Hi Team,
As i am not from a financial background I am really confused the exact difference between actual, budget and forecasting process.
I am aware that actuals is the actual data which cant be changed(historic data until today) and also aware that forecast will be done for future predictions of data(can be done on weekly/monthly/quarterly from today till forward/backward 1-2 Years) and also budget will be calculated one time at the starting of the Period!Correct me if i am wrong anywhere!
I am interested in knowing how can be load and calculate budget and forecast moving forward on weekly/Monthy basis?Do we need to load the actual data to forecast everymonth? in this process does the budget also will be calculated or remains static?
Please clarify my ignorance!
Thanks in advance,
DWH Guy
Budgeting and Forecasting Process in TM1
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dwhcognos8
- Posts: 21
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- OLAP Product: TM1
- Version: 9.5
- Excel Version: 2005
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Duncan P
- MVP
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- OLAP Product: TM1
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Re: Budgeting and Forecasting Process in TM1
Actual = what has happened in the past
Forecast = what you think will happen in the future
Plan = what you are going to do about it
Target = what you want to result
Budget = what you commit to, either to spend or produce or sell
[soapbox]
The primary difference between a budget and a plan is in the level of commitment, the degree to which you are held to those commitments and the level to which others can rely on them. This is why budgets tend to be cast in stone, often for an entire year. If however your organisation or systems are geared up to adapt to changes in plans then you might benefit from a rolling plan, in which each month the plan is adjusted in the light of existing circumstances. This will however only work if the mechanisms exist to communicate those changes to others whom they will affect and if those affected are agile enough to adapt to the change themselves.
[/soapbox]
For an interesting discussion of this topic see
Hope, J.D., and Fraser, J.R.T. (2003) Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap, Boston: Harvard Business School Press, ISBN 1-57851-866-0
Forecast = what you think will happen in the future
Plan = what you are going to do about it
Target = what you want to result
Budget = what you commit to, either to spend or produce or sell
[soapbox]
The primary difference between a budget and a plan is in the level of commitment, the degree to which you are held to those commitments and the level to which others can rely on them. This is why budgets tend to be cast in stone, often for an entire year. If however your organisation or systems are geared up to adapt to changes in plans then you might benefit from a rolling plan, in which each month the plan is adjusted in the light of existing circumstances. This will however only work if the mechanisms exist to communicate those changes to others whom they will affect and if those affected are agile enough to adapt to the change themselves.
[/soapbox]
For an interesting discussion of this topic see
Hope, J.D., and Fraser, J.R.T. (2003) Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap, Boston: Harvard Business School Press, ISBN 1-57851-866-0
-
dwhcognos8
- Posts: 21
- Joined: Tue Sep 21, 2010 5:43 am
- OLAP Product: TM1
- Version: 9.5
- Excel Version: 2005
Re: Budgeting and Forecasting Process in TM1
Thanks Duncan for the Prompt reply.