1. Mastering rolling forecasting
Patrick Tullemans
November 20th 2018

2. Get information timely to adjust your route

3. A recent Finext survey suggests a growing trend toward rolling forecasting whereas 44% of companies now use it *
Key question: Does a rolling forecast make sense for my organization and if so, how?
How many organizations are adopting using rolling forecasting and why?
What is in general the horizon of rolling forecasting and what is driving this?
What’s the cadence to update the forecast? E.g. do we want to look ahead 12 months, 18 months, or more?
Is there an opportunity to focus on key drivers to have more efficient planning and forecasting processes?
What are success factors to rolling forecasting?
What are lessons learned from practitioners?
Which ideas or leading practices can I consider to improve effectiveness and efficiency of rolling forecasting?

4. Building blocks of (rolling) forecasting
1. Customer (s)
2. Purpose
3. Horizon
4. Frequency
5. Review structure
6. KPIs
7. Information requirements
8. Process and timeline
9. IT support
5. Review structure

5. Reasons for rolling forecasting in practice
Drive cost efficiency towards target on longer term e.g. beyond year-end
Manage growth and rebase targets and resources
Visibility of debt ratios 4 quarters ahead
Anticipate changing business conditions instead of focus on short term
Eliminate budgeting

6. External stakeholders
The requirements to (rolling) forecasting should be aligned across its “customers” or stakeholders
Illustrative
External stakeholders
Business / OPCO
ExCo
Group FP&A
Forecast accuracy
Continuous performance improvement
Integration FC and S&OP
Dual focus on short and long term
Meet analyst consensus
Rebase targets for next quarters
Common process
“One” IT system
Instant insight in financial outcome

7. Building blocks of (rolling) forecasting
1. Customer (s)
2. Purpose
3. Horizon
4. Frequency
5. Review structure
6. KPIs
7. Information requirements
8. Process and timeline
9. IT support
5. Review structure

8. The horizon of rolling forecasting varies across companies
Jan till April : current calendar year. As from May : this year and next Calendar year
Various rolling forecasts exist
12 to 18 months
current calendar year only
year end forecast
current year + 5 years; we intend to upate our forecast 4 times a year and add another year only once a year; stricktly speaking, it is not really a rolling forecast
Nog current year only, planning to extend period
5-jaren plan
Through currenct year
Just starting with RF
Next 4 years
First simple model in Excel
Rolling forecast starting after the 1st quarter of the current year. Then each month forecasting to the end of the current year.
No rolling, only current year + 2 years there after
uncertain yet
Through current year

9. Organizations conduct rolling forecasting quarterly or monthly
- We can’t conclude that companies forecast MORE FREQUENT WITH ROLLING FORECASTS
Quarterly more formal, monthly “flash”, light update of R/O
There is no universal standard process that works for every organization. Forecasting needs to be tailored to the needs of your own organization.
Design covers 9 topics,

10. Moving to a rolling forecast
Assess
Design
Implement

11. Challenges when moving to rolling forecasting
Insufficient tools. Excel based
Time consuming
Involves technical trend analysis
unpredictable business due to short lead times
unclear market outlook
Not the rigtht tools and capacity
Organisatie meekrijgen
Poor forecast alignment between functions
No right tooling in place yet
Adoptability
It will be a new topic for our organisation. A 'learning curve' period is anticipated not only to increase the quality of the data, but also training the organisation to supply and use the data.
Data quality and tooling
Less accuracy beyond current year
Perception extra effort required
Other
Business inertia to change cadence
Lack of business partner engagement

12. SMART ideas for (rolling) forecasting
SALES & VOLUME (P x Q) AS BASELINE
Snapshots operational plans as baseline
Active involvement beyond Finance M
MEASURE FORECAST ACCURACY
Forecast is always wrong
Eliminate bias caused by systematic error A
ACTION ORIENTED
Structured review meeting
Decisions on corrective actions for gap closing R
REDUCE AMOUNT OF DATA
Balance materiality and volatility
Forecast less, more often!
Rigorous repetitive process
Delink forecasting from month-end closure
Delink forecasting from budgeting T
TIME EFFICIENT PROCESS

13. Key success factor is to use rolling forecasts as a management instead of a measurement tool
Forecasting is management instead of measurement tool
Automation
Cross-functional collaboration
Other
Support /buy-inby relevant departments
Organisatie meekrijgen
identifying the drivers
Skilled business partners (F&C managers) have can deal with less detailed information to still build a reasonable forecast.

14. Implement the basics first and then gradually mature
Next level
Integrated Planning
Advanced
Driver based roling forecasting
Basics
(Rolling) forecast via Onestream
Now
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15. Takeaways The reasons for rolling forecasting vary across companies
SMART ideas can inspire you to improve effectiveness and efficiency of (rolling) forecasting
Implementation of rolling forecasting is an evolution, not a one-time project 1.
RoFo does not replace budgeting, but their functions in the planning control cycle are fundamentally different 2.
Generally often adopted practices to consider in the design or redesign of your forecast process
3. Companies often do not anticipate many of the challenges that arise after the transition to a rolling forecast. Progressive companies continue to refine their process and make fairly significant adjustments over the years after the initial adoption. By adequately preparing for the transition and understanding how the process must adapt to the needs of the business, new practitioners of rolling forecasting will avoid common pitfalls during transition.

16. Mastering rolling forecasting
Patrick Tullemans
November 20th 2018