How to Improve Sales Forecasting - Page 2

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Sales force automation: a good idea that doesn't work

Hopefully, it is now clear that sales forecasting is not an exercise in tabulation. It is more like an exercise in psychology and political maneuvering to which no software can add any value.

Unfortunately, this was not something that was given much consideration when SFA (sales force automation) first came to market. Siebel's original sales pitches played to a deep-seated longing by the vice president of sales for a full automation of this onerous forecasting process, with a system that would cut out the middle management and instead roll up every individual forecast into a companywide forecast, an ??ber-dashboard. All a VP of sales would need to do is sit behind a mahogany desk and monitor a display showing a needle inexorably moving toward "goal." With omniscience would come omnipotence, quotas would be met, and all would be well with the world.

The dream proved elusive

First, aggregating many small piles of rubbish just creates a big pile of rubbish, not a forecast. Second, sales reps know that their most precious resource is time, so no self-respecting sales rep is going to spend an hour per day typing updates in the system-particularly one as onerous as the early Siebel system. The rainmakers simply refused (and had the clout not to be called to account). The midlevel players took their cue from the rainmakers, which only left the struggling sales reps to fill in the multiple fields, in the hope that their servitude would buy another quarter of employment.

Siebel was aware of this. I recall a particular presentation where the speakers advised my company that, for success, one must take up the spirit of Fernando Cortez, who conquered Mexico in 1518 and ordered his men to burn their ships. This sent a message that there was no turning back. Siebel understood that implementation would be far from straightforward, so it adopted a "call to arms" mentality that would not brook compromise. Over time, statistics bore out the company's trepidation, as SFA became a watchword for disaster-with project failure rates in excess of 50 percent.

An exercise in management communication

In recent years, things have gotten better. First, CRM has moved to a SAAS (software as a service) delivery model. With instant user provisioning and annual subscriptions, the hassles of setup have been diminished and success rates are much improved. Current systems present a much more user-friendly environment, which makes it more efficient for the user.

Equally important, many organizations are giving up on the pipe dream of forecasting as an automated process, and are accepting it for what it really is: an exercise in management communication.

Select SAAS over on-premises CRMsolutions

What is notable is that, the market leader, focuses its messaging not on forecasting, but on the bread-and-butter customer database as its core value proposition. What is probably most important for the success of is that it is a true SAAS company. With that comes a host of business model advantages that put it in a better position than on-premises solutions.

The reason why I am optimistic about SAAS is that the transparency and immediacy mean it's not possible for an unused, or even onerous, application to survive more than a billing cycle. Sure there will be mistakes, but these will be quickly rectified.

The problem with on-premises CRM is that this is not the case. Projects get tied up in implementation, or users will boycott the system because it is so onerous. Nevertheless, the system survives for years. Many companies really did follow the advice of Fernando Cortez and ploughed on regardless. Doubling down, their prize was not Mexico, but the biggest slump in IT spending in recent times.


Joe Ruck is President and CEO of BoardVantage. He has led many high-technology companies through successful growth to IPO or acquisition. Prior to joining BoardVantage, Joe was senior vice president of marketing at Interwoven and part of the team that drove the company through one of the most successful IPOs of 1999. Previously, he held sales, marketing and executive positions at Sun Microsystems, Network Appliance and Genesys Telecommunications (subsequently acquired by Alcatel).

Joe holds a B.S. in engineering from Oregon State University and an MBA from Santa Clara University. He can be reached at