Why does your business need sales forecasting software?

In today's fast-paced world, enterprises must deal constantly with changing market conditions. Changes in demand for products can be caused by various factors, such as changes in market capacity, worsening living standards, legislative innovations, etc. It is difficult to forecast sales solely by expert judgment methods, which are based on the subjective opinion of specialists who are experts in their respective fields. An accurate forecast allows you to reduce production storage costs, optimize the utilization of production capacities, and reduce transportation costs. A growing number of companies are using special software to predict sales. The use of information technology by enterprises is a necessity for their success.

The purpose of this article is to determine the best software for forecasting sales. To achieve this goal, it is necessary to review the market for programs that forecast sales and conduct their comparative analysis using the matrix method. There is still no clear classification of forecasting programs. Conventionally, they can be divided into two groups:

1) Microsoft Excel application and programs created on its basis

2) Specialized sales forecasting software

A lot of software tools for sales planning have appeared recently - most of them are either expensive for small businesses or require significant costs for specialist working hours. The Microsoft Excel application allows you to quickly get a valid forecast for sales of just launched goods, as well as for already known products, but still, an outdated tool for a larger business.

On the other hand, specialized sales forecasting software offers unique opportunities due to the fact that it implements time series forecasting methods designed both for building forecasts of individual independent goods and simultaneously for many goods, taking into account the mutual influence of goods on each other as well as the influence of external factors.

Prediction in the program is carried out by both classical and unique forecasting methods. These methods are widely used around the world to predict sales. In such programs, trends and seasonal methods are implemented.

For each series (sales statistics of an individual product), it is possible to find the optimal forecasting method that gives the most accurate forecast estimates. Specialized methods have been developed for joint forecasting of many time series (goods and factors), for example, sale of goods, prices, and advertising costs. For seasonal sales, a forecasting method has been implemented for products that are subject to seasonal demand. Most often, users have the opportunity to import data from files prepared in text form or in the form of Excel tables. An important step is to define criteria for evaluating software.

We distinguished the following criteria for evaluation:

• Accuracy

• Compatibility with existing software

• Data processing, ease of data entry

• Ease of interpretation of the data

• Graphic features of the program

• Software complexity

• The reputation of the supplier

• Cost of the software

The first three of the criteria considered are the most important when choosing software for forecasting sales.

The most important criterion is accuracy since it is the receipt of an accurate forecast that is the main goal of users of this software. In this case, it is advisable to choose a system that is well tested and provides the most complete information about the model, as well as in which you can track how the program calculates the forecast.

Furthermore, it is important to obtain information about the accuracy with which the forecast was calculated, the confidence interval, whether the program can determine the forecast error. Accuracy can be judged when evaluating forecasting approaches. Each user should be able to gradually monitor the forecasting process, as well as obtain more detailed data on the accuracy of the forecast.

Software compatibility with other products is a very important selection criterion, as it allows the user to save significant time. This feature provides the ability to read files created in various systems so as not to re-enter data. In this regard, it is also important that the program can save files in various versions, convenient for reading by other programs.

The third criterion (data processing and ease of data entry) is closely related to the compatibility criterion. Forecasting efficiency can undoubtedly be improved using software that allows you to read information from other databases.

The ease of interpretation of the obtained data depends on the form in which the user receives information from the program, whether the forecast error, confidence interval, or other indicators for assessing the accuracy of the obtained sales forecast model are clearly defined.

Graphics capabilities are used in the software when testing both the initial input model and its predictive part. In all modern programs, you can see on the chart comparison of actual data with the forecast and compare them. Some more advanced systems provide graphics to the user in a wide resolution and also allow you to place several graphs simultaneously in one working window for comparing different data models, or time series on one graph.

Sometimes users are frightened by the excessive complexity of forecasting software. There are many manuals on the practical application of these programs, and most often the companies providing the service have excellent technical support. Rely on the reputation of a software manufacturer that plays an important role when choosing a program for forecasting sales, as most users are guided by feedback on a particular product received from colleagues or posted on the Internet.