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Sales forecasting is an essential process for most businesses. It helps guide the efforts not only of the sales function but also of finance, operations, manufacturing and customer service. Our recently released sales forecasting benchmark research reveals significant insights and best practices that can help companies optimize the effectiveness of this process. I recently wrote that most sales organizations need to make significant changes to the way they do sales forecasting. VentanaResearchBenchmark_SalesForecastingIn that analyst perspective, I examined aspects of technology that can make sales forecasting a much more efficient process than it is in most organizations that use software not designed for sales forecasting.

This research finds much indecision about making changes to improve the technology for sales forecasting. Half of organizations do not plan to change their vendor for sales forecasting in the next 12 to 18 months, and only 10 percent plan to change, although 8 percent will upgrade to the current vendor’s latest version. For organizations that are planning to change vendors, the most common reason is to speed up the forecasting process (54%); fully half of this group are not satisfied with their current product’s functionality. A substantial number of organizations are dissatisfied with their tools because data gets outdated quickly: One in four ranked this first. This discontent likely reflects the more rapid flow and greater volume of data organizations accumulate today and issues derived from the use of tools like spreadsheets into which people copy and paste data with no direct link to its sources. Yet the pace of business has accelerated along with the mass of data, and sales groups feel pressure to have timely forecasts; this challenge is another reason for improving the tools in use.

Organizations use desktop spreadsheets for many activities, and while they are easily accessible, spreadsheets are not designed for vr_SF12_03_sales_forecasting_technology_is_changingsales forecasting. Nevertheless the research shows that they are the most commonly used tool for sales forecasting (by 29%); sales force automation (SFA) ranked second, an increase from our past research. The third-most common tool used is analytics and business intelligence (BI, 10%). A range of planning and forecasting applications are used by 16 percent of organizations. Most of this technology was not designed to meet the specific needs of sales forecasting.

It is not surprising that fewer than one-quarter (24%) of the sales organizations primarily using spreadsheets for sales forecasting are satisfied with their process. Our analysis shows a correlation between spreadsheet use and lack of confidence in the information for sales forecasting: Fewer than one in three organizations relying primarily on spreadsheets (32%) are confident or very confident in the quality of their forecast. Moreover, more than half (59%) said that reliance on using spreadsheets makes it difficult to manage the sales forecast efficiently. Yet despite the evidence that spreadsheets have negative effects on sales forecasting, only 38 percent of heavy spreadsheet users are planning to change their forecasting process in the next 12 to 18 months, fewer than users of SFA (48%) and business intelligence tools (53%). When such an important process as the sales forecast is left to tools not designed for the process, risk increases that sales people will not have visibility into their information, let alone timely knowledge of progress and the source of issues that should be addressed.

On the other hand, the research finds that two in five (40%) organizations use dedicated tools for sales forecasting. Most that do are rather new to the technology; three in 10 have been using it for more than a year, and 10 percent more began in the last year. Currently dedicated sales forecasting software is deployed mostly to users on the front lines of sales: 42 percent of front-line sales managers and 41 percent of the front-line sales team have it available. Those that use dedicated sales forecasting technology find value in it: More than one-fifth (22%) of them said it has improved significantly the outcomes of sales activities and processes, and half (51%) indicated it has improved outcomes slightly. Larger organizations use such applications much more often than smaller ones: More than half (54%) of very large companies that use one have been doing so for more than a year, as have 46 percent of large companies. Another 29 percent of the very large started using a dedicated application in the last year, so nearly four out of five of this size of organization have dedicated software. But more than one-fifth of participants said they have no plans to deploy dedicated software. Asked why, most (58%) said they do not know, which indicates a lack of awareness of the technology and its advantages. One-fourth more (24%) said deploying it will not have a positive impact on business, which indicates a lack of understanding of its benefits. Dedicated applications can contribute to more accurate sales forecasts, but we find that many organizations aren’t prepared to implement them or do not understand why they should.

Our analysis finds good reasons for using dedicated technology. vr_SF12_11_teamwork_critical_for_sales_forecastingSales forecasting requires a team effort that involves account managers who track the sales pipeline, operations people and analysts who manage the process and sales managers who approve it and contribute information and metrics. According to our research the most important capabilities for the sales team in the process are to collaborate within the team to improve the sales forecast (selected by 53%), to compare quotas to the sales forecast (47%) and to perform account-level forecasting (40%). These activities make it possible for sales management to compare changes to the forecast, collaborate to address changes and determine actions, and take advantage of operating conditions in sales. The sales operations group processes the sales forecast, from preparing data through presenting the forecast to sales management, and we find that doing so takes a significant amount of time for this essential sales support team – time that could be spent better in applying a range of analytics to the forecast. Sales managers and management have their own priorities, which makes it important to profile the users of sales forecasting and align software capabilities to their roles and responsibilities. Making notations on why the forecast has changed and providing coaching based on the forecast are examples of tasks required to support the sales forecast process that are particularly difficult to do using a desktop spreadsheet.

vr_SF12_06_organizations_planning_to_change_forecastingOverall our research finds a developing movement to adopt more useful technology for supporting the sales forecasting process. For organizations planning to change, most (40%) are going to use software as a service (SaaS), which is convenient as this cloud-based approach has the lightest burden to install, configure and manage the technology. Nearly as many (35%) plan to use the on-premises approach, which could distract sales from its primary mission and the processes designed to support it. Being able to operate on mobile technology likely will spur adoption as more than half (59%) of participants indicated that mobile technology will help improve the accuracy and timeliness of sales forecasting. We urge organizations to use dedicated software for sales forecasting as a way to improve the outcomes of their sales efforts. Those that do not invest in such software will continue to face impediments in the sales process and risk not achieving the best possible outcomes.

