Whether it’s the global pandemic, US-China trade wars, Brexit or the 2020 US presidential election, finance teams are keenly aware of what many pundits hate to admit; uncertainty IS the new normal. And though COVID-19 is a black-swan event, navigating through uncertainly is nothing new for finance leaders. Navigating uncertainty is why long-range planning and rolling forecasting are so vital. But not just to forecast the numbers. Long-range planning and rolling forecasts help facilitate collaboration throughout the organization and increase business agility. How? By sharing insights and exchanging ideas across functions about business risk and opportunities. And of course, by leveraging those to make more effective decisions. You know what else corporate finance leaders agree on?
That predictive analytics and machine learning (ML) can take this to the next level.
New Technologies Becoming Mainstream
Like the exponentially increasing adoption of cloud-based solutions by finance, the adoption of predictive analytics and ML is a matter of when – not if.
The use of and interest in predictive analytics and machine learning is growing. Want proof? Here are just a few of the results from OneStream’s “Beyond the Hype” Predictive Analytics & Machine Learning Market Survey from August-2019:
Why all the interest?
Because finance and operational leaders are looking to supplement their planning processes with statistically significant predictive forecasts in order to compare against business forecasts that may be biased by the fog of uncertainty. How? By helping finance and business leaders to find new ways to ask “why.”
And with a focus on 100% customer success, OneStream is helping finance leaders find new ways to ask why – which is precisely “why” OneStream is dedicated to providing finance leaders with intuitive ways to take advantage of predictive analytics and machine learning no matter where they are in their advanced analytics journey.
Figure 1: OneStream’s Beyond the Hype Predictive Analytics & Machine Learning Market Survey
Figure 2: OneStream’s Beyond the Hype Predictive Analytics & Machine Learning Market Survey
Built-In Predictive Analytics
OneStream’s built-in Predictive Analytics solution (see Figure 3) provides end users with the power to predict future performance based on applying predictive algorithms to historical data</st rong>. With predictive analytics, users execute seasonal trend models right from the same interface they already use for planning, forecasting and reporting. How does it work?
Just select the data, click a button and OneStream runs many predictive algorithms and automatically picks the best forecast model based on the data patterns of the historic data selected. Users can then leverage predictive models to create baseline forecasts, validate forecasts submitted by managers in the field, seed forecast scenarios or blend predictive forecasts with business initiatives.
This type of predictive analytics is not new. In fact, the underlying capabilities of predictive models are something many of us learned back in Statistics 101. But by automating model creation directly in the planning interface, OneStream is making predictive modeling easy to execute for any planner.
That “ease of use” makes the solution powerful for finance teams. However, no predictive algorithm is going to predict with 100% accuracy. Why not? The answer is human intuition and business acumen.
Figure 3: OneStream’s Predictive Analytics 123 Framework
Unlimited Forecasting with Machine Learning (ML)
For finance teams that need to go beyond traditional predictive analytics, ML is the answer. Why? Because ML is where people and technology come together. Here are a few examples to consider:
For example, consider a retailer’s demand forecast for product A in region B within store C. To forecast at this granular level, there are so many other factors to consider. How about the weather in region B, for instance? And what if store C built a new parking garage? Or what if a major competitor opens a location across the street or materially changes pricing? Factors like these are all potential features an ML model might consider.
ML IS the new frontier for finance on the journey into advanced analytics.
And to support this journey, OneStream is taking an agnostic approach to ML. We understand that data scientists want to use the tools with which they’re most comfortable.
Connecting ML to CPM with OneStream
OneStream’s strategy is to provide an accessible ML framework for our customers that’s unified with corporate performance management (CPM) processes. Here’s a quick summary of our two-tiered approach:
For organizations with data science resources:
Figure 4: OneStream’s ML Integration
For organizations without data science resources:
Just like the integrated ML solution, the guided ML experience is designed to enable finance teams to focus on collaborating with their business partners. This allows finance teams to leverage new insights to find new ways to ask why and extend their dialogue to make better decisions.
Putting Advanced Analytics to Work
Will machine learning and predictive analytics eliminate all the uncertainty in the world today? Absolutely not. Nor will these technologies change the Office of Finance forever. But they do offer capabilities that every finance team needs to have ready in their arsenal to provide model scenarios that not long ago we never dreamed would be necessary.
And like we’ve done for each of our 500+ customers around the globe, OneStream’s mission of delivering 100% customer success ensures finance teams will have what it takes to lead the charge.
To learn more about Predictive Analytics and ML, download our latest video interview with OneStream CEO Tom Shea.