Quarterly rolling forecast master March 2015 -...

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How to implement

quarterly rolling

forecasting and quarterly

rolling planning– and get

it right first time

by David Parmenter


How to implement quarterly rolling forecasting Copyright ©2015

By David Parmenter [email protected] www.davidparmenter.com

Table of Contents

Page

1. Background ......................................................................................... 5

1.1. A burning platform .......................................................................... 5

1.2. History of annual planning ............................................................... 6

1.3. Jeremy Hope .................................................................................. 7

1.4. The myths around annual planning ................................................... 9

2. Introduction to quarterly rolling forecast process ................................... 13

2.1. What is a quarterly rolling forecast process? ..................................... 13

2.2. The process quarter by quarter for June year-end organisation ........... 14

2.3. Definitions ................................................................................... 15

3. The foundation stones of a rolling forecasting process ............................ 16

3.1. Abandoning processes that do not work ........................................... 16

3.2. The QRF model should be built by in-house resources ....................... 17

3.3. Separation of targets and realistic forecasts ..................................... 17

3.4. A quarterly process using the wisdom of the crowd ........................... 19

3.5. Forecast beyond year-end (e.g., six quarters ahead) ......................... 20

3.6. Monthly targets set, a quarter ahead, by the QRF ............................. 20

3.7. A quarter-by-quarter funding mechanism ........................................ 21

3.8. The annual plan becomes a by-product of the QRF ............................ 22

3.9. Forecasting at category level rather than account code level .............. 23

3.10. The QRF should be based around the key drivers ........................... 25

3.11. A fast light touch (completed in an elapsed week) .......................... 26

3.12. Built in a planning application – not in a spreadsheet ...................... 29

3.13. Design the planning tool with four or five week months ................... 34

3.14. Invest in a comprehensive blueprint ............................................. 35

4. The features of quarterly rolling forecasting .......................................... 37

4.1. Recognise that it involves all Budget holders .................................... 37

4.2. Accurate revenue forecasting ......................................................... 37

4.3. Bolt down your strategy beforehand ................................................ 41

4.4. As much pre-work is done as possible by the forecasting team ........... 41

4.5. Hold a briefing workshop instead of issuing instructions ..................... 41

4.6. Expand your forecasting help team ................................................. 41

4.7. Enable monthly phasing for only the next 6 months .......................... 42

4.8. Establish a Forecasting committee .................................................. 42

4.9. Have one page summary for each budget holder .............................. 42

4.10. Have trend graphs for every category forecasted ........................... 42

4.11. Forecast personnel costs accurately .............................................. 45

4.12. Automate and standardize travel and accommodation costs ............. 46

4.13. Beware of the dangers of scenario planning ................................... 47

4.14. QRF roll-out 18 months not 12, 13 or 15 months ........................... 48

4.15. Complete the forecast for the next quarterly before it starts ............ 48

4.16. Reporting the QRF to the Board.................................................... 48




4.17. The redesigned month-end report ................................................ 49

5. Lessons learnt when implementing QRF ................................................ 51

6. Selling change – the John Kotter way ................................................... 56

6.1. Leading change by John Kotter ....................................................... 56

6.2. Learn to sell by using the emotional drivers of the buyer ................... 57

6.3. The elevator speech ...................................................................... 58

6.4. Selling the need for a one day focus group workshop ........................ 59

6.5. Preparing the project sales pitch ..................................................... 59

6.6. Pre-selling to an influential member of the decision team ................... 60

6.7. Practise, practise, practise ............................................................. 60

6.8. Deliver presentation to seek project approval ................................... 60

6.9. Empower broad-based action ......................................................... 60

6.10. Ongoing communication .............................................................. 60

7. Sell the concept of rolling planning with a planning tool .......................... 61

7.1. Step 1: Securing senior management team commitment ................... 61

7.2. Step 2: Getting the green light from the influential sages .................. 62

8. Build in-house team capability ............................................................. 64

8.1. Step 3: Selection of a quarterly rolling forecasting project team ......... 64

8.2. Step 4: Project research, planning, and project team training ............. 65

8.3. Step 5: Completing your Blueprint .................................................. 66

9. Buying the right planning tool .............................................................. 67

9.1. Step 6: Commence acquisition of a planning tool .............................. 67

9.2. Step 7: Test planning tool applications & close the deal ..................... 68

10. Implementing quarterly rolling forecasting in a planning tool ................... 69

11. Build and test the model ..................................................................... 70

11.1. Step 8: Training of in-house designated experts ............................. 70

11.2. Step 9: Build the model based on the blueprint .............................. 70

11.3. Post-it reengineering a forecasting process .................................... 70

11.4. An introduction to SCRUM ........................................................... 75

11.5. Kanban Board ............................................................................ 77

11.6. Step 10: Pilot planning application on three business units .............. 78

12. Rollout use ........................................................................................ 79

12.1. Step 11: Road show of new rolling forecast process ........................ 79

12.2. Step 12: In-house experts roll out training .................................... 80

12.3. Step 13: Complete quality assurance ............................................ 80

12.4. Step 14: Commence first quarterly rolling plan run ......................... 80

12.5. Step 15: Review process and ascertain lessons learnt ..................... 81

13. Barriers to implementation .................................................................. 82

14. QRF immediate steps ......................................................................... 84

15. Writer’s biography.............................................................................. 85

Appendix one: Examples of planning tool formats .......................................... 86

Appendix two: Prospective project team members checklist ............................ 89

Appendix three: Implementing QRF regime -checklist .................................... 90

Appendix four: Performing a quarterly rolling forecast - checklist .................... 95

Appendix five: The “planner tool supplier” evaluation checklist ........................ 97




Appendix six: Delivering bulletproof PowerPoint presentations ........................ 98

Appendix seven: The one-day focus group workshop ................................... 101




1. Background

1.1. A burning platform

Quarterly rolling planning is a process that will revolutionize any

organization, whether public or private sector. It removes the major

problems that are associated with annual planning including:

� An annual funding regime where budget holders are encouraged to

be dysfunctional building silos and barriers to success

� The monthly budgets set in the annual plan bearing no relation to

reality

� Takes too long – often a three month period where management is

not particularly productive

� Using the annual plan as part of a bonus system.

� Costs too much – annual planning costs in time alone runs into the

millions each year for larger organizations

� Often needs to be updated during the year to reflect the dynamic

and a rapidly changing environment we work in see Exhibit 1.1.

� Is an “anti-lean” process

Exhibit 1.1 Findings from a recent study by the Aberdeen Group

This paper will explain why the QRF is the most important management

tool of this decade and why the rolling forecasts of the past are a

different beast to the 21st century QRF.

In a poll during a webcast to corporate accountants in Canada, see

Exhibit 1.2, I asked the attendees “How long does your planning take

each year? Around 80% were investing two months or more and 60%

were taking three months or more.




Exhibit 1.2 Speed of annual planning (Source: CGA Canada webcast poll)

The only thing certain about an annual target is that it will be wrong; it

will be either too soft or too hard for the operating conditions.

The answer is to “throw away the annual budget and its associated

processes, smart organisations do not do an annual planning process

anymore”. These smart organisations have moved to using quarterly

rolling planning.

For organisations between 400-700 FTEs you will invest between $1m

to $2m for the next annual planning round which equates to $10m to

$20m in the next ten years if you do not act now. We need to radically

change the annual planning process. We have a burning platform. We

need to jump.

