In our latest session, we explored how to build a robust budgeting and forecasting model using Microsoft Fabric, focusing on applying data OPS and DevOps techniques. Here are the key insights and steps to create an effective model.
Key Concepts: Budget vs. Forecast vs. Actual
- Budget: The planned financial metrics set at the beginning of the fiscal year.
- Forecast: Updated projections based on current trends, often adjusted quarterly or semi-annually.
- Actuals: The real financial data collected from operational activities.
Our goal is to build a model that accurately compares these three datasets to perform variance analysis and gain actionable insights.
Steps to Build the Model
- Start by selecting a business process, such as profit and loss (P&L) reporting.
- Use standard processes, like those from APQC, to guide the model structure.
Data Collection:
- Gather three years’ worth of P&L data for actuals.
- Create budget data for the upcoming financial year using Excel.
- Develop a forecast for the next six months to one year, initially in Excel, with potential AI integration for advanced forecasting.
Data Modeling:
- Establish the granularity of the data (e.g., monthly).
- Create separate fact tables for budget, forecast, and actuals.
- Include dimension tables for date, account, and department.
Implementation Using Microsoft Fabric:
- Use Excel for budget and forecast creation, leveraging its robust features for financial planning.
- Integrate the data into Microsoft Fabric for seamless analysis.
- Consider using AI tools for forecasting if the project scope allows.
Data OPS and DevOps Integration
Integrating Data OPS and DevOps practices ensures the model is built efficiently and accurately:
- Data OPS: Focuses on optimizing the data pipeline from entry to insight. Ensure data quality, transformation, and standardization are maintained throughout the process.
- DevOps: Streamlines the development process from idea to working code. Implement version control, automated testing, and continuous integration to manage updates and improvements.
Practical Application
- Start with a basic report layout, including refresh dates and metadata.
- Use Power BI’s features to build interactive dashboards and reports.
- Validate the model with real data to ensure accuracy.
Optimizing the Process:
- Use Git repositories for version control.
- Set up dev, test, and prod workspaces to manage the lifecycle of the report.
- Automate deployment pipelines for efficient updates and maintenance.
Advanced Techniques:
- Experiment with AI-driven forecasting models for more accurate predictions.
- Incorporate user feedback to refine and improve the model continuously.
Conclusion
Building a budgeting and forecasting model using Microsoft Fabric involves careful planning, data collection, and the integration of advanced tools and techniques. By following these steps and leveraging Data OPS and DevOps principles, organizations can create efficient, accurate, and insightful financial models that drive better decision-making.
For more detailed insights and practical examples, stay tuned for future posts!
