VMware Forecasting &

Forecasting Process

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Forecasting – Art or Science

“Forecasting is very difficult, especially if it’s about the future” – Niels Bohr

“Forecasting future events is like searching for a black cat in an unlit room, that may not even be there.” – Mark Twain

“If you have to forecast, forecast often.” – Edgar R. Fiedler

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Forecast – Creators & Consumers

Te

rritorie

sT

errito

ries

Districts, R

eg

ion

s & A

rea

sD

istricts, Re

gio

ns &

Are

as

GE

Os

GE

Os

FP

&A

FP

&A

VP Sales, CEO & CFOVP Sales,

CEO & CFO

RevenueRevenue

AccountingAccounting

AR/IRAR/IR

MarketingMarketing

Product BUProduct BU

Product BUProduct BU

Product BUProduct BU

Product BUProduct BU

Sa

les O

ps

Sa

les O

ps

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Opportunity Forecasting

(aka ‘Why do we need to enter all this junk in

Siebel’)

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Three Views of Forecasting

• Field forecast / field assessment

• The forecast provided by the field based on all known factors in the local market.

• Funnel perspective / assessment

• Analysis against the opportunities currently in the system, typically analytically driven

• Historical & analytical perspective

• Based purely on historical achievement & trends

We are going to mostly talk about the first oneWe are going to mostly talk about the first one

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Components of an Opportunity

• Sales Method

• Account / Customer

• Partner(s)

• Territory(s) / Sales Team

• Revenue (including line item breakout)

• GAM Home

• Buying Program

• Sales Stage

• Technical Sales Stage

• Sales Status

• Close Date

• Sales Method

• Account / Customer

• Partner(s)

• Territory(s) / Sales Team

• Revenue (including line item breakout)

• GAM Home

• Buying Program

• Sales Stage

• Technical Sales Stage

• Sales Status

• Close Date

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Components of an Opportunity - Stages

Sales Method

Stage

Standard

00 – Prospect

01 – Suspect/Lead

02 – Qualified

03 – Technical Validation

04 – Business Validation/Pre-Agreement

05 – Agreement to Purchase

06 – Closed Won

07 – Closed Lost

OEM

01 – Suspect/Lead

02 – Qualified

03 – Technical Validation

04 – Business Validation/Pre-Agreement

05 – Agreement to Purchase

05a – Awaiting OEM Activation (Closed)

06 – Closed Won

07 – Closed Lost

Sales

Method Stage

PSO

00 – Prospect

01 – Suspect/Lead

02 – Qualified

03 – Technical Validation

04 – Business Validation/Pre-Agreement

05 – Agreement to Purchase

06 – Closed Won

07 – Closed Lost

Renewals

01 – Suspect/Lead

02 – Qualified

05 – Agreement to Purchase

06 – Closed Won

07 – Closed Lost

Under Bar 05 – Projected

06 – Closed Won

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Components of an Opportunity - Product

Server Desktop Non-License

VI VI for VDI 1st year SNS

SRM ThinApp Multi year SNS

M&A View Renewals

Lab Mgr/Stage Mgr Other Desktop PSO

LCM/Orchestrator

Other Server

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Components of an Opportunity - Probability

Sales Method Stage Forecast % Upside %

Standard

00 – Prospect 0% 0%

01 – Suspect/Lead 35% 20%

02 – Qualified 55% 40%

03 – Technical Validation 75% 60%

04 – Business Validation/Pre-Agreement

95% 80%

05 – Agreement to Purchase 100% 90%

06 – Closed Won 100% 100%

07 – Closed Lost 0% 0%

OEM

01 – Suspect/Lead 35% 20%

02 – Qualified 55% 40%

03 – Technical Validation 75% 60%

04 – Business Validation/Pre-Agreement

95% 80%

05 – Agreement to Purchase 100% 90%

05a – Awaiting OEM Activation (Closed)

100% 100%

06 – Closed Won 100% 100%

07 – Closed Lost 0% 0%

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Closing out the Opportunity

• When orders are booked in Oracle (ERP), orders are booked at GROSS value

• All orders booked flow into the Bookings DB (Bookings). An automatic reduction of the front end rebates are applied

• The NET amount (w/o Back End rebates applied) is passed into the Order Log, which flows to Siebel

• The NET amount is what should be applied to the opportunity when closing an opportunity

• Once revenue is updated, you move the opportunity immediately to Sales Stage 06 – Closed Won

• The Order ID (or id’s) should be entered into the opportunity. This will allow automatic updates as and when we implement

