoption through substantial change programmes. All of which would benefit from FP&A oversight through planning & analysis that drives accountability, ownership and ultimately success.
A look to the future
**Disclaimer The following represent my personal views on where this is heading and the likely impact AI will have in future in the field of FP&A. Bear in mind that this is evolving at pace, and that the timeline stated could well be incorrect!
Building modelling logic
What is clear is that it will not stop where we are today. FP&A for now, will still be required to define the data structures and build relevant and robust financial models and forecasts, however AI will at a future point be capable of automating this process. Ingesting raw data, and providing guidance and prompts to users to construct models, through leveraging its own industry intelligence to define logic and produce interactive out of the box forecasts tools. In doing so identify the relationships and dependencies between financial and non-financial items, and writing the code or configuration to implement the model.
Value adding decision guidance
For those that follow the development of AI more broadly, this kicked off this year with data retrieval through ChatGPT, however people across the globe are experimenting in taking this to the next step, which is how do we automate the output from the AI.
A simple example if you will..
I want to go for a romantic long weekend in Paris, you ask the AI to "Design me an itinerary including where I will stay, eat, what i will do to maximise my time in the city". Telling it what you and your partner like.
The follow-on step to this would be to say - "Thanks, now go and book it all and put it into our calendar."
Apply that to the future of FP&A, where the AI has a broad range of data within your organisation as well as outside market intelligence. AI may also be able to provide Leaders and FP&A professionals with valuable guidance on how to make better decisions, with suggestions across the different levels of the organisation for actionable improvement which it expects will lead to enhanced financial performance. As well as assessing risks and opportunities of a range of different business options, and recommending, and then executing those actions.
Lets not get carried away...
This vision for automated course correction by AI likely is only achievable at the point we reach what we call "Artificial general intelligence" or AGI, which is the point where AI can can surpasses human capabilities, the estimates for this vary widely, anywhere from 4 years to more than 70 years.
Conclusion
FP&A has come along way in the adoption of technology, with AI and ML enabled solutions in the market now which will have a profound impact on our roles within the profession. Those that are early adopters and view this technology positively, rather than fear it, will capitalise on the change that will happen over the coming years and will separate themselves from the pack in their value in the marketplace, and therefore the opportunities that are available to them.
A short note about Pigment & Viridian
Our vision is to bring planning to everyone in an enterprise organisation, helping them make smarter, faster, data driven decisions, with the AI that is being built into the platform a core enabler to this vision.
Rather than being theoretical and remaining a promise for the future, we are bringing this to life today to deliver more and more value to customers.
If you would like to explore what the platform can do, speak to me today.