In today’s environment, purchasing decisions are under increased scrutiny especially from the Finance Team. Financial Controllers and Finance Directors need solid numbers based persuasion. The investment return must obvious and the cashflows, cost, ROI, clearly demonstrated. Stands to reason.
Financial modelling and business intelligence from MXI Software can convert data into real business advantage using financial modelling software such Quantrix, Crystal Reports. Vendors need a compelling business case for CFO’s and purchasing committees. Model-based selling is the next level approach offering that opportunity, especially for high-value products and services that deliver long-lasting returns and benefits.
Model-based selling is not a new concept; however, it has never realized its potential due to technology and perception constraints. Sales executives have historically employed
spreadsheets to present figures and charts to prospective clients. However, the reliability of the model can be called into question by the closed nature of spreadsheets. Complex, linked worksheets with cryptic formulas are frequently perceived with suspicion due to the lack of transparency. Spreadsheet models can be percieved as being contrived to support the sales executives’ claims rather than present an objective business case. Sales executives will occasionally struggle explaining the inner workings of spreadsheet models to the prospect’s satisfaction. Quantrix offers a transparent, flexible tool that is ideally suited to model-based selling.
Key benefits of Quantrix include the ability to: A) Clearly present the business case using NPV, ROI, simple payback, net cash flows, tax benefits, and other calculations and metrics. B) Demonstrate the full range of configurations, customizations and other variables with “what if” scenarios. C) Present customized configurations in real time. D) Rapidly prototype solutions and respond to proposals. E) Build confidence and trust with highly transparent, understandable models. F) Create professional-looking, interactive dashboards and visualizations. G) Integrate multiple data sources to populate model with actual, timely data. H) Refine and improve model with data-driven analytics and feedback.
Vendor’s products and services are frequently evaluated according to Internal Rate of Return (IRR) or Return On Investment (ROI). If the acquisition does not meet a certain threshold or compare favorably to other investments, then the purchase does not move forward. Quantrix enables users to build models that incorporate key financial metrics including ROI, IRR, NPV, payback and others. Financial Controllers like to see where the numbers came from, it is much easier to demonstrate how the logic was constructed. The business logic and cell values used for these calculations are transparent and inscrutable, thus giving the sales executive the confidence to explain and stand behind the model.
Since Quantrix models are created with plain-language formulas, it is very easy for prospects to understand and validate the logic. Quantrix models often reduce the number of formulas by over 85%. Interested Take the Excel Challenge and let us show how Quantrix will work effectively for you. Excel Challenge
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1. Forecast at the right level.
Sales Forecasting accuracy can be greatly improved by deciding on the right level to sales forecast at. Is a forecast at SKU level appropriate? In many environments it is not and greater detail must be made available by segmenting history and forecast by channel, sales region, or even customer. In other cases companies are currently forecasting at customer level when a more accurate forecast could be achieved with less effort by working at a higher level. Send us your sales history for real demo
2. Review forecasts at aggregate levels
When reviewing item level forecasts it is all to easy to "pad" each item's forecast just in case. It is not until the item level forecast is aggregated and reviewed at a brand or product category level that the cumulative effect of this "padding" is exposed in the form of a clearly unachievable growth in forecast over history. Aggregate level forecast review is an essential part of the forecast review process because it allows for a "sanity check" of the forecast compared to history and preferable company budgets. Any anomalies must be identified and corrected before putting the forecast into the inventory planning system.
3. Review forecast by exception
20% of your products are the important ones so why not use ABC analysis to focus on the products which are most important first while the mind is still fresh? Why not use deviation filters to identify the few products in the database which have unusually high or low trending forecasts when compared to history? Survey
4. Measure and report forecast accuracy
MXI Forecast Pro UK (Free Trial available) allows you to review and report on forecast accuracy as required. 100 Standard reports offer analysis to help you identify weak areas and opportunities for forecast accuracy improvement.
Success breeds success
A forecasting process will rarely be successful if the progress is not measured and the results reported to all participants. Take advantage of the functions available and start your forecast accuracy graph this month. Let everyone know how "good" or "bad" they are doing and what progress they have made over time. Success breeds success. Contact us now
SAVE YOUR FORECAST EVERY MONTH
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MXI explain how MXI Quantrix Modeller will help with budgeting and modelling your organisations integrated financials or a company you wish to acquire. You will need projected revenues, expenses, costs,debts and taxes driving expected profit. Next you need to make assumption examining the key business drivers on the Balance Sheet, Growth rates, Prices, Creditor - debtor days. And most importantly you need a robust model so that you can produce best and worst case scenarios.
ASSETS
Creditors
Grow with credit sales (net revenues)
Using an IF statement, model should enable users to override with creditor days sales outstanding (DSO) projection, where days sales outstanding (DSO) = (AR / Credit Sales) x days in period.
