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THREE KEYS TO BETTER FORECASTS
Presenters:
David Levy, CMO, Trefis
Larry Gorkin, Managing Director
Corporate Solutions, Tr...
OUR MISSION IS TO TRANSFORM DATA AND ANALYSIS
INTO EXPERIENCES THAT INSPIRE VISION AND ACTION
David Levy, CMO
He began his career as an editor at Reader’s Digest before jumping
into the world of digital marketing and...
TODAY’S WEBINAR IS ABOUT HELPING
HELPING LEADERS DEVELOP
BETTER, MORE ACCURATE
BUSINESS PLANS AND FORECASTS
1 2
What
you can do
about it
3
How
Trefis
can help
Why
companies
miss their
forecasts
WE’LL COVER THREE THINGS TODAY
DID YOU KNOW THAT EACH YEAR, AN
AVERAGE 25% OF PUBLIC
COMPANIES MISS WALL STREET
EARNINGS EXPECTATIONS FOR
QUARTERLY RESUL...
THE BIG SHORT
25%
MISS THE MARK
HOUSEHOLD NAMES
Internal decisions
• Capital spending
• Compensation
• Hiring
• Inventory
• Production
External decisions
• Analyst projec...
SIMPLY PUT:
MISSED FORECASTS
DESTROY VALUE
SO, WHY DO
COMPANIES MISS
THEIR FORECASTS?
1
No Agreed
Fact Base
Data and analyses overload
Key unanswered questions
Few objective and statistically
valid facts
MISS...
WITHOUT THESE FOUNDATIONAL FACTS,
YOU’RE JUST GUESSING. AND
UNLESS THE LEADERSHIP TEAM
AGREES ABOUT THE FACTS, IT’S
JUST A...
CONSTRAINED CAPABILITIES
2
Inadequate
tools
Dense analytic detail
Static presentation limits
scenario comparison
Unanticip...
WHEN UNANTICIPATED QUESTIONS ARE
RAISED, THE CHOICE IS BETWEEN
ADJOURNING TO A LATER DATE OR
MAKING DECISIONS WITHOUT FULL...
3
Incomplete
process
Leading indicators not tracked
Business results focus limits
options
Continuous real time feedback an...
DRIVING WITHOUT HEADLIGHTS
LEADERS NEED INFORMATION AS SOON
AS POSSIBLE. OPPORTUNITIES TO
CHANGE DIRECTION DIMINISH
THROUG...
WHY COMPANIES MISS FORECASTS
1 2
Inadequate
tools
Dense analytic detail
Static presentation limits scenario
comparison
Una...
WHAT CAN WE
DO ABOUT IT?
1
Create
the fact base
Identify business driver
hypotheses
Use regression analysis to
determine actual drivers
Integrate f...
GET IN THE LEAD
IDENTIFY FACTORS THAT DIRECTLY
INFLUENCE FUTURE RESULTS
INCLUDING EXTERNAL DATA SUCH AS
UNEMPLOYMENT RATES...
EXPLORE THE FUTURE
2
Develop
Scenarios
Test assumptions and the range
of future possibilities
Assess risk and reward and
a...
SLAY HIPPOS WITH DATA
OFTEN THE MOST VOCAL AND “HIGHEST
PAID OPINION” IN THE PROCESS WINS.
GET THE FACTS AND USE STATISTIC...
3
CREATE A CONTINUOUS LOOP
Continuously track and update KPIs
Monitor and update KPIs either through automated
data feeds ...
DRIVING WITHOUT HEADLIGHTS
LEADERS NEED INFORMATION AS SOON
AS POSSIBLE. OPPORTUNITIES TO
CHANGE DIRECTION DIMINISH
THROUG...
THREE KEYS TO BETTER FORECASTS
3
Install
“headlights”
Continuously track and update
key performance indicators
Integrate w...
TREFIS PULLS THE WHOLE
PROCESS TOGETHER
Transform
models
We take companies’ full forecasting
models—those with the correlated business
drivers integrated—and tran...
“What-if”
scenarios
Transform
models
Teams easily and
quickly focus on key
drivers and evaluate
“what-if” scenarios in
rea...
“What-if”
scenarios
Continuous
monitoring and
tracking
Transform
models
Trefis automates the
process for monitoring
and tr...
“What-if”
scenarios
Continuous
monitoring and
tracking
Transform
models
Determine
implications and
take action
Finally, ex...
TREFIS TRANSFORMS
CLICK THE GRAPHIC TO SEE THE “ABC” FORECAST
RELATED TREFIS CAPABILITIES
• We will:
• Work with you to identify hypotheses for external and
internal business drivers
•...
As a special offer, Trefis will transform your
spreadsheet model into the Trefis Interactive
Experience at no charge.
Clic...
CONTACT INFORMATION
David Levy, Chief Marketing Officer
david.levy@trefis.com
Larry Gorkin, Managing Director Corporate So...
THANK YOU
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Three keys to better forecasts

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Published on

It’s simple: Plans and forecasts matter

Your firm makes consequential decisions every year based on its plans and forecasts: What markets to enter, what people to hire, where to invest... and many others. Getting it right involves analytical inputs from dozens, hundreds, maybe even thousands of people. Yet many firms still get it wrong.

