Off the Shelf

A powerful forecasting and business-modeling package does what spreadsheets never could

Analytica aims to simplify model development, maintenance, and communications. Using the Mac's familiar point-and-click interface, users can build flowchartlike diagrams of financial and scientific models. Because Analytica's models make it easier to see structural relationships, the program gives you a better understanding of structural problems and helps you refine your approach. I particularly appreciated that Analytica allows model builders to insert plain-English explanations at every node of every diagram.

Analytica model components can include formulas, constants, and multidimensional data, but what really makes the program shine is its ability to develop probability-based predictions from numerous variables and their relationships to one another. Before we tested Analytica, we used spreadsheets for all our quantitative analyses. Although the spreadsheet approach works well for historical data, it is too cumbersome for forecasting. A spreadsheet yields a two-dimensional view of its designer's narrow guesses about future costs, expenses, interest, inflation rates, revenues, and so on. To generate a range of projections, the user is obliged to type in each of the possible variables. Analytica, on the other hand, lets the user describe an array of numbers for a given variable, and it allows for statistical deviation.

I experimented: I built a model to predict how my company's profitability might be affected by the addition of a salesperson. I wanted the model to account for all costs associated with sales activities. Analytica's multidimensional approach permitted the model to easily incorporate such data as the size of the sales territory and even the cost differences between leasing a car and reimbursing the salesperson for mileage. I defined the parameters of the model, and as I entered the projected revenues and cost arrays, Analytica's graphical representation was forming. When I finished, I could get the general forecast in one window and then double-click through the web of variables to view the probable impact of each one on our bottom line.

A caveat: Analytica assumes a rudimentary understanding of statistics and probability, so you may have to return to your old college texts. But I think you'll find that it's such a powerful business modeling tool that the remedial study is well worth the effort.

The Product
Analytica, developed by Lumina Decision Systems Inc., published by Decisioneering Inc. (800-289-2550; www.decisioneering.com; $795), object-oriented visual-modeling software

Reviewer
Patrick Cook (cook@lcmassociates.com), CEO of LCM Associates Inc., a seven-year-old architectural-millwork contracting company in Baltimore

Requirements
Windows: 486 or higher with Windows 95, 16 MB RAM (24+ MB recommended), 5 MB free hard-drive space, 8-bit color display

Macintosh: 68020 or higher, System 6 or higher, 2.5 MB RAM for 68000 version, 4 MB (8 MB recommended) for Power Macintosh (16 MB recom-mended for System 6 or higher)