Rolling forecasting anno 2018

1. Rolling forecasting anno 2018 Rotterdam School of Management, RSM Thursday, April 19th 2018

3. Ournetwork

4. www.hardwerkenhardlachen.nl

5. Audience Go to slido.com Enter # rofo2018 Join

6. Agenda

7. Movingto a Rolling Forecast Patrick Tullemans Finext

8. Moving to a rolling forecast

9. The survey suggests a growing trend toward rolling forecasting whereas 44% of companies now use it * * Based on 50 responses / companies to date

10. Prevalence of rolling forecasting, by industry

11. Rolling forecasts provide insight into future performance to anticipate changing conditions and strategic assumptions Other Re-allocate resources Measure progress towards strategic objectives Simplify annual budget process Promote a long-term outlook beyond fiscal year

12. Most organizationsprepare a rolling forecast on a regularquarterly or monthly basis

13. The horizon of rolling forecastingvariesacross companies

14. Business cycleanddecisionleadtimesdefinethe horizon of rolling forecasting Outside in best practices Other Course business cycle Leadtime of decisions

15. Companies do see improved efficiency from rolling forecasts versus budgeting (but don’t stop budgeting)

16. Manyorganizationsrely on spreadsheets

17. Rolling forecasting has advantages over year-end whereas potential challenges need to be addressed

18. Moving to a rolling forecast

19. Challengeswhenmovingto rolling forecasting Business inertia to change cadence Data qualityandtooling Less accuracy beyond current year Perception extra effort required Lack of business partner engagement Other

20. 3 “traps” to rolling forecasting 1 Creating a one-size-fits-all standard approach 2 Continuing with highly detailed forecasts 3 Holding onto bad habits and behavior

21. Moving to a rolling forecast

22. Keysuccess factor is touse rolling forecasts as a management instead of a measurement tool Forecasting is management instead of measurement tool Automation Cross-functionalcollaboration Other

23. “SMART” waystoimprove (rolling) forecasting S SALES & VOLUME (P x Q) AS BASELINE • Snapshots of value drivers andoperationalplans as a baseline • Active involvementacrossfunctions M MEASURE FORECAST ACCURACY • Accept tolerance in accuracy: forecast is always wrong • Eliminate bias caused by systematic error A • ACTION ORIENTED • Focus on corrective actions for gap closing • Re-allocate resources dynamically R • REDUCE AMOUNT OF DATA • Balance materiality and volatility • Forecast less, more often! • Align horizon withdecisions at hand • Rigorousrepetitiveprocess • Delink forecasting from month end closure • Delinkforecastingfrombudgeting T • TIME EFFICIENT PROCESS

24. Takeaways • An annual budget and rolling forecast are commonly used across companies • There are SMART ways to improve effectiveness and efficiency of forecasting • It’s an evolution, not a project

25. Rolling forecasting anno 2018 RSM, Rotterdam Donderdag 19-April-2018