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Case Study

Enhancing Revenue Forecasting Capabilities

Team Size
1 Managing Director, 1 Director, 1 Vice President
Project Duration
5 weeks

The Situation

A leading hardware and software communications provider to the media and entertainment industry was facing performance headwinds. Additionally, they were experiencing challenges with forecasting revenue as a result of an evolving operating environment, limited insights into revenue drivers, and recent management and organizational changes. The Company was set to kick off a full year reforecast process to provide an updated outlook to the Board of Directors and PE Sponsor. The Company’s CFO engaged Accordion to enhance the revenue forecasting process through a data-driven analysis of historical performance trends and analytical validation of the Company’s quarterly reforecast.

Services

Budgeting & Forecasting Process Improvement

Stakeholder Reporting & KPI Development

FP&A Process Redesign and Implementation

The Execution

  • Worked closely with the Company’s FP&A team, sales operations, and other relevant stakeholders.
  • Conducted a deep-dive review of monthly revenue performance by business unit and product category, identifying variance ranges and areas for further examination.
  • Aggregated a data set for analysis of underlying revenue cycle trends by business unit and product category, including:
    • Composition analysis of historical sales pipeline and conversion metrics.
    • Review of historical backlog, backlog roll, and burn-off metrics.
  • Developed an analytical model – which was used to back test – by developing a revenue forecast for the two prior quarters and comparing against the Company’s previous quarterly revenue forecasts and actual results.
  • Ensured the model-based back test indicated an upside/downside sensitivity range for actual revenue performance by business unit and product category.
  • Rolled forward the analytical model with the latest pipeline and backlog data sets to derive a revenue forecast range for the upcoming two fiscal quarters.
  • Used model derived forecast and resulting metrics to validate the Company’s quarterly revenue forecast submissions by business units and products.
  • Transitioned the aggregated data sets and analytical forecast model to the Company’s FP&A team for use in ongoing reforecast cycles.

The Results

With Accordion’s assistance, the Company gained stronger visibility into revenue cycle trends and drivers. Our data-driven approach to the revenue forecast allowed the Company to objectively validate its bottom-up reforecast and identify areas of risk as they discussed their full-year outlook with the Board of Directors and PE Sponsor. In addition, the FP&A team was able to utilize our analytical model in upcoming reforecast cycles.