Stock
Grow with cost of goods sold (COGS) -
Override with inventory turnover (Inventory turnover = COGS / Average stock turn)
Expenses
Grow operating expenses (may include COGS if the prepaids are cycled through COGS)
Other Current Assets
Grow with revenues (presumably these are tied to operations and grow as the business grows)
If reason to believe that they are not tied to operations, straight-line projections.
Capital Assets, Plant Etc
PP&E - beginning of period (Opening)
Capital expenditures (grow historicals with sales or use mgmt or analyst guidance)
-Depreciation (function of depreciable plant & equipment opening balance by life expectancy)
- Assets sales (use historical sales as guide)
PP&E - end of period (Closing).
Intangibles
Intangibles - Opening
Purchases (when disclosed, grow historicals with sales or use mgmt or analyst guidance)
Amortisation (when disclosed, amortizable intangibles BOP divided by useful life)
Intangibles - Closing
Simple alternative is to just straight-line or grow entire balance with sales
Goodwill & Other Assets
Straight-line
LIABILITIES
Accounts payable
Grow with COGS
Override with payables payment period assumption
Accrued Expenses
Grow with operating expenses
Taxes Payable
Grow with the growth rate in tax expense on income statement
Other current liabilities
Grow with revenues
If reason to believe that they are not tied to operations, straight-line projections.
Using MXI Quantrix with a little effort in modelling the plan this can achieved in 1-2 days and create a model the entire business can use. Built with budgeting and forecasting software that will generate a real finanical model which the company can link to the ledger for rolling forecasts into the future.
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MXI Software provider of Budgeting and forecasting software in the UK Ireland providing companies with the data analysis tools and busines intelligence which enables organisation to strategically plan find and work the true profit drivers in their business using proper financial modelling software. MXI suggest Quantrix business intelligence tools. WATCH HERE
We want to be the partner of choice in UK Ireland for organisations wishing to implement leading edge demand management, sales forecasting, business modelling and financial modelling. Take the Excel challenge.
We believe that spreadsheets are inaccurate, error prone and too difficult to correct when faulty. Its now well documented that most large consulting practices, Bearing Point, PWC, Deloitte etc state clearly that any spreadsheet with more than 100 rows of data is likely to contain errors. Just Google it for yourself.
An example of the crucial role played by spreadsheets is the valuation of most Pension and investment portfolios around the world. The US albeit in a slightly different form, Iceland, Ireland and Italy all have state agencies who are responsible for relieving Banks of most of their toxic property portfolios. indeed many of these agencies will become the largest property companies in the world.
These agencies are using spreadsheets to value these portfolio's or funds. This can't be right in this day and age. In Iceland and Ireland this will amount to the largest investment ever made by the state and the use of a proper financial modelling intelligence to get at the facts.
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Forecast Pro is a statistical forecasting tool which makes forecasting a manageable and fairly accurate and predicable exercise in UK and Ireland. Forecast Pro reads the times series data then using it's expert selector it selects most appropiate forecasting methodology automatically such as exponential smoothing, holt winters. Like most software products, you do not get maximum return on the product without some training and education. Successful Forecast Pro implementations are not realised overnight as it is a iterative process which requires much understanding of the data and the best ways to resolve forecasting difficulties. Forecast Pro is sold in the UK and Ireland by MXI. We know Forecast PRO which is why we offer the MXI challenge.
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With Foecasting and Forecast Pro overcoming these forecasting difficulties are best explained with some practical training. Part of the training would be to define a forecasting process for the organisation and document this so that all affected parties gain a clear understanding and appreciation of the process. Once you have this in place, the focus turns to the understanding of the data which is being forecasted and how Forecast Pro interprets this data. Forecast Pro will do all the hard work of doing the forecast for each item and then it's up to the user to iron out the data anomalies via their understanding of the model selection and search for a best fit forecast per item. There are many factors that affect forecasting like event modelling (weather, foot fall, population, sales promotions) so the understanding of the forecasting environment is key to its success.
We are MXI are accredited experts in the area of implementing Forecast Pro and have successfully helped clients to improve forecasting accuracy and supply chain. That's why we are running the Forecast Pro challenge.
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MXI specialists in the UK/Ireland sales budget modelling software. MXI advises organisations on forecasting, financial and sales modelling to plan and monitor corporate business performance. MXI advises on the intricate process of compiling plans and budgets. Thats why MXI should your first call for any sales budget modelling in the UK.
At MXI we offer tailored training to financial and non-financial staff to support any financial or sales modelling requirements that you might have.
Beneath are listed some of the major issues that MXI clients have found in building a UK sales budget, 5 year forecast, projected cash flows for the UK/Ireland corporate sector.