Here’s an astounding fact. Every quarter, nearly 25% of public companies miss Wall Street earnings expectations, or have to reduce their earnings guidance. And the consequences are huge.

In this presentations, you'll learn:

Why companies miss their forecast

What you can do about it

Next steps you can take

Published in: Business
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Three keys to better forecasts

  1. 1. THREE KEYS TO BETTER FORECASTS Presenters: David Levy, CMO, Trefis Larry Gorkin, Managing Director Corporate Solutions, Trefis
  2. 2. OUR MISSION IS TO TRANSFORM DATA AND ANALYSIS INTO EXPERIENCES THAT INSPIRE VISION AND ACTION
  3. 3. David Levy, CMO He began his career as an editor at Reader’s Digest before jumping into the world of digital marketing and direct response. More than twenty-five years later he brings to Trefis a unique mix of editorial experience, agency acumen and B2B marketing savvy. Before joining Trefis in 2015, David spent five years as a marketing consultant to enterprise software companies. Larry Gorkin, Managing Director, Corporate Solutions Throughout his career, Larry has learned what it means to help companies grow and he helps our corporate customers use Trefis to do just that. His line executive experience includes stints at Procter & Gamble, MCI and GE Capital. As a consultant–at McKinsey & Company and Stonebridge Consulting Group–Larry has guided clients such as IBM, MasterCard Worldwide, and Baxter Health Care.
  4. 4. TODAY’S WEBINAR IS ABOUT HELPING HELPING LEADERS DEVELOP BETTER, MORE ACCURATE BUSINESS PLANS AND FORECASTS
  5. 5. 1 2 What you can do about it 3 How Trefis can help Why companies miss their forecasts WE’LL COVER THREE THINGS TODAY
  6. 6. DID YOU KNOW THAT EACH YEAR, AN AVERAGE 25% OF PUBLIC COMPANIES MISS WALL STREET EARNINGS EXPECTATIONS FOR QUARTERLY RESULTS, OR REDUCE PREVIOUSLY GIVEN GUIDANCE
  7. 7. THE BIG SHORT 25% MISS THE MARK HOUSEHOLD NAMES
  8. 8. Internal decisions • Capital spending • Compensation • Hiring • Inventory • Production External decisions • Analyst projections • EPS multiples • Stock price • Investments FORECASTS HAVE CONSEQUENCES
  9. 9. SIMPLY PUT: MISSED FORECASTS DESTROY VALUE
  10. 10. SO, WHY DO COMPANIES MISS THEIR FORECASTS?
  11. 11. 1 No Agreed Fact Base Data and analyses overload Key unanswered questions Few objective and statistically valid facts MISSING FOUNDATION Data and analyses overload Companies have TONS of facts and data, probably too much Key unanswered questions Which facts actually impact results? Every business is different. Is your business sensitive to interest rate movements? CPI? Do you know the answers? Few objective and statistically valid facts Everyone has an opinion. Few companies have objectively measured statistics-based answers for which facts actually count, and by how much.
  12. 12. WITHOUT THESE FOUNDATIONAL FACTS, YOU’RE JUST GUESSING. AND UNLESS THE LEADERSHIP TEAM AGREES ABOUT THE FACTS, IT’S JUST AS BAD AS NOT HAVING THE FACTS AT ALL.
  13. 13. CONSTRAINED CAPABILITIES 2 Inadequate tools Dense analytic detail Static presentation limits scenario comparison Unanticipated questions slows process and drives bad choices Dense analytic detail Key facts and business drivers are squirrelled away in rows and columns of individual spreadsheets Static presentation limits scenario comparison Executives want to evaluate alternatives but analysts present them with only a few static options Unanticipated questions slows process and drives bad choices Teams can never anticipate the full range of scenarios and questions that executives want to consider.
  14. 14. WHEN UNANTICIPATED QUESTIONS ARE RAISED, THE CHOICE IS BETWEEN ADJOURNING TO A LATER DATE OR MAKING DECISIONS WITHOUT FULL DATA. IN A WORLD WHERE TIME IS MONEY, AND FACTS ARE ESSENTIAL, NEITHER IS A GOOD OPTION.
  15. 15. 3 Incomplete process Leading indicators not tracked Business results focus limits options Continuous real time feedback and response loop missing PLANNING LIMITATIONS Leading indicators not tracked Companies track results but not leading performance indicators that can impact the forecast. Business results focus limits options Once business results come in, it’s frequently too late to respond. No continuous feedback loop Executives need the earliest possible headlights when plans aren’t going to be met; more often than not they don’t have a disciplined or consistent process for doing this.
  16. 16. DRIVING WITHOUT HEADLIGHTS LEADERS NEED INFORMATION AS SOON AS POSSIBLE. OPPORTUNITIES TO CHANGE DIRECTION DIMINISH THROUGHOUT THE YEAR.
  17. 17. WHY COMPANIES MISS FORECASTS 1 2 Inadequate tools Dense analytic detail Static presentation limits scenario comparison Unanticipated questions slows process and drives bad choices 3 Incomplete process Leading indicators not tracked Business results focus limits options Continuous real time feedback and response loop missing No Agreed Fact Base Data and analyses overload Key unanswered questions Few objective and statistically valid facts
