4 Steps to Successfully Implementing Rolling Forecasts

But at this point, the budget is most likely obsolete due to changing business conditions.  So most of the work is spent analyzing and explaining variances to budget, and not enough work is spent on making mid-course corrections.

To address this issue, many organizations are adopting rolling forecasts as a way to periodically update budget assumptions throughout the year, reallocate resources, and more accurately predict future results.  But managing a rolling forecast process can be difficult when relying on Excel spreadsheets and email.  Thus, many organizations are implementing cloud-based planning platforms to facilitate more dynamic planning techniques, such as rolling forecasts.

Planful recently sponsored a webinar on this topic.  The event was featured two experts in the field of financial planning & analysis (FP&A):  Brian Kalish, Founder and Principal at Kalish Consulting, and Larry Maisel, President at DecisionVu Group, Inc.

Here’s what our panel of experts had to say about planning challenges and four steps to successfully implementing rolling forecasts.

Challenges in Planning and 4 Steps to Implement Rolling Forecasts

With increasing volatility in the business environment, it’s more important than ever for organizations to have agility in planning.  This means they must adopt new techniques and tools to remain competitive.  Finance organizations are being asked to do more with the same or fewer resources.  This is driving the need to reduce or eliminate manual processes, and spend more time on analytics and supporting decision-making.

Step 1 – Streamlining Budgeting

There are several techniques organizations are using to streamline the annual budgeting process.  One example is using driver-based planning techniques, which put focus on material items that truly impact revenue and expenses while focusing less on the minutiae of budgeting.  Robotic process automation (RPA) tools can help automate manual processes, such as data collection and integration.  Many organizations are implementing rolling forecasts to get a head-start on the annual budget.

From a technology standpoint, organizations are moving away from reliance on spreadsheets and email. Instead, they’re adopting packaged budgeting and planning software applications that include purpose-built functionality and workflow capabilities to facilitate faster budgeting and planning.

Step 2 – Plan Continuously

Many organizations are now adopting the rolling forecast technique to better adapt to change and set future direction.  This notion of “continuous planning” helps improve decision-making in fast-changing business conditions.  It provides predictive insight for both corporate executives and line-of-business (LOB) managers to improve resource allocations.  The frequency of forecasting varies in different industries and organizations based on their requirements.  This can be semi-annual, quarterly, monthly, weekly, or more frequently if needed.  In a 6-quarter rolling forecast, one emerging best practice is to forecast the next 4 quarters at the monthly level, then 2 additional quarters at the quarterly level.

Step 3 – Adopt Best Practices

Best practices for successfully implementing rolling forecasts is to “teach managers how to fish” – in other words, have them update their own forecasts instead of Finance doing the work for them.  This requires new skill sets in Finance and LOBs, including predictive modeling and how to leverage data.  Finance needs to act as a business partner, supporting LOB executives throughout the business cycle.  Finance should position themselves as helping the LOB perform better.  This can be done by assigning specific staff in Finance to each department or by embedding Financial analysts within the LOBs so that they can gain an in-depth understanding of the business.

For those first starting out with rolling forecasts, don’t try to implement this across the entire enterprise.  A better approach is to start in one area or department, prove the success, then expand into other departments.

Step 4 – Pick the Right Tools for the Job

The panelists both agreed that spreadsheets and email don’t provide the agility needed to support rolling forecasts.  Software packages purpose-built for FP&A are a better choice, and cloud-based applications are becoming the preferred approach in today’s environment.  The advantages of cloud-based planning applications include faster deployment, improved collaboration, reduced costs vs. on-premises applications, and the fact that cloud applications provide Finance with autonomy from IT.


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