Daniel Sousa-Lennox: How Microsoft is using AI to win at forecasts and help their FP&A team

Oct 17, 2023

Daniel Sousa-Lennox, a data scientist at Microsoft, discusses how the company uses AI for accurate forecasts. They developed FINN, an AI finance tool that has achieved 99% accuracy in revenue forecasting for an Azure product. Sousa-Lennox emphasizes that while AI isn't magic, it has transformed financial forecasting at Microsoft. FINN provides access to 25+ models, reducing forecasting time significantly. The podcast also covers building flexible budget models, improving forecasts with machine learning, the role of AI in data analysis and forecasting, and the curiosity about meeting historical figures like Leonardo da Vinci.

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ANECDOTE

Dual Budgeting Challenge in Panama

Daniel Sousa-Lennox shared his experience in Panama banking where he managed dual budgeting for ongoing business and new initiatives.
He highlighted the challenge of dynamic spreadsheets and collaborating closely with multiple stakeholders in strategic planning.

ADVICE

Design Flexible Financial Models

Build your financial models with intent and design them to be dynamic and adaptable.
Avoid hardcoding and plan for changes to easily update your models amid evolving requests.

ADVICE

Ensure Stakeholder Buy-In

Engage stakeholders in budgeting so they feel ownership of forecast numbers.
This buy-in makes it easier to sell numbers to leadership and ensures commitment.

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How is Microsoft using AI to reach up to 99% accuracy in some forecasts? In this episode of FP&A Today, Daniel Sousa-Lennox, a data scientist at Microsoft with deep experience of financial analysis, reveals all.

The Microsoft’s finance team – about 5000 people – saw its first foray into machine learning in forecasting. The team developed FINN (or Microsoft Finance Time Series Forecasting Framework) says Sousa-Lennox who sits within the finance organization, providing software engineering and data science expertise. Using machine learning and creating AI finance tools (such as FINN which has been open-sourced) Sousa-Lennox says the Microsoft finance team has replaced burdensome forecasting and Excel heavy lifting. "The tool has helped, for instance, this one team in terms of accuracy to get the revenue that they were trying to forecast for an Azure product (the cloud computing platform run by Microsoft) to 99% accuracy". But Sousa-Lennox adds that it is important to remember that AI is not "magic" and "wont lead to 99% in every single forecast" and the quality of data is paramount.

Nevertheless the results are transforming financial forecasting at the $2trillion company.

FINN alone provides access to 25+ models supporting Microsoft’s daily, weekly, monthly, quarterly, and yearly forecasts, transforming the approach of FP&A.

Sousa-Lennox says: “It takes on average for a forecast used run using our tool, it takes about an hour to an hour and a half, which is significantly less than a week [previously]. It is also an hour and a half where you don’t have to be actively doing anything.”

In this episode Daniel Sousa-Lennox shares:

Similarities and differences between FP&A in US and Panama (and banking vs Microsoft)
Getting an internship to full-time career at Microsoft
How he trained in Data science and technology
How to evangelize finance teams into adopting AI
How Microsoft is transforming its forecasting and FP&A
Despite its success why AI is not a “magic bullet” for finance
The two most powerful lessons in presenting AI to finance teams
The biggest advice for anyone starting in FP&A
Last thing finance thing I Googled ChatGPT’d
My favorite Excel function

Links

Follow Daniel Sousa-Lennox: https://www.linkedin.com/in/dsousalennox/

FINN (Open-sourced by Microsoft): https://microsoft.github.io/finnts/