5 Billion €uros Budget Forecast with Advanced Analytics

What were the Pain Points

The Client
Our client, an international company of over 8,000 employees in more than 75 countries, has an annual budget of nearly 5 billion euros. 

The Budget As-Is Process
The yearly budget exercise takes 4 to 5 months from preparation to final forecast approval and requires the participation of about 100 persons during that period:

  • Preparation of internal data from several sources in different formats and currencies
  • Preparation of competition data for comparison and benchmarking
  • Preparation of market assumptions (new laws, parallel trade, etc)
  • Several rounds of reviews and manual interventions.

The Pain Points
There are several points to reduce in several stages of the project, but the main ones are:

  • A better accuracy of the budget forecast
  • Eliminate the bias of the forecast depending on several assumptions (sales deductions, pricing…)
  • Reduce the time and resources used to prepare the budget data, correct, compare with competition, discuss, review several rounds… with an estimated cost of 1 million euros.

A similar scenario:

We audited a company of the same size, and they encountered similar problems in their financial planning including year-end planning forecasts. Note that both were of different industries with other aspirations and targets, but very similar issues.

Does this scenario apply to your company too? 

If you encounter the same issues in your long-term or short-term financial planning, contact us and let’s have a first discussion around this topic.

How Digitalys implemented the Solution

We did an analysis of the current situation, created a to-be situation and implemented it together with the client (business, IT and advanced anaytics teams) over a 3-years period,  improving it year after year; in short, this is what we did:

  • We defined the as-is process with all the data used, business rules, exceptions, assumptions…
  • We suggested a new process with a mix of centralization and decentralization of resources, data and activities
  • We established a business team dedicated to change management
  • We automated all the business rules with IT team
  • We elaborated an advanced algorithm that was then developed by the client’s IT team. Simply put, it’s a result of several algorithms out of which we used the best model to forecast a trend from the historical data
  • We added additional data on top of the trend such as competition data affecting sales or/and pricing, business rules and other statistical assumptions 
  • We designed reports that are easy to read and to analyze using the business intelligence tool already used by our client
  • We improved the whole process in a 3-years process aiming for better accuracy and building trust with our stakeholders.
Please note that we cannot go beyond these details even offline in respect to our contract with our client.

The result was a faster, more accurate and non-biased yearly budget forecast.