Rolling Forecasts Enable Accuracy and

Agile Business Planning

May 2013
Nick Castellina
 May 2013
Rolling Forecasts Enable Accuracy and Agile
Business Planning Analyst Insight
Accurate planning, budgeting, and forecasting is essential for enabling Aberdeens Insights provide the
executives, managers, and the line of business to have confidence when analysts perspective on the
making investments and make informed decisions. Unfortunately, achieving research as drawn from an
accuracy is easier said than done. The first rule of forecasts is that they are aggregated view of research
never 100% accurate. This margin of error is especially compounded in surveys, interviews, and
volatile business conditions where forecast accuracy can very quickly suffer data analysis
as a result of outdated data and scenarios. Seventy-one percent (71%) of top
performing organizations mitigate this risk by continuously updating
forecasts to reflect current business conditions. This can be referred to as a
rolling forecast. But to be able to do this effectively and efficiently, it
requires a combination of capabilities and technologies that Aberdeen has
identified in past research reports, such as Financial Planning, Budgeting, and
Forecasting: Removing the Hurdles. This Analyst Insight, based on a survey of
over 200 respondents, identifies the necessary tools needed to enable
rolling forecasts along with the benefits, such as increased profit margins, of
utilizing this strategy.

The Need for Agility

Aberdeens 2013 Financial Planning, Budgeting, and Forecasting survey
illustrated the top pressures that organizations face in the planning,
budgeting, and forecasting processes (Figure 1).

Figure 1: Pressures in Planning, Budgeting, and Forecasting

Market volatility creates the need to

43%
dynamically account for change
Growing operational costs 32%
Current budgeting and forecasting process
25%
is too long and resource-intensive
Corporate mandate for growth 23%
Inability to trace business success to its key
21%
components
0% 20% 40% 60%
Percentage of Respondents, n = 214

Source: Aberdeen Group, January 2013

Two of the top pressures directly impact the amount of time it takes to
complete forecasts, as well as the likelihood that the results are accurate.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Groups methodologies provide for objective fact-based research and
represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.
and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.
Rolling Forecasts Enable Accuracy and Agile Business Planning
Page 2

Aberdeen Methodology
Forty-three percent (43%) indicated that market volatility creates a need to
The Aberdeen maturity class is
dynamically account for change. This means that budgets, forecasts, and comprised of three groups of
plans that are devised in January, for example, may be based on outdated survey respondents. Classified
business conditions by February. Therefore, as time goes on, it can become by their self-reported
less likely that forecasts are accurate. Additionally, 25% indicate that the performance across several key
current budgeting process is too long and resource intensive. On one hand, metrics, each respondent falls
this means that employees are being taken away from their day-to-day jobs. into one of three categories:
On another, employees do not necessarily know which role they play and Best-in-Class: Top 20% of
which actions they are responsible for in the process. But most importantly, respondents based on
the process simply takes too long, which leaves the organization increasingly performance
susceptible to volatility. Enabling accuracy in these conditions requires an Industry Average: Middle
ability to be agile by quickly changing forecasts and budgets. 50% of respondents based
on performance
Laggard: Bottom 30% of
The Value of Rolling Forecasts respondents based on
Since market volatility makes ongoing forecast accuracy difficult and performance
forecasting processes have been known to bring organizations to a stand-
Sometimes we refer to a fourth
still in the past, the majority of organizations have adopted a strategy of category, All Others, which is
rolling forecasts (Figure 2), which involves continuously reforecasting as Industry Average and Laggard
conditions change. These conditions could be anything from changes in gas combined.
prices to the departure of certain employees. This can occur even on a day-
to-day basis. The effect that this strategy can have on accuracy is evidenced
In the report, Financial Planning,
by the fact that Best-in-Class organizations (see sidebar), which have more Budgeting, and Forecasting:
accurate budgets and forecasts, are the most likely to have implemented this Removing the Hurdles,
strategy. Furthermore, the value of performing rolling forecasts is evident respondents were ranked on
due to the impact that the resulting accuracy has on the bottom line. the following criteria:
Organizations that perform rolling forecasts saw a 10% revenue growth
Percentage of financial
over the past 24 months in comparison to a 7% growth for organizations
reports delivered in the
that do not perform them. Additionally, organizations with rolling forecasts time needed for
saw an 8% increase in operating margins in comparison to a 6% increase for decision-making:
those without over the same time frame. Best-in-Class 94%,
Industry Average 76%,
Figure 2: Best-in-Class Organizations Continually Update Laggard 58%

Best-in-Class Industry Average Laggard

Percentage that actual
costs are within
Percentage of Respondents, n = 214

80% budgeted costs (above or

71%
70% below):
61% Best-in-Class 3%, Industry
60%
47% Average 9%, Laggard
50%
20%
40%
30% Percentage that actual
20% revenue is within
10% forecasted revenue
0% (above or below):
Ability to re-forecast as market conditions Best-in-Class 2%,
change Industry Average 10%,
Laggard 22%
Source: Aberdeen Group, January 2013

2013 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897
Rolling Forecasts Enable Accuracy and Agile Business Planning
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But as with creating a traditional budget or forecast, it does not make sense
to simply come up with a plan without basing it on more than just a
standard increase or a hunch. In order to enable rolling forecasts,
employees need to have access to more accurate data and make quicker
decisions (Table 1). This can mean more software tools, or a greater ability
to use the tools that are already available. Organizations that perform
rolling forecasts provide more stakeholders with accurate data in the time
needed to make decisions. In order to update forecasts as quickly as
possible, this decision-making ability is essential. Of course, organizations
enable this visibility and agility through a series of capabilities and
technologies.

