What is LLM Fine-Tuning?

Large Language Models (LLMs) are neural networks trained on massive datasets from the internet to essentially learn a “world model” through statistical correlations. Their generative capabilities are impressive in numerous tasks including answering questions, summarizing documents, writing software code, and translating human language.

Using LLMs in the enterprise environment, however, essentially requires taming their intrinsic power and enhancing their skills to address specific customer needs.

Tailoring LLMs for Specific Use Cases

In order to do so, one has to understand the exact use case that needs to be addressed and decide on the best way to ground the model’s responses to match the business expectations reliably. There are various ways to give context to a general-purpose generative model. Fine-tuning and RAG (Retrieval Augmented Generation) are two popular approaches.

Why fine tuning LLMs are essential for enterprises

Understanding Retrieval Augmented Generation (RAG)

Retrieval Augmented Generation (RAG) relies on augmenting system prompts (instructions to the model) with external knowledge sources such as a library of organization documents (referred to as a Knowledge Base). It is ideal for generating accurate, informed factual responses reducing the model’s hallucinations.

RAG combines a retriever and a generator where each component can be optimized separately. The retriever indexes the data corpus in the Knowledge Base and identifies passages that are relevant to a user’s query, while the generator uses this context along with the original query to generate the final output. This kind of modularity makes the method transparent and easily scalable.

The Importance of Fine-Tuning in LLMs

Fine-tuning, on the other hand, allows for further customization by adding new knowledge to the model itself so that it learns – or adapts its learned knowledge – to master specific tasks. It is a supervised learning task based on labeled datasets to update the model’s weights. The demonstration datasets are usually prompt-response pairs that indicate the kind of refined knowledge needed for a particular task.

When is Fine-Tuning Necessary?

There are a number of key factors that need to be considered before deciding on how to adapt a generic model to specific business needs. Fine-tuning usually comes into play when instructing the model to perform a specific task fails or does not produce the desired outputs consistently. Experimenting with prompts and setting the baseline for the model’s performance is a first step towards understanding the problem or task.

Addressing Specific Business Needs Through Fine-Tuning

When proprietary data is available, fine-tuning can offer a high level of control and privacy. Handling sensitive data, edge cases or cases where you need to set a specific tone might be good reasons why you’d like to let the model learn and adapt in an unstructured manner as opposed to crafting complex prompts.

Fine-Tuning for Domain-Specific LLM

In cases where an out-of-the-box model is missing knowledge of domain or organization-specific terminology, a custom fine-tuned model also called a domain-specific model might be an option for performing standard tasks in that domain or micro-domain.

BloombergGPT and Med-PaLM 2 are examples of LLMs that were trained from scratch to have a better understanding of highly specialized vocabulary found in financial and medical texts, respectively. In the same sense, domain-specificity can be addressed through fine-tuning at a smaller scale.

Fine-tuning is finally effective when cost or latency needs to be reduced during inference. A fine-tuned model may be able to achieve high-quality results in specific tasks with shorter instruction prompts. However, you have to be aware that interpreting or debugging the predictions of a fine-tuned model is not trivial. Different factors like data quality, data ordering, and the model’s hyperparameters may impact the performance.

Fine-tuning heavily relies on accurate, targeted datasets. Before fine-tuning a model, one should first make sure that enough representative data is available so that the model does not overfit on limited data. Overfitting describes a model’s limited ability to generalize to new data.

Automating Dataset Preparation and Workflow

Dataset preparation is a costly process. Automating parts of this process is a vital step towards offering a scalable solution for fine-tuning LLMs for enterprise use cases.

Here’s an example: Suppose you want to customize a model to be able to generate social media posts following your company’s marketing strategy and tone.

As an organization you might already have a sufficient record of such posts which you can use as golden outputs. These outputs form a Knowledge Base from which you can generate key content points using RAG. The generated content points paired with the corresponding outputs can form your dataset to fine-tune the model to master this new skill.

Fine-tuning and RAG are not mutually exclusive. On the contrary, combining both in a hybrid approach may improve the model’s accuracy and it is definitely a direction worth investigating.

A recent study by Microsoft shows how capturing geographic-specific knowledge in an agricultural dataset generated using RAG resulted in a significant increase in the accuracy of the model that was fine-tuned on that dataset.

Making fine-tuning LLMs less of a black box and more accessible to the enterprise involves making each step in the workflow as simple and transparent as possible. A high-level workflow involves the following steps:

  1. Experimenting with prompting different LLMs and selecting a baseline model that fits one’s needs.
  2. Defining a precise use case for which a fine-tuned model is needed.
  3. Applying automation techniques to the data preparation process.
  4. Training a model preferably with some default values for the model’s hyperparameters.
  5. Evaluating and comparing different fine-tuned models against a number of metrics.
  6. Customizing the values for the model’s hyperparameters based on feedback from the evaluation step.
  7. Testing the adapted model before deciding that it’s good enough to be used in actual applications.


Leveraging a full-stack Generative AI platform to address the workflow above essentially means connecting the dots between:

  • Prompt engineering and evaluating prompts for different models;
  • Using knowledge retrieval to generate demonstration data;
  • Fine-tuning a model with generated data.

This is the future for operationalizing LLMs for the enterprise and reducing time, effort, and cost for maximizing their adaptability to specific skills. Book a demo with Aisera to find out more about our Generative AI capabilities.

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