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Advice for high-tech CEOs: Have a forecasting culture

By Denzil Doyleforecasting

If I had only one piece of advice to give CEOs in the high-tech industry, it would be to work hard at implementing a forecasting culture in their companies. The most visible sign of such a culture would be a bonus system that rewards employees not only for meeting budgets that have been approved by senior management, but for their ability to forecast how close they come to doing so.

Most CEOs give forecasting a low priority; it’s often seen as another level of reporting that is not worth the effort. In fact, there’s also little agreement on the parameters to be included.

The cornerstone of any forecasting system is the sales forecast. At the beginning of each month, every salesperson and sales agent in the distribution channels should be required to forecast their bookings (orders received) for each of the next four quarters. In the jargon of the trade, this is referred to as a monthly updated four-quarter rolling forecast. Then, at the end of each quarter, every salesperson would have his or her actual booking figures compared with those that were forecast at the three intervals during the quarter.

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