Spreadsheets have been around for hundreds of years. Pre-dating the electronic spreadsheet made popular by Lotus 1-2-3 and Microsoft Excel in the 80s and 90s, spreadsheets were a computerized program used to summarize information from many sources in one place and present the information in a format to help a decision maker see the financial “big picture” for a company. It is a sad fact that despite the vast amount of technology innovation that has occurred since that time – the growth of the Internet, emergence of the cloud, adoption of powerful business applications such as Salesforce, Oracle, and SAP – companies are still using spreadsheets in much the same way that they did 20 years ago. Even the largest of the Fortune 500 are still making critical decisions from spreadsheets.
Rolling Up the Sales Forecast
While spreadsheets provide great ease-of-use and the ability to aggregate data together to analyze what’s happened in the past, even with the most sophisticated formulas, models or macros, they will never help business executives get prescriptive insights to guide the business forward. While business intelligence (BI) tools are a step forward from spreadsheets to visualize the data companies have, they unfortunately, were not built to provide executives with data-driven, unbiased insights to forecast and predict critical revenue functions, such as, sales bookings, revenue, upsells, cross-sells and churn.
A case in point is sales bookings forecasting. Sales reps put data into CRM; managers, ops and finance aggregate their team’s data into Excel; and analysts build models and provide executives with a sales forecast roll-up across product lines, geographies, and sales teams. Given the data inputs by sales reps and managers are typically based on gut-feel, and that the data variables for every deal is ever-changing and impacted by external market factors, the sales forecast that most CXOs look at is distorted, making it difficult, if not impossible, for them to make informed decisions that impact revenue.
It’s Time to Apply ‘Data Science’ to Revenue
While most of the talk in the hyped up ‘Big Data’ space is about applying advanced mathematics and data science to solve problems like cancer, oil exploration and financial fraud, there is no reason why similar techniques can’t be applied to corporate revenue data for CXOs to make better decisions to drive their businesses forward. If you were a CXO, wouldn’t you want to utilize all your revenue data to get an unbiased, data-driven view of your sales forecast? Or how about automated, machine-powered insights that identify where your business is most exposed? And what if you were empowered to simulate scenarios based on the data that allow you to allocate resources to the best revenue opportunities?
To move today’s sales and revenue forecasting from spreadsheets to a data-driven, prescriptive solution, we need to apply data science to revenue data. One approach is to leverage Wall Street quantitative techniques, such as, portfolio management frameworks combined with machine learning to analyze, predict and prescribe action for CXOs, sales, finance, and operations leaders. Like a portfolio manager seeks to optimize a client’s investment portfolio for risk and return, a sales manager or ops team in a Fortune 500 company has the responsibility to optimize the company’s portfolio of revenue for its employees, board of directors and shareholders.
With the right approach, CXOs can now be armed with the right information at the right time to make the right bets. And more importantly, CXOs can have more confidence in the decisions they make, and instead of relying solely on gut feel, intuition and experience, they can used data science and leverage machine-powered insights to guide them to the best scenarios to optimize revenue, to provide immediate early warning indicators when a deal or customer is going off the tracks, and prescriptive actions on how best to allocate resources to the right revenue opportunities. And if done right, CXOs have the potential to help their businesses move forward, stimulate and create more jobs, and help our economy thrive. Best of all, imagine all of this done without a spreadsheet.
Travis Patterson is the chief revenue officer of Aviso, producers of sales analytics software that helps sales managers meet and exceed quarterly targets.
