4 Forecasting Trends and What You Need to Know About Them
With new systems and technologies, the scope of forecasting has broadened, expanding its value as a traditional reporting function to become an essential and strategic business lever for the organization.
Driven by advanced analytics and seamless data integration, technology innovation is changing how finance teams can apply their forecasting efforts. Following are four ways that technology is transforming the future of forecasting – and simultaneously uncovering new opportunities for businesses.
Accelerated Time to Information
With technology supporting automated data feeds into finance systems, you can analyze and share information exponentially faster than in the past. Rather than working on an Excel file for several weeks and presenting the results at the end of the quarter, you can now support continuous communications through instant data access.
With the ability to quickly monitor and measure the performance of daily operational tasks, automation lets you react and make decisions based on the data you’re getting today – rather than three months later. Automation vastly improves the timeliness of your financial decision-making and gives businesses agility in responding to events.
Further, by moving the conversation away from the process of how you sourced the data, automation allows finance teams to concentrate on the findings uncovered by the data. This improves quality, increases transparency, and builds credibility for your forecasts.
Deeper, Driver-Based Forecasting
Finance no longer needs to wait until the month is over to see and analyze data. If bookings are up 10 percent, you can immediately go back and apply analytics to determine what might have caused that bump.
Analytics make it possible to spot key business drivers much further up the pipeline. By seeing what impacts sales and revenue sooner, you can share that information across the company to repeat a successful process or recalibrate prospecting efforts before the close of the quarter.
It’s very valuable to a business if you can identify the right customer candidates earlier. With this type of insight available, marketing and sales can apply more precision to their customer outreach and generate a better quality pipeline. This, in turn, lets finance increase its ability to predict against the pipeline in terms of eventual orders.
Consider as well the cost savings to the business. Marketing takes a huge amount of your investment. By leveraging machine learning and data gathering to identify top traits of your customers, you gain greater ROI on that investment.
A Clearer Course
Variable pay is one of the biggest expense line items in a company. Yet, even today, many companies still use spreadsheets to calculate this expense – a retroactive process that delays finance’s ability to forecast accruals in a timely fashion.
By delivering immediate insights into these costs, automated compensation solutions increase forecasting accuracy. Finance can see what’s really in the queue and determine if incentive compensation calculations are on target. With faster insights, you improve decision-making and reduce risks.
However, the intelligence gained by analytics goes even farther – illuminating data patterns that prescribe the best course of action. For example, with real-time feedback to sales reps, systems can drive behavior at the actual point of sale. If reps are working a deal and see, from the software, that they will achieve a higher commission by adding a cross-sell that served a similar-type company, they can apply that knowledge in the moment.
Data can now be easily accessed through company-wide systems. With bi-directional data feeds, leadership has instant visibility to information and analysis – providing shared insight and increased knowledge. All parts of the business become engaged.
With finance’s training and skill set, we are uniquely positioned to analyze data and support operational teams. Because multiple departments, especially sales and marketing, increasingly rely on data-driven tools and systems, finance is the obvious choice to help maximize ROI.
With integrated systems, finance can facilitate a closer relationship with other groups, gaining a more comprehensive forecast. Finance can also make more timely assessments and decisions for the business with faster access to cross-functional data. Add in advanced analytics, and you get deeper insights into revenue drivers, as well as intelligence to determine the best approach.
All improve the availability and accuracy of your forecasting and help move the business from a reactive to a proactive mindset.