  18. 18. WHAT CAN WE DO ABOUT IT?
  19. 19. 1 Create the fact base Identify business driver hypotheses Use regression analysis to determine actual drivers Integrate findings into pro-forma financials BUILD THE FOUNDATION Identify business driver hypotheses Conduct interviews or work sessions with internal stakeholders to identify hypotheses of what the leading business drivers might be. Use regression analysis to determine actual drivers Validate with regression analysis which hypothetical factors actually correlate with business results and what weight each has. Integrate findings into pro-forma financials Once the KPIs pass the sniff test, plug them into your forecast
  20. 20. GET IN THE LEAD IDENTIFY FACTORS THAT DIRECTLY INFLUENCE FUTURE RESULTS INCLUDING EXTERNAL DATA SUCH AS UNEMPLOYMENT RATES, INTEREST RATES, OR THE PRICE OF OIL. IT ALL DEPENDS ON YOUR BUSINESS.
  21. 21. EXPLORE THE FUTURE 2 Develop Scenarios Test assumptions and the range of future possibilities Assess risk and reward and alternative options Align key stakeholders on the best path forward Test assumptions and the range of future possibilities Examine more than a handful of “what-if” alternatives and test which ones are more likely Assess risk and reward and alternative options What risks are apparent, and which do you want to defend? What are potential opportunities, and which do you want to protect? Align key stakeholders on the best path forward Share both your conclusions AND your assumptions to align stakeholders on a plan
  22. 22. SLAY HIPPOS WITH DATA OFTEN THE MOST VOCAL AND “HIGHEST PAID OPINION” IN THE PROCESS WINS. GET THE FACTS AND USE STATISTICAL METHODS TO GET PAST MERE OPINION.
  23. 23. 3 CREATE A CONTINUOUS LOOP Continuously track and update KPIs Monitor and update KPIs either through automated data feeds or a disciplined work flow Integrate with business data to determine implications Understand the business implications and share those conclusions with the appropriate leaders Refine the underlying model as necessary Meet on a monthly--or at least quarterly--basis to discuss the latest updates and next steps Install “headlights” Continuously track and update key performance indicators Integrate with business data to determine forecast/plan implications Refine the underlying forecast model as necessary
  24. 24. DRIVING WITHOUT HEADLIGHTS LEADERS NEED INFORMATION AS SOON AS POSSIBLE. OPPORTUNITIES TO CHANGE DIRECTION DIMINISH THROUGHOUT THE YEAR.
  25. 25. THREE KEYS TO BETTER FORECASTS 3 Install “headlights” Continuously track and update key performance indicators Integrate with business data to determine forecast/plan implications Refine the underlying forecast model as necessary 2 Develop Scenarios Test assumptions and the range of future possibilities Assess risk and reward and alternative options Align key stakeholders on the best path forward 1 Create the fact base Identify business driver hypotheses Use regression analysis to determine actual drivers Integrate findings into pro-forma financials
  26. 26. TREFIS PULLS THE WHOLE PROCESS TOGETHER
  27. 27. Transform models We take companies’ full forecasting models—those with the correlated business drivers integrated—and transform them into Trefis Interactive Experience.
  28. 28. “What-if” scenarios Transform models Teams easily and quickly focus on key drivers and evaluate “what-if” scenarios in real time. Stakeholders test assumptions, assess risk/reward, and align on the best possible plan
  29. 29. “What-if” scenarios Continuous monitoring and tracking Transform models Trefis automates the process for monitoring and tracking. Each month, the model is updated with the latest business results and KPIs. Leaders can link in directly and see the most current results versus plan.
  30. 30. “What-if” scenarios Continuous monitoring and tracking Transform models Determine implications and take action Finally, executives quickly create scenarios and assess the risks and opportunities in their plan. And TAKE ACTION at the earliest possible moment.
  31. 31. TREFIS TRANSFORMS CLICK THE GRAPHIC TO SEE THE “ABC” FORECAST
  32. 32. RELATED TREFIS CAPABILITIES • We will: • Work with you to identify hypotheses for external and internal business drivers • Conduct regression analysis • Integrate the business drivers into the company’s pro-forma financials and create a model that can be used to create and evaluate alternative scenarios
  33. 33. As a special offer, Trefis will transform your spreadsheet model into the Trefis Interactive Experience at no charge. Click our logo to send your model TRANSFORM YOUR MODEL
  34. 34. CONTACT INFORMATION David Levy, Chief Marketing Officer david.levy@trefis.com Larry Gorkin, Managing Director Corporate Solutions larry.gorkin@trefis.com www.trefis.com/info/solutions
  35. 35. THANK YOU

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