- Period for modelling 1 year, 2 years, 5 years. The norm is 5 years.
- Weekly monthly quarterly financial periods
- Identify key business drivers in business (This changes constantly)
- Product, service offerings, 10, 20 Product Groups
- Income flow from Sales, Standard debtor days patterns (Impacts Cash Flow, profitability, rolling forecasts)
- Target Market penetration, unit sales volume, seasonality product by region by month
- Customer churn rates (subscription-or licence products & services)
- Revenue calculation parameters - sale prices by product by region by year, flat fees Vs user-based fees, etc (There will be huge variations within the revenue calculation module, depending on type of business, product characteristics, etc.)
- Revenue share % where distribution is via business partner.
- Recurring revenue models where % based maintenance fees apply - e.g. second and later year fees for software products/services
- Additional revenue streams - e.g. after-sales service offerings, product upgrade options, etc
- Direct costs - % of turnover or fixed value by product by region by year
- Other % based expenses
- One-off expenses by month Salaries, Consultant fees, personnel budget
- Salaries, months of commencement and yearly salary review levels
- Other expenses, months of commencement and yearly increase or reductions.
At MXI we understand the challenges of accurate forecasting thats why we are offering a 30 day trial of our budget and forecasting as used by JP Morgan, Bank of America, Caterpillar and KRAFT-Cadbury. Request Here: QUANTRIX TRIAL
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Minister of Finance revealed as "shocking" the complete lack of cash management, credit control, margin analysis, risk management systems such as Quantrix from MXI Software deployed in the Banks. Powerful easy to use software that would have deftly illustrated the scale of the risks that are at the core QUANTRIX financial modelling, risk modelling abilities.
Minister of Finance has charged the Regulator with improving Bank IT systems to reduce dependence on aging, faulty spreadsheets compelling Financial Instiutions to use recognised dependable bank modelling software such as QUANTRIX from MXI Software.
Brian Lenihan, Dublin Government, Minister of Finance
March 30th the Irish tax-payer inherits the mess and settles the bill for the witless financial vandalism of the Tiger years. Minister of Finance intends to buy Euro 81 billion of distressed loans. Instantly creating the world's largest property operation. Ironically housed in the Treasury Holdings Building. Lets hope these guys have the power of MXI Quantrix at their disposal.
Powerful financial modelling and scenario testing is requried when considering selling Hotels cheaply, trying to complete just started schemes, rising interest rates, reducing prices of the NAMA owned houses. If NAMA had QUATNRIX from MXI software it could easily models all these financial risks, test assumptions and recover tax payers money.
That is roughly 50,000 per head for every Taxpayer in Ireland or whatever number actually remains working. The Financial crisis which the rest of the world appears to be emerging from is just got a lot more serious for the Paddies.
NAMA (subsidiary of the National Treasury Management agency) needs the risk management, cash flow planning, financial modelling capabilities MXI Software brillaint and easy to use financial modelling software. QUANTRIX
MXI Software is therefore delighted to announce another Financial Industry seminar demonstrating how QUANTRIX manages the following easily in Dublins IFSC on April 27th.
- Financial Forecasting
- Budgeting and Forecasting
- Risk control
- Risk analysis
- Credit risk
- Financial assumptions
- Cash Flows and margins
- financial projections
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Forecast PRO TRAC available in the UK is a great way to start improving forecasting accuracy. The Expert forecasting methodology selector allows Forecast PRO and Forecast PRO Collaborator users to save money, time and improve forecast accuracy every day. 2000 UK/Ireland Forecast Users can't be wrong. However human interaction, knowledge will always be needed.
I want more details on Forecast PRO.
2010 brings many challenges for Demand Planners, Forecasters, Sales & Operations Planning and anyone who needs to use a statistical forecasting methodology. Economic reality currently means two issues collide.
A) Everyone wants improved forecasting accuracy.
B) Confidence in forecasting and forecastors is at an all time low and patience in short supply.
Question - Did your finance department see the financial crisis coming?
FREE FORECAST PRO - Send us your data
Forecast PRO will improve the planning capability of most organisations but it takes time. Forecast accuracy is driven by small steps. In 2010 we have plenty of events driving demand, creating bias, affecting forecasts.
- Soccer World Cup
- Hardest winter in UK / Ireland for years
- Recession / Financial Crisis
- UK Election
And that is just the external issues there will be lots of other issues where experience, Industry and local knowledge is required to hone the forecast. We are working with UK business to speed this process up, focus on the problem lines first, collaborate with colleagues effectively, reduce spreadsheet reliance for example.
Confidence levels in Forecasting are low.
Forecast PRO forecasting techniques will improve accuracy now as well as in the good times. Confidence in the forecast, analysis, decisions maybe low. Fast Moving Consumer Goods patterns and Capital markets all behave differently since the financial collapse. We will help you see the changes and meet them.
