Our second difference between CRM, sales forecasting and sales analytics revolves around how they handle the forecasting business process. Sales forecasting is one of those business processes that requires deep levels of collaboration to drive a good outcome for a company.
Difference #2: How systems support cross department collaboration in building the forecast
Although the sales forecast begins with a bottoms-up commit from sales people, many other departments are involved in constructing and vetting the sales forecast. The input from sales people is the start of a collaborative process that should result in an enterprise demand forecast. This integrated demand forecast reflects inputs and judgments from many people including executives, sales operations, product management, marketing, demand planning and finance.
A Sales Forecasting System understands the part all of these stakeholders play in the sales forecasting process and is configurable enough to support the definition of a business process that allows these individuals to contribute and collaborate in a way that is predetermined by the company:
- Executives can forecast tops-down
- sales people can forecast bottoms-up
- product managers can forecast by product
- sales-people can forecast by customer
- product managers can forecast new products
- finance can forecast cost.
An enterprise sales forecasting system allows the complete process. The entire enterprise demand forecast can be captured along any dimension by all stakeholders. This results in a complete and timely forecast that is actionable by any part of the company.
A CRM System is focused mainly on the sales people and capturing how they think they are doing with regard to new opportunities. Most CRM systems do not anticipate collaboration around the forecast by the other stakeholders. To achieve this, they need to be customized or the process needs to happen outside of the CRM system. In order to generate a complete sales forecast, the new business opportunity forecast contained in CRM is often augmented by spreadsheets that track the run-rate, or recurring business sales forecast. For many companies, new business is a subset of recurring business.
A Sales Analytics System allows other departments to see how the new business pipeline in CRM is evolving but does not otherwise aid cross department collaboration, or in creating a complete forecast collaboratively.
Sales forecasting is an extremely collaborative process that touches both the front office and the back office of every company. Many companies support that process with a hodgepodge of applications and systems, from CRM to Excel to analytics/BI to ERP demand planning. It’s almost as if each function brings their own bat and ball to the party. This makes for a very interesting and chaotic game for most companies.
Next, we’ll look at how companies have brought this game under control.