Revenue Forecast Calculation

Oracle Hyperion 11.1.2.4 Hyperion Planning Revenue Forecasting Rule

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History: Version 0.1

Description Change Initial Draft

Author Amit Sharma

Publish Date 10th Feb 2015

Contents The Fundamentals of Revenue Forecasting ............................................................................................................. 3 Example of Revenue Forecast............................................................................................................................. 3 Writing Business Rule For Revenue Forecasting ....................................................................................................... 4 Step#1 SET Commands....................................................................................................................................... 4 Step#2 Apply FIX on Subset of Cube Commands .................................................................................................. 4 Step#3 Apply FIX on Subset of Cube Commands .................................................................................................. 4 Step#4 Calculating Hardware Revenue Units*Average ......................................................................................... 4 Step#5 Apply FIX on Period Dimension ................................................................................................................ 5 Step#6 Calculating Cost of Sales

("4110" * (1 - "Gross Margin %") .................................................... 5

Step#7 Confining Focus to Gross Profit ................................................................................................................ 5 Step#8 Consolidating Product Dimension ............................................................................................................ 5 Step#9 Calculating Revenue Driver Assumption ASP and COS Rate........................................................................ 5 Step#10 Calculating Gross Margin % ................................................................................................................... 5 Step#11 Calculating Sales Calls ........................................................................................................................... 5

The Fundamentals of Revenue Forecasting Understand thoroughly how sales channels work and how prospects become customers. On a high level, many companies develop sales forecasts by applying an expected or desired market growth rate to current year revenues. These forecasts are then substantiated using a bottom-up forecasting approach that takes into account inputs such as projected product units sold, price, sales productivity and seasonality, to name a few. Most of the time, the second approach ends up using assumptions designed to meet the end result of the first method.  The total number of potential customers with which a company can realistically do business, described sometimes as the “addressable market.”  Sales team productivity variables: the number of productive sales reps in the market, the number of calls each can make, the number of calls and average length of time expected to close a sale, average close rate(s) per rep and per product and any ramp-up time required for new products or reps.  The incentive structure of the sales team and its potential impact on product sales. For example, if sales reps are rewarded based on gross monthly sales, then one should not be surprised if they spend their time selling products with the highest price tags.  Online sales channel productivity variables: the number of products that customers will be comfortable purchasing online, the speed and effectiveness of the fulfillment process, the type of marketing investment required to drive the level of transaction activity sought.  Any seasonality associated with buyer behavior

Example of Revenue Forecast

Writing Business Rule For Revenue Forecasting Step#1 SET Commands

Step#2 Apply FIX on Subset of Cube Commands

SET UPDATECALC OFF ; SET AGGMISSG ON;

FIX (&CurForecast, {Version},{Department})

Step#3 Apply FIX on Subset of Cube Commands

FIX (@CHILDREN("P_TP1"),@CHILDREN("P_TP2"))

Step#4 Calculating Hardware Revenue Units*Average

"4110"( IF ((@ISMBR(&QRFYr1) AND @ISDESC(&QRFPer1)) OR (@ISMBR(&QRFYr2) AND @ISDESC(&QRFPer2)) OR (@ISMBR(&QRFYr3) AND @ISDESC(&QRFPer3)) OR (@ISMBR(&QRFYr4) AND @ISDESC(&QRFPer4))) "4110" = @ROUND("Units" * "ASP",2); ENDIF )

Step#5 Apply FIX on Period Dimension

Variable Reference

Step#6 Calculating Cost of Sales ("4110" * (1 - "Gross Margin %")

"5110"( IF ((@ISMBR(&QRFYr1) AND @ISDESC(&QRFPer1)) OR (@ISMBR(&QRFYr2) AND @ISDESC(&QRFPer2)) OR (@ISMBR(&QRFYr3) AND @ISDESC(&QRFPer3)) OR (@ISMBR(&QRFYr4) AND @ISDESC(&QRFPer4))) "5110" = @ROUND("4110" * (1 - "Gross Margin %"),2); ENDIF )

"5110" = @ROUND("4110" * (1 - "Gross Margin %"),2); Step#7 Confining Focus to Gross Profit

@IDESCENDANTS("GP");

Step#8 Consolidating Product Dimension

CALC DIM ("Product");

FIX (&CurForecast, {Version},{Department})

Step#9 Calculating Revenue Driver Assumption ASP and COS Rate

"ASP" = @ROUND("4110" / "Units",2); "COS Rate" = @ROUND("5110" / "Units",2); Step#10 Calculating Gross Margin %

"Gross Margin %" = @ROUND("GP" / "4001",2);

Step#11 Calculating Sales Calls

"Sales Calls"( IF (@ISMBR(&QRFYr4) AND @ISMBR("BegBalance")) "Sales Calls" = "Units"->"P_TP1"->"Rolling" / "Avg Order Size" / "Close Rate" * "Travel %"; ENDIF )

FIX (&CurForecast, {Version},{Department}) FIX ( @CHILDREN("P_TP1"),@CHILDREN("P_TP2")) "4110"( IF ((@ISMBR(&QRFYr1) AND @ISDESC(&QRFPer1)) OR (@ISMBR(&QRFYr2) AND @ISDESC(&QRFPer2)) OR (@ISMBR(&QRFYr3) AND @ISDESC(&QRFPer3)) OR (@ISMBR(&QRFYr4) AND @ISDESC(&QRFPer4))) "4110" = @ROUND("Units" * "ASP",2); ENDIF ) "4001";

"5110"( IF ((@ISMBR(&QRFYr1) AND @ISDESC(&QRFPer1)) OR (@ISMBR(&QRFYr2) AND @ISDESC(&QRFPer2)) OR (@ISMBR(&QRFYr3) AND @ISDESC(&QRFPer3)) OR (@ISMBR(&QRFYr4) AND @ISDESC(&QRFPer4))) "5110" = @ROUND("4110" * (1 - "Gross Margin %"),2); ENDIF ) @IDESCENDANTS("GP"); ENDFIX FIX ("Units",@IDESCENDANTS("GP")) CALC DIM ("Product"); ENDFIX ENDFIX FIX (&CurForecast, {Version},{Department}) "ASP" = @ROUND("4110" / "Units",2); "COS Rate" = @ROUND("5110" / "Units",2); "Gross Margin %" = @ROUND("GP" / "4001",2); "Sales Calls"( IF (@ISMBR(&QRFYr4) AND @ISMBR("BegBalance")) "Sales Calls" = "Units"->"P_TP1"->"Rolling" / "Avg Order Size" / "Close Rate" * "Travel %"; ENDIF ) ENDFIX