In the UK/Ireland in 2010 the biggest impact on Forecast accuracy will still be the Macro assumptions, management over-rides that lead to forecast bias. An organisation's culture, behaviour and reward systems are the key to eliminating bias improving the forecast in the longer term.
And as we said at the beginning Forecast PRO is the place to start.
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There is a low cost cost-effective solution to replace desktop spreadsheets. It's QUANTRIX a desktop solution for the real world MXI Software that helps clients to implement the multi dimensional Quantrix Modeller. It can replace most or all (depending on how it's used) of the difficulties that organisations face in budgeting, forecasting, sales & operations planning as part of a repetitive collaborative business process.
This is particularly important in planning, budgeting, forecasting and modelling. The business intelligence integrator, DataPush helps companies to automatically push data from Quantrix models to databases or business applications. DATA Push feature is useful when people want to do integrated business planning, cash flow, scenario testing and "what if".
This speed of analytic capacity is vital to city's key financial thinkers in planning the way out of the current financial morass. That's why we are running a seminar in Dublins IFSC on March 11th to demonstrate this innovative planning advantage.
Priority QUANTRIX Registration: March 11th IFSC Jurys Inn
Research on this topic shows that corporations engage in multiple, parallel planning activities: there are sales plans, operations and demand plans, transportation plans, marketing plans etc. Most don't formally integrate the results of these plans. The closest thing to an integrated plan is the annual budget and the periodic updates. However, there are at least two important issues that prevent spreadsheet-based budgets from being a useful integrated business plans. First, since budgets are mainly concerned with money, much of the non-financial operating detail is omitted - limiting the budget's usefulness in supporting non-financial planning. Quantrix Modeller enables companies to keep track of "things" (headcount by grade, units of bar stock, minutes of machine time, consulting hours and so on) as they construct their models and share this data.
The problem with rolling up and consolidating data from multiple sources in desktop worksheets is that the connection is indirect and not necessarily co ordinated. DataPush addresses this. When changes occur that require an update, DataPush will send out updates of specific pieces of a plan out to every other planning unit (such as a department, division, business unit, etc.). Formally linking the models ensures that accurate, synchronized and up-to-date information is used by all parts of the business. The data also can be pushed into ERP systems, databases or other information sources that can use this data to prepare reports or drive other analyses.
Quantrix launched DATABAV for BI Business intelligence in 2009. MXI research indicates this is a strong business intelligence tool at a new price point level with excellent query, analysis and visualization capabilities to strenghten the core Quantrix Modeller.
This the next move for companies seeking to reduce cost in this area, increase output, put new performance monitoring metrics in place. Forecasting, Modelling, planning, business intelligence, sales & operations planning, budgeting cost can be greatly reduced for planning teams. As well as providing methods for rapid query and analysis with neat navigation and visualization.
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I've had a series of interesting discussions with potential clients this week, one of which inspired me to sit this evening and write my latest blog. The client concerned was clearly very attached to the spreadsheet based forecasting and budgeting system his company employed and repeatedly took umbrage at the merest suggestion that there may be a better alternative. Our discussions culminated with the guy in question spluttering "Will you leave my spreadsheets alone"
I found his outburst fascinating on a number of different levels, firstly, why did this guy seemingly have such an almost personal attachment to this computer application and secondly why was he desperately defending them?
Furthermore, his attachment, based on the law of averages, can't be an isolated view and many business people must have a similar level of attachment to Microsoft's product.
I then thought back to a time when (as some of us remember) spreadsheets didn't exist and budgeting and forecasting were a painfully laborious processes. All of sudden a product was presented to the Financial fraternity that revolutionised the entire process and made an enormous difference to their working lives. Small wonder there is a loyalty to that product. Then I considered the amount of man hours this client and thousands of others like him have invested into the creation of the spreadsheet based process they use. They have probably spent more time with that collection of spreadsheets then they have with some of their families, again small wonder they defend them.
So my challenge is to build a robust argument to challenge these relationships. Driving home my thoughts were:
1) Would their relationships with spreadsheets falter if they understood the inherent flaws that many of their spreadsheets contain (97% of spreadsheets contain errors according to reliable sources)
2) Do they appreciate the amount of errors that the multiple copying and pasting of formulas over time are likely to have created
3) Are they relying on the information these flawed systems often throw out to make business critical decisions and do they appreciate that these flaws can effect outputs by as much as 5%
4) Do my spreadsheet obsessed potential clients appreciate the huge amount of time that is consumed in checking and maintaining these vast data beasts
5) How on earth do people share information amongst divisions and colleagues and how can they restrict access to suit their needs?
If you share my clients obsession with spreadsheets and need some help then please give me a call.
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