Monday, August 27, 2012

Forecasting Software Sales

"Forecasts may tell you a great deal about the forecaster," we're told by Warren Buffett, CEO of Berkshire Hathaway Inc., and quoted by David Olive in his book "A Devil's Dictionary of Business Jargon."

"They tell you nothing about the future," Buffett explains.

I subscribe to quite a few software development industry trade magazines and business publications. And I agree with Buffett that we have to be careful with the many forecasts that are published every week.

Some of the forecasters have an agenda. If you're interested in expanding the reach of a particular product or service, from Android tablets to software as a service (SaaS), you can create a questionnaire and target an audience that will give you the results that you're interested in publishing.

Many forecasting firms are professional and objective. Some aren't.

Don't bet the direction of your software development company on the accuracy of the forecasts that you read in industry trade journals.

1 comment:

  1. Thanks Al. Great post. I think it's worth having your marketing team track the metrics that make the most sense for your particular industry rather than just relying on industry reports. These can be external statistics or internal metrics. For example, I know a supply chain software exec who tracks fuel prices. Now, I wouldn't have considered fuel prices as being that relate-able to software sales, but apparently when fuel prices go to one extreme or another it impacts trucking and optimization software. I know another cloud software executive that has tied web page engagement statistics (time on page, bounce rates, etc.) to lead quality. He feels that because his sales cycles in a SaaS model are so fast, web metrics are the most immediate indicator.

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