Better Way to Develop Business Forecasts
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Business managers across many organizations spend endless amounts of time to develop their business forecasts. The situation does not need to be like this. With a logically structured forecasting methodology and the right collaboration tools managers can develop accurate, repeatable and reliable forecasts in minutes.
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Better Way to Develop Business Forecasts
- 1. A BETTER WAY TO DEVELOP BUSINESS FORECASTS
- 2. 0 2 of forecast to PLAN FOR ITS FUTURE Every business relies on some form
- 3. 0 3 But most of the times Sometimes forecasts are accurate THEY ARE NOT
- 4. 0 4 But Consistently they are: TIME CONSUMING HARD TO DEVELOP RESOURCE INTENSE
- 5. Days, weeks and sometimes months planning their long range forecasts COMPANIES SPEND
- 6. 0 6 UNFORTUNATELY!!! No book, class or training course teaches how to forecast properly
- 7. Managers develop their own forecasting methodologies AS RESULT
- 8. 0 8 INCONSISTENTAND NON REPEATABLE FORECASTS ACROSS THE ORGANIZATION LEADING TO
- 9. 0 9 They spend days trying to: Justify underlying assumptions Roll up all their forecasts Rationalize the overall final number
- 10. 1 0 THIS TAKES AWAYTIME FROM Actual planning and execution to just developing revenue numbers
- 11. 1 1 FORECASTING DOES NOT NEED TO BE THIS DIFFICULT NOT ANYMORE!!
- 12. With a logically structured forecasting methodology and smart quantitative tools, companies can develop more ACCURATE, REPEATABLE and RELIABLE forecasts in minutes
- 14. ? SHOULD FORECASTS BE DEVELOPED? SO HOW!!
- 15. 1 5 Finance and Management Factory operations Product Management Sales BUSINESS FORECAST First, get the right parties at the table 1 2 3 4
- 16. 1 6 Finance and Management Factory operations Product Management Sales BUSINESS FORECAST 1 Then get top management’s financial targets and expected market conditions
- 17. 1 7 DATA BASED BASELINE REVENUE FORECAST $300 $250 $200 $150 $100 $50 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 82,0% 81,0% 80,0% 79,0% 78,0% 77,0% 76,0% Actuals Forecast Use these estimates and data on historical performance to develop a baseline forecast
- 18. 1 8 Finance + Management Factory operations Product Management Sales BUSINESS FORECAST Then utilize sales feedback to account for potential new, existing or lost business 2
- 19. 1 9 UTILIZE A SIMPLE SALES PIPELINETOOLTO CAPTURE SALES INPUTS Part Number Customer Industry Industry Peak Expected Annual Volume Expected Price ($per unit) Probability Status Expected Start Project Lifetime AZ349C-52 Precision Microelectronics Technology / Semiconductors AlphaDigi Life Extension 1,900,00 1,42 High Proposal Jan 2016 3 AZ349C-52 Argo Chemical Industrial Chemicals Argo Fertilizer Plant 234,00 1,42 Medium Proposal Jan 2016 3 AZ349C-52 Otis Appliances Industrial Argo Fertilizer Plant 2 1,234,00 1,72 Medium Samples Jan 2016 3 AZ349C-52 DynaRob Military / Robotics Extended Battlefield Robot - 13,100,00 0,92 High Proposal Jan 2016 3 AZ349C-52 Precision Microelectronics Technology / Semiconductors AlphaDigi Life Extension 19,00,00 1,42 High Proposal Jan 2016 3 AZ349C-52 Precision Microelectronics Technology / Semiconductors AlphaDigi Life Extension 19,00,00 1,42 High Proposal Jan 2016 3
- 20. 2 0 Calculate total expected revenue of all opportunities in the pipeline and expected time frame Total value of revenue from expected new opportunities Expected total revenue • Probability of success • Time into future • Sales success rate • Typical product ramp up rate WEIGHTEDFACTORS REVENUE CALCULATION
- 21. 2 1 Finance + Management Factory operations Product Management Sales BUSINESS FORECAST Then include product management inputs about new, upcoming or soon to be obsoleted products 3
- 22. 2 2 Product Extension DeclineMaturityGrowthIntroduction Sales Calculate potential revenue from upcoming new products and planned obsolete products based on historical ramp up and down curves REVENUE PER PRODUCTLIFECYCLE STAGE
- 23. 2 3 Finance + Management Factory operations Product Management Sales BUSINESS FORECAST Finally, include factory inputs to ensure manufacturing capacity is capable of supporting the expected total revenue 4
- 24. Adjust total revenue based on factory’s feedback on available capacity to support upcoming demand CAPACITY ANALYSIS
- 25. IS EASIER SAID THEN DONE Good comprehensive approach
- 26. MULTIPLE EXCEL FILES Collaboration with is not the best way
- 27. MANAGERS NEED A RELIABLE COLLABORATIVE PLATFORM to easily and quickly gather inputs from all parties and quantitatively analyze data to develop an overall forecast 2 7 Finance + Management Factory Product Management Sales KEY STAKEHOLDER INPUTS 1 2 3 4 SMARTDATA ANALYSIS
- 28. 2 8 EASY INTUITIVE MANAGEMENT DASHBOARD A single dashboard to develop business forecasts in minutes SMART DATA ANALYSIS ENGINE SALES PIPELINE MANAGER PRODUCT LIFECYCLE MANAGER FACTORY THROUGHPUT MANAGER A COMPLETE BUSINESS FORECASTING PLATFORM
- 29. 2 9 NO MORE CONFUSION WITH MULTIPLE SPREADSHEETS AN EASY WAY FOR ALL KEY STAKEHOLDERS TO COLLABORATE SINGLE SOURCE OF TRUSTWORTHY DATA SMARTDATA ANALYSIS FOR FACT BASED FORECASTING