• When orders are booked in Oracle (ERP), orders are booked at GROSS value

• All orders booked flow into the Bookings DB (Bookings). An automatic reduction of the front end rebates are applied

• The NET amount (w/o Back End rebates applied) is passed into the Order Log, which flows to Siebel

• The NET amount is what should be applied to the opportunity when closing an opportunity

• Once revenue is updated, you move the opportunity immediately to Sales Stage 06 – Closed Won

• The Order ID (or id’s) should be entered into the opportunity. This will allow automatic updates as and when we implement

Lots of F

ussy D

etails

Lots of F

ussy D

etails

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VP Level - Forecasting the ‘Run Rate’

VIP RUN RATE Level of business trackedManaged Periods

Geo/Function <1.5k <4.5k <10k <20k 13 Wks

US Northeast x x

US West x x

AMER x x

Japan Tracked x x

Korea x x

APAC

CE x x

SE x x

EMEA

Renewals - AP x x

Renewals - EMEA x x

Renewals

Web Sales x

Web

Worldwide

More Fussy D

etails

More Fussy D

etails

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The Forecast Call(s)

(they never end)

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Called Numbers – 10 Data Points

• Best Case

• Most Likely Case

• Worst Case

• Management Gap (can be negative)

• To Go

• Conversion Ratio - (Forecast + Upside)/To Go

• Weighted Roll Up – Funnel weighted by Stage & Status

• Run Rate (usually <$20k,varies by GEO)

• OEM Royalty

• War Room Deals

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Forecast Calls – 24/7

• Monday – WW Forecast call

• Previous Monday – GEO call

• Previous Friday – Area call

• Previous Thursday – Regional call

• Previous Weds – District call

• Previous Tuesday – Team call

• Is the data always a week old? - sales mgmt is discussing deals real time, all the time

• Don’t forget about monthly “Deep Inspection Calls”

• Oh, and don’t forget your weekly report, which contains all of the above

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Last Week of the Quarter – FCST 3x Day

Mgmt Commits Mgmt Commits

Goal 307.0Best Case 315.0 QuarterMost Likely 300.0 Upside Commit WorstWorst Case 280.0 West Area 64.00 61.00 57.00

Central Area 48.00 48.00 45.00Trended Forecast East Area 94.00 91.00 85.00

Canada 20.50 19.50 18.00Current Closed in Flash 185.3 Fed 28.00 27.00 26.50Unclosed in Siebel 71.6 Latin 12.50 11.50 10.50Sub Total 256.9 Americas 267.00 258.00 242.00

OEM Estimate for December 0.0 Globals 20.6 15.8 16OEM Double Counted 0.0 Under $4,500 9 8 7OEM Not Counted Above 9.0 Total 296.6 281.8 265.0

Total Projected 265.9

Remaining Pipeline 49.5 (all deals, including war room, $75M as of yesterday)

Siebel Stats FCST PIPEMonday 103.7 49.0 9am

103.2 48.0 11am102.9 48.8 1pm

Wednesday 103.1 45.6 7:30am97.5 49.5 3:30pm

Thursday 97.3 45.3 7am

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Last Week of the Quarter – War Room Review

region subregion unique_territory sales_team account TotalUS East NY Metro Strategic-NJ2 JDEAS Bristol Myers Squibb $5,400,000US Central Ohio Valley Strategic-Ohio CWEER Lexisnexis $3,000,000US East Midatlantic Strategic-East Midatlantic JMCDONALD Capital One Services Inc $3,000,000US West Northwest Strategic-Northwest DHARPER Washington Mutual, Inc. $1,843,000US West Southwest Strategic-Colorado LPARRISH First Data Corporation $1,751,311US Central Plains St. Louis LDALEBOUT Scottrade, Inc $1,500,000US Central North Central Strategic-Wisconsin BKLAAS Manpower Inc. $1,500,000US Central Plains Twin Cities HBLUMENTHAL Minnesota State Colleges and Universities $1,300,000US East Southeast Strategic-Atlanta STHOMAS Worldspan, L.P. $1,300,000US East Midatlantic Strategic-East Midatlantic JMCDONALD Sas Institute Inc $1,250,000Canada Canada Ontario West RSETH Rogers Shared Services $1,200,000US West Southwest Strategic-San Diego RANDERSON Intuit Inc $1,121,000US Central North Central Strategic-Illinois1 JBUCCI United Air Lines $1,100,000US West Southwest Strategic-Southwest SDUNBAR First American Corporation $1,000,000US West Southcentral East Houston/LA DION Capital One, N.A. $1,000,000US East Midatlantic Strategic-PA BMCFARLAND SEI Investments Company $955,549US Central North Central Strategic-Illinois3 TKAGEL Accenture, Inc $909,975US West Northwest NorCal JFALVEY Deltanet, Inc $891,000US West Northwest Strategic-SiliconValley KENP Juniper Networks, Inc $880,000US West Southwest Strategic-Arizona2 BOLDEN Apollo Group Inc $820,000Canada Canada East Canada GSCHEMAGIN Quebecor Inc $800,000US Central Plains St. Louis LDALEBOUT Yellowbook Company, Inc $800,000LatAm LatAm Brazil-Country CAMBC Sicredi $782,000US East New England Strategic-Boston2 RICHA ACI Worldwide, MA $778,476US East NY Metro Strategic-NY1 JCORWIN Metropolitan Life Insurance Company Inc $750,000US Central Plains St. Louis LDALEBOUT Iowa Health System $728,864

