integrated business planning framework

A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of five essential building blocks: a business-backed design; high-quality process management, including inputs and outputs; accountability and performance management; the effective use of data, analytics, and technology; and specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

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In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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To improve your supply chain, modernize your supply-chain IT

Supply-chain resilience: Is there a holy grail?

Imagine a symphony orchestra where each musician plays their own tune without listening to others. The result would be chaotic and dissonant, right? Similarly, in the business world, when decision-making happens in silos and planning processes are disconnected, it’s like having a group of individuals playing their own instruments without any coordination. The harmony is lost, and the organization becomes inefficient, misses opportunities, and struggles to keep up with the fast-paced market.

Integrated Business Planning (IBP) addresses these challenges by providing a comprehensive framework that integrates strategic, operational and financial planning, analysis, and reporting to drive better business outcomes.    A retail company experiences a sudden surge in online sales due to a viral social media campaign. Integrated planning incorporates supply chain planning, demand planning, and demand forecasts so the company can quickly assess the impact on inventory levels, supply chain logistics, production plans, and customer service capacity. By having real-time data at their fingertips, decision-makers can adjust their strategies, allocate resources accordingly, and capitalize on the unexpected spike in demand, ensuring customer satisfaction while maximizing revenue.   This blog explores the significance of IBP in today’s modern business landscape and highlights its key benefits and implementation considerations.

Integrated business planning framework

Integrated Business Planning (IBP) is a holistic approach that integrates strategic planning, operational planning, and financial planning within an organization. IBP brings together various functions, including sales, marketing, finance, supply chain, human resources, IT and beyond to collaborate across business units and make informed decisions that drive overall business success. The term ‘IBP’ was introduced by the management consulting firm Oliver Wight to describe an evolved version of the sales and operations planning (S&OP process) they originally developed in the early 1980s.

Making up the Integrated Business Planning framework are six key pillars:

1. strategic planning.

Integrated Business Planning starts with strategic planning. The management team defines the organization’s long-term goals and objectives. This includes analyzing market trends, competitive forces, and customer demands to identify opportunities and threats. Strategic planning sets the direction for the entire organization and establishes the foundation for subsequent planning roadmap.

2. Operational planning

Operational planning focuses on translating strategic goals into actionable plans at the operational level. This involves breaking down the strategic objectives into specific targets and initiatives that different departments and functions need to execute.

For example, the sales department might develop a plan to enter new markets or launch new products, while the supply chain department focuses on inventory optimization and ensuring efficient logistics. The key is to align operational plans with the broader strategic objectives to ensure consistency and coherence throughout the organization.

3. Financial planning

Financial planning ensures that the organization’s strategic and operational plans are financially viable. It involves developing detailed financial projections, including revenue forecasts, expense budgets, and cash flow forecasts. By integrating financial planning with strategic and operational planning, organizations can evaluate financial profitability, identify potential gaps or risks, and make necessary adjustments to achieve financial targets.

 4. Cross-functional collaboration

A fundamental aspect of IBP is the collaboration and involvement of various functions and departments within the organization. Rather than working in isolation, departments such as sales, marketing, finance, supply chain, human resources, and IT come together to share information, align objectives, and make coordinated decisions.

5. Data integration and analytics

IBP relies on the integration of data from different sources and systems. This may involve consolidating data from enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, supply chain management systems, and other relevant sources. Advanced analytics and business intelligence tools are utilized to analyze and interpret the data, uncovering insights and trends that drive informed decision-making.

6. Continuous monitoring and performance management

The Integrated Business Planning process requires continuous monitoring of performance against plans and targets. Key performance indicators (KPIs) are established to measure progress and enable proactive management. Regular performance reviews and reporting enable organizations to identify deviations, take corrective actions, and continuously improve their planning processes.

What are the benefits of Integrated Business Planning?

By integrating strategic, operational, and financial planning organizations can unlock the full potential of IBP and drive business success and achieve their goals.

Enhanced decision-making

IBP facilitates data-driven decision-making by providing real-time insights into various aspects of the business. By bringing together data from various departments, organizations can develop a holistic view of their operations, enabling them to make better-informed decisions.