1.2. History of annual planning

Annual planning dates back to Charles Dickens time and possibly back to

1494 when Luca Pacioli first wrote in 1494 about double entry book

0% 5% 10% 15% 20% 25% 30% 35%

over 4 months

3-4 months

2-3 months

1-2 months

less than 1 month




keeping. Annual planning went ballistic with the advent of mass

production typified by the Model T ford, see Exhibit 1.3.

Exhibit 1.3 The birth of management accounting

Writers like Charles Horngren in his “Cost Accounting: A Managerial

Emphasis” helped lock in what we know today as annual planning.

1.3. Jeremy Hope

Jeremy Hope was the world’s foremost thought

leader on corporate accounting issues, he sadly

passed away a few years ago. Hope had an

uncanny ability to always be at least five years

ahead of what better corporate accounting

practices should be. Hope has stated that not only

is the budget process a time consuming, costly

exercise generating little value, but it also, and

more important, is a major limiting factor on how

your organization can perform.

Here are some of his quotes that challenge the very concept of

budgeting.




“So long as the budget dominates business planning a self -

motivated workforce is a fantasy, however many cutting -

edge techniques a company embraces.”

“The same companies that vow to respond quickly to market

shifts cling to budgeting — a process that slows the response

to market developments until it ’ s too late.”

“It’s no secret that annual budgeting processes are time

consuming, add little value, and prevent managers from

responding quickly to changes in today’s business

environment”

Hope and Fraser in their beyond budgeting booki, pointed out that the

annual budgeting process was doomed to fail. If you set an annual

target during the planning process, typically 15 or so months before the

last month of that year, you will never know if it was appropriate, given

that the particular conditions of that year will never be guessed

correctly.

Beyond Budgeting in New Zealand: A Major Road

Contracting Company

I was presenting Beyond Budgeting and key performance

indicators (KPIs) in New Zealand and was introducing myself to

the managing director of a large road contracting company. He

politely informed me that he was mainly interested in hearing

the KPI part of my presentation, as the beyond budgeting

session was of little interest as they were already doing it. In

fact, the group had never had an annual planning process. He

said if the group could predict when it was going to sunny and

when it was going to rain, annual planning would be useful.

The business encompasses concrete, transport (local and

rural), fuel distribution, and roading. The group has around

1,000 staff members and a consistent profit growth, the envy

of many larger organizations.

The growth path has been either to grow from scratch or buy

existing family companies. As the CEO says, expansion is often

driven by opportunity. It has 23 companies as well as a

number of joint ventures.

The business has different performance tables depending on

the size of operations, so the companies can compare with one

another. Each table shows the ranking of the operations within

that table with reference to some key ratios. The ratios they

monitor include:

� Return per km — revenue and cost per km

� Margin per litre

� Delivery cost per litre

� Concrete cost per cubic meter

� Cubic meter delivered by pay hour

Monthly reports are short and based on major cost categories

(not at detail account code level). They do not waste time

showing a consolidated result each month; this is done at year

-end only.




There is much delegation to the other offices, which manage

staff levels within given limits, set staff salaries, and choose

which suppliers to use (providing there is not a national

contract in place).

There is an in-depth case study on Svenska Handelsbanken and Bulmer

cider in the electronic media that supports this paper.

1.4. The myths around annual planning

There are many reasons why

your annual planning in your

organization is not working.

One main factor is a lack of

understanding of the myths

surrounding annual planning.

Just like six centuries ago we

are blind to the realities that

are there to see on closer

observation. We have for

centuries blindly applied old

thinking to how we measure, monitor and improve performance.

Myth 1: There is a need to set annual targets

It is a myth that we know what good performance will look like before

the year starts and, thus, it is a myth that we can set relevant annual

targets. In reality, as former CEO of General Electric, Jack Welch says,

“it leads to constraining initiative, stifling creative thought processes and

promotes mediocrity rather than giant leaps in performance”. All forms

of annual target are doomed to failure. Far too often management spend

months arguing about what is a realistic target, when the only sure thing

is that it will be wrong. It will be either too soft or too hard.

I am a follower of Jeremy Hope’s work. He and his co-author Robin

Fraser were the first writers to clearly articulate that a fixed annual

performance contract was doomed to fail. Far too frequently

organizations end up paying incentives to management when, in fact,

they have lost market share. In other words, rising sales did not keep up

with the growth rate in the marketplace. As Hope and Fraser point out,

not setting an annual target beforehand is not a problem as long as staff

members are given regular updates about how they are progressing

against their peers and the rest of the market. Hope argues that if you

do not know how hard you have to work to get a maximum bonus, you

will work as hard as you can.

Just like a high jumper in the Olympics in order to win they have to

jump the highest. Having a predetermined height set in their minds will

only limit their performance.




Myth 2: We only need to forecast out to the current year-end

Typically corporate accountants have reforecast the year-end numbers

every month. This is flawed on a number of counts. Firstly, why should

one bad month, one good month translate into a change of year-end

position. We gain and lose major customers, key products rise and

wane; this is the life cycle we have witnessed many times. Secondly, the

forecast is a top-top forecast with little input and no buy-in from the

budget holders. Thirdly, two months before year-end management

appear to ignore the oncoming year. Fourthly management and the

Board know whatever number you have told them is wrong. You will

change it next month!

Myth 3: We could set monthly targets from the annual plan

As accountants we like things to balance and our work to be neat and

tidy. Thus it appeared logical to break the annual plan down into twelve

monthly breaks before the year had started. We could have been more

flexible. Instead we created a reporting yardstick that undermined our

value to the organisation. Every month we make management, all

around the organisation, write variance analysis which I could do just as

well from my office in New Zealand. “It is a timing difference” “We were

not expecting this to happen”, “The market conditions have changed

radically since the plan” etc.

Myth 4: Giving budget holders an annual entitlement made sense

Doing an annual plan is daft enough but to compound it with asking

budget holders what they want and then, after many arguments, giving

them an ‘annual entitlement’ to funding is the worse form of

management we have ever presided over.

The nine year old’s birthday cake

A clever parent says to Johnny, “Here is the first slice, if you

finish that slice, and are not going green around the gills and

want more, I will give you a second slice”. Instead, what we

do in the annual planning process is divide the cake up and

portion all of it to the budget holders. Like nine year olds,

budget holders lick the edges of their cake so even if they do

not need all of it nobody else can have it. Why not, like the

clever parent, give the manager what they need for the first

three months, and then say “What do you need for the next

three months?” and so on. Each time we can apportion the

amount that is appropriate for the conditions at that time.




Myth 5: We need to budget at account code level

What made accountants ever conceive that we needed to set targets at

account code level? It was done by our forefathers so we duly followed

in the well trodden steps. It makes no sense.

Having budgets at account code level has encouraged budget holders to

allocate expenditure to an account that that has room for it, thus at a

single stroke undermining the purpose of the G/L which is to account for

costs and revenue in the right areas.

Do you need a target or budget at account code level if you have good

trend analysis captured in the reporting tool? I think not. We need to

apply Pareto’s 80/20 rule and establish a category heading which

includes a number of G/L codes.

Myth 6 An annual plan needs to takes months to complete

The annual planning process is not adding value, instead it is

undermining an efficient allocation of resources, encouraging

dysfunctional budget holder behaviour, negating the value of monthly

variance reporting and consuming huge amounts of time from the

Board, senior management team, budget holders, their assistants and of

course the finance team.

When was the last time you were thanked for the annual planning

process? At best you have a situation where budget holders have been

antagonized, at worst, budget holders who now flatly refuse to co-

operate!

