Implementing Rolling Forecasts

Juan Porter

November 2nd, 2011

In the previous post we covered the “what and why” of rolling forecasts as well as how to transform traditional budgeting and forecasting into this innovative approach. The next step is to look at how to make the transition come to life. And the first step is implementation.

Initial Considerations

The key to any successful implementation is executive sponsorship from the CFO and/or CEO and not the CIO/IT. Forecasting should be viewed as a management, not a measurement process, and as such, the transition from traditional forecasting to rolling forecasts is a business initiative that falls into the persons responsible for the overall business (CEO) or the person directing the company’s financial goals and objectives (CFO) as opposed to the technological direction of the company. And leading the change by example is a key component of executive sponsorship. You can’t ask people to do what you are not willing to do yourself.

Another critical consideration is company culture – Culture is critical since it defines the acceptance of change. You have to manage the acceptance of change within the culture. If you don’t, you will be adding unnecessary challenges to your implementation.

Key Questions to Ask

First you want to evaluate how to improve current ways of doing business, and you do this by asking questions like:

1. How did our current planning and forecasting process evolve over time?

Most people look at forecast as a corporate requirement to provide more insight into the future of the business.

2. What do we like about the current process?

The answer for this one can be quite interesting and is usually limited only by who you ask and where they fit in the process.

3. What do we dislike about the current process?

The answer to this one can be quite broad, but many times is focused on the amount of detail required.

Once you have this information, you want to understand organizational direction, because this is the best way to determine what information you want to manage, and how you want to measure it. A key question to ask your organization is – What is important to the business and does this line up with the corporate goals and objectives (goals and forecasts need to be in sync). The interesting thing about this question is that there is no specific time frame associated (ex: year-end). What rolling forecasts do is look beyond the end of year and enable you forecast in a matter that business operates – as an ongoing business.

Decisions and Criteria

The next step in the implementation process is choosing the right solution. Based on the answers to the key questions, what fits your needs – a packaged solution or spreadsheet based solution?

Once you’ve found your solution, you want to figure out timing – i.e., when is the best time to implement the solution. You need to fit it into the needs of the business to make the transition as smooth as possible.

Resources are the next item on the list. What do you need?

  • IT support
  • Temps for data entry and validation
  • New hardware
  • Application and process administration

Finally, you need to have the conversation about consistency across the organization. You are potentially overhauling your entire process, so as painful as it might be, you have to ask the questions-e.g.,

  1. What is time frame to prepare/submit a forecast?
  2. What level of detail is needed?
  3. What can you control or influence?

Technology, Process, and Change

You know the old adage, “Technology is great, when it works”? And to make sure your technology works, you have to balance the business process with technology. You do this by determining what you current process is, what you want the process to be, and how/where technology helps the process – e.g.,

  • What do you want managers to be responsible for?
  • How do you want managers to interact?

Also critical is to pinpoint possible areas of resistance and manage them through executive leadership. Socialize the change early and often. Identify cheerleaders and detractors – if you can convert the detractors, everyone else will fall in line.

Challenges to Implementing

Change is always tough, and make no mistake transitioning from traditional forecasting to rolling forecasts will be painful. Initial set up is labor intensive. You will meet resistance because people are always resistant to change. Then there is the cost – it’s a one-time hit, but you need to be aware. You’ll have software and support costs as well as unanticipated project costs because your existing data is never as clean as you think.

Training, testing, and parallels are critical to get a feel where the project is, identify any changes that might be needed, and ensure that all stakeholders understand why this process is changing.

Final Thoughts

Implementation is all about making great things happen. It is the essence of the strategic plan. The process itself is a step-by-step trajectory towards an innovative solution. And for the full plan to be realized, you can’t skip any steps.

This Part II of a four-part blog series on rolling forecasts:

Part I  – Transition Traditional Forecasting to Rolling Forecasts

Part II – Implementing Rolling Forecasts

Part III  – Advanced Methods in Rolling Forecasts

Part IV – Understanding Your Forecast

Check back next Wednesday for Part III – Advanced Methods in Rolling Forecasts.

Download E-book: Rolling Forecasts in Four Parts

Juan Porter

About Juan Porter

Juan Porter, Chief Solutions Officer, founded TopDown Consulting in 2000. He has over 30 years combined customer, vendor, and consultant experience with Hyperion, which enables him to bring unmatched insight into the strategic impact of performance management solutions as well as in-depth understanding of the day-to-day realities of managing global applications while supporting users’ needs. Prior to founding TopDown, Juan managed all aspects of Hyperion applications, on a global basis, for ABB, Novell, and SGI. He is considered a visionary with an exceptional, proven ability to effectively address complex global business problems through EPM solutions. He has served as a member of the Oracle Hyperion Partner Advisory Council, was the chair of Hyperion’s national steering committee, and has led many Hyperion enhancement committees and user groups. Recognized as a thought leader, Juan presents regularly at various industry events, including Kscope, Budgeting and Finance Summits, and Oracle EPM/BI Days. He has also authored a number of articles and blogs for various industry publications.

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