Table 1: More Access, Quicker Decisions

No
Rolling
Metric Rolling
Forecasts
Forecasts
Percentage of time that reports are delivered in
time for decision-making 80% 72%
Percentage of stakeholders with access to
performance data 71% 57%
Decrease in time-to-decision over the past year 13% 11%
Percentage of financial reports that are accurate 83% 74%
Source: Aberdeen Group, January 2013

The Essential Tools

In order to enable agility in forecasting, organizations must make the
budgeting and forecasting processes as easy as possible (Figure 3).

Figure 3: Making it Easier to Forecast

Rolling Forecasts No Rolling Forecasts
Percentage of Respondents, n = 214

80% 71%
62% 61%
60%
47% 49%

40%
24%
18%
20% 14%

0%
Ability to perform Business users are Budget templates are Ability to assign
what if scenarios able to create reports used to communicate resources and
and change analysis / charts in a self- and manage input workflows for
service capacity budgeting and
forecasting activities

Source: Aberdeen Group, January 2013

One way of doing this is by allowing business users to plan ahead.

Organizations that enable rolling forecasts are 4.4-times as likely than those
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Rolling Forecasts Enable Accuracy and Agile Business Planning
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that do not to have the ability to perform what if scenarios and change
analysis. Not only does this allow them to mix and match different
possibilities and see how they will impact metrics (enabling accuracy), but it
also allows them to build contingency plans that enable them to react
immediately when conditions change. Decision-makers can also plan ahead
better if they can interact with the data available to them. As such,
organizations that perform rolling forecasts are 2.6-times as likely as those
that do not to allow business users to create their own reports and charts
without relying on IT. This also allows them quicker access to the data that
they need.
For rolling forecasts to work, the budgeting and forecasting process itself
needs to be streamlined. This can be done with budget templates that
instruct employees exactly which data they need to put where in order to
complete the forecast. Additionally, organizations that perform rolling
forecasts are 2.5-times as likely as those that do not to have the ability to
assign workflows and resources to the budgeting process. These combined
capabilities enable employees to compose the newest iterations of budgets
and forecasts as quickly as possible in response to business events.
Of course, to be able to provide this agility, employees need access to
relevant information (Figure 4). Aberdeens Financial Planning, Budgeting, and
Forecasting: Removing the Hurdles noted that 76% of Laggards do not have the
ability to incorporate business drivers into the forecasting process, but over
half of organizations that perform rolling forecasts have this capability. This
takes visibility, which can be provided by holistic reports that can then be
drilled down to individual details such as business unit, product line, or sales
person. Additionally, 56% of organizations that perform rolling forecasts Fast Facts
provide employees with a one stop shop for data by integrating their
business applications to provide one true repository. Finally, this data is only Organizations that perform
rolling forecasts are twice as
useful for rolling forecasts if it is up to date (see Fast Facts). Automated
likely as those without to
alerts enable instant reactions and changes to the forecast. have real-time updates to
financial metrics.
Figure 4: Visibility Enables Rolling Forecasts
Fifty percent (50%) of
Rolling Forecasts No Rolling Forecasts organizations that perform
Percentage of Respondents, n = 214

80% rolling forecasts receive

60% 59% 56%
automated alerts based on
60% 55%
internal events that can
38% trigger changes to the
40%
25%
30% forecast.
23%
20% Organizations that perform
rolling forecasts are almost
0% three times as likely as those
Ability to incorporate Able to perform multi- Able to drill down to Integrated business
business drivers into dimensional reporting successive levels of applications serve as that do not to receive
the on-going with roll-ups detail from a complete and automated alerts based on
forecasting process summaries auditable system of external events.
record

Source: Aberdeen Group, January 2013

2013 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897
Rolling Forecasts Enable Accuracy and Agile Business Planning
Page 5

So how does using data to create accurate, agile forecasts work in practice
(Figure 5)? If one were to assume that a forecast is accurate as long as
conditions do not change, it would make sense that any variances between
the forecast and actual would necessitate changes. As such, 80% of
organizations that create rolling forecasts can create variance reports. This
is why these organizations are over twice as likely to be able to measure the Fast Facts
accuracy of forecasts, which allows them to learn from mistakes and alter Thirty percent (30%) of All
forecasts going forward. These organizations are more likely to be able to Others use spreadsheets as
identify performance from every angle and ensure that all relevant data is their only method of input
included, and they are more likely to be able to perform profitability analysis and communication in the
so that they can ensure that any investments made, or projects started, will forecasting process
impact the organization positively. While these capabilities are essential for compared to 23% of the
creating a forecast of any kind, it should be reiterated that the key to Best-in-Class.
creating a rolling forecast is utilizing available data as quickly as possible to
create plans that reflect current business conditions.

