FSN: Forecasts still missing the mark, says Cartesis

Forecasts still missing the mark, says Cartesis

6th February 2006
A global investigation into corporate planning has revealed that 84 per cent of businesses have a financial forecast that is less than 95 per cent accurate, while 54 percent report inaccuracies of up to 10 per cent. The research is based on interviews with senior financial executives in the planning, budgeting and forecasting process at 281 global companies with revenues exceeding $100 million - in the US, UK, Germany and France.

The Global Planning Survey, commissioned by business performance management (BPM) specialist Cartesis, interviewed companies about their planning process. Questions surrounded objectives, best practice and satisfaction with planning strategies.
The study uncovered high levels of dissatisfaction with both the results of financial forecasting and the rift that continues to grow between strategic objectives and the operational tactics employed to achieve them. Some of the problems encountered by respondents include difficulty consolidating actuals into the plan, and seeing specific plans' details and assumptions. These results point to a need for a more strategically-aligned planning and performance methodology.

While almost 100 per cent of companies surveyed have a financial plan, many express an inability to update it on a quarterly basis because of overwhelming complexity and detail. In fact, almost two thirds of the organizations that took part in the survey update their financial plan only twice a year or less.

"Companies need to revise their Financial Plans in detail, but doing so without the ability to push accountability down the organization and automate the planning process, leads to slow update cycles and inaccurate forecasting," commented Walker. "When accountability is distributed and automation is introduced into the process, it is far easier for management to concentrate on business-critical and value added activities."

About Us