The Ledger

Don’t Let Forecasting Overshadow Your Planning

While forecasting is a vital practice, it can be misused and overshadow or replace business planning. Part of the problem is that finance professionals use forecasting and planning interchangeably, but they are completely different. Planning is about knowing where you are today and determining where you want to go, whereas forecasting is more about estimates and trying to figure out what the future will bring. It is important to understand the difference and to not overlook the value of forecasting, but also to know when it is useful.

Read More at Strategic Finance Magazine >

Predictive Analytics in Healthcare

New predictive analytics tools keep healthcare professionals hopeful that they will reduce waste and improve care by forecasting the likelihood on an event, such as an illness, and allowing providers to treat accordingly. Despite what these tools can do for healthcare facilities, they are not being used as much as they should be due involving the wrong people and a lack of time, among other things. The success of implementing these tools in health care depends on the time, effort, and resources set aside for communication, change management, and making the tool a seamless part of user workflow.

Read More at The Harvard Business Review >

The Gap In Innovation

These days, most organizations are living in the age of the “superstar firm.” Top players in their respective industries- Google, Samsung, BMW etc., are prospering, while economic growth remains slow in other firms around the world. The superstar firms are able to gain access to the most advanced technologies and allows them to gain a competitive advantage against their less productive competitors. With the rise in technology, the competition is getting fierce and in order to keep up organizations have to invest in R&D. At the same time, many firms are unable to keep up with the pace of developing technologies and innovation.

Read More at The Harvard Business Review >

The Dunning-Kruger Effect May Be Affecting Your FP&A

How can the Dunning-Kruger effect be related to FP&A in your organization? In short, the Dunning-Kruger Effect is when someone assess their cognitive ability as greater than it is. So how does this relate to FP&A? Many companies have turned to driver-based forecasting, essentially putting forecasting in the hands of trained finance professionals. Finance professionals are removed from what goes on day-to-day, and as a result, trending models may not pick up on changes in the marketplace of operations that front-line managers may be anticipating.

“If there was ever a process where people would overestimate their skill, it’s forecasting.”

Read More at EPM Channel >