Is Fine-Tuning or Prompt Engineering the Right Approach for AI?

While prompt engineering is a quick and cost-effective solution for general tasks, fine-tuning enables superior AI performance on proprietary data.

We previously discussed how building a RAG-based chatbot for enterprise data paved the way for creating a comprehensive GenAI platform. That article highlighted the growing need for enterprises to develop AI solutions tailored to their specific needs.

As AI adoption accelerates, organizations face a critical decision: Should they rely on prompt engineering for quick solutions or invest in fine-tuning models for deeper customization?

Let’s explore the differences between these two approaches, learn from early adopters and outline the infrastructure requirements for fine-tuning at scale.

Prompt Engineering and RAG: Quick Start Into the AI World

Prompt engineering involves crafting precise input prompts to guide large language models (LLMs) like OpenAI’s GPT or Anthropic’s Claude without modifying their architecture.

Prompt engineering

When combined with retrieval-augmented generation (RAG), which integrates external knowledge bases, this approach dynamically enriches model outputs, making it a cost-effective and adaptable solution.

Prompt engineering + RAG

Advantages of Prompt Engineering and RAG

• Speed and simplicity: Faster to implement with minimal technical overhead.
• Adaptability: Effective for general use cases and common tasks.
• Lower costs: No need for complex infrastructure or model training.

Challenges and Limitations

• Knowledge cutoffs: Pretrained models may lack up-to-date information.
• Limited customization: Models struggle with niche or proprietary tasks.
• Data privacy risks: Using sensitive data in prompts may expose intellectual property.

While prompt engineering is ideal for general applications, specialized AI workflows often require more robust solutions. This is where fine-tuning shines.

Fine-Tuning: Unlocking Model Customization

Fine-tuning involves retraining a base model using domain-specific data sets and adjusting the model’s weights to better suit unique workflows. This process enables organizations to enhance model performance for specialized tasks, offering unparalleled control and customization.

Fine-Tuning

Key Benefits of Fine-Tuning

• Improved accuracy: Tailored models perform better on proprietary data sets.
• Full control: Fine-tuning allows deeper control over model behavior and outputs.
• Specialization: Perfect for industry-specific or proprietary use cases.

Common Fine-Tuning Techniques

• Continued pretraining (CPT): Extends base model training with custom data sets.
• Supervised fine-tuning (SFT): Uses labeled prompt-response pairs for task-specific optimization.
• Reinforcement learning from human feedback (RLHF): Aligns outputs with human preferences for nuanced results.

Why Fine-Tuning Is Becoming Popular

Fine-tuning is becoming more popular as enterprises realize its potential to deliver better results by customizing AI models for their specific needs. It’s not just about having access to GPUs — it’s about getting the most out of proprietary data with new tools that make fine-tuning easier.

Here’s why fine-tuning is gaining traction:

1. Better results with proprietary data: Fine-tuning allows businesses to train models on their own data, making the AI much more accurate and relevant to their specific tasks. This leads to better outcomes and real business value.
2. Easier than ever before: Tools like Hugging Face’s Open Source libraries, PyTorch and TensorFlow, along with cloud services, have made fine-tuning more accessible. These frameworks simplify the process, even for teams without deep AI expertise.
3. Improved infrastructure: The rising availability of powerful GPUs and cloud-based solutions has made it much easier to set up and run fine-tuning at scale.

While fine-tuning opens the door to more customized AI, it does require careful planning and the right infrastructure to succeed.

AI Development Journey: From GPUs to Fine-Tuned Models

Developing fine-tuned AI models is a multistep process that begins with securing the right infrastructure. Below is a step-by-step roadmap.

Step 1: Procuring GPUs

Securing GPUs is the foundation of AI development. Organizations often use NVIDIA’s Cloud Partner (NCP) program, cloud GPU providers or platforms like AWS.

Example: A technology company, ABC Corp, decided to procure GPUs to support its growing AI initiatives, including running complex simulations, accelerating machine learning experiments and enabling fine-tuning of models for proprietary use cases. By building an in-house AI data center, it ensured it has the flexibility and resources needed for diverse AI projects while maintaining control over sensitive information.

Step 2: Setting Up GPU Infrastructure

After securing GPUs, the next step is setting up the infrastructure. Automation tools and platforms simplify tasks like cluster management, server setup and deployment, making it easier to consume and scale GPU resources efficiently.

Example: IT administrators at ABC Corp used automation tools to deploy and manage their GPU clusters efficiently. This streamlined process allowed their teams to begin experimenting with models much sooner.

Step 3: Building the Orchestration Layer

Managing GPU resources efficiently requires an orchestration layer. This layer allocates GPU capacity based on developer needs. Rafay’s GPU PaaS solution, for example, allows IT administrators to create GPU profiles for teams, enabling seamless self-service access.

Example: The IT team at ABC Corp configured GPU profiles using an orchestration platform. When a lead data scientist needed a 4-GPU or 2-GPU instance for a project, it was provisioned instantly, allowing the team to proceed without delays.

Step 4: Fine-Tuning and Model Development

Once the infrastructure is set up, AI teams can focus on the real work: fine-tuning and building models. Public cloud platforms like AWS Bedrock and Azure AI, and private cloud solutions like Rafay, provide user-friendly environments that make it easier for developers to experiment, train and deploy models efficiently.

These platforms allow end users such as data engineers and machine learning engineers to use fine-tuned models for their daily tasks, driving innovation and productivity.

Example: A data scientist at ABC Corp uploaded a domain-specific data set to a fine-tuning platform, tailoring a large language model to the company’s unique requirements. This resulted in a model that delivered superior accuracy and improved outcomes for their business applications.

Conclusion

As enterprises accelerate their AI adoption, choosing between prompt engineering and fine-tuning will have a significant impact on their success. While prompt engineering provides a quick, cost-effective solution for general tasks, fine-tuning unlocks the full potential of AI, enabling superior performance on proprietary data.

From securing GPUs to fine-tuning models, the journey is complex, but organizations can simplify it with the right infrastructure and tools.

In future articles, we’ll explore fine-tuning techniques in detail, providing actionable insights for enterprises at every stage of their AI journey.

If you’re looking for solutions to support your AI initiatives, Rafay supports enterprises across key steps of the AI journey — from setting up infrastructure with Rafay’s Bare Metal Solution, managing GPU resources with Rafay’s GPU PaaS, to fine-tuning and model deployment using Rafay’s GenAI platform.