In a recent Institute of Business Forecasting virtual town hall, Patrick Bower, Fazlur Rahman of Kraft Heinz, and Prevedere CEO, Rich Wagner discussed the evolution of traditional business planning and the critical role of intelligent forecasting, AI, and external data in future forecasting.
One of the most significant impacts of the pandemic on business planning was the widespread realization of just how many external factors can affect business performance and planning. Throughout 2020, the business environment was constantly changing, and leading indicators were difficult to identify or track, presenting significant challenges to forecasting. In many ways, traditional planning methods simply stopped.
While uncertainty remains a common theme in 2021, more data and tools are available to help businesses find their footing in the ever-changing environment. In the discussion, Rich Wagner explained that during the pandemic, “it’s not just what you do internally… but it’s consumer behavior, it’s economic conditions, it’s climate, now supply chain issues. All these things are outside your four walls.”
The COVID-19 pandemic merely highlighted and accelerated the need for a revolution in business planning. Patrick Bower defined this shift in planning as a movement into “a more quantitative and less judgemental space,” meaning planning will rely more on statistical models and less on assumptions or intuition alone. Even before the pandemic hit, some businesses started to identify the holes in their traditional forecasting methods. Notably, this often tied back to the idea that traditional business planning centered around internal intuition or insights and historical data. While these are certainly valuable components of forecasting, they only provide part of the bigger picture.
While internal knowledge is critical in providing context and grounding for forecasts, business planning that only relies on internal insights can be problematic. Successful business planning involves leveraging and integrating every relevant data point to create a cohesive picture. The combination of internal and external data is an essential piece in this process. A truly holistic forecast will integrate the power of external data with the expertise and knowledge of the internal team. Wagner highlighted that a “forecast shouldn’t be just one thing versus another; for us, it’s an ingredient.” The shift towards intelligent forecasting does not mean discarding existing planning models completely but rather leveraging them in a new way. Intelligent forecasting is best used as an extension of a business’s current model.
As we head into a new, post-pandemic normal, the future is still largely unknown. Businesses are still facing massive amounts of uncertainty, and the new normal is undefined. Moving forward, the only thing that companies can control is their own business planning methods. As the new normal begins to take shape, it’s clear that those that invest in predictive analytics will be best prepared to face the uncertainty. Intelligent forecasting platforms, such as Prevedere’s, provide businesses the tools and technical capacity to capture the complete picture in business planning. The result is a more accurate, more reliable, and more powerful forecasting model.