Forecasts point to the cloud
Every year, it seems, someone, somewhere will be predicting that this will be the one when business forecasting takes off in a big way. This year it might be true, writes John Stokdyk.
Leaving aside the accuracy of these long-running predictions, evidence is emerging to suggest that 2016 will indeed witness an upturn in forecasting as a new generation of cloud contenders step in to fill the void left by Winforecast, the desktop tool no longer supported by Sage.
Thanks to Winforecast, the current buzz centres around accountants who prepare multiple forecasts for different clients. But Decision Curve founder and chairman Geoff Bristow argues: “The owner-manager/numerate non-accountant market is huge, and bigger than the market of professional accountants who do modelling. Traditionally it was served by ‘out of the box’ business-planning software such as BizPlan Pro, and now it’s going web or app.”
One reason forecasting has been hanging around the fringes of financial software for the past few years is possibly due to accountants focusing more on cloud bookkeeping and general ledger tools than analytic applications.
It didn’t help that specialist forecasting and planning tools tended to come with eye-watering price tags attached.
When AccountingWEB researched software satisfaction levels in 2013, just 4% of respondents used the kind of specialist business intelligence software that drives detailed forecasts.
Three years ago, anyone doing forecasting work either used Excel or Winforecast. In spite of the transition to the cloud, Excel remains a key fixture within the profession, but the withdrawal of support for Winforecast alerted developers of cloud reporting add-ons to a new opportunity.
As has happened with other business applications, cloud tools lower the cost of entry for users wanting particular functionality. CrunchBoards and Spotlight are probably the best known reporting add-ons in the Xero/QuickBooks Online marketplace, and during the past year both of them have been pushing hard into the forecasting space. But such is the speed of development in this market, there are already several established developers in place including Float, Live Plan and ProfitSee.
Darren Glanville, director of sales at Spotlight Reporting, said the latest forecasting boom has been a long time coming, but accountants are beginning to realise that where they may not have had the capacity for this kind of service before, the technology now exists to deliver it.
“Culturally, the profession is on a long journey from compliance to value-added services, which for profitable firms will account for as much as 60% of fees, according to the ICAEW,” he said
“We’re encouraging our partner firms to use forecasts to engage clients in an advisory journey. There’s no better time to do it. Have a brainstorm, look at different scenarios with them - and then go back to them with three bits of advice based on your findings. It’s the starting point for surprising and delighting them with your advice.”
Crunchboards founder Hannah MacIntyre launched her company at Xerocon last year with the boast, “We’re going to replace Winforecast.” In the intervening months, Crunchboards has refined the core application into a forecasting engine that allows users to create flexible scenarios for a variety of inputs, timescales and source data.
Like Spotlight, CrunchBoards is targeted at accountants looking to offer strategic advice to business clients. CrunchBoards lets them share the forecasts they have built in live boards, or as PDF summary reports. Having created one set of scenarios and reports, it is a simple matter to replicate similar models across multiple clients, the developer says.
Edinburgh-based Float has had a specialist online cashflow forecasting management tool on the market for several years that integrates with Xero, FreeAgent and now QuickBooks. Designed with business owners in mind, the app presents a visual cash flow graph that users can interrogate with a ‘what if?’ query tool to see how different factors affect the graph.
“Spotlight Reporting and CrunchBoards are building reports for accountants,” said Float founder Colin Hewitt. “We’re operating in different spaces. Our product focuses on the needs of business owners, which means it’s going to be simpler and easier to understand. We’re dealing with the real-time position, so we can figure out what your balance is going to be tomorrow rather than the end of the month.”
Hewitt agrees with Geoff Bristow that business owners represent a very significant market that has been overlooked by many external accountants. But businesses doing it for themselves present a trickier challenge for developers - and accountants who work with them.
“You have to take a holistic approach. If their accounts are a mess, it’s going to be hard to start forecasting. Often the business will need to rethink how they get data into their accounting system, how often they reconcile and how they do their reporting and forecasting with it.”
Desktop accounting systems encourage a batch mentality, and if the journals and bank accounts aren’t reconciled until the period end, there was less pressure on companies to get it up to date, Hewitt explained. By making back office systems easier, the cloud is giving business owners more useful, relevant and timely information - which in turn drives demand for forecasting tools and tighter reconciliation regimes.
“The big thing that changed is people started to engage more with data because online accounting products are so much easier to use,” Hewitt said. “In the days of Winforecast you would get a model that had all the formulas in place, but it was out of date as soon as it was written. Now people are looking for the real-time aspect, because that’s much more interesting than an out-of-date report generated three months ago.”
You might also be interested in
AccountingWEB’s interim Editor in Chief has been with the site since 1999 and returned to the editorial hot seat in March 2020 to lead the hunt for a long-term successor... Send a DM if you're interested! When not tending to the needs of AccountingWEB members and geeking out on their technology habits, he devotes much of his time to his oddball...