Last Updated: September 10, 2021
In a recent CFO Dive event with Prevedere and Hexion, Andrew Duguay, Prevedere Chief Economist, Rich Wagner, Prevedere CEO and President, and Mark Bidstrup, SVP and Treasurer at Hexion, Inc., discussed how CFOs are using economic data and predictive analytics to minimize risk and maximize opportunity. This blog recaps the webinar and main takeaways.
External factors are more important than ever
The pandemic has shifted many aspects of business planning, but most notably, it has brought forth the realization that outside factors can significantly impact a company’s performance. In traditional forecasting, businesses rely on historical internal data and trends to extrapolate into the future. However, as Andrew Duguay explains in the discussion, “while this may work as a ‘safe’ forecast, you will never project any turning points by just linearly extrapolating the past.” Increasingly, businesses understand the need to incorporate external data into their forecasts alongside their traditional data. Intelligent forecasting uses the best technology available to harness the power of external data to create a more robust forecast.
AI is the horsepower behind intelligent forecasting
Intelligent forecasting models can process billions of data points to identify critical statistical relationships by leveraging artificial intelligence and machine learning. AI can not only process massive amounts of data, but it can weed out the most critical drivers far quicker than manual forecasting. While AI is the horsepower to intelligent forecasting, one of the essential steps to success is integrating both artificial intelligence and human intelligence. Intelligent forecasting gives the advantage of quickly comparing many sets of outcomes. However, the results need to be augmented with professional expertise from CEOs, CFOs, and those within the business. Intelligent forecasting works best as an add-on to a company’s current planning process rather than a complete replacement. During the webinar, Rich highlights that “the best use case is when finance uses it as an ingredient and shares it with the business to take action.”
Intelligent forecasting maximizes opportunity with improved forecast accuracy
When augmented with human intelligence, the long-term use of intelligent forecasting models can improve forecast accuracy and minimize risk. Identifying and tracking key leading indicators allows businesses to be agile and quickly adapt to an increasingly volatile landscape. Moreover, leveraging AI and ML means decreased labor and time in forecasting models, allowing for more frequent planning cycles with more accurate results over longer periods. In the webinar, Mark Bidstrup explains how “Prevedere’s tool helps us to better understand the changes that we may see in the future quarters beyond the next three to six months.”
As businesses move into a post-COVID world, predictive analytics such as intelligent forecasting can help provide quantifiable support to CFOs when making strategic decisions. In the webinar, Rich concludes that intelligent forecasting “gives them the opportunity to really think about their business a little bit differently.” Moving forward, CFOs can maximize opportunity and minimize risk by capitalizing on AI and ML and harnessing the power of big data.
Click here to view the entire webinar.