Forecasting

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Forecasting next year's requirements is not an exact science ”it can't be because it involves predicting what's going to happen in the next 12 months. The important thing about providing a forecast is to lay down a marker with a value attached to it. It goes without saying that the value attached should be reasonable and based upon some form of evidence, not merely plucked out of the air! The best starting point is the data available from previous years . This is accurate because it reflects what actually happened and is not going to change. For example, consider a system manager trying to estimate the required support budget for his computer systems and administration section. Suppose that last year there were 6 large servers, 300 workstations, 25 printers, and 4 members of staff. After an expansion program, there will be 9 large servers, 400 workstations, and 40 printers.

Some simple arithmetic will show that, theoretically, each member of staff can administer and support 1.5 servers, 75 workstations, and about 6 printers. By creating a spreadsheet, the cost for last year can be used as a basis for this year ”say, adding a 10% increase to allow for price rises. Ideally, though, to achieve any reasonable level of accuracy, more than one year's statistics should be available so that a growth factor can be built into the calculations. Many companies have experienced unprecedented growth in recent years because of the Internet and e-commerce, which, if not taken into account, could throw off the figures by a considerable amount.

A possible example is shown in Figure 2.3, using the previous year's data as a starting point for the forecast. Note that the figures used are for illustrative purposes.

Figure 2.3. Existing Data Provides the Most Accurate Source for Forecasting.

Figure 2.3 shows that $2 million might be a good estimate to include in the budget to support the systems, allowing a little for contingency.

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