Improved alignment

By aligning strategic objectives with operational plans and financial goals, IBP ensures that every department and employee is working towards a common vision. This alignment fosters synergy and drives cross-functional collaboration.

Agility and responsiveness

In the rapidly changing business landscape, agility is crucial. IBP allows organizations to quickly adapt to market shifts, demand fluctuations, and emerging opportunities. By continuously monitoring and adjusting plans, businesses can remain responsive and seize competitive advantages.

Optimal resource allocation

Integrated Business Planning enables organizations to optimize resource allocation across different functions. It helps identify bottlenecks, allocate resources effectively, and prioritize initiatives that yield the highest returns, leading to improved efficiency and cost savings.

Risk management

IBP facilitates proactive risk management by considering various scenarios and identifying potential risks and opportunities. By analyzing data and conducting what-if analyses, companies can develop contingency plans and mitigate risks before they materialize.

Essential steps for implementing Integrated Business Planning

Implementing an effective IBP process requires careful planning and execution that may require substantial effort and a change of management, but the rewards are well worth it. Here are some essential strategic steps to consider:

1. Executive sponsorship

Establish leadership buy-in; gain support from top-level executives who understand the value of Integrated Business Planning and can drive the necessary organizational changes. Leadership commitment, led by CFO, is crucial for successful implementation.

2. Continuous improvement

Continuously monitor and adjust; implement mechanisms to monitor performance against plans and targets. Regularly review key performance indicators (KPIs), conduct performance analysis, and generate timely reports and dashboards. Identify deviations, take corrective actions, and continuously improve the planning processes based on feedback and insights.

3. Integration of people and technology

To foster cross-functional collaboration, the organization must identify key stakeholders, break down silos, and encourage open communication among departments. Creating a collaborative culture that values information sharing and collective decision-making is essential.

Simultaneously, implementing a robust data integration system, encompassing ERP, CRM, and supply chain management systems, ensures seamless data flow and real-time updates. User-friendly interfaces, data governance, and training provide the necessary technological support. Combining these efforts cultivates an environment of collaboration and data-driven decision-making, boosting operational efficiency and competitiveness.

4. Technology

Implement advanced analytics and business intelligence solutions to streamline and automate the planning process and assist decision-making capabilities.  These solutions provide comprehensive functionality, data integration capabilities, scenario planning and modeling, and real-time reporting.

Integrated Business Planning software

From a tech perspective, organizations need advanced software solutions and systems that facilitate seamless data integration and collaboration to support IBP. Here are some key components that contribute to the success of integrated business planning:

1. Corporate performance management

A platform that serves as the backbone of integrated business planning by integrating data from different departments and functions. It enables a centralized repository of information and provides real-time visibility into the entire business.

2. Business intelligence (BI) tools

Business intelligence tools play a vital role in analyzing and visualizing integrated data from multiple sources. These tools provide comprehensive insights into key metrics and help identify trends, patterns, and opportunities. By leveraging BI tools, decision-makers can quickly evaluate financial performance, make data-driven business decisions and increase forecast accuracy.

3. Collaborative planning and forecasting solutions

Collaborative planning and forecasting solutions enable cross-functional teams to work together in creating and refining plans. These planning solutions facilitate real-time collaboration, allowing stakeholders to contribute their expertise and insights. With end-to-end visibility, organizations can ensure that plans are comprehensive, accurate, and aligned with business strategy.

4. Data integration and automation

To ensure seamless data integration, organizations need to invest in data integration and automation tools. These tools enable the extraction, transformation, and loading (ETL) of data from various sources. Automation streamlines data processes reduces manual effort and minimizes the risk of errors or data discrepancies.

5. Cloud-based solutions

Cloud computing offers scalability, flexibility, and accessibility, making it an ideal choice for integrated business planning. Cloud-based solutions provide a centralized platform where teams can access data, collaborate, and make real-time updates from anywhere, at any time. The cloud also offers data security, disaster recovery, and cost efficiencies compared to on-premises infrastructure.

6. Data governance and security

As organizations integrate data from multiple sources, maintaining data governance and security becomes crucial. Establishing data governance policies and ensuring compliance with data protection regulations are vital steps in maintaining data integrity and safeguarding sensitive information. Implementing robust data security measures, such as encryption and access controls, helps protect against data breaches and unauthorized access.  