Like a laboratory rat we go down the same pathway each year to find

there is no cheese, no passing ‘Go’ and collecting £200, just mayhem.

The annual planning process may have worked for Julius Caesar but

certainly not for us.

The nightmare of three to four months arguing over resource allocation

when nobody knows the answer, the endless cut-back rounds, and the

game playing, the spend–it or lose-it-mentality is not befitting the 21st

century.

Myth 7: We had to use Julius Caesar’s calendar

Julius Caesar gave us the calendar we use today. It is not a good

business tool because it has divided up the year in uneven periods. With

the weekdays and number of weekend days, in any given month, being

different to the next month it is no wonder forecasting and reporting is

unnecessarily compromised.

Even if we are stuck, in the short term with reporting results on calendar

months we can and should base our forecasting models around a 4,4,5

quarter e.g. there are two four week months and one five week month

in a quarter. The model would them smooth back the numbers to the

correct working days for monthly targets.




Myth 8: The annual plan will be quicker this year

Each year I was involved in the annual planning process I thought I had

discovered the secret to cut months out of the process. I even had

budget holders on my side saying, “Yes we agree that four months is

ridiculous and we will cooperate.” As you all know the next annual plan

will be as worse as the last one because once the annual planning

process has begun budget holders commence their political gesturing. It

is just like Pavlov and his dogs.


How to implement quarterly rolling forecasting Copyright ©2015 Page 16


3. The foundation stones of a rolling forecasting

process

There are a number of QRF foundation stones that need to be laid down

and never undermined. You need to ensure all the construction of the

QRF model is undertaken upon the following foundation stones:

1. Abandoning processes that do not work

2. The QRF model should be built by in-house resources

3. Separation of targets from realistic forecasts

4. A quarterly process using the wisdom of the crowd

5. Forecast beyond year-end (e.g., six quarters ahead)

6. The monthly targets are set, a quarter ahead, from the QRF

7. A quarter-by-quarter funding mechanism

8. The annual plan becomes a by-product of the QRF

9. Forecasting at category level rather than account code level

10.The QRF should be based around the main events / key drivers

11.A fast light touch (completed in an elapsed week)

12.Built in a planning application – not in a spreadsheet

13.Design the planning tool with months that consist of four or five

weeks

14.Invest in a comprehensive blueprint

3.1. Abandoning processes that do not work

Management guru Peter Drucker frequently used the word

‘abandonment’. I think it is one of the top ten gifts Drucker gave us. He

said

“the first step in a growth policy is not to decide where and how

to grow. It is to decide what to abandon. In order to grow, a

business must have a systematic policy to get rid of the

outgrown, the obsolete, and the unproductive.”

He frequently said that abandonment is the key to innovation. He also

put it another way: “Don’t tell me what you’re doing, tell me what

you’ve stopped doing.”

In planning many of the processes are carried out, year-in year-out

because they were done last year. When staff question why do we do

this the answer being “There must be a reason”.

All the previous givens with regards forecasting need now to be

challenged and all the inefficient processes thrown out. Here is a list, by

no means complete of what needs to be abandoned:

Using Excel Forecasting in Excel, just because we

are good at it




At account code level forecasting in detail, at account code

level and to the dollar

Only forecasting to year-end Only forecasting to the current year-

end as if next year did not exist

An annual entitlement Giving budget holders an annual

entitlement, they have not got a clue

as what the next year is really going

to be, nor do we in Finance

Forcing numbers Forcing the annual plan to be the

same number that the Board want to

see - we have just lied!

A three month process A three month process when it can be

done in two weeks – both will be

wrong. You may as well be wrong

quickly!

Setting the monthly targets Setting the monthly targets from the

annual plan - since we cannot see

into the future this breakdown of the

annual plan has always been a stupid

activity

Written instructions Annual plan written instructions –

nobody reads them and if they say

they have don’t believe them.

3.2. The QRF model should be built by in-house resources

The project team must always design the model themselves. You need

to use the planning tool consultants more as advisors and trainers and

make sure you drive the mouse. The planning tools are relatively simple

to use providing the in-house staff have attended in-depth training.

If the model is built by the consultants, not only will the project cost

more money, you have the added risk of bringing someone who may not

fully understand your business, and who will endeavour to build you a

better annual planning model, the very thing you need to migrate away

from!

The in-house team has a better chance of designing a model that fits

your industry and your decision-making processes than an external

consultant. Consultants, with the best will in the world, cannot help but

design a model based on their prior experiences, which may be adrift of

techniques described in this white paper.

In other words it’s just like learning to drive a car, the team will need a

series of lessons and hopefully practise first on “quiet country roads”

(pilot the model) before they drive on the motorway (unleash the model

to all budget holders).

3.3. Separation of targets and realistic forecasts

Generating realistic forecasts rather than forecasts the board or senior

management want to achieve is vital. We need to get this foundation

stone agreed with the Board.




Dialogue with the board

You can say to the board, “Setting a stretch target is desirable but

you must accept that we might not be able to achieve this. We

understand that the bonuses might well be pegged against the goal

and we are not trying to lower the threshold to get the bonus, but

merely informing you of the performance gap so you can think

strategically about how we are to close the gap up.”

The board might want a 20 percent growth in net profit, yet

management might see that only 10 percent is achievable with existing

capacity constraints. The board then must make strategic decisions to

manage the shortfall. However, if the forecasting team reports what the

board wants to hear, they are simply hiding the truth. Exhibit 3.5 shows

what happens if the team reports what the board wants. Only in the final

quarter does the real situation become clear, a year-end performance

below expectations. In this example, the annual plan, which was

prepared in March for the new year that starts in July, is forced to match

the stretch target and subsequent forecasts in June, September and

December to keep up this charade. In reality, the truth was always a

shortfall, as the dark line in Exhibit 3.1 illustrates.

Exhibit 3.1: Hiding the performance gap

The fudged forecast

Mr Forecasting : "I have just updated the forecasts : the

forecast EBIT this month is $1.2m"

CEO: "Our budget shows EBIT of $2.0m: go away and review

the forecasts but make sure they show an EBIT of at least

$2m".

Mr Forecasting: " But when we did the budget we didn't

realise that we would have production problems and that the

domestic markets would suffer so much from the economic

downturn"

CEO: "Don't argue with me: review these forecasts as

instructed.... or else"

The end result might be that the forecast gets "fudged" to say

$1.5m or $1.6m.

0

50

100

150

200

Mar X

X

Jun X

X

Sep X

X

Dec X

X

Mar X

X

$ms Performance Gap for Year Ending 30/6XX

Annual plan target

Annual plan reforecast

The truth




3.4. A quarterly process using the wisdom of the crowd

A planning tool model should be designed with a view to involving

budget holders in updates four times a year. The goal is for them to buy

into the targets that they will report against and accept the new funding

level. Monthly forecasting is too costly and the benefits not worth the

effort. There will be too many oscillations in the forecast as shown in

Exhibit 3.2.

To achieve a bottom-up process, all budget holders should be able to

enter their data. Training and adequate support from forecasters is

needed and you should have sufficient licenses to enable budget holders

to enter data during the 2-3 day window for data entry.

In addition, I recommend extending the help offered by in-house

advisors to include some outside contractors who can support more

remote locations, or offer them remote virtual one-on-one training with

virtual meeting technologies.

Exhibit 3.2: quarterly re-forecasting

Many forecasts have little input and no buy-in from the budget holders.

