Seed the forecast with budget data

Description

Seeding forecasts with budget data in Corporate Performance Management (CPM) software is a process involving the integration of budget data from a certain time period into the forecasting model to increase its accuracy and relevancy. This allows organizations to maintain an updated vision for the company's financial future and account for any changes that may have occurred since the initial budget was created.

Example Use Case

Scenario: A retail company uses CPM software for financial planning. They have a budget created at the beginning of the fiscal year, but due to unforeseen market changes over time, they find their budget is no longer accurate.

Solution: Using the CPM software, the company seeds their forecast with the current budget data, updating the forecast model to align with the actual performance and updating the future predictions. This provides a more accurate and relatable performance prediction for the remainder of the fiscal year.

Considerations

Seeding forecasts with budget data is the fastest way to populate the forecast with relevant data, and should be done in just a few clicks. This also enables the successive rolling forecasts to be based on the original goals set forth at the beginning of the year.

Most products offer this in some form. When the forecast is created (say 1+11), the following 11 months will be populated with forecast data. Actuals will be updated as of the prior month (the only month that has occurred since the budget was built) and off you go. Now you can re-adjust your forecast based on actuals, using those drivers you setup during the budget process. This is another reason why driver-based budgets are so helpful - they serve to re-calculate each month with little intervention on your part.

Questions to Ask a Vendor

• Seeding Process: How seamless is the process of seeding forecast with budget data in your software? Can this be automated for every forecast period?
• Seeding Options: Can I seed certain account / dimension combinations and not others, or is this all or nothing?
• Using Drivers: Will drivers used in the budget be re-used properly when we seed the new forecast? (are the formulas re-usable?)