IBM Planning Analytics for Integrated Business Planning

IBM Planning Analytics   is a highly scalable and flexible solution for Integrated Business Planning. It supports and strengthens the five pillars discussed above, empowering organizations to achieve their strategic goals and make better data-driven decisions.  With its AI- infused advanced analytics and modeling capabilities, IBM Planning Analytics allows organizations to integrate strategic, operational, and financial planning seamlessly. The solution enables cross-functional collaboration by providing a centralized platform where teams from various departments can collaborate, share insights, and align their plans.  IBM Planning Analytics also offers powerful data integration capabilities, allowing organizations to consolidate data from multiple sources and systems, providing a holistic view of the business. The solutions’s robust embedded AI predictive analytics uses internal and external data and machine learning to provide accurate demand forecasts. IBM Planning Analytics supports continuous monitoring and performance management by providing real-time reporting, dashboards, and key performance indicators (KPIs) that enable organizations to track progress and take proactive actions.  As the business landscape continues to evolve, embracing Integrated Business Planning is no longer an option but a necessity for organizations. To succeed in this dynamic environment, businesses need an integrated approach to planning that brings all the departments and data together, creating a symphony of collaboration and coordination.

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What Is Integrated Business Planning and Why Is It Important?

Think of modern integrated business planning, or IBP, as a mashup of supply chain optimization, financial planning and analysis (FP&A) and operational best practices, powered by a companywide culture that’s all about delivering the speed, savings and responsiveness today’s consumers demand while managing risk.

Note that IBP as a fuzzy, buzzword-laden process methodology has been around for years. It’s usually implemented by expensive consultants in sprawling, global corporations that know they need to unify siloed sales, supply, financial and operational resources — before more nimble competitors relegate them to the former Fortune 500 list.

We’re here to argue that IBP deserves a second look for any company that wants to maximize profits and minimize the risks associated with growth. No six-figure consultant required.

What Is Integrated Business Planning?

On paper, IBP is a process for aligning a company’s business goals with its finance, supply chain, product development, marketing and other operational functions. Think parts suppliers that work with automakers and need to constantly retool to accommodate design changes, or food producers operating on razor-thin margins that must manage both uncertain supply chains and fickle customer tastes.

Lag, and a competitor is standing by to take that business. Move quickly but in a disjointed manner and you may keep customers, but at the expense of higher cost of goods sold (COGS) and lower profitability.

For example, consider PickerBots, a fictional maker of custom machinery for manufacturing and warehouse operations. When the company launched in 2017, it found a niche in restaurant supply, but when that business slowed significantly in 2020 the founders decided to retool. Rather than simply changing up its marketing, the firm set out to revamp its business strategy. A top-down scenario planning exercise led to realigning its R&D, demand forecasting, profitability and revenue analysis, supply chain planning and marketing and sales strategy.

The company culture was already strong on innovative thinking, but the founders realized that the link between strategic planning and day-to-day operations could use improvement. Enter a new COO with the chops to align operations with product demand planning and sales and marketing while weighing in on financial targets and budgets.

Key Takeaways

• In a company that embraces IBP, there’s a direct line from purchasing, production and inventory to sales and marketing to financial targets and budgets.
• A key IBP benefit is that materials are bought at the right price, at the right time and in just the right quantity to fulfill market demand.
• Successful IBP delivers closer collaboration and more trust among departments, leading to improved decision-making.
• IBP may require significant cultural change and cannot be successful without unwavering commitment from the executive team.

Integrated Business Planning Explained

Many organizations mistake IBP for a supply-chain-centric exercise. While linking supply chain planning with other departments, from sales and operations through finance, is important, that’s just one element.

IBP aligns business g oals and financial t argets with decisions and execution across the entire business.

There is overlap with financial planning and analysis (FP&A). Because an IBP initiative gathers data from across the enterprise, companies get better at predictive analysis. Now, when purchasing forecasts a parts shortage, supply and operations can adjust before customers are affected.

It’s also not a one-and-done exercise. PickerBots’ new COO advises looking a minimum of 36 months out. Leaders will need to keep their eyes on that long-range plan while continually reviewing, revising and communicating financial and operating results. What supply chain gaps have opened up, and how can we close them? Do we need to update our scenario planning? Are we tracking the right financial KPIs?

