There is a consensus now about moving away from traditional forecast and moving towards rolling forecast in light of today´s stiff competition and highly volatile market. Organizations are now forced to be adaptive and quick to respond to sudden changes.
Centuries old companies who once didn´t expect to face political and economic unrest are now struggling to come up with plans and deliver results that are at par with very high stakeholder expectations. CFOs are under growing pressure to have steady, reliable, and real time access to insights that can give them an advantage when weighing in risks and business opportunities.
Rolling forecast in any angle you look at it is the way to move forward. It is a planning technique that is designed to forecast on a continuing basis. It is a process that takes into consideration risks and opportunities that may affect the performance of the business as a whole. It is a process that allows frequent changes to the plans and allows realignment of resources to stay ahead.
However, shifting from traditional forecast to rolling forecast can be tricky. Based on the experience of our consultants working with finance departments, we have come up with 4 tips on how to ensure successful shift to rolling forecast from traditional forecast.
- Start with Driver-based forecasting
The problem encountered by most organizations we have worked with is that the FP&A teams are drowning in too much data and too many details. A good tip is to focus on critical drivers that are valuable for decision-making.
Driver- based forecasting will ensure that corporate standards are set and that there are company-wide alignments and control over the process.
- Get the buy in of influencers and create accountability among budget owners
Shifting to rolling forecast is a huge step and a radical step. Many companies do not realize that this shift is a major cultural change for everyone – front liners, managers, and budget managers most especially. It is therefore very important to begin with a clear objective that everyone understands and accepts.
In addition, once the buy-in is achieved, there must be a certain level of accountability that is to be expected from all budget owners. As mentioned earlier, rolling forecast is not just about adjusting numbers to fill in gaps and suit individual interest. Budget owners must be involved, must own their data, and must understand that they are expected to provide unbiased data. Failure to do this defeats the purpose of rolling forecast which is to serve as the company’s reality check.
- Adopt a robust technology
The biggest challenge with shifting to rolling forecast is that it works on multiple assumptions and iterations. It also is very reliant on real time access to information and quick analysis. Without a new technology that will allow the business to have access to what if scenarios or multiple budget assumptions or even real time integration, rolling forecast is bound to fail.
It is not just about adopting a new technology. It is important to adopt the most modern and appropriate technology that can get the job done. Performance Canvas by DSPanel is an example of a solution that can help companies do unlimited what if scenarios, do multiple budget assumptions, and have native integration that allows for real time access and faster analysis.
In reality, rolling forecast focuses on data, data management, technology, and strategic thinking in order to support the entire initiative. Failure of one of these can lead to the poor execution and consequently the failure of shifting to a new planning technique.
To know more about how to manage the transition smoothly and to get an exclusive look at a new technology that is aimed precisely to supporting the rolling forecast initiative, visit www.performancecanvas.com or email [email protected] to talk to one of our finance consultants.
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.