Nowadays, data and information about our organizations are more and more common. Whether we are talking about data at the department level, group of employees or the entire organization, the data that all these groups generate is available at any time. Once collected, the data must be prepared for the analysis and interpretation processes. Their accuracy and high-performance analysis tools provide users with relevant conclusions about organization and the processes carried out, valuable information about sales strategies or forecast.
But how do we extract the most important information to make the right decisions regarding future business strategies? How do we identify future trends in the business environment and how do we correlate our actions with what will happen in the future? To answer these types of questions, we will discuss today how to use the Forecast feature in Tableau Software. We will understand how Tableau calculates forecasts and how we use them as a decision-making tool.
The Forecast in Tableau is a way to predict what will happen in the future. At the same time, forecast is used to outline an idea about the results we could have in the future, considering the data recorded so far. The forecast in Tableau has the role of detecting the direction to which the business market will go in a certain field and to highlight its trend.
First, we must keep in mind that in Tableau the forecast can be form only if our analysis includes a date dimension and at least one measure. Second, to state future trends more accurately, Tableau uses a technique called exponential smoothing. This technique refers to the fact that the most recent results and data have a greater weight and importance than the oldest ones. In this way, Tableau identifies the trend and seasonality of our results, thus managing to transpose them into the future.
The technique by which Tableau builds the forecast is exponential because the values found in the forecast consider the real values from the analyzed data set, the recent values always having a higher weight. Forecast in Tableau is often used then we want to have a prediction about future trends or results in a given season.
Next, we will show you how to build a forecast in Tableau and how to analyze the details they display.
→ In Tableau Desktop, connect to Superstore sample data provided by Tableau.
→ Create a line chart with Order Date (Year) in the Columns shelf and Sales in the Rows shelf. Go to the Analysis tab and click on Forecast under Model category.
→ On completing the above step, you will find the option to set various options for forecast. Choose the Forecast Length as 2 years and leave the Forecast Model to Automatic and then click OK.
→ You can also get minute details of the forecast model by choosing the option Describe Forecast. To get this option, right-click on Forecast diagram.
By Adelina Popescu
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