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Four steps to get started with rolling forecasts

Rob Livingstone recommends validating the business case and assessing technology for rolling forecasts, among other steps.

Rob LivingstoneRob Livingstone

How should a company get started with rolling forecasts?

Transitioning from a fixed to a rolling forecast regimen is an important step in enhancing the agility of an organization. If you are implementing a forecasting regimen for the first time and are not constrained by any existing fixed period forecasting, you are at a distinct advantage as there are no legacy issues to manage.

Companies should consider a number of key factors before and during this transition:

  1. Validate the business case for rolling forecasts:  Moving from fixed to rolling forecasts needs senior management commitment because it is a fundamental process and cultural change initiative. Testing the assumptions behind the move to a rolling forecast before launching into it is crucial. Are the business drivers clearly defined? Has a project plan been proposed showing the IT dependencies, training plans and effort needed to redesign the supporting business and decision-making processes? If this is critical to your business, have you considered a prototype or proof of concept project for your environment?
  2. Re-architect your forecasting framework: Shifting from a fixed to a rolling forecast requires changing the data gathering, modeling and decision-making processes. If this is your first attempt at implementing a rolling forecast regimen, ensure you understand the mechanics and processes that underpin a rolling forecasting methodology. Ensure you have access to individuals that have demonstrated experience in the appropriate analytical techniques.
  3. Review technology capabilities: If your existing fixed forecasting software systems are ill-equipped to deal with rolling forecasts, then it might be time to replace them. The business case for purchasing and commissioning an appropriate forecasting software suite needs to be carefully considered along with a clear understanding of your existing and planned data architecture. Also keep in mind that the forecasting system will depend on its compatibility with other enterprise IT systems.
  4. Assign accountabilities clearly.  Rolling forecasts require collaborative, ongoing involvement of key decision makers to obtain a broader and more accurate view of the organization's current and future state. All players in the rolling forecasting process should see themselves as part of the organization's continuous improvement process.

A final word of advice: "Implement in haste, repent at leisure" should not be your modus operandi when moving to a rolling forecast process.

Rob Livingstone is a former CIO with more than three decades of experience in the corporate world. In addition to running his IT advisory practice, he is an author and commentator, providing authoritative, independent insights on a range of IT topics including emerging technologies, governance and IT security. Rob is the author of the book Navigating through the Cloud and is also a fellow at the University of Technology Sydney, Australia, where he teaches leadership, strategy and innovation in the school’s flagship MBITM program. Visit Rob at www.rob-livingstone.com or email him at rob@rob-livingstone.com.

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