A recurring question among business forecasters is how to incorporate input from the sales force. We discussed this last year in The BFD post "Role of the sales force in forecasting." But the question came up again this week in the Institute of Business Forecasting discussion group on LinkedIn, where Leona O of Flextronics asked:
My company is using Excel to do Sales Forecasting on a monthly basis, I am looking for a solution to automate the front part where sales people will input their numbers directly in the system (instead of compiling different Excel spreadsheets currently). Our forecast period is for 36 months, please recommend a software that could automate this function.
The story of O is a familiar one. The good news is that when a company is ready to move ahead from Excel, there are plenty of forecasting software choices available. These include my personal favorites: SAS Forecast Server (for large-scale automatic forecasting) and SAS Forecasting for Desktop (which provides the same automatic forecasting capabilities for small and midsize organizations).
However, before automating the collection of input from the sales people, we need to first ask whether this is even advisable?
If it is known that the sales force inputs are adding value to the forecasting process (by making the forecast more accurate and less biased), then making it faster and less cumbersome to provide their inputs could be a very good thing. If a company hasn't already done this (and I don't know the particular circumstances at Flextronics), I would suggest they first gather data and determine whether the sales force inputs are adding value.
There are reasons why they may not be.
In addition to being untrained and unskilled (and generally uninterested) in forecasting, sales people are notoriously biased in their input. During quota setting time they will forecast low, to have easier to achieve targets. Otherwise they may forecast high, to make sure there is plenty of supply available to fill orders.
Also, if you ask someone whether they are going to hit their quota, the natural response is "Yes!" -- whether they believe they'll hit their quota or not. Why get yelled at twice (first for admitting you won't hit your quota, and then again at period end when you don't hit it), when you can just say yes you'll hit it, and then only get yelled at once (at period end when you don't hit it). Steve Morlidge made a similar point at his International Symposium on Forecasting presentation in 2012.
If you find that your sales people are not improving the forecast, then you'll make them very happy -- and give them more time to sell -- by no longer requiring their forecasting input. So rather than implement new software to gather sales input, it may be simpler, cheaper, and ultimately much more effective, to stop gathering their input. Instead, implement software to generate a better statistical forecast at the start of the process, and minimize reliance on costly human intervention.