Regards,

Mark Smith

CEO & Chief Research Officer

Pressure to comply with requirements of the Affordable Care Act (ACA) is a looming challenge for most organizations today. Many go through numerous manual iterations such as running reports and compiling data into spreadsheets from benefits, payroll and HR systems to calculate whether their employees are eligible. As my colleague Stephan Millard explains in “Is Your Organization Technology Ready for the Affordable Care Act?”, the ACA applies to organizations with 50 or more full-time employees who work more than 30 hours a week; individuals not covered by an employer can get insurance through the government. There are a great many details for employers to address in the ACA, and most HR departments lack a smooth process and effective technology to generate the information to determine compliance.

I was reminded of these issues at Equifax’s FORUM 2014 where the workforce management software provider described its efforts to help organizations with compliance and employer assurance processes including I-9 and W-2 forms management. Among its Workforce Solutions is the ACA Management Platform, which Stephan covered at its launch. Now Equifax says that more than 100 major organizations have adopted the platform, which according to our analysis makes it the most widely adopted dedicated software for ACA compliance.

The product provides verifications, eligibility tracking and employmentvr_HCA_04_dissatisfaction_with_human_capital_analytics notifications on top of modeling and reporting. While many software companies in the HR and payroll management segment provide compliance reports, Equifax has the capability to integrate data sources and model data through analytics that can generate the metrics, reports and dashboards businesses need to determine compliance. This information can be automated and distributed to the appropriate parts of the organization and help avoid fines and penalties for late or inadequate compliance. Equifax has built a library of predefined reports and dashboards that can save time otherwise spent on creating them manually. These capabilities can alleviate what our human capital analytics research finds are the largest points of dissatisfaction: data not readily available (cited by 63%), not enough skilled people (45%) and analytics that are hard to build and maintain (42%).

Equifax also makes it possible to maintain histories of compliance and to look back at the data in detail; these features help prevent falsification of hours worked to show that the company does not avoid providing healthcare as required, which can incur significant penalties and potentially damage the company’s credibility and brand. On the reverse side it also can ensure that the minimum number of hours are worked for healthcare eligibility and notify employees through workforce scheduling. Equifax encourages organizations to evaluate the effectiveness of their technology for supporting the ACA compliance process and its integration with underlying HR systems and processes. Users should consider how well their technology automates the process and whether it can support notifications and management reviews, which are necessary not just to stay in compliance but to assess policy changes and track approvals. We have found confusion in HR and benefit teams as to how and where to generate analytics that produce these and other insights. Our latest research on payroll management optimization found the capability most often seen as very important (by 42%) is to perform auditing or compliance for adherence to policies and procedures; this indicates that many professionals think payroll is the logical place to address this need, but in fact they need detailed employee and work data also from HR, workforce management and even benefits systems for both historical and real-time data related to employment and healthcare. It is clear that organizations have to collect and store worker information from all of these sources and model them with analytics, which is not a capability of legacy HR and payroll management systems.

Equifax has experience serving a variety of industries where the details about types of workers and times worked can be challenging to track and calculate, let alone have the right set of metrics and reports. It has built industry-specific versions of its application for staffing and for higher education that can accelerate the time to value for users of its human capital analytics.

These steps to provide ACA compliance build on a key advance in the use and benefits of human capital analytics that we have vr_HCA_01_issues_driving_human_capital_analytics_investmentresearched. Our research shows that the issues most often driving investment in these systems are about improving efficiency and productivity (for 63%), overcoming a lack of analytical process (41%) and collecting scattered information (37%). The research shows that a dedicated human capital analytics system can provide a foundation to manage compliance at any level and address the broader aspects of people, performance, process and risk metrics that are essential for employer assurance. Equifax’s ACA Management Platform is built on robust analytics that handle a range of data and offer visual discovery and exploration that it acquired several years ago from eThority. This technology continues to advance in support for business users as well as analysts; its latest release provides access to metrics and key indicators on mobile devices through dashboards that can be easily assembled and published.

Equifax is dedicating itself to the range of compliance needs to help employers be sure they are doing everything possible to meet their responsibilities regarding regulations like the Affordable Care Act. If your organization is not confident in how it manages these tasks, we suggest evaluating how Equifax can help it establish and maintain compliance.

Regards,

Mark Smith

CEO & Chief Research Officer

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