It was Dr. Seuss who said, “Only you can control your future.” No doubt the good doctor was prone to a bit of hyperbole, yet those words carry relevance for today’s finance teams.
While controlling the future is clearly a stretch, Adaptive Insights users increasingly have the opportunity to present a clearer picture of what the future might hold for their business, and what to do about it. Case in point: ZAGG, the manufacturer of mobile phone accessories. A few years back, the company experienced a quarter in which it missed its guidance estimates of net sales by 33%.
“We were over $100 million off in our estimates,” said Jason Bingham, manager of FP&A for ZAGG. “So it was decided finance should take over forecasting and create standard financial processes.”
Key to that finance-led transformation has been the company-wide adoption of Adaptive Insights solutions. Recently, Bingham shared his insights into how improved budgeting and forecasting has led to better financial results and streamlined processes.
What was your approach to forecasting prior to using Adaptive Insights?
When I arrived at ZAGG a few years ago, we really didn’t have a consistent, mature budgeting and forecasting process in place—and it led to some considerable challenges. The sales staff did try to do some forecasting, but the product demand forecasts were often way off target. Because of that, we too often ended up faced with the costly proposition of shipping products from China overnight. The lack of forecasting capabilities was also a major pain point when it came to analyzing and projecting how customer discounts and wholesale pricing were impacting overall profit margins.
So what was the impetus that ultimately led you to seek out a better budgeting and forecasting solution?
It all came to a head the year I came on board when we missed our guidance estimates of net sales by 33%—that translated to being more than $100 million off in our estimates. Needless to say, the market did not react kindly. It was pretty clear to everybody at that point that we needed to improve our ability to budget, plan, and forecast—and we needed to do it fast.
It was decided at that time that finance would lead the forecasting efforts. After doing our due diligence, we knew we wanted a cloud-based solution, and the Adaptive Suite met all our needs. The Adaptive Planning solution enables our users to do rolling 12-month sales forecasts to better understand revenue projections and more accurately plan for manufacturing and distribution costs.
How did you go about getting buy-in across your organization when it comes to forecasting—and using Adaptive Insights for FP&A transformation?
Well, the short answer is this: Better results and improved profitability have a way of quickly gaining converts—and I think that has been a big factor in getting buy-in and adoption here at ZAGG. Quite simply, once people across the organization started seeing what this platform could do for their results, it became a pretty easy sell.
For instance, sales and product managers are more educated and aware about freight costs and have greater visibility of consumer demand and sales projections. With that information, they are able to order the right products with enough lead time to be delivered via less costly ocean freight compared to overnight air. They also have the capability to do weekly sales forecasts by individual SKU to calculate the cost of goods sold, analyze actual sales to see what products are moving well, and report on profitability.
How have enhanced forecasting capabilities changed the perception of your finance team in your company?
I think it has clearly enhanced the credibility and visibility of the finance team—and also made us more accessible and valued. Too often, I think in some companies finance is seen largely as just a back-office accounting function. Being able to budget and forecast more effectively—and in ways that people from throughout the organization can see concrete results from—can be a real game changer
Ultimately, as a finance team, I think you want to be viewed as an engaged partner and someone that people throughout the organization trust and turn to for guidance and insights. Since we got on board with Adaptive Suite, my team and I are much more strategic. We’re spending more time helping to drive decisions rather than just cranking out reports. It feels great to know we are directly contributing to the success of the company.
Beyond the clear financial benefits, how has enhanced forecasting changed the culture of how ZAGG does business?
We’re just a smarter, more engaged organization. If you have a clear picture of where you are and a good roadmap for where you are going, then you are going to be in a much better position to make good decisions and outsmart the competition. There is a lot more confidence and a bit of swagger throughout the organization, and I think that confidence comes from more people knowing what the numbers look like and getting comfortable with their role in helping us make data-based decisions.
What’s your best advice for others who aim to improve forecasting capabilities at their organizations?
To borrow from Nike—just do it! Once you get up to speed on the potential benefits and ROI of cloud-based solutions such as those offered by Adaptive Insights, then it’s pretty easy to be an advocate for change. Throughout our organization, we have found Adaptive is intuitive, easy to use and, because it’s cloud-based, there is little to no increased demand on IT.
It’s important to emphasize how Adaptive integrates smoothly with your ERP and allows everyone to see what the actual numbers look like and the data and factors that are driving planning and forecasting. Once leaders and others throughout the organization start to grasp the potential results and the improved forecasting capabilities, you can really start building momentum and support.
Visit the Customer Success section of our website to learn how other companies are using Adaptive Insights to transform FP&A.