What is rolling forecast? How can you use it in Enterprise Planning and Budgeting?
- Rolling Forecast is a popular concept to facilitate continual planning vs. distinct planning as in Annual Plans or a regular Forecast.
- In a Rolling Forecast companies typically plan for 12, 18 months or a rolling 4,8 Quarters. The Forecast goes beyond the current year.
- Forecast the entirety of the Current Year plus a portion of the following year.
- Less focus on the “YearTotal” and more on the Rolling Forecast Range.
- Many companies want to run both process but eventually would like to move to rolling forecast
What are the key differences between traditional budgeting/planning and rolling forecast?
- Calendar-based (Annual, Quarters etc.)
- Fixed targets (Sales/Profit, other KPIs)
- Resource allocations are rigid
- Manual account based and often connected to accounting cycles
- Event based and real-time adjustment to calendar forecasts
- Dynamic adjustments to targets based on external/internal events in business
- Forecasts and re-allocation of resources based on dynamic targets
- Driver based on assumptions, and connected to business operations
Thank you to Muthu Ranganathan, Director, Product Management, for information on this topic.