A crucial element of IBP is that it integrates financials with operations. Here’s a structure that PickerBots plans to follow.

Why Is Integrated Business Planning Important?

Companies that undertake IBP realize a number of practical benefits, including reduced holding costs, more responsive customer service and demand fulfillment, shorter time to market for new products and an improved correlation between demand planning and fulfillment.

After PickerBot’s scenario planning and strategy session, the company decided to jump into the emerging collaborative robot, or cobot, market. A collaborative robot is designed to safely interact with human workers. PickerBot’s leaders believe demand will increase for “pick and place” cobots with fine motor skills for use on manufacturing lines as well as in agricultural settings.

Now that the company has its strategic direction, the COO wants to focus on three higher-level concepts before delving into more practical areas, like financial planning and analysis and supply chain optimization. That’s because without goal-setting, PickerBots won’t be able to define success.

Alignment and accountability 

All executives must agree on three things: What are our corporate goals? What does success look like for each? How will I and my team contribute and be accountable?

The company’s goals are grouped into four areas: industry-focused, operations and supply chain, financial and marketing and sales. The management team will review all goals to make sure they align with strategy and are both actionable and achievable.

Industry-focused goal: Offer the most innovative cobots on the market

What success looks like: Develop a product that can match or exceed a human worker in its ability to pick fragile crops without damage.

Who will execute: The R&D team

Financial goal: Diversify revenue streams

What success looks like: Minimize dependence on one market/industry. Add a services arm to generate recurring revenue from maintenance contracts, powered by sensors built in to all new products.

Who will execute: Cross-functional led by CEO and finance

Other goals might be “control costs at each step and deliver cobots to customers on time and to specifications” with an expectation to lower COGS by 10% and raise the company’s Net Promoter Score by 25% within one year. Or for sales, “find 10 new customers for the company’s agricultural cobots and bundle maintenance contracts with each sale.” That ties back to revenue diversification.

An important point: Every manager is accountable for every goal, not just those that lie within their purviews.

Informed decisions and actions 

Planning across PickerBots’ supply chain was disjointed, with engineers purchasing materials direct and little central planning or cost control. As part of the IBP process, the company will adopt sales and operations planning (S&OP) principles to improve its supply chain and logistics.

Actionable goals here include building visibility into how each department is working and tying the impact of decisions to financial goals. For example, by having R&D build in sensors that can automatically collect and transmit data on a cobot’s operational status, PickerBots can proactively perform preventative maintenance so the devices are almost never down — an important selling point and a way to contribute to maintenance income.

Organizationwide, divisions need to focus less on their own needs and view actions through the lens of all goals. That means the company needs to collect a lot of timely data and use it to issue reports so managers can make better decisions, more quickly. That may require an investment in ERP and other software.

Transparency/visibility 

All department heads will take part in a monthly business review, where the group will assess progress in achieving the company’s objectives. The strategic plan is also available to all staff members, and quarterly all-hands meetings will be held to gather ideas and insights and walk through KPIs.

Four success metrics for the IBP process include:

1. Getting all stakeholders to buy in to corporate goals so that everyone agrees and understands what the business wants to achieve and how it will get there. There are clear responsibilities for each function in the pursuit of goals.

2. Basing business decisions on data. The integration of finance into product, demand and supply functions is key here, as are selecting the right KPIs.

3. Tying decision-making to outcomes and improving accountability. Because every department is responsible for providing accurate numbers and projections, there’s less risk that the CFO and finance team are left holding the bag if revenues fall short.

4. Shifting the culture to embrace cross-functional collaboration. An IBP process encourages openness and trust, and as a result more deeply engages and empowers employees. As an action item, each R&D and manufacturing team member will spend a week annually accompanying sales reps on customer calls.

What Is the Difference Between S&OP and IBP?

The term “IBP” was coined by management consultancy Oliver Wight to describe the next iteration of the sales and operations planning (S&OP) process Wight developed in the early 1980s.

The big difference between IBP and S&OP is that the latter has become the domain of supply chain and logistics specialists, particularly those involved in supply-and-demand balancing and planning. S&OP is execution-focused and involves a traditional budgeting process.

