Planning and Forecasting

Planning focuses on defining objectives, laying out strategies, and allocating resources, while forecasting uses historical data and predictive analytics to anticipate revenues, costs, demand, and other business metrics. Planning and forecasting can and should be executed at multiple levels: by department, region, group, entity, and even product line and SKU levels.

Typically, planning and forecasting is a process of defining corporate actions based on past and present data trends. To create a plan is to detail KPIs and events that should lead up to reaching a specific objective. Since forecasts are predictions of future events, plans lean heavily on forecasts to inform the decision making process.

There are a number of common elements you’ll find in a plan, no matter what department, level of the organization, project, or product it serves:

• Budgets: Budgets are the financial guardrails for a specific period or project. Typically, they outline expected expenses and resource requirements and set spending limits to achieve objectives while staying within the financial plan.
• Financial and operational targets: Plans typically set measurable objectives for both financial performance and operational outcomes. These targets act as a barometer for how much revenue a project should generate, how much it should cost, and which non-financial objectives it aims to achieve.
• Revenue estimates: Plans should outline expected income from sales, services, or other revenue streams and work backward from these figures to guide resource allocation.
• Cost projections: Plans forecast anticipated expenses, including fixed and variable costs, to ensure budgets are realistic and resources are allocated efficiently.
• Workforce: Plans should outline the staffing levels, skills, and labor costs required in relation to expected demand, ensuring human resources are neither over- nor underutilized.
• Supply chain planning: Many plans include supply chain requirements. Supply chain plans outline expected demand, inventory needs, production requirements, and distribution plans to ensure service levels are met while controlling costs.
• Scenario models: Multiple planning scenarios help teams understand how changes in assumptions, market conditions, or operational variables could impact outcomes and allow them to plan mitigations if those scenarios occur.
• What-if analysis: It is useful to stress-test alternative assumptions and conditions so teams can understand potential risks and the impact of “what-if” scenarios on performance and resource requirements.
• Key performance indicators (KPIs): Plans should clearly define how success will be measured. By tracking actual results against forecasts and plans, identifying variances, and highlighting performance drivers, KPIs determine whether a project has met its goals and help improve future planning accuracy and decision-making.

While forecasting processes will differ depending on whether you’re creating a demand forecast or a workforce forecast, most forecasting efforts follow a similar workflow:

1. Define the objective and scope: What are you forecasting? Over what time horizon? And at what level of detail? 
2. Data collection: What historical data is needed to inform the forecast? In addition to financial data, what operational data could impact the forecast? What about external data, such as market analysis or environmental factors? What assumptions and business drivers will influence outcomes? Once these questions are answered, data should be normalized to ensure consistency. 
3. Select a forecasting method: How will you create this forecast? Will you use a driver-based model, a statistical model, or a scenario-based approach? 
4. Generate the forecast: Depending on the software you use, this step can be as simple as clicking a button to run an automated model or as complex as manually orchestrating statistical methods, assumptions, and calculations across multiple spreadsheets. 
5. Review and refine: Once the forecasting period has closed, what is the variance between the forecast and actuals? What can be changed to refine assumptions and improve future forecasts? 

CCH Tagetik is an extended planning solution that integrates financial, operational, and supply chain planning. It supports rolling forecasts, scenario modeling, and KPI tracking, giving finance and operational teams a single platform to align plans, anticipate risks, and make confident, data-driven decisions.

Using CCH Tagetik, organizations gain the insights and flexibility needed to forecast accurately, adapt quickly, and optimize performance across the enterprise.