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Financial Forecasting: Room for Improvement for people, process and technology
A CFO World White paper sponsored by SAP
Preparing an accurate forecast in this volatile business climate is challenging. Still, it is critical for businesses to be able to predict outcomes for the next month, quarter or year, and be able to respond quickly when the actuals vary significantly from the forecast. Forecasting may be equal parts art and science, but the most dialed-in enterprises report using a solid, collaborative process for generating accurate forecasts upon which they build their business.
IDG Research Services and CFOWorld.com recently conducted a survey of 306 global finance professionals. Most respondents report having a high level of confidence in their forecasts, and update those forecasts on a monthly or quarterly basis. Among the other interesting survey results are that more than half of the organizations responding have implemented rolling forecasts and measure forecast accuracy by evaluating how well the forecast maps to actual business results.
Other research findings, specifically certain geographical variations and differing conclusions in the survey results, bring up at least one issue with forecasting: analyzing forecast results compared with actual results may be a matter of perception versus reality. Forecasts are, by their very nature, educated and informed guesses. There may be much more of a psychological component to forecasting in terms of how forecasts are perceived, how rigidly they're followed, and how they may impact job performance of those whose responsibility it is to generate and maintain an accurate forecast.
Read the white paper |
