5 Ways companies can leverage AI in financial planning and analysis
As any financial planning and analysis (FP&A) professional can tell you, forecasting and budgeting can be extremely complex and challenging processes requiring a great deal of time, energy and foresight.
FP&A software platforms, such as Workday Adaptive Planning, are becoming increasingly popular with organizations looking to streamline these processes, while also improving their accuracy and enhancing capability.
Most modern FP&A software platforms leverage AI. While AI and Machine Learning (AI/ML) are very much in the news right now, and are growing in popularity, it’s understandable that some organizations may be uncertain how to implement this new technology in the most effective way.
In order to reap the full benefit of AI-enabled FP&A software, the best approach may be to start simple and build to more complex applications.
Five ways financial planning and Analysis professionals can leverage AI in their planning and forecasting
1. Automate routine tasks in financial planning
Begin with the basics: AI can be used to automate routine tasks like data entry, data consolidation, report generation and identifying variances and anomalies.
Finance teams often have to rely on spreadsheets and disconnected systems, while operations teams spend significant time consolidating workforce and project data across departments. Relying on these kinds of manual processes creates inefficiencies, making it challenging to consolidate data, ensure accuracy and reach decisions. It also increases the risk of errors.
AI can automate many of these manual tasks. This minimizes errors and reduces the time and effort required for these processes, allowing finance teams to focus on more strategic activities.
2. Improve data accuracy
AI can also be easily implemented to clean and validate data.
Many organizations struggle with unreliable data, or with multiple data sources with no single source of truth. AI’s ability to process vast amounts of data from diverse sources, using algorithms to detect anomalies and inconsistencies, reduces the risk of errors and ensures data consistency and accuracy across the organization.
3. Predictive analytics
Next, move to predictive analytics.
Finance teams often have difficulty producing accurate forecasts. This can lead to poor financial-planning and bad decision-making.
AI’s ability to cross-reference data sets allows it to uncover patterns and insights that might be missed using more traditional methods. It can also analyze historical data as well as external factors to give you more accurate and reliable insights into future performance. This helps finance teams anticipate and identify potential risks and opportunities.
4. Scenario planning in financial planning
At this point, you can integrate AI-driven scenario planning into your processes.
Without scenario modeling tools, it can be difficult for HR and finance teams to assess the impact of things like headcount or hiring changes, organizational shifts or strategic adjustments.
AI’s ability to simulate various, complex business scenarios can help teams better understand the possible impacts of different strategies and provide a more comprehensive view of potential outcomes. It can respond to market fluctuations, considering various factors and their interactions to help in triangulating predictions.
This allows for more agile and informed planning and decision-making.
5. Advanced forecasting models
Finally, adopt advanced AI models for more sophisticated forecasting.
AI algorithms can analyze data at unprecedented speeds, handling complex datasets and considering a wide range of variables. These models can continuously learn and improve over time, adapting to new data and changing conditons.
This provides businesses with more nuanced and accurate predictions, reducing the time needed for forecasting and allowing for quicker adjustments based on new information.
A step-by-step approach to financial planning
AI-driven FP&A software platforms, like Workday Adaptive Planning, can provide businesses with solutions to some of their most pressing pain points.
Automating routine tasks, improving data accuracy and predictive analytics enables more effective scenario planning and more accurate forecasts. AI has the power to drive better decision-making, efficiency, and resource management.
Taking a step-by-step approach to AI implementation ensures a smooth transition and can help businesses maximize the benefits of AI at each stage. By starting with simple tasks and gradually incorporating more complex capabilities, FP&A professionals can significantly enhance their planning and forecasting processes.