Companies have, in order to save money, centralized data input within

the finance function. I call these forecasts “a top-top forecast,” whereby

the finance team talks amongst themselves and with senior

management but believes they do not have time to involve budget

holders. Such a centralized approach can slow down the forecasting

process, limits the budget holders’ buy-in to the planning tool and does

not take advantage of collective knowledge.

James Surowiecki wrote that “a large group of people are often smarter

than the smartest people in them.” Hence the term “wisdom of the

crowd was born”ii. In other words, a group’s aggregated answers to

questions that involve quantity estimation have generally been found to

be as good as, and often better than, the answer given by any of the

individuals in the group. Involving a “crowd” in planning and forecasting

can have a major positive impact on the process because:

Reforecasts of June year-end result

0

150

300

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

$ms

Monthly reforecast quarterly forecasts




� A great deal of trend information is being noted by those at the

workplace, such as unsold products that are piling up, products that

are being returned and customer comments.

� Groups are less motivated to forecast what management wants to

see.

� A small group of forecasters can only process a tiny fraction of the

information available whereas a crowd can take in an almost

unlimited “harvest of data.”

� Experts tend to have a bias of optimism, especially if they are

looking at sales from inside the company rather than from the

customer perspective. A very interesting paper has been written

about this called “Delusions of Success—How Optimism Undermines

Executives’ Decisions.”iii

3.5. Forecast beyond year-end (e.g., six quarters ahead)

Typically corporate accountants have reforecast only to year-end. Two

months before year-end management appear to ignore the oncoming

year. A foundation stone of a QRF process is forecasting for a rolling

period that passes through the year-end barrier. There are various

options as to how far forward you go, these include:

� Forecasts always two years ahead –this is particularly relevant

where the business is very seasonal and much activity happens in

the last quarter

� Forecast six quarters ahead

� Variations such as four or five quarters ahead

I advocate the six quarter ahead (18-month) rolling forecast regime, as

it has some substantial benefits that include:

� you see the full next year half way through the current year, e.g. the

third quarter forecast can set the goal posts for next year’s annual

plan

� the QRF is consistent each time it is performed, as opposed to

organisations who always look ahead for two financial years (the

QRFs will vary between 15 to 24 months)

� your annual plan is never set from a cold start as you have seen the

whole financial year in the previous quarter’s reforecast.

3.6. Monthly targets set, a quarter ahead, by the QRF

I use a sporting analogy to explain the folly of the monthly budget,

Exhibit 3.3. The annual plan is the establishment of goal posts at the

end of the pitch, the budget process is where we set 12 X 10 metre lines

to report against, see diagram. The problem is that the 10 metre lines

(the monthly budgets) are wrong as soon as the year has started. When

there is stoppage, a player fanning injury on cue, management come on

the pitch and ask “Why are you here you should have been over there?”

The reply from the team is “The ball is over here” and this report back

on progress is of the same use as our monthly variance commentary, in

other words useless.




4. The features of quarterly rolling forecasting

There are a number of better practices in quarterly rolling forecasting (QRF) and

these are set out below.

4.1. Recognise that it involves all Budget holders

A quarterly rolling planning process needs to involve all budget holders (BHs)

entering in their numbers directly into the planning tool application. To achieve

BH participation in the model there will need to be a roll out of training in the

application and attendance will need to be made compulsory by the CEO.

In addition some budget holders will need support every quarter to enter in their

forecast. This assistance needs to be achieved without extending the tight

deadline. To achieve this please read the later section on “expanding the

support team”.

Most forecasting models, built in excel, tend to have restricted consultation with

BHs as they have been built by an Excel guru who may well have had a skewed

view of the business operations.

4.2. Accurate revenue forecasting

With over 200 products and 2,000 customers how do you reasonably obtain an

accurate sales forecast? The answer lies by:

• applying Pareto’s 80/20 rule to the sales forecasting process.

• using the wisdom of the crowd

• decoupling sales performance payments from fixed annual performance

targets

• remembering to tell the Board what sales are likely to be made rather than

what they want to hear

Applying Pareto’s 80/20 rule to the sales forecasting process

Sales need to be forecast by major customer and major products. The rest of

the customers and rest of the products should be put into meaningful groups and

modelled based on the historic relationship to the major customers buying

patterns. See Exhibit 4.1 for a suggested format.

Many organisations liaise with customers to get demand forecasts only to find

them as error prone as the ones done in-house. The reason is that you have

asked the wrong people.

One participant told me that they decided to contact their major

customers to help with demand forecasting. Naturally, they were

holding discussions with the major customers’ HQ staff. On reflection

they found it better but still error prone so they went back “How come

these forecasts you supplied are so error prone”. “If you want

accurate numbers you needed to speak to the procurement managers

for our projects” was the reply. “Can we speak to them?” “Of course,

here are the contact details of the people you need to meet around

the country” With that a series of meetings were held around the

country. They found that these managers could provide very accurate

information and were even prepared to provide it in an electronic




friendly format. The sales forecast accuracy increased seven fold due

to focusing on getting the demand right for the main customers.

It is always best to approximate the size of the forest rather than count the trees

and recant the analogy of counting the trees, see previous section, to the

forecasting team to ensure you stay in the “helicopter” for the revenue forecast.

Major lessons learnt include:

Major customers You can forecast revenue more accurately by delving

into your main customers’ future demand patterns by

asking them “who should we speak to in order to get

a better understanding of your likely demand for our

products in the next 3 months and subsequent five

quarters.” Forecast the major products line-by-line. You would not identify a product if the revenue was

less than 5% of total sales in the year. Using

analytics then forecast the minor product purchases

in relevant groupings.

The other customers Forecast all non major customers by first looking at

their demand for the major products using analytics

to forecast their demand. As with major customers

use analytics to forecast the minor product purchases

in relevant groupings.

Products with recall risk Identify in the forecast all products with a significant

recall risk so you can quickly identify these and the

impact should a recall occur.

Branches Important to forecast through the major customers

to the organisation. One branch may be assigned the

responsibility to link to the customer and complete

the forecast for all relevant branches.

See Exhibit 4.1 for a suggested format for forecasting sales by major customer

and major products.

Using the wisdom of the crowd

The theory of “the wisdom of the crowd”, as discussed in the previous foundation

stones section, was tested by Best Buy, a leading US consumer electronics

retailer with these results:

� Gift card business revenue forecasts made by experts were 95 percent

accurate and the wisdom the crowd revenue forecasts were 99.5 percent

accurate.

� Holiday season sales revenue forecasts made by experts were 93 percent

accurate and the crowd’s revenue forecasts were 99.9% accurate.

As a result, at Best Buy the forecasts are now prepared by asking selected

“sages” in the business to provide an anonymous forecast directly into a system.

They are provided with some basic trend information with the incentive of the

recognition and a prize if their forecast is the nearest to the actual figure.x




Exhibit 4.1 Suggested Sales Forecast Model




In another example, an internet gambling organization had picked the winner in

each one of the US Senate elections. The favourite in each state was a direct

reflection of all the bets placed and a perfect representation of collective wisdom

of the crowd.

Convincing experts to adopt collective wisdom

Resistance from “experts” is likely when you suggest using the wisdom of

the crowd in place of their forecast. To convince them, you can take a page

from Best Buy’s book. Suggest two forecasts: theirs and one by selected

sages from around your business. Ask the sages, to forecast sales for the

whole organization based on what they are seeing in their areas. You can

tell them, “We have prepared some historic data for you and limited the

forecast to some key lines and the rest is summarized in groups. Please

place your forecast in the system. If your forecast turns out to be the most

accurate you will win a weekend for two at xxx resort.”

