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Adding geographic and location context to business information enables organizations to develop fuller understanding and optimize the activities of people that use the information. We call this location intelligence, and to achieve it requires location analytics, which focus on that context where the processing and presentation of geography and spatial aspects of data are utilized. Analysis of geographic information can provide business insights that help organizations make better business decisions. I have written about this new generation of location analytics previously and noted that it can provide fresh analytic perspectives on information collected and integrated from in-house applications and across the Internet.

In our latest benchmark research on location analytics two VentanaResearch_LocationAnalyticsout of five (41%) organizations said it is very important to have information about location to improve processes and performance. Participants in business roles (51%) insisted more on its importance than did those in IT (30%); this difference indicates the importance of location to business professional to improve activities and processes they are responsible for improving. However, the research also shows that most businesses aren’t taking advantage of this enhanced perspective. Our Performance Index analysis found the largest percentage (29%) of participants at the lowest Tactical level of location-related performance. Almost all organizations have room for improvement: Only 12 percent said they are very satisfied with the available location information and analytics. Similarly only 15 percent are very confident in the quality of their location information.

vr_LA_location_analytics_requires_experiencesBringing a new perspective, location analytics requires familiarity to deliver benefits. Users that are very experienced in location analytics most often said it has significantly improved the results of their activities and processes (62%), compared to 23 percent of those who described themselves as experienced. To achieve this value organizations must invest in skills and knowledge of this domain for their analysts and tools that can help them derive value from this type of information.

As with other new areas of technology and analysis, to improve effectiveness using location intelligence will require a business case for investment. Our research found several barriers to building the case: lack of resources and lack of awareness (each cited by 41%), no budget (33%) and the business case not being strong enough (30%). While training and understanding of the potential of location intelligence are essential, some decision-makers need better examples of its use in terms of business results to make it an investment priority. In this regard organizations said the most important factors are to increase speed of response to customers, improve the quality of business analysis and decisions, and increase the accuracy of information. Nearly all that have adopted location intelligence said this focus has improved the organization’s processes significantly (40%) or slightly (56%).

The research found several key business areas in which value can be found. Improving customer relations is a significant driver for change: Two-thirds (68%) of organizations using location analytics and a customer focus will be changing the way they use it in the next 12 to 18 months. A focus on customers is a natural use of location analytics; our research shows that for more than one-third (37%) of organizations it is the type of information for which location is most important. The benefit most often ranked first by those analyzing customer data is to improve the customer experience and customer satisfaction (20%). But customer facing areas are not the only place to apply location analytics that can be especially useful in areas: optimizing sales efforts for territory management, identifying fraud for risk mitigation, optimizing routes and customer interactions across field service, routing optimization for distribution and warehouse management for supply chain management or identify best markets for advertising effectiveness.

The emphasis on location analytics by the lines of business vr_LA_location_analytics_improves_resultsappears again in funding for initiatives. It comes not just from the general IT budget (40%) but also from the business technology budget (31%) and the business budget (28%). And the investments pay off. Those that have invested in location analytics have improved the results of their activities and processes significantly (34%) or slightly (51%). Business people, who are better-positioned to see the benefits, indicated significant improvement three times as often (48%) as did IT staff (16%).

Analysts in the lines of business should assess their existing efforts and determine how the use of location analytics could improve the results they provide to decision-makers. One key tool for this is visualization through maps, which can provide more intuitive presentation of information than more general visualization. Simplifying the presentation of location information and making it easier to identify insights are essential for business professionals, who should not have to be trained to see the insights. Location Analytics is more than just a map and pretty picture, but a method to process data to get information for delivering geographic insights that are actionable and impactful to business. Organizations not yet taking advantage of this valuable supplement to their business information should evaluate it.

Regards,

Mark Smith

CEO & Chief Research Officer

In today’s highly competitive sales environment, where success depends on meeting the specific needs of buyers, an accurate and timely sales forecast is a critical tool for optimizing business outcomes. VentanaResearchBenchmark_SalesForecastingI discussed this as part of our 2014 research agenda for sales, noting that linking the forecast to commissions, quotas and territories is a requirement for success. We recently completed new benchmark research on sales forecasting to ascertain the state of the processes and technology sales organizations use. This research continues to find less than adequate efforts by organizations to improve their sales forecasting process and insufficient information about the full revenue potential from accounts and customers.

Each of our benchmark research studies generates a Performance Index that assesses organizations’ performance in a specific process and how well people use information and technology. Our latest sales forecasting research places fewer than one in five (18%) organizations at the highest Innovative level of the four by which we measure sales forecast performance and increasingly larger percentages at each of the succeeding lower levels; more than one-third (35%) rank at the lowest Tactical level. The largest organizations by both number of employees and annual revenue perform better than smaller ones. We find that organizations do see the importance of sales forecasting: More than half (55%) said that it is very important, and another one-third (34%) said it is important. But execution is another matter: More than half (53%) are not satisfied with their current sales forecasting process, and two-thirds (64%) of those that said forecasting is very important also said they are not satisfied with the process.

