Automatically remove forecasted values as actuals come into the system

Description

The ability to automatically clear out or adjust forecasted values as actuals come into the system. This functionality eliminates the risk of confusion between projected figures and real-time data and maintaining accuracy within the system's output. This is required when doing a rolling forecast.

Example Use Case

Scenario: A large corporation has implemented CPM software to facilitate its budgeting and financial forecasting processes. As the fiscal year progresses, the company records actual income and expenditures. These are loaded onto a new spreadsheet each time.

Solution: They implement new CPM software capable of automatically detecting the incoming actual data and replacing the corresponding forecasted value. For instance, if the forecasted sales for Q1 were $50,000, and the actual sales ended up being $55,000, the system should be able to overwrite the forecasted value and adjust the variance report, providing more precise financial analytics.

Considerations

When a forecast is rolled forward, systems will replace the forecasted values for the prior month with actuals from the ledger, or whatever system is being used. This will erase your forecast from the prior month thereby making it impossible to see how accurate it was. To combat this, we recommend keeping the prior forecast as an archived version and creating an entirely new version for the rolling forecast. This allows you to compare your original forecast with actuals to calculate accuracy. Understanding accuracy is the key to continuous improvement in business planning.

Questions to Ask a Vendor

• Updating the Forecast: When bringing in new actuals, do we simply move the forecast date forward, or is it a more involved process?
• Versioning: Can we keep a set of versions for our 2+10, 3+9, 4+8 and so on to learn from our forecasting accuracy over time? Is there a better way to do this all in one “forecast only” version that never brings in actuals?