Three Ds for improving your forecasting process 

Successful business performance is closely tied to better practices in forecasting. CFOs can help define the future of the organization by keeping the focus on decisions, data, and discipline.

Recent changes in the global markets have raised the stakes for accurate, improved forecasting to help businesses better manage opportunities and risks. Given the availability of increasingly sophisticated tools and techniques, and the recent empowerment of CFOs to implement change, why aren't more organizations more successful in their forecasting efforts?

 

Tools and techniques alone cannot produce successful forecasting. Businesses have often struggled to forecast with reliability because they haven't focused sufficiently on forecasting fundamentals—what we call the three Ds: decisions, data, and discipline.

 

  • Decisions: Effective forecasters know what they're looking for and why. They pursue forward-looking information that can facilitate specific business decisions.
  • Data: Business leaders are hungry for insightful information, which in turn depends on high-quality data. Successful forecasting processes share several characteristics relative to data, including:
    • Exploiting the organization's current efforts around data management to ensure they will meet forecasting requirements
    • Creating transparency back to the data sources, which helps obtain stakeholder buy-in on the methods used to create or compile data
    • Enhancing the richness and reliability of forecasting by incorporating external key performance indicators (KPIs) and data sources.
  • Discipline: The forecasting discipline includes a commitment to managing the business in a forward-looking manner, embedding the forecasting process in the organization, and consistently using forecasting as an element of strategic decision making.

 

In the current environment, boards and investors seek reassurance that the impacts of changing market forces are understood, forecasts can be adjusted quickly and appropriately, and robust and appropriate guidance on key business decisions can be backed up by solid scenario planning. With a relentless focus on the three Ds, CFOs are better able to deliver crucial and timely support.

 

Publication

 

 (4520kb) Three Ds for improving your forecasting process