In contrast, IBP takes a more cross-functional and holistic approach to weaving business goals through every function. As a result, in theory, supply chain management is proactive and optimized.

IBP includes S&OP processes but because it involves cultural change, without executive buy-in, IBP will not be successful.

Some major differences between S&OP and IBP are:

6 Steps in the Integrated Business Planning Process

Now that its goals are set, PickerBots can take the next steps in its IBP journey.

1. Determine what is holding the company back. Is it a lack or growth or profitability? Is the product portfolio too complex? Has the business lost competitiveness in its space? For our manufacturing firm, the main problem was overfocus on one niche market.

2. Engage and educate employees. Once leadership buys in to goals, that enthusiasm must trickle down through the ranks. Unless everyone is committed to integrated business planning, success will be elusive. The COO recognizes that a formal employee engagement program will keep workers invested in the success of the business and actively working to meet strategic goals.

3. Set up a tiger team. IBP success comes from tight coordination, constant communication and accountability for KPIs. It’s a cultural shift that will take time to propagate throughout the business. To jumpstart things, PickerBots identified engaged employees within each functional area and assigned them to a daily 20-minute standup call. Now, say a shipment of RFID readers needed by manufacturing will be two weeks late. The purchasing team member shares that information promptly so that sales can manage customer expectations and finance can account for delayed revenue. If the problem recurs, the company can seek out new suppliers. No more surprises.

4. Establish a project/product prioritization process. IBP takes discipline. Only projects that forward the company’s strategic goals get resources. Same for products. That might mean sunsetting a line that’s still selling but lacks growth potential. All managers who require resources or have a product or service launch idea fill out a cost-benefit analysis template that is tailored to reveal whether expected benefits and costs align with goals. Leadership prioritizes using this process. No more sacred cows.

5. Expand the finance team’s influence. Finance needs to sit in on product planning, supply chain optimization and sales strategy meetings. Specifically, choose a finance team member well-versed in FP&A functions. FP&A professionals inform major decisions made by the executive team and collect and analyze financial data from across the organization to create reports that reveal whether goals are being met — and if not, why not? How do we fix the problem? Like many smaller firms, PickerBots doesn’t have a dedicated FP&A staffer, so the head of finance assigns an accounting team member who knows the business and has an aptitude for data collection and number crunching.

6. Adopt technology and tools to support IBP. If the forecasting process is seen as a quarterly or annual exercise imposed by finance and yielding little benefit to departments, IBP can’t succeed. Companies with static, point-in-time budgets need to adopt rolling forecasts to make sure the business stays on track. And, finance teams need to be able to easily access the data they need from each operational area. Both rolling forecasts and better use of data require technology and a commitment to transparency. You can’t manage what you can’t measure.

Traditional vs. Rolling Forecasts

5 tips to succeed at integrated business planning.

Some ways the COO plans to set PickerBots up for success include:

1. Sell IBP as a way to bring order from chaos. For example, large companies, especially those that have engaged in a number of mergers and acquisitions, may have thousands of SKUs and product codes. One big manufacturer Oliver Wight worked with used IBP to whittle 120,000 item numbers down to about 10,000 and reduce inventories by 50% while improving on-time, in-full delivery by up to 20%. For a smaller company, IBP can prevent ever getting in a situation where it needs to slash 90% of SKUs.

2. Adopt a continuous improvement mindset. All parts of any production or service system, particularly people, are interconnected, inform one another and are mutually dependent on generating successful outcomes. This practice’s origin comes from Kaizen, a Japanese term meaning “change for the better.” Originating in Japan, the business philosophy looks to continuously improve operations and involve all employees, from assembly line workers to the CEO. It’s a way to reinforce IBP.

3. Get buy-in from the CIO. PickerBots’ CIO came up through the ranks of manufacturing IT and is familiar with the concept of Total Quality Management (TQM), which has overlap with IBP. That went a long way in communicating the benefits of IBP and freeing up budget for technologies that can make IBP work, like ERP, enterprise performance management (EPM), supply chain management and real-time-capable accounting and finance software — especially important to realize the “one set of numbers” value proposition.