Each quarter, you then disclose the experts’ forecast versus actual and the

wisdom of the crowd versus actual. I predict that the experts will want to

duck for cover after a couple of forecasts highlight their inaccuracies. They

will ask, even plead, “Please put our forecast in with the wisdom of the

crowd.”

The wisdom of the crowd has implications on the design of the planning tool. You

can expect to accommodate possibly 20 versions of the revenue forecast and

then average them. This, however, should not be a problem because you are not

forecasting revenue by each line and by each branch.

Decoupling sales performance payments from fixed annual performance targets

To pay sales staff on a predetermined annual sales target has been broken since

commerce began. It is flawed logic and will only work when you can see into the

future and get it right. I would suggest that if this was so you would already be

retired in a tax haven with a super yacht and crew awaiting you next excursion.

It is far better to:

� design a relative measures process where sales staff are compared against

their peers with similar sized sales patches (have different league tables)

� compare regularly to your competitor’s performance so any loss in market

share is seen as inferior performance regardless as to whether sales are

higher than last year ( you will need to use test proxies for this )

� provide regular feedback to sales staff as to their progress, just like the

high jumper who knows how far off they are from leading the high jump

competition.

� skim off super profits as these will be needed in future years to pay

commissions and were not earned anyway as the phone just kept on

ringing. Visit my website.for a performance related pay paper.

If we do not decouple sales performance payments from fixed annual

performance targets you will have a fair degree of politics at play during and

after the annual planning process. You will have:

� endless arguments about how high to set the bar

� once set it is best for the sales team to keep on saying they can make it

rather than attract unnecessary heat for the executive

� month-end revenue figures will be manipulated as next month’s revenue is

pilfered to meet this month’s target

Tell the Board what sales are likely to be made rather than what they want to

hear




This foundation stone needs to be put in place in order to avoid inflated sales

forecasts. There is nothing wrong in having a big hairy audacious goal, doubling

revenue in the next three years, provided forecasts are not forced to make it

look like it is a reality.

4.3. Bolt down your strategy beforehand

Leading organisations always have a strategic workshop out of town for the

senior management team and their direct reports. The session is to look

forward. Normally Board members will be involved as their strategic vision is a

valuable asset. These retreats are run by an experienced external facilitator.

The key strategic assumptions are thus set before the annual planning round

starts, also the Board can set out what they are expecting to see.

4.4. As much pre-work is done as possible by the forecasting team

There is much pre-work that can be performed to reduce the effort in the five

day window. I have prepared a checklist in Appendix four. Here is an extract of

some of the work to be performed:

� Automate any additional expense categories you can e.g. where trend

analysis is as good or better than a budget holder’s estimate

� Complete payroll details and pre-populated all budget holders schedules

� Obtain up to date demand forecasts from key customers where possible

� Organise additional support to the forecasting team so that one-to one

support can be provided to all BHs (using local accounting firms - their

staff would have to attend the workshop)

� Establish schedule of who is to provide who with one-to-one support

during the forecast.

4.5. Hold a briefing workshop instead of issuing instructions

Never, I mean never, issue budget instructions for you already know instructions

are never read. Follow the lesson of a leading accounting team who always hold

a briefing workshop that is compulsory to attend. With technology today you can

also hold the workshop simultaneously as a webcast so budget holders in remote

locations can attend albeit electronically.

Hold a workshop on budget preparation covering the way to completely use the

planning tool, explaining why they do not need to forecast monthly numbers,

only quarterly, the 3 day window to use the planning tool, the daily update to the

CEO, the fact that late returns will be career limiting, stressing that the more

material categories should have much more detail and why you have automated

some of the categories, the help they will receive etc.

4.6. Expand your forecasting help team

Many budget holders will need one-to-one support. Yet I have said we are to do

this all in three working days. We thus need to expand the support team. There

are some suggestions:

� get all qualified accountants involved, even those not working in the finance

team e.g. this involves the CFO too

� ask the auditors to loan some audit seniors who will forever thank you for

being involved in an interesting task




� A planning tool independent from the general ledger provider might be a cheaper

and better option.

9.2. Step 7: Test planning tool applications & close the deal

After you have reduced the number of planning tool providers to the best three

applications, request from the providers that they demonstrate how their application

can operate with your organization’s key drivers. Agree to pay 2-3 days of

consultancy fees to each provider and evaluate results. Paying the fees enables you to

retain copies of the work. In reality, the providers will be putting in much more than

2-3 days of effort.

Getting the selection panel to see the presentations

Nothing is more frustrating to a planning tool provider, who has worked hard on the

proposal, than not to be given the courtesy of a fair hearing. Frequently, in proposal

situations, one party is on the inside track, usually someone who might have already

completed an assignment for the client. However, you should listen to the other

proposals for the following reasons:

� You can gain insight into how the model can work.

� A particular planning tool might not have a good local support provider, and this

should be counted against them.

� If the presentation is very complex, you might be dealing with a bunch of “rocket

scientists,” as I call them, who see complexity in everything. This view is the last

thing you need with a planning tool application.

� The ability of the planning tool provider to understand the foundation stones of

the desired planning system is a key criterion.

Making the final selection

Everyone has their own ways of making the final selection and hence I leave this in

your capable hands. To assist you, I have set out in Appendix five a checklist you can

use when evaluating the short-listed planning tool providers.

In the Balance case study they undertook the following tasks

• Having selected developers complete the blueprint with their solution

• Gain demonstration of solution

• Negotiate the pricing terms

• Close deal subject to Board approval

• Gain Board approval for capital spend supported by comprehensive business case




10. Implementing quarterly rolling forecasting in a planning tool

Whilst all implementations will be unique they should have many common features just like a fingerprint. This section

provides the reader with some useful templates.

This implementation plan, see Exhibit 10.1, should help those about to start an implementation. One key feature is the

time-frame. A rolling forecast implementation is I believe a five to six month process if you do not own an appropriate

planning tool.

Exhibit 10.1: the proposed steps to implement rolling forecasting in a planning tool

Note: timings for an organisation over 500 FTE

The QRF implementation checklist, see Appendix three, is an evolving tool, and should be a useful checklist helping

ensure that while you are juggling the balls you do not drop the ones that matter.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8

Project 1/2 months pre 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd

8 Training of in-house designated experts on the new application

9 Build new model using in-house teams with external advice

10 Pilot planning tool on two business units

11 Roadshow of new rolling forecast process

12 Roll out training of PT (using in-house experts)

13 Complete QA processes on the forecasting model in the PT

14 Commence first quarterly rolling plan run

15 Review process and ascertain lessons learnt

Build and

test model

Rollout

use

Sell concept, build in-house

team, planning tool

acquisition




11. Build and test the model

Having bought a planning tool it is now time to build the model based on the

blueprint. The testing will be comprehensive on three business units. The three

tasks are set out in Exhibit 11.1 below.

Exhibit 11.1: the proposed steps to implement rolling forecasting in a planning

tool

11.1. Step 8: Training of in-house designated experts

Select at least four in-house staff to become experts on the forecasting system

(do not forget the CFO). Over time you will find these staff will be head hunted

so always maintain this level of in-house competence. Not only will this save you

money in the long run you will have the system you need.

Many programmers working for application providers are not familiar with

quarterly rolling planning. They will build you a better annual planning tool,

which is not what you will need.


