The founder of QuarterOne, the newest contender in the forecasting space, thinks CRM data is the missing link that has kept the market from flourishing. Could he be right?
“Forecasting, as a finance person, you’re wholly reliant on other people in the business to give you a perspective on how the business is trading,” said Michael Foulkes, the founder of QuarterOne. And he’d know. Before this venture, Foulkes spent over a decade at CFO level for various startups.
His point is also a cogent one: finance teams generally have a view on historic information. From there it’s possible to project outward, but things do move on. Sales people overestimate, projects end, markets change.
AccountingWEB columnist Hugh Johnson once remarked that the half-life of a typical forecast is “no more than 25% of the forecast period”. In other words, unless refreshed, the usefulness of the month’s sales forecast halves within a week of producing it.
That’s partly why Excel remains such a relevant tool in this day and age. Forecasting is not a fine art, and the intransigence of forecasting solutions makes it frustratingly difficult to tinker. Excel, of course, is a tinkerer’s paradise (albeit infamously prone to errors).
Forecasting needs to be more reliable and Foulkes thinks the key could be CRM data. “In the time I’ve been an accountant, CRM systems have become really big. Very successful sales tools that are brilliant for sales people. There’s loads of brilliant data being collected, but finance people might be intimidated by it or simply not have a concept of it.
“These systems are built for sales people. There’s a big disconnect between sales and marketing teams using certain tools and finance teams using historic accounting tools or ERP systems. We saw an opportunity to bring those two worlds together. Using CRM data to inform the finance function on what trends their business is going through.”
QuarterOne allows an FD to create a forecast on their CRM data, and then once a month, they can calculate revenue recognition within the application and post it into their accounting system to give month end revenue calculation.
But, Foulkes stressed, It’s not just about sales for the month. “It should be about analysis of exactly where that revenue has come from. QuarterOne can tell you who sold that revenue, what clients it was for, what products and services, what the average sales cycle was -- that data is all in the CRM system.”
QuarterOne isn’t the first to do this. Some advanced ERP systems funnel CRM data to the finance team, but that’s for enterprise-level businesses. Foulkes’ vision is centred on extending this functionality to the startup/scale-up and SME side of the market.
And the emphasis is on data and control. There’s no AI-led panacea where a Hitchhiker's Guide-style computer simply spits out a figure. “No credible finance person would rely on a black box AI calculation,” said Foulkes. That granular detail is critical in fostering trust.
“QuarterOne gives you a granular breakdown of how a forecast is calculated. It’ll tell you a lot of metadata around that forecast. So, for example, I can do a forecast today and ask ten of my sales team to give their input on how likely each of their opportunities is to closing.
“In three month’s time, I ask for another forecast and the tool can then give a complete breakdown of the original forecast and then tell you here’s what happened in the last three months. If you have a consistent database of how things change. You can then spot unreliable forecasts.”
Foulkes explained that, over time, QuarterOne will use trend analysis to identify over-optimistic (or, indeed, pessimistic) inputs from commercial teams. The tool can flag a forecast as biased, one way or the other.
For now, the price point is low: a flat fee of £25 per user. But Foulkes admitted that longer term QuarterOne would transition to a model where you’d pay for functionality. “We’re not there yet,” he said. “So for now we’re on a flat priceline.”
The tool’s main integration is with HubSpot, and QuarterOne will be situated in in its app market (akin to Xero’s app ecosystem). There will also be backend integrations with other big name CRM’s like SalesForce and Pipedrive.