Why are people most dissatisfied? The most common complaints about how sales forecasting works are that the process is not vr_SF12_09_complaints_with_sales_forecastingreliable (for 57%), data is not accurate (50%) and the process is too slow (50%). But those seeking to address these complaints encounter barriers that obstruct improvement; those most commonly cited by organizations not satisfied with the current process of creating forecasts are lack of resources (84%), no executive support (79%), no suitable software (77%) and lack of awareness (75%). All of these findings indicate room for improvement across the people, process, information and technology dimensions of performance.

Dissatisfaction correlates with low confidence in the sales forecast and the information in it; 44 percent lack confidence, which is even more disturbing when we remember that the information from the forecast is essential for managing not just the process but all of sales operations. Similarly issues with accuracy of information also correspond to lower levels of confidence: Fewer than one-third (29%) of participants said that their forecasts are more than 80 percent accurate; that is a lower number than in our previous research. One way to improve accuracy is to tie performance rewards to it, but we find that not many (29%) organizations reward sales forecast accuracy. However, those that do this are more confident by a large margin in the quality of the information than those that don’t (61% vs. 37%). Thus we recommend the use of rewards as a way to improve the accuracy of sales forecasts. A related element is timeliness, and the research finds that often the sales forecast takes too long to generate: One-third (35%) of organizations take three weeks or longer to generate a sales forecast, more than one-fourth (27%) take a week or two, and the fewest (24%) take less than a week. The time spent to process a forecast can impact the frequency of sales forecasting and hence its usefulness. This sluggishness often is related to inadequate technology to process and generate information for review and metrics to guide improvement. Almost half (44%) of sales organizations acknowledged that they have impediments that motivate management to contemplate further investment in sales technology.

Speaking of technology, only two in five (40%) of the organizations participating in this research use dedicated tools for sales forecasting. Most that do are 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. Those that use dedicated sales forecasting technology told us it is helpful: More than one-fifth (22%) said it has improved significantly the outcomes of sales activities and processes, vr_SF12_10_reliance_on_spreadsheets_undermines_efficiencyand half (51%) indicated it has improved them slightly. The largest organizations have been using dedicated software longest among company sizes. Less 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 would not have a positive impact on business, which indicates a lack of understanding of its benefits. We found similar uncertainty elsewhere. Fewer organizations are confident in their ability to select and use sales forecasting technology (35%) than are only somewhat confident (40%); at the extremes, slightly more are not confident (14%) than are very confident (12%). Organizations that reward forecast accuracy also are more often satisfied with their sales forecasting technology (79% vs. 44%), which indicates maturity in understanding the full potential of technology investments. Yet many organizations use spreadsheets for sales forecasting even though more than half (59%) admitted that reliance on them undermines efficiency and only 24 percent said they are accurate and timely.

This research also finds much indecision about making changes to improve the process or the technology for sales forecasting. A larger percentage of sales organizations said they are not planning to change their process (41%) than said they will change it (32%); more than one-quarter (27%) do not know whether they will change the process. The most common drivers for changing the forecasting process are a business improvement initiative (for 65%) and a drive to improve the quality of business processes (60%), followed by increased operational efficiency and cost savings (48%) and improved sales and revenue generation (47%). All of these are good reasons, but we think that commitment to sales excellence and maximizing the number and value of sales should be enough to justify investments and efforts at continuous improvement. Dedicated applications can contribute to more accurate vr_SF12_07_impediments_in_sales_motivate_investmentsales forecasts, but we find that many organizations aren’t prepared to implement them or do not understand why they should. For organizations that are planning to change vendors for technology, the most common reason is to speed up the forecasting process (54%); fully half of this group is not satisfied with the current product’s functionality. The current research found organizations are dissatisfied with their tools because data gets outdated quickly, which indicates lack of integration of data and tardy processing of forecasts.

We conclude that many organizations should make a deeper commitment to sales forecasting; the research shows that those that do invest and improve are reaping the rewards in increased sales. We add that improving accuracy and participation should be rewarded and that up-to-date sales pipeline information should be processed into a periodic sales forecast that should be readily available. The whole point of a sales forecast is to measure performance of sales activities, and that should be aligned to the quotas assigned to the sales force across territories. Also important is the capability to examine the forecast by customer, product and geography to determine where more management is required and where coaching and instrumental changes to the sales methods used to drive the best execution through improvement to the efficiency and results. The sales forecast also impacts other key process, such as the financial plan, the demand plan for operations including customer service and field service, and manufacturing and distribution. It is critical for streamlining the overall business plan. Sales forecasting should be a well-managed, collaborative process with capable technology to support it, and not just running a report from the SFA that summarizes the current state of activities and lacks the analytics and collaboration required to operate the process. Having a commitment to improve the process and information requires technology that is designed to support it and finding ways for gaining more participation and interaction through collaboration and mobile technology.

I urge every organization that has issues in its sales forecast to conduct a self-examination with an eye on how to improve it.

Regards,

Mark Smith

CEO & Chief Research Officer

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