• Ensure dedicated business resource appointed to team

• Conduct initial training to ensure familiarization with solution toolset

• Ensure business project manager appointed and developer appoints a

project manager

11.2. Step 9: Build the model based on the blueprint

Build the model using the foundation stones and features discussed in earlier

sections. The team should be knowledgeable in the lean (agile) techniques

including:

• Post-it re-engineering

• Scrum meetings

• Kanban boards

11.3. Post-it reengineering a forecasting process

This can be a complex and expensive task or a relatively easy one, the choice is

yours. Many organisations start off by bringing in consultants to process map the




9 Build new model based on the blueprint

10 Pilot planning tool on three business units


12 Roll out training of planning tool using in-house experts




Build and

test model


team, planning tool

acquisition

Rollout

use




existing procedures. This is a futile exercise as why spend a lot of money

documenting a process you are about to radically alter and when it is done only

the consultants will understand the resulting data-flow diagrams!

The answer is to “Post-it” re-engineer your month-end procedures in a workshop;

see Exhibit 11.2 below for an outline of the workshop in Appendix 7. This

workshop is also provided electronically to you.

Exhibit 11.2: Agenda for a Post-it re-engineering workshop

Re-engineering forecasting and planning

Agenda for workshop

Date and Time: ____________

Location:

Location: xxxxxxxxxxxx

Date and Time: xxxxxx

Suggested attendees: Budget committee, selection of business unit heads,

all management accountants, and a selection of budget holders involved in

forecasting.

Attendees after this workshop will be able to:

• discuss and explain to management why Xxxxxxx should adopt QRP

• use better practices to streamline current forecasting bottlenecks

• describe better practice forecasting and planning routines

• recall all agreements made at the workshop (these will be documented)

Pre work: Teams to document forecasting procedures on post-it stickers.

One procedure per post-it. Each team to have a different colour post-it.

See attached “post-it re-engineering instructions

Some tips on running a ‘post-it’ re-engineering session

Stage 1 Invitation

Having set the date, get the CEO on board and ask them to send out the invites.

The finance team needs to send out instructions, a week or so prior to the

workshop, outlining how each team is to prepare their post-it stickers, see Exhibit

11.3.




Exhibit 11.3: Post-it re-engineering instructions to be sent out to attendees a

week prior to the workshop

You have been asked to attend a workshop on re-engineering the forecasting

processes. In order to do this we need you to prepare a list of all the processes

you undertake as a team.

This process is quite simple, all it requires is:

� Each team to list all their processes on to the “Post-it” stickers allocated to

them prior to the workshop and document each process with a whiteboard

marker pen as set out in the example below. It is important that these

stickers can be read from 4 to 5 metres.

Day-5

Finalise Sales Forecast

� One procedure/process per Post-it (please note, every Excel is a process)

� State when it is done—time scale is week 1 commence planning, week 13 or

so finalise plan.

Set up a schedule to ensure all the main teams have a unique colour of post-it

sticker, see Exhibit 11.4.

Exhibit 11.4: Allocation of post-it stickers so every team has a unique colour

Budget holders Yellow

Payroll Green

Budgeting & Forecasting team in Finance Red

Sales Forecast Purple

Budget Committee Blue

G/L & Reporting team in Finance Light yellow

CAPEX Pink

Production team etc

Board etc




Stage 2 Standing up around the whiteboard

Assemble everyone to go through the agenda items starting off with a

introduction to best practice. When you get to the stage in the agenda for the

Post-it re-engineering you ask a representative of each team to place the “Post-

its” in time order under column headings Day - 2, Day - 1, Day+1, Day+2, and

so forth using a white board. When all the post-its are on the board it will look

like Exhibit 11.5.

Then remove all desks, near the whiteboard, and ask all the staff present to

come to the whiteboard, standing in semi circles, hopefully with the “height

challenged” staff at the front. The standing-up is critical as it brings everybody in

sight of the stickers and, more importantly, as the meeting progresses ensures

swifter and swifter agreement as nobody will enjoy standing for over 2 hours.

Exhibit 11.5: Post-it re-engineering on a white board

Stage 3 Missing processes

Then you ask “What is still missing from the list?” There will always be a

forgotten process. I probe until at least two additional processes are put on the

board and I ask each person in turn to acknowledge that they are in agreement

that the whiteboard represents all the processes.

Stage 4 Removal of duplication

I then ask “What processes have two stickers when there should only be one?”

(we want to remove any duplication). These stickers are removed, see Exhibit

11.6.

Stage 5 Abandonment

We then ask “What processes do we not need to do anymore and therefore

should abandon?” There is often a pause here as staff look bewildered. Why

would we do something that was not required they all are thinking. At this stage

I talk about Peter Drucker, the great management thinker’s abandonment

philosophy, discussed in section one of this paper.




Exhibit 11.6: Abandoning processes by removing the “post-it” stickers

I recommend that you buy a dozen movie vouchers before the workshop so you

can give one to every attendee who points out a process that can be removed as

it is not necessary (the process was done because it was done last month)—each

procedure that is removed is like finding gold because it means less work, fewer

steps. After the first movie ticket handout you will notice a greater focus from

the attendees!

I will spend up to two hours to ensure all the superfluous processes are removed.

Stage 6 Rescheduling activities

Reorganize the key processes and bottlenecks based on better practice (e.g., the

foundation stones and features of QRF) and now reschedule tasks that can be

done earlier. You will find it hard to justify an annual planning process longer

than two weeks.

With each rescheduling of a process it is important to seek consensus. Invariably

some members of the team will believe the world will end if the cut-off is moved

earlier. I simply question the logic and allow a dissenting group to have their

objections noted. I then move the sticker to where the majority have agreed,

see Exhibit 11.7.

After 45 minutes of standing these disagreements will recede due to peer

pressure.




Exhibit 11.7: Moving the bottlenecks to the earliest time they can be completed

Stage 7 Spreading the load

Look at Week-1 steps as you may have too many. Move the non time critical

ones between Week-2 and Week+1 to better spread the workload.

Document the “post-it” stickers on a spreadsheet. This is the only record you

need. Any person, who for health reasons, cannot stand, can be assigned this

documentation process.

You will find it hard to justify a rolling forecast taking longer than any day +5!

You can review a YouTube video of me demonstrating a ‘post-it re-

engineering exercise on www.quickmonthendreporting.com.

11.4. An introduction to SCRUM

This is a technique that was developed to radically reduce the time it took to

write new software applications. It recognized that teams in very intense work

periods do not always function properly.

Scrum (an Agile technique) – started off as a rethink of project management by

Jeff Sutherland, a fighter pilot in Vietnam. He saw that combat fighter planes

and big projects had a lot in common. They had to avoid being shot down. He

noticed that large projects were:

� typically late with lots of pressure and no fun

� run even later as more resources were applied to help speed them up.

Typically the new staff were “tripping over each other” and having long

dysfunctional meetings, going nowhere quickly

� frequented with duplication of effort

� often over planned only to find the “game had changed”

� constantly hitting a road block which the team members frequently were

unable to surmount as they did not have the skills or internal respect

within the organisation.

Sutherland had a challenge to produce a new product in six months. He

discovered:

� a 1986 HBR study "The New Product Development Game" by Hirotaka

Takeuchi and Ikujiro Nonaka that noted best teams looked like sports

teams, all linked together, overcoming obstacles with intensity




� discovered a company called Borland who thrived on - communication

saturation - a daily meeting

� developed SCRUM and was successful.