region subregion unique_territory sales_team account TotalUS East NY Metro Strategic-NJ2 JDEAS Bristol Myers Squibb $5,400,000US Central Ohio Valley Strategic-Ohio CWEER Lexisnexis $3,000,000US East Midatlantic Strategic-East Midatlantic JMCDONALD Capital One Services Inc $3,000,000US West Northwest Strategic-Northwest DHARPER Washington Mutual, Inc. $1,843,000US West Southwest Strategic-Colorado LPARRISH First Data Corporation $1,751,311US Central Plains St. Louis LDALEBOUT Scottrade, Inc $1,500,000US Central North Central Strategic-Wisconsin BKLAAS Manpower Inc. $1,500,000US Central Plains Twin Cities HBLUMENTHAL Minnesota State Colleges and Universities $1,300,000US East Southeast Strategic-Atlanta STHOMAS Worldspan, L.P. $1,300,000US East Midatlantic Strategic-East Midatlantic JMCDONALD Sas Institute Inc $1,250,000Canada Canada Ontario West RSETH Rogers Shared Services $1,200,000US West Southwest Strategic-San Diego RANDERSON Intuit Inc $1,121,000US Central North Central Strategic-Illinois1 JBUCCI United Air Lines $1,100,000US West Southwest Strategic-Southwest SDUNBAR First American Corporation $1,000,000US West Southcentral East Houston/LA DION Capital One, N.A. $1,000,000US East Midatlantic Strategic-PA BMCFARLAND SEI Investments Company $955,549US Central North Central Strategic-Illinois3 TKAGEL Accenture, Inc $909,975US West Northwest NorCal JFALVEY Deltanet, Inc $891,000US West Northwest Strategic-SiliconValley KENP Juniper Networks, Inc $880,000US West Southwest Strategic-Arizona2 BOLDEN Apollo Group Inc $820,000Canada Canada East Canada GSCHEMAGIN Quebecor Inc $800,000US Central Plains St. Louis LDALEBOUT Yellowbook Company, Inc $800,000LatAm LatAm Brazil-Country CAMBC Sicredi $782,000US East New England Strategic-Boston2 RICHA ACI Worldwide, MA $778,476US East NY Metro Strategic-NY1 JCORWIN Metropolitan Life Insurance Company Inc $750,000US Central Plains St. Louis LDALEBOUT Iowa Health System $728,864

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What Happens on the Forecast Call?

•Inspection

•Interrogation

•Motivation

•Occasionally Humiliation

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What they don’t teach you in new hire training

• For Reps

• Asymmetry in the penalty for being wrong vs. the reward for being right

• Listen to your customers, not your manager, to keep your job (why would he pressure you to raise your forecast??)

• Nobody goes to club for being a good forecaster (or gets promoted for that matter)

• For Managers

• Fear isn’t necessarily a good thing, but it sure works well on the forecast call

• Forecasting – more important than when you were a rep (slightly) but still asymmetric

• For Sales Ops

• For every process, there is a loophole (sales stages, probabilities, $’s)

• For Reps

• Asymmetry in the penalty for being wrong vs. the reward for being right

• Listen to your customers, not your manager, to keep your job (why would he pressure you to raise your forecast??)

• Nobody goes to club for being a good forecaster (or gets promoted for that matter)

• For Managers

• Fear isn’t necessarily a good thing, but it sure works well on the forecast call

• Forecasting – more important than when you were a rep (slightly) but still asymmetric

• For Sales Ops

• For every process, there is a loophole (sales stages, probabilities, $’s)