Related Topics:
			Business Research: Operational, Sales, Supply Chain Imperative Research: Performance Improvement, Profitability Management Vendor Research: Adaptive Planning, Adexa, Alight, Applix, Business Objects, Cartesis, Clarity Systems, Coda, Cognos, Demand Solutions, Demantra, Enterprise Incentive Software, Epicor, Hyperion, i2, Interlace Systems, IRI, JDA, John Galt Solutions, KCI Computing, Kinaxis, Lawson, Logility, Longview Solutions, Microsoft, Oracle, OutlookSoft, OutPerformance, PROPHIX, SAP, Silvon, Supply Chain Consultants, Symphony-Metreo, Teradata, The Nielsen Company, Terra Technology, TrueDemand
			Printer friendly version Email this article

Summary
Ventana Research believes that integrated, enterprise-wide sales forecasting and demand planning is essential to an organization’s success in today’s competitive markets. Using integrated sales forecasting and demand planning tools and processes, companies can improve business performance, coordinate operations across functional, departmental and divisional lines, reduce costs and increase customer satisfaction. Unfortunately, most companies have approached sales forecasting and demand planning piecemeal, with each functional area operating on its own initiative, if at all. Even companies that have taken an enterprise-wide approach often use inappropriate tools and technologies not up to the job.

View
In the last few years, the desire for better sales forecasting and planning has grown dramatically. Driven to improve operational performance and to be more responsive to customer demands, sales, marketing and finance managers have turned to sales forecasting and demand planning tools to guide their operational departments and processes and to increase revenue. Our recent research study, “Supply Chain Business Intelligence” (released in April 2007), confirmed this trend. Although respondents said they intend to use supply chain business intelligence (BI) tools primarily to reduce inventories and to cut costs, a majority said they also expect to use these tools to sharpen the accuracy of forecasting and to provide a better understanding of what drives customer demand.

Those responsible for creating sales forecasts – product managers, sales account managers or sales operations analysts – consider it a tedious, unrewarding and unimportant part of their job. In most companies, it’s hard to find a common database of historical sales information, and often each individual keeps his or her own records. Even worse, these sales forecasts often stay within the confines of the department or functional area that generates them; few bother to distribute these sales forecasts to other functions, such as marketing, distribution, production and finance. And even when they do, these other groups often ignore or do not believe the forecasts.

The most appropriate remedy to these problems is to deploy integrated, enterprise-wide sales planning and demand forecasting technologies and processes that span all functional areas. Unfortunately, our previous research shows that many companies instead opt for less appropriate or ineffective remedies. Our 2006 study “Performance Scorecards and Dashboards,” for instance, found that companies deploy performance dashboards most often in finance and sales, followed by marketing and customer operations. This confirmed our belief that companies place a priority on tracking revenue goals rather than balanced measures of operational strategy execution, especially sales forecasting and demand planning. Spreadsheets are another common remedy, but they are notoriously unreliable, difficult to scale upward and, most dangerous of all, disconnected from the underlying data and its mutations.

Assessment
Ventana Research contends that, to be effective, sales forecasting and demand planning processes must span the enterprise and cross functions. To create accurate and actionable plans, these processes also need to integrate plans across sales pipelines, demand forecasts, revenue expectations and products and to assimilate external and internal information. This is one of the most difficult challenges facing operational management today, but efforts to change existing functionally oriented sales forecasting and demand planning into an integrated, enterprise-wide system can provide a framework to improve financial performance.