The features of SCRUM are best illustrated in Exhibit 11.8

Exhibit 11.8: How SCRUM works

Instead of over planning one needs to have a clear vision of what you are after.

With this shared vision you take a small chunk of work, saying, ”If we deliver this

feature we will progress the project. We thus do not need a massive project

schedule befitting an Apollo space programme”.

The key is that this chunk is about two weeks of effort and is an isolated

standalone part of the project that can be signed off by the customer as “yes that

is what I want”. This chunk is called a sprint.

Each day the team’s members delivering the sprint meet in a stand-up meeting.

They are asked to talk about:

� What they did yesterday?

� What are they doing today?

� What are your road blocks which are barriers to progress?

Their debrief is to take no more than a minute or so and some teams even have

a dumb bell to be held out with the rule you can only talk as long as you can hold

it up. The team leader, renamed the “scrum master” notes all the road blocks

and immediately sets about removing them with an appropriate phone call or

walkabout “Pat, please will you make time this morning to see my corporate

accountant?. I understand Sam has being trying, for the last few days, to meet

you. This is now holding up the year-end and the CEO and auditors will soon be

on mine and your back shortly if we cannot resolve the issue today”.




At the end of the session the group end the session touching fists, a homage to

the source of this technique.

This scrum does many things, it replaces loads of emails, as the team members

get to know what has been done and going to be done and by whom. It makes

everyone accountable. There is no place for a cruiser.

Visit Jeff Sutherland’s YouTube presentation to understand more details. The

following presentations will help you to understand more about this great

technique.

11.5. Kanban Board

Here we need to adopt visual control techniques which are part of the lean or

agile movement.

Creating a kanban board to visually manage an implementation is a great way to

increase your overall effectiveness and efficiency. Kanban is also a great way to

instil a sense of accomplishment among a team. Let's take a look at why this is.

A kanban board is a visual process and project management tool that helps

teams organize and manage their work. Kanban boards allow teams to visualize

their work and understand what is going on at a glance. Using note cards or

sticky notes to represent work items, you can show any sized body of work such

as a project (involving numerous tasks) or a task (usually involving only one

person). Different colours are for different staff, or work groups. Lanes can be

used to represent backlog, doing, or done as shown in Exhibit 11.9.




Exhibit 11.9: Kanban board used to help staff manage daily workflow

Kanban boards visually show the work in progress. This way, everyone is kept in

the loop. It is particularly powerful when staff hold daily SCRUM meetings which

are stand–up 15 minute meetings first thing each morning.

Kanban boards work well for any type of work. It's so flexible that you can start

with whatever process you already have.

The Kanban method uses a pull system. Instead of trying to do 10 things at once,

manage your personal tasks by "pulling" in new work only when you are done

with the current work.

Kanban boards show a team's accomplishments. Have you ever had a hard time

explaining to your boss what you're working on because you have so many things

on your "to-do" list that you don't know where to begin? By showing him your

Kanban, he will instantly see all of your work and understand your workflow.

11.6. Step 10: Pilot planning application on three business units

Pilot the planning application on three business units (BUs) as advised by Peter

Drucker. Drucker pointed out one pilot will never be enough as all the employees

will point out that the pilot was not representative. Two is better but why not

three. The greatest management thinker of all time is seldom wrong.

These need to be carefully selected. You want BUs who have a good relationship

with the team, the BU leader is on the focus group committee and is therefore

supportive of the project, and a BU who has used technology well in the past.

It is important to fine tune the PT based on this run before the rollout to all other

business units.


• Carefully select pilot business units – they must be supportive to the

solution and have had been involved in the scoping phase

• Change management has a significant role in this phase – communications

and business solution

• Use business developer to support pilot not external developer




12. Rollout use

Having built the model based on the blueprint and thoroughly tested it in three

business units it is now time for the rollout. The five tasks in the rollout are set

out in Exhibit 12.1 below.

Exhibit 12.1: the proposed steps to implement rolling forecasting in a planning

tool

12.1. Step 11: Road show of new rolling forecast process

The PT team will prepare a road show presentation with the help of a PR expert

and then test the presentation in front of the PR expert and some of the focus

group members. The road show will be delivered by members of the SMT

supported by the project team. For larger organisations there may be two or

three travelling road shows travelling at the same time.

After the road show there will be a workshop so that budget holders learn how to

calculate costs at category levels instead of at account code level. The areas

where detail is required will be explained e.g. personnel costs, revenue by key

customers etc.

It is important that you test all the workshop exercises so they create the

anticipated learning experience with the budget holders.

As the road shows are presented make improvements based on feedback forms

which have been given out at each presentation. Ensure you are making

significant changes rather than simply minor ones. Avoid the temptation to make

cosmetic changes as the audience will not benefit from these and it will require

expensive reprinting of handout material.

It is important to explain that budget holders are to give realistic forecasts rather

than what they think management wants to hear.


• No surprises – communications in advance emphasizing the why as well as

to the what

• Outline the long term requirements of forecasting emphasizing the benefits

to the users and to the business




9 Build new model based on the blueprint

10 Pilot planning tool on three business units


12 Roll out training of planning tool using in-house experts




Build and

test model


team, planning tool

acquisition

Rollout

use




Appendix six: Delivering bulletproof PowerPoint presentations

This is a skill you need to adopt before you can be an effective manager. So it is best to

start now. I will assume that you have attended a presentation skills course, a

prerequisite to bulletproof PowerPoint presentations. The speed of delivery, voice levels,

using silence, and getting the audience to participate are all techniques that you need to

be familiar with and comfortable using.

There are at least 25 rules for a good PowerPoint presentation:

Prepare a paper to

go with the

presentation

� Always prepare a paper for the audience covering

detailed numbers and so forth so that you do not

have to show detail in the slides.

� Understand that the PowerPoint slide is not meant

to be a document; if you have more than 35 words

per slide, you are creating a report, not a

presentation. Each point should be relatively

cryptic and be understood only by those who have

attended your presentation.

Presentation planning � Last-minute slide presentations are a career-

limiting activity. You would not hang your dirty

washing in front of a hundred people, so why

would you want to show your audience sloppy

slides? Only say “yes” to a presentation if you have

the time, resources, and enthusiasm to do the job

properly.

� Create time so that you can be in a “thinking

space” (e.g., work at home, go to the library, etc.).

� Map the subject area out in a mind map and then

do a mind dump on Post-It stickers covering all the

points, diagrams, pictures you want to cover.

Have one sticker for each point. Then you place

your stickers where they fit best. Using stickers

makes it easy to re-organize them. This will lead

to a better presentation.




� Presentation

content

� At least 10 to 20% of your slides should be high-

quality photographs, some of which will not even

require a caption.

� A picture can replace many words; to understand

this point you need to read Presentation Zen:

Simple Ideas on Presentation Design and Delivery

by Garr Reynolds,xiv and Slide:ology: The Art and

Science of Creating Great Presentations by Nancy

Duarte. xv

� Understand what is considered good use of colour,

photographs, and the “rule of thirds.”

� For key points, do not go less than 30-pt-size font.

As Nancy Duarte says, “Look at the slides in the

slide sorter view at 66% size. If you can read it on

your computer, it is a good chance your audience

can read it on the screen.”

� Limit animation; it is far better that the audience is

able to read all the points on the slide quickly

rather than holding them back.

� Use Guy Kawasaki’s “10/20/30 rule.” A sales-pitch

PowerPoint presentation should have ten slides,

last no more than 20 minutes, and contain no font

smaller than 30 pt.

