WHITEPAPER ADVANCED ANALYTIC FORECASTING

YY Vanguard Software
CORPORATION

It???s about where you're going...not where you've been.

ERP? BI? CPM?
Why it always comes back to Forecast Accuracy

Modern enterprises are awash in data. And it???s a fact that these data produce more accurate
expected outcomes (and fatter returns) when wrung through statistical models, rather than
guessed about. So why is there a hole in this marketplace?

Nearly all popular ERP, Bl and Performance Management systems advertise ???forecasting.??? But
nearly all fall woefully short of delivering on forecasting???s full business potential. Why do we
care? Because forecasting, when based on advanced analytical methods, is arguably the single
greatest contributor to operating efficiency, savings, and customer satisfaction???across all
industries. So, it???s critical to define what forecasting is, and then begin to parse it from the fray
of business intelligence capabilities that are so commonly marketed as forecasting.

In business analytics, forecasting is the science of planning based on what is most likely to
happen. Business intelligence, rather, enables planning based on what has already happened.
To make this distinction clear, let???s look at two different approaches to the P&L forecast.

The analytics-driven approach starts with a time-series, forecast engine. This piece
of software combs historical data, captures patterns and relationships, and then

Depending on the particular models and extrapolates an objective representation of what is to come. Multiple
management culture, forecasts layers of advanced analytics (plus management foreknowledge) may refine

are sometimes referred to by predictions, but it all starts with statistically-derived inputs for revenue, fixed and
other names, such as budget, variable cost, and whatever else.

target, or goal. It???s important This is starkly different from the ???forecasting??? modules of popular ERP, CPM
to remember that an object, and BI suites. To be fair, these systems provide excellent web-based computing

analytics-driven forecast

environments and historical reporting value. They eliminate the rigmarole of

should inform budgets and desktop spreadsheet management. They provide fast, easy roll-up capabilities.

targets, not attempt to
portray them.

They streamline multi-division financial consolidation and reporting. They look
cool and they're getting easier to use. But what they don't do is generate objective
forecasts from statistically derived inputs. Nor do they deliver the accuracy and
ROI possible from analytics-driven forecasting.