Why forecasting is essential for digital success

I’ve been around the Technology, SaaS and Digital sectors for almost two decades now and Forecasting has always had a bad reputation, been the elephant in the room and in some cases actively avoided at all costs.

But why?

I think this stems from the following:

• A forecast can sometimes feel like a ‘guarantee’ and that makes people apprehensive about sharing it with clients.
• In digitally less mature sectors it is easier to hide behind the old sayings such as “SEO is a longer-term channel and it will take 6 months to see any impact, hence we can’t forecast” – utter nonsense! 🙂

Seeing past the discomfort, and learning to make forecasts, build scenario models, and ultimately create business cases is a crucial skill.

In fact, at Iff Digital we actively lead with forecasts and here is why.

1) Forecasts provide a solid basis for client discussion and collaboration. 

2) Scenario modelling and stress testing enable the comparison of different options and data points – which are very useful when looking at new growth, category and market opportunities. 

3) Business cases are the building blocks for decisions at board level and need to demonstrate financial rigour and ultimately ROI!

We would recommend that you prioritise all 3 for differing reasons.

• A forecast is a ‘best estimate’ of what is actually going to happen in the future, taking into account external factors such as seasonality, any known dependencies and current plans – it will often include different confidence levels and can also demonstrate expected uplifts. Crucially it should also include any caveats and assumptions. 
• Scenario modelling is groups of forecasts under different conditions and decisions – they answer the “what Iff” (pun intended 🙂) questions – e.g. “what if we invest X?” and conversely “what if we reduce the budget by Y?”
• A business case typically combines some form of a forecast (where they are now), a scenario of the desired outcome (end goal) and a connection between the investment (cost) and benefit. 

If you can do all of this and ensure it directly relates to the things the business truly cares about, you will have a greater chance of digital success and you will also have a much better opportunity of bringing digital into the boardroom.

What are your forecasting tips?