Figure 5: Measuring to Manage

Percentage of Respondents, n = 214

Rolling Forecasts No Rolling Forecasts

100%
80%
80% 74%
66% 66%
60% 56%
45% 43%
40%
26%
20% BI vs. No BI
0% Percentage of
Ability to create Ability to identify Ability to measure the Ability to perform
variance reports performance by accuracy of forecasts profitability analysis
stakeholders with access
product line, sales to performance data:
person, or business BI 72%, No BI 60%
unit
Percentage of financial
Source: Aberdeen Group, January 2013 reports delivered in the
time needed for
The above capabilities are enabled by a variety of technologies that aid decision-making:
decision-makers in accessing data to create agile forecasts (Table 2). Tools BI 78%, No BI 76%
such as Enterprise Performance Management (EPM) allow decision-makers
to get a full view of relevant performance data. Business Intelligence (BI) or Decrease in time-to-
Analytics allows managers to take a forward-thinking look and apply that to decision over past year:
BI 15%, No BI 11%
projections. Case in point: organizations with BI provide more employees
with the data they need to make decisions which had led to quicker Revenue growth over
decisions, more revenue, and greater profit margins (see sidebar). When it past 24 months:
comes to making it easier to devise plans, budgets, and forecasts, 70% of BI 10%, No BI 9%
Best-in-Class organizations have specific applications that facilitate the Change in operating
process. In conjunction with the capabilities listed above, the technology margins over past 24
below can help organizations access data more quickly, in order to react months:
and create rolling forecasts. BI 9%, No BI 5%

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Rolling Forecasts Enable Accuracy and Agile Business Planning
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Table 2: Key Enablers of the Best-in-Class

Best-in- All
Class Others
Query and reporting tools 79% 56%
Financial reporting and consolidation application 70% 53%
Planning / budgeting / forecasting application 68% 47%
Dashboard / scorecard tools 66% 38%
Enterprise Resource Planning 62% 49%
Enterprise BI platform 50% 28%
Enterprise Performance Management 49% 30%
Source: Aberdeen Group, January 2013

Key Takeaways and Recommendations

Forecast accuracy is absolutely essential for enabling decision-makers to
guide their businesses successfully. In todays volatile climate, where
conditions change so quickly, continual updates to the forecast are
necessary to reflect current business conditions. Organizations that are not
currently utilizing rolling forecasts, or are unable to perform them efficiently
and accurately, should heed the following recommendations:
Make it as easy as possible for employees to put together
plans, budgets, and forecasts. Organizations that perform rolling
forecasts are much more likely to provide guidelines on how to
complete the budget as well as provide self-service access to charts
and reports. This enables employees to complete processes
efficiently while ensuring that they utilize the data available to them.
This will lead to greater agility and potentially greater accuracy.
Identify and incorporate business drivers. Many organizations
create plans, budgets, and forecasts without insight into the business
drivers that impact success. In order to forecast effectively, 55% of
organizations that utilize rolling forecasts have the ability to
incorporate business drivers into the ongoing forecasting process.
This data can then be integrated into budget and forecast templates.
Provide visibility into performance and analyze gaps. Top
performing organizations enable their employees to have access to
data that provides visibility on activities that take place both inside
and outside of the organization. This allows them to track
performance and integrate it into ongoing forecasts. For example,
80% of organizations that utilize rolling forecasts have the ability to
create variance reports.
Automate the process through technology enablers.
Business Intelligence, stand-alone financial planning tools, Enterprise
Resource Planning, and Enterprise Performance Management can all
serve a purpose in enabling data discovery and use as well as

2013 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897
Rolling Forecasts Enable Accuracy and Agile Business Planning
Page 7

speeding up the planning, budgeting, and forecasting process. While

spreadsheets are something that will never go away, Best-in-Class
organizations are more likely to rely on more robust tools that
enable rolling forecasts.
These recommendations can help businesses forecast in an agile manner,
and develop skills and infrastructure needed to make accurate business
decisions in the face of uncertainty.
For more information on this or other research topics, please visit
www.aberdeen.com
To take part in Aberdeens 2013 Financial Planning, Budgeting, and
Forecasting research, click here.

Related Research
Enabling More Accurate Forecasting Culture, Collaboration and Coordination:
through Agile EPM; April 2013 Driving High Performance with EPM;
Financial Planning, Budgeting, and January 2013
Forecasting: Removing the Hurdles; Improving S&OP with Planning and
March 2013 Forecasting Technology: An Integrated
Look at Financial and Business Planning;
October 2012
Author: Nick Castellina, Senior Research Analyst, Business Planning and
Execution (nick.castellina@aberdeen.com)
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This document is the result of primary research performed by Aberdeen Group. Aberdeen Groups methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. (2013a)
2013 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897