AI and Corporate Performance Management: is AI a Buzzword in Today's Business?
Author: Peter Tegenbosch
Will the near future hold dramatic and important change in corporate planning?
The future of planning is on the eve of a drastic change, a fundamentally different approach from the one based on human intuition and a gut feeling supported by a bit of data. Just like other technologies such as Cloud and Blockchain, planning is often and frequently discussed with little true understanding of uses and applications. It is relevant to most industries and functions and it is rapidly infusing the marketplace.
In the wake of this generation’s digital transformation, machine learning and the greater promise of Artificial Intelligence creates wonder in people’s minds and effervescence within organizations.
For most businesses, the implementation of Artificial Intelligence is facing internally. This means that a good business strategy will be unique and differentiated from your competitors, but your AI strategy can be the same as everyone else’s. Your data is different from theirs, and thus your results will be as well.
In my opinion, this development towards introducing AI into Corparate Performance Management is being driven, above all, by the growing amount of data being collected and processed. In addition, both corporate planning and AI have now reached a level of maturity that makes advanced applications of the sort considerably more interesting. It could improve the result of planning and the planning process.
Companies are not yet focused on completely automating planning and forecasting. Planners should thus continue to be involved in the planning process. However, they should be relieved particularly of routine tasks, such as manual activities and forecasts. Hence, it is not about replacing human planners with machines. Instead, it is about shorter-term and quicker forecasts, reduced manual planning efforts that are intended to increase the relevance of planning data and thus make planning more efficient. Moreover, it is about faster simulations, more accurate forecasts, and increased automation in corporate planning. Principally, it is about companies hoping for higher quality and accuracy in planning and forecasting.
To perform this transformation, finance must understand the role of AI regarding data management and data science. Building and maintaining the required competences and skills should be a priority to gain this understanding. More important than having AI capabilities is having a data and analytics culture. If there is no collection of results and outcomes, then no predictive or explanatory model can be derived. AI needs to learn from data. Data comes from records, and records come from processes. This should thus not be disregarded.
The execution and implementation of your AI strategy requires the same attention and focus as opening a new department. AI will directly impact KPIs as it should enable your company to make or save more money, make your processes more aligned and thus, saving time by your employees. It will take time to implement. It is important to focus on gradually building the insights you need and not on the one-time overnight success. Start small, learn and improve. Pick a project, break it down to its key activities, and automate one of them. Then maybe automate another, and so forth.
AI will have a huge impact on performance management since it allows you to correlate information and create insights that were not possible before, meaning you can take the best possible decision.
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