Live Forecasting

Performance Canvas Financials, a complete and cloud-based FP&A solution that can be installed and provisioned in as fast as 5 minutes, recently introduced one of its most powerful capabilities – Live Forecasting.

However, not many understand the differences between traditional forecasting vs rolling forecasting vs live forecasting or if there are even significant differences at all.

Traditional Forecasting

To fully understand just how powerful live forecasting is, we need to look at it from the very beginning which is traditional forecasting.

Traditional forecasting basically uses historical observations to estimate future business metrics like inventory requirements, budgets, revenue or asset performance. Traditional forecasting practices fail because the past does not necessarily represent the future.

Traditional forecasting is not very good at connecting asset operations to performance metrics and costs. It heavily relies on historical data which has the tendency to create a gap between forecasts and actuals. It also requires that organizations simplify or oversimplify their assumptions.

Traditional forecasting is usually done within one fiscal year and often done quarterly – 3+9, 6+6, 9+3. It also involves complexities in copying data between different scenarios and often has rigid, inflexible workflow.

Rolling Forecasting

In contrast to traditional forecasting, rolling forecasting rests upon the idea that the organization does not need to manage the business based on a static budget that was created the previous year. Instead, rolling forecasting advocates the idea that forecasts must be constantly rechecked for relevance and budget assumptions updated as necessary.

The goal of rolling forecasting is to have plans and allocations that are more responsive to market stressors or changes.

Rolling forecasts basically means that the organization can project future results through actual YTD results + original budget or updated revenue and expense forecasts for future periods.

Rolling forecasting continously forecasts 12-18 months forward. This is a large change to the current forecasting methods in terms of process. However, rolling forecasts often have limited workflow capabilities since approvals become impractical in a rolling process.

Live Forecasting

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Live forecasting, which is a powerful feature introduced recently by a rising star solution in the budgeting and planning arena- Performance Canvas Financials, endeavors to bring together the best of rolling forecasting and traditional forecasting while addressing the criticisms of both.

To start with, live forecasting can be kept within one fiscal year or may be extended further. The time period extension does not have to be uniform.

With live forecasting, each month you plan for the next month´s forecast objectives.

Live forecasting also has selective workflow application for enforcing updates and approvals. This is an attempt to address the criticism of rolling forecasting where it has limited workflow capabilities due to approvals becoming impractical in a rolling process.

With live forecasting, you also get one continous forecast with the ability to automatically keep copies on close of months.

With traditional forecasting you do it 3+9, 6+6, 9+3. With live forecasting, you can also do quarterly – – 3+9, 6+6, 9+3 or continous – and this can be changed by month.

Lastly and perhaps more importantly, live forecasting requires very little to no change in current business process to implement. It supports gradual change and refinement of business processes.

Are you curious to see how live financial forecasting works with your organization´s financial figures? Visit www.performancecanvas.com or email info@dspanel.com to schedule a free online demo or to request for a free 30-day trial.

 

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About DSPanel
DSPanel offers cutting edge technology platform for business analytics, planning, and visualization. DSPanel designs, builds, and operates with the end users in mind. Performance Canvas was created by DSPanel to answer the unarticulated needs of the market not addressed by previous available solutions. With Performance Canvas, information is transformed into valuable business insights for the business executives to utilize in their decision-making process. DSPanel currently has over 2500 organizations deploying their solutions.
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