The tools of the master forecaster

Crystal Ball Premium makes use of a mathematical technique called the Monte Carlo simulation to predict the probability of possible outcomes of a numeric scenario.

Despite how difficult this sounds, learning to use Crystal Ball is almost as easy as installing the software. Although you can use just Microsoft Excel to run a Monte Carlo simulation, it’s incredibly more difficult to do so. In addition, it takes a long time and is taxing on the CPU.

After running through a few simple steps in an installation wizard, the Crystal Ball software loads and attaches to your Excel toolbar, right below your drop-down windows. In minutes we were up and running.

A very intuitive and simple-to-use introductory wizard launches every time you initiate the software from the toolbar, and a tutorial guides you through the steps needed to create a simulation.

An example that the software provides for Crystal Ball’s powers is a simulation of profit forecasting given a simple spreadsheet that has revenue, costs and total profit.

The Monte Carlo simulation essentially depends on your understanding of your industry by letting you assume the probability of your revenues and costs to go up or down interdependently.

Through this probability assumption, the software then initiates a simulation of a predetermined set of time forecasting where your revenue, costs and total profits should be in the future. The benefit of this simulation is that it then lets you drill into the data to see the best- and worst-case scenarios as well as the most probable outcome.

Another benefit of the Crystal Ball tool is that it lets you run statistical operational-efficiency reports that are commonly known as Six Sigma operations.

Six Sigma calculations let you better optimize a process in your organization by reducing variability and uncertainty, thereby saving time and money.

Crystal Ball gives Six Sigma users the ability to calculate the variance levels of an activity and localize disorders within a series of events.

Six Sigma operations are predominantly found in plant operations or industrial situations where a repetitive series of events produce a product such as in a Humvee. An invaluable tool to the military, Six Sigma applications can help to minimize cost, increase operational speed and, more important, eliminate mistakes and repetition.

By default, Excel can run many Six Sigma applications, but Crystal Ball’s Six Sigma applications are easier to use and more graphically intensive. The level of detail is also more detailed than on a plain Excel document.

The retail list price of the premium-edition software is $3,000; however with a General Services Administration discount, an agency can pick up Crystal Ball for about $2,574. Decisioneering Inc., Denver, (800) 289-2550, www.crystalball.com