Outdated and Costly: How Spreadsheet Forecasting Is Undermining Your Business

In today’s fast-paced professional services industry, it’s not enough to work well as a team; you need to anticipate future demands accurately. Resource forecasting is crucial for enhancing project planning, agility in resource management, and maintaining consistent utilization rates. Despite the availability of advanced forecasting tools, many companies still rely on spreadsheets, which is costing them in the long run.

According to the 2024 Forecasting Report by the Resource Management Institute (RMI), 75% of professional services businesses use spreadsheets for forecasting. Why are so many companies stuck in the past? Understanding how spreadsheet forecasting is hurting your business can help you make better decisions for the future.

The Limitations of Spreadsheet Forecasting

It’s common for many new professional services businesses to use spreadsheets, often using Excel or Google Sheets, as a makeshift tool in their everyday processes. According to RMI Research, 71% of organizations depend on spreadsheets to support resource management processes like skills tracking, forecasting, and workload planning. Managers working at businesses who are not ready to invest time and money into a new software solution will use these spreadsheets to gather the insights they need to make crucial business decisions.

While this might work initially, spreadsheets quickly become cumbersome as data complexity and business size increase. Effective resource forecasting also goes beyond just numbers; it involves understanding the roles and skills needed for future projects. Spreadsheets fall short in this area for several reasons:

1. Static Data: Spreadsheets can’t dynamically update as your team evolves. Specialized tools can track skills, certifications, and experience, ensuring an up-to-date view of your team’s capabilities.
2. Scenario Planning: Spreadsheets lack the ability to create and manage scenarios, which are crucial for understanding the impact of various staffing decisions on project timelines and budgets.
3. Skill Gaps: Identifying skill gaps from raw spreadsheet data is inefficient. Advanced tools provide detailed insights, allowing for targeted training and development.
4. Unexpected Demands: Inaccurate forecasts can lead to time-sensitive project demands sneaking up on resource managers, forcing last-minute project rearrangements and resource reassignments.
5. Hiring Mistakes: Delays in spreadsheet-based forecasting can result in hiring mistakes, leading to financial overhead from resources that don’t match actual demand.

These limitations affect the data and decisions pivotal to every project, leading to cumulative losses in time and money that add up in a big way over time.

The Importance of Accurate Real-Time Data

The ability to get granular insight into supply and demand, forecast utilization, resource requests, and scheduled vs. allocated hours provides major benefits that spreadsheets cannot provide, including

1. Agility: Real-time adjustments allow you to respond to changes in project scope, deadlines, or resource availability quickly, minimizing disruptions and staying on top of projects.
2. Cost Control: By dynamically reallocating resources based on real-time data, you can avoid overstaffing or understaffing, both of which can have significant financial implications.
3. Margin Protection: Accurate and timely resource allocation helps keep projects on track, protecting your projected margins and ensuring profitability.

Simply put, spreadsheets lack the capability for real-time staffing adjustments and therefore prevents companies from experiencing any of these critical benefits.

The Way Forward

It may be intimidating to stop using spreadsheets for forecasting, but moving to a dedicated resource management tool can provide a plethora of benefits.

Dependable resource forecasting software can improve resource allocation by providing a better understanding of what skills and roles will be needed for upcoming projects, helping managers not only put the right team members onto the project, but also prevent complications with other concurrent work that will need their skills. And with the ability to adapt to changing project requirements forecasting software can improve agility for a faster and more efficient team.

With this long-term foresight, businesses can improve their financial planning by having accurate project cost estimates that they can use to more effectively manage their budgets and the roles related to their daily spend. In conjunction with better allocations and a greater understanding of finances, companies will be able to minimize their project risks, improving client satisfaction rates and continuing to improve their processes over time for a stronger business.

With a strong forecasting solution, the future is no longer uncertain and intimidating. It can be exciting and understood.

See The Future With Kantata

The Kantata Professional Services Cloud was designed to strengthen every aspect of a business, both in the present through game-changing resource and project management software and in the future through reliable resource forecasting. Together, businesses can exponentially improve their processes and performance.