This article discusses how you can combine the strengths of leading business intelligence and corporate performance management solutions to create easy-to-use, business dashboards and operational reports.
This article covers the top things to consider when buying a CPM tool.
This article will describe a real life example of a manual application of BI360.
This article will describe the importance of forecasting with the best corporate performance management software and how it differs from budgeting.
Why is forecasting a good practice for all organizations? Here are five reasons:
While the budget is created one to two months before the year starts, the bulk of it is created up to fourteen months prior to the start of the month. For example, the budget is finalized in November for a company based on a calendar fiscal year, which is a year prior until the next November happens. Meanwhile, a lot can change in the various aspects of an organization regarding economy, industry, products, competitors, employees, and leadership. A forecast can more accurately influence decision-making.
A forecast should include the current year actual data for the closed months. It should also allow the departmental managers to modify the amounts for the remaining months. Additionally, copying the budget data to the forecast will allow managers to concentrate solely on changes in the forecast. You can show the prior year actual data as well.
Another example is a rolling forecast. This template exists for organizations that do not create a budget but they forecast monthly. In a five-year forecast template, it is recommended to plan the first two years quarterly and the last three years annually.
One other option for a monthly forecast is to enter an expected annual amount by each account. Create a calculation that subtracts the annual amount entered from the actual year-to-date data. Then allocate the remaining amount based on historical actual data.
Finally, we recommend using the Breakback template. This template allows a manager to enter a few amounts to create the forecast in October, November, and December:
The calculation of a variance is the difference between the actual expenses and the budget, the actual expenses and the prior-year expenses, or the actual expenses and the forecast. To calculate revenue data, subtract the budget from actual expenses. To calculate expenses, simply do the opposite. The reason for this is that a positive variance is typically good while a negative variance is typically bad.
The first step is to calculate and analyze variances. Then allow departmental managers to enter comments to document the reasons for the variances.
Variance reports can have comparison reports against the budget for both month-to-date and year-to-date data. Envision a middle section that allows for comments or a conditional format for a quick highlighting variances for review. Variance reports can also be an exception report that allows the manager to filter out variances over or under a specific percentage.
There are several ways of showing variances, but how management will create actionable items to prevent or correct the issues remains essential. Variance analyses help highlight trends, opportunities and challenges. Variances should be a precursor to a re-forecast. This can significantly affect hiring decisions, marketing spending, and strategy changes.
Companies utilize forecasting to resolve budget allocation or to plan for anticipated expenses for the upcoming year. Take the time to forecast. Use the tips mentioned above to help achieve those organizational goals without wasting any time. Learn more from Enabling World-Class Decisions, the executive’s guide to understanding and deploying modern corporate performance management tools.
If you need assistance in finding a corporate performance management solution or a forecasting tool, Solver has a team of experienced professional that can get your organization starting in building the right template for you.
Solver enables world-class decisions with BI360, a leading web-based CPM suite made up of budgeting, reporting, dashboards, and data warehousing, delivered through a web portal. Solver is reinventing CPM with its next generation solution. BI360 empowers business users with modern features including innovative use of Excel in the model design process. If you’re interested in learning more, our team is excited to hear about your organizational needs and goals.
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