Understanding AI Buzzwords: Vocab you need to know.

AI is moving so quickly that it seems like there's a completely new dictionary required to keep up. Some of the buzzwords you might be able to make sense of but there's there's a lot that will make no sense at all. So this is my best effort at trying to distill the vernacular that you need to know, not sor that you sound intelligent but just so you can understand what people will try to confuse you with.

Let's start from the top....

Generative AI (Gen AI)

Generative AI is a type of AI that creates new content based on your input. For example, if you ask it to draft a financial report, it can produce a tailored report that meets industry standards. Companies like OpenAI and Google note that this technology can cut content creation time by over 50%, saving you valuable time. This is what forms the basis of Elfworks.ai. The Generative AI language models that we use to provide accurate advice and research.

Tokens

Tokens are small pieces of information, like a word or character. When you enter text like “2023 revenue trends,” the AI breaks it into tokens to process it. Think of it as splitting a sentence into smaller parts for easier understanding by the language models. 1 token is about 1.3 words.

Hallucinations

In AI, “hallucinations” happen when the system generates incorrect or made-up information. This is critical for accountants, as faulty data can lead to errors. Research suggests about 25% of AI responses may include these inaccuracies, so always verify the output. This is the single biggest issue with trusting AI models. All robust solutions need to have the ability to validate and weed out hallucinations. In our experience, if you ask Chat GPT to tell me all the legislation, case law and ATO documents it will be correct about 75% of the time. The way these models are designed they'll give you a wrong answer before admitting they're wrong. There are techniques to deal with this that we've built in to Elfworks.ai

Latency

Latency is the time it takes for an AI to respond after you send a request. It’s like waiting for a webpage to load. For efficient AI tools, aim for latency under 100 milliseconds to keep tasks like data analysis running smoothly.

Bias

Bias in AI occurs when the system produces skewed results, often due to flawed training data. For instance, if an AI is trained on data from one group, it might not reflect broader trends. Studies show 39% of AI analysts have seen biased outputs affect business decisions, so stay cautious to avoid financial missteps. Each model will have it's own bias based on the data they've been trained with and their algorithms. This is why we have 4 different language models working together. We find that a difference of opinion is often a good thing as it will help arrive at the right conclusion.

Prompt Engineering

Prompt engineering is about crafting clear, specific questions to get better AI responses. Instead of asking, “What are the expenses?” try, “Summarise the top three expense categories for Q1 2023.” This approach improves the quality of information, helping you make informed decisions. This is about 35% of AI platforms and there's a saying in the tech industry that the answer will only ever be as good as the prompt you use.

Reasoning Models

Reasoning models help AI make decisions based on data. They’re great for exploring scenarios, like optimising tax strategies. AI-driven reasoning models can deliver over 90% accurate forecasts, helping you advise clients effectively. It will be really interesting to to see how these models evolve. At the moment, we've found they're not that great in our use cases because the answer is often quite nuanced. They're excel in coding and mathematic problems where there's a definitive correct answer. They don't like shades of grey!

Chatbots

Chatbots are AI tools that interact with users through text or voice. They can handle client questions or automate simple tasks. Accounting firms using chatbots see a 30% reduction in response times, improving client satisfaction and freeing up time for complex work.

API (Application Programming Interface)

An API is a set of rules that lets different software talk to each other. For example, when QuickBooks connects with payment platforms, APIs make data transfer seamless. This can save hours of manual data entry and boost productivity.

Machine Learning (ML)

Machine Learning is a part of AI that learns from data without being programmed directly. For example, it can analyze past financial trends to predict future sales with over 85% accuracy, offering valuable insights for advising clients.

Natural Language Processing (NLP)

NLP helps machines understand human language. Tools that analyze contracts or emails use NLP, letting you extract key data quickly. Companies using NLP in audits report a 60% faster review process, making decision-making more efficient. Again, all the tools that we use are centred around NLP. it's the core of Chat GPT, Gemini, Claude etc..

Algorithm

An algorithm is a set of instructions a computer follows to complete a task, like a recipe for a dish. In AI, algorithms process large datasets quickly, which is essential for accurate analysis and decision-making.

Neural Networks

Neural networks mimic the human brain to spot patterns and are used to solve complex problems by processing data through interconnected layers of artificial neurons. These networks are the models that underpin the AI models and it's essentially getting the language models to compute and reason the same way that we do, but with the ability to do this at scale. For example, about 70% of financial institutions use neural networks for fraud detection, improving their response times. It's the same reasoning process we would use just implemented through AI models.

Cloud Computing

Cloud computing stores data online instead of on local servers. This gives accountants easy access to information from anywhere without hefty hardware costs. A survey found 52% of small businesses now use cloud accounting solutions for flexibility and savings.

Wrapping Up

As accountants, getting a grip on these AI terms keeps you in the game. Tools like Generative AI and chatbots can really streamline financial tasks. Sure, AI might seem a bit daunting, but once you break it down, it's totally doable. Keep yourself updated, watch out for any errors or biases, and make the most of these tools to simplify and boost your work!