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Forecasting & Budgeting
Choosing the Right System
By Peter Boulton, President, Data Perceptions

You need a good system, forecasters who really understand their markets, and above all, the strongly held determination to put it into practice.

The forecasting methodology recommended in these articles places a lot of emphasis on the knowledge and judgment of the forecaster. This is unavoidable given the nature of the market, but it follows that developing a good forecast is a labour-intensive process.

Computer systems can help here, by providing the forecasters with a productive and flexible environment in which to analyse and manipulate numbers. A lot of companies use spreadsheet based systems. Some use systems that have been developed to run via terminal emulation on their corporate midrange or mainframe machines. Finally, some use the an option from their ERP (Enterprise Resource Planning) system.

None of these approaches are ideal.

Spreadsheet based systems are generally difficult to maintain, in terms of adding new products or customers, updating actuals or rolling forward years. They also tend to show the data in fixed views due to the fixed rows and columns structure of spreadsheet programs. Some analytical capability can be introduced by building clever spreadsheet macros, or by users reformatting data in different ways within their spreadsheets, but this approach tends to be clumsy and labour intensive. In addition, aggregation of data across products and customers tends to require considerable manual processing.

Terminal based midrange or mainframe systems and ERP options overcome the maintenance problems but tend to be inflexible, and do not provide the variety of instant graphical views that a PC based system makes possible. In addition, such systems can sometimes have performance problems - where transaction processing systems and decision support systems operate on the same host, transaction processing systems necessarily get preference in receiving processor time. In addition, it is hard to give terminal based systems the degree of user-friendliness which sales and marketing users generally prefer.

Therefore, whilst these traditional approaches offer elements of the ideal approach, one really needs a system which combines the ease of maintenance and robustness of the mainframe / ERP approach with the speed, flexibility, graphics and user friendliness of the PC.

Nowadays, PC based systems which meet this need are available. Here is a checklist of features to look out for:

  1. Can you customise the system for your market and needs - in terms of facts, periods, product and customer levels etc.?
  2. Does the system give you the ability to input forecasts at different levels of product or customer detail and have the changes recalculated 'up' and 'down' the product and customer hierarchies?
  3. Does the system allow you to capture qualitative information too? What caused the historical peaks and troughs? What was the forecaster's rationale for this forecast?
  4. Does the system allow you to store and analyse different sets of forecasts through the year? o Does the system contain forecast accuracy analysis features?
  5. How flexible is the reporting and analytical engine offered by the system? Can you store and replay favoured views of the data?
  6. How flexible and helpful are the graphics included?
  7. Can the system run in a true networked environment, or support remote forecasters?
  8. How user friendly is the system? How much on line help is available?
  9. Does the system have any options which analyse forecasts and warn forecasters of risks identified versus previous sales history?
  10. Check data interchange with your corporate systems

    Peter Boulton was a full time sales forecaster for 10 years, prior to moving into software design and development. His company, Data Perceptions, specializes in the development of Sales Forecasting, Planning and Budgeting software. Contact Peter at or email

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