� Be aware of being too cute and clever with your

slides. The move to creating a lot of whitespace is

all very well, provided your labels on the diagram

do not have to be very small.

� Never show numbers to a decimal place nor to the

dollar if the number is greater than 10,000. If sales

are $9,668,943.22, surely it is better to say,

“approx. $10 million” or “$9.6 million.” The precise

number can be in the written document if it is

deemed worthwhile.

� Never use clipart; it sends shivers down the spine

of the audience and you may lose them before you

have a chance to present.

� Use technology � Where possible, if you are going to present on a

regular basis, make sure you have a Tablet PC,

which gives you the ability to draw when you are

making points. This makes the presentation more

interesting, no matter how bad you are at drawing.

� Have a simple remote mouse so that you can move

the slides along independently of your computer.

� Practise, practise,

practise

� Practice your delivery. The shorter the

presentation, the more you need to practice. For

my father’s eulogy, I must have read it through 20

to 30 times. Each time breaking down at a different

point, I even had my brother as a backup in case I

was unable to deliver it. He sat in fear throughout




the whole service. However, on the day, all the

practice paid off and I was able to deliver a worthy

eulogy—one that has been commented on by many

as the best they had ever heard. The point I am

making is that the best speech I have ever

delivered is the one I prepared the most for.

� Presentation itself � Bring theatrics into your presentation. Be active as

a presenter, walking up the aisle so that those in

the back see you close up, vary your voice, get

down on one knee to emphasize an important

point; have a bit of fun and your audience will, too.

Very few things are unacceptable as a presenter.

� Always tell stories to relate to the audience,

bringing in humour that is relevant to them. A

good presenter should be able to find plenty of

humour in the subject without having to resort to

telling jokes. No doubt, some of the audience have

heard the jokes and would rather hear them from a

professional comedian.

� Make sure your opening words grab the audience’s

attention.

� Understand Stephen Few’s work on dashboard

design if you are using graphs.

� Always remember the audience does not know the

whole content of your speech, particularly if you

keep the details off the slides; if you do leave some

point out, don’t worry about it—they don’t know or

would not realize the error.

� If there has been some issue relating to

transportation, technology, and so forth that has

delayed the start, avoid starting off with an

apology. You can refer to this later on. Your first

five minutes is the most important for the whole

presentation and must therefore be strictly on the

topic matter.

� Greet as many members of the audience as you

can before the presentation, as it will help calm

your nerves, and it will also give you the

opportunity to clarify their knowledge and ask for

their participation such as at question time. The

other benefit is that it confirms that nobody in the

audience would rather be doing your role, so why

should you be nervous?

� If you are delivering a workshop at the end shake

hands with as many of the audience as possible by

positioning yourself by the door when the audience

leaves. This develops further rapport between

presenter and audience.




Appendix seven: The one-day focus group workshop

Location: xxxxxxxxxxxx

Date and Time: xxxxxx

Suggested attendees: Budget committee, selection of business unit heads, all

management accountants, and a selection of budget holders involved in forecasting.

Attendees after this workshop will be able to:

• discuss and explain to management why Xxxxxxx should adopt QRP

• use better practices to streamline current forecasting bottlenecks

• describe better practice forecasting and planning routines

• recall all agreements made at the workshop (these will be documented)

Pre work: Teams to document forecasting procedures on post-it stickers. One

procedure per post-it. Each team to have a different colour post-it. See attached

“post-it re-engineering instructions

Requirements: event secretary, lap tops x2, data show, white boards x2

8.30 am Welcome by CFO, a summary of progress to date at Xxxxxxx,

an outline of the issues and establishing the outcome for the

workshop.

8.40 Setting the scene - why clever organizations are not involved in

the annual planning cycle—a review of better practices among

public and private sector organizations. Topics covered include:

• Why annual planning is flawed and the rise of the Beyond

Budgeting movement

• Foundation stones of quarterly rolling forecasting and planning

• Benefits of QRP to the Board, SMT, finance team, and budget

holders

• Better practice stories

• Current performance gap between Xxxxxxx and better practice

• Some of the building blocks are already in place at Xxxxxxx

• Some better practice features within Xxxxxxx’s forecasting

process

• How the annual plan drops out of the bottom-up quarterly

rolling forecasting regime

• Impact of assigning funds on a quarter-by-quarter basis

• Impact on monthly reporting

• How each subsequent forecast works

• Involvement of SMT in a forecasting process

9.40 Workshop 1: Analyzing the current pitfalls of Xxxxxxx’s

forecasting. Separate teams look at the key pitfalls and how

they can be overcome.




10.15 Morning break.

10.30 Workshop 2: Mechanics of a rolling forecasting. Workshop

where separate teams look at the key components:

• Who should be involved in a bottom-up forecasting process

• Potential pitfalls

• Reporting needs

• When can it be implemented

• Training requirements

• What cost categories should be forecast (higher than G/L

account code)

• Project structure

11.00 Workshop 2: Workshop on “post-it” re-engineering of

the Annual Planning process. During the workshop we

analyze the bottlenecks of the forecasting process. In this

workshop we use “post-its” to schedule the steps (e.g., yellow-

budget holder activities, red-forecasting team activities, blue-

Budget Committee activities during the forecast).

12.15 Lunch at venue.

12.45 Feedback from work groups on both workshops and action plan

agreed (document deadline date and who is responsible).

Individuals will be encouraged to take responsibility for

implementing the steps.

1.15 The team prepares a short presentation of the key steps they

are committed to making.

2.00 The team presents reports to an invited audience on what

changes they would like to implement and when. They can also

raise any issues they still have.

Suggested audience: all those who attended the setting

the scene morning session

2.30 Wrap up of workshop

i Jeremy Hope and Robin Fraser, Beyond Budgeting: How Managers Can Break Free from

the Annual Performance Trap Harvard Business Press, 2003

ii Surowiecki, James. The Wisdom of the Crowds. Anchor, 2005.

iii Lovallo, Dan and Kahneman, Daniel “Delusions of Success –How Optimism Undermines

Executives’ Decisions” Harvard Business Review, July 2003

iv Jeremy Hope Reinventing the CFO: How Financial Managers Can Transform Their Roles

and Add Greater Value, Harvard Business School Press, 2006

v David Magee “How Toyota Became #1 – Leadership Lessons From The World’s Greatest

Car Company” Penguin Group 2007

vi Jeremy Hope Reinventing the CFO: How Financial Managers Can Transform Their Roles





vii Jeremy Hope Reinventing the CFO: How Financial Managers Can Transform Their Roles


viii Rickard Warnelid, “Reducing the Risk in Excel Risk Modelling,” CompAct, January 2011

ix Parmenter, David “Quick month-end reporting, by day three or less” White paper,

www.DavidParmenter.com, 2014 x Michael J. Mauboussin, Think Twice: Harnessing the Power of Counter intuition. Harvard

Business Review Press, 2012

xi David Parmenter. How to implement a forecasting and planning tool– and get it right

first time , Whitepaper, www.davidparmenter.com, 2014 xii John Kotter Leading Change, Harvard Business Review Press; 2012

xiii Hamel, Gary, with Bill Breen, “The Future of Management” Harvard Business Press,

2007 xiv Garr Reynolds, Presentation Zen: Simple Ideas on Presentation Design and Delivery,

New Riders, 2008. xv Nancy Duarte, Slide:ology: The Art and Science of Creating Great Presentations,

O’Riley, 2008.

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