4. Apply risk management principles. Disasters large and small happen. While the zen of IBP skews toward positive and upbeat, make sure department heads are doing scenario planning and what-if analyses to model operational risk — like overdependence on one market. Consider assigning your tiger team a secondary function as a crisis management strike force.

5. Don’t forget HR. Labor is likely your company’s biggest operating expense, so ensure that it’s working for your IBP effort, not against it. A human resources professional can identify traits in applicants — like team players who are data driven and comfortable with transparency — that predict whether they will be contributors to IBP success.

Benefits of Integrated Business Planning

Research shows that the main benefit of implementing IBP is increased revenue, followed by forecast accuracy and improved Perfect Order Delivery rates.

Three additional key benefits:

Real-time insights: Once companies have instituted rolling forecasts, for example, finance can more quickly and accurately answer questions on spending and cash flow. Expect more accurate KPIs across the board.

Ownership: The flip side of accountability is that in a company fully embracing IBP, all employees assume responsibility for meeting all goals. So you’d better make sure that authority to make decisions is decentralized and tied to responsibility for outcomes, because there are few bigger morale killers than accountability without the power to effect success. Companies can further nurture a culture of ownership by tying rewards to meeting or exceeding goals.

Improved customer satisfaction: While more on-time, in-full deliveries make customers happy, that’s not the only way IBP improves Net Promoter Scores. Better planning yields better insights into what customers want, and a strong company culture often leads to improved customer empathy and its associated benefits.

Integrated Business Planning Adoption Challenges

Where a business starts with IBP depends on its maturity. Companies with dog-eat-dog cultures and highly siloed processes have a lot of work to do. These tend to be firms with traditional top-down management structures, static annual budgeting with little ability to generate forward-looking projections and dated business plans that are misaligned with current customer needs.

While all are thorny structural challenges, a leadership team that’s averse to placing trust and decision-making authority at lower levels of the organization is in even worse shape. Companies with autocratic, command-and-control styles must be willing to decentralize authority if they hope to realize IPB’s benefits.

Even businesses with mature, integrated processes and egalitarian cultures often get tripped up by “top down” versus “bottom up” KPI reporting and budgeting. IBP requires businesses to focus less on finance developing a top-line budget and then handing departmental budgets down from on high. Rather, they need to become comfortable with a bottom-up process, where departments start with a plan of what they want to achieve, calculate what it will cost and then feed a number up to the finance team, which uses that input to calculate the total budget.

Companies not already using at least a somewhat flexible budgeting process are likely to find this shift difficult. One way to jump-start the transformation might be a modern form of zero-based budgeting.

Steps of Zero-Based Budgeting for 2021

• Create a strategic vision for ZBB: Identify cost targets, relevant KPIs and goals.
• Evaluate business units to select ZBB candidates (also referred to as “decision units,” or any organ of the business that operates independently with its own budget).
• Start selected budgets from scratch (i.e., from zero).
• Each decision unit provides “decision packages,” which break down each activity in terms of its objective, funding needs, justification in the context of company goals, technical viability and alternative courses of action.
• Evaluate each proposed item to determine its value-add to the company and whether the entire cost is justified. What does the expenditure bring back to the company?
• Prioritize costs based on company goals. Reduce or cut expenses in areas that no longer produce significant value.
• Allocate funds among areas that are productive and aligned with the business’s growth drivers.

Elements of Integrated Business Planning

Integrated business planning takes place at a regular cadence; every month is most common, so we’ll use that in our example.

These steps are standard for IBP consultants, adaptable to most industries and bake in the PickerBots COO’s virtuous cycle of market research and strategic planning, R&D and manufacturing, demand forecasting and predictive analysis, profitability analysis, supply chain optimization and marketing and sales strategy.

1. Product management review. This includes all elements of product portfolio management. A cross-functional team meets monthly to review the overall status of all of product-related projects: Are they on track? Have we identified new risks and opportunities? Are the most high-value products or services prioritized? The goal is aligning the product portfolio with business goals and making sure needed raw materials and manufacturing floor capacity are lined up. Product managers revise as needed and publish an updated master plan, along with the resources it’ll take to deliver any changes.

2. Demand planning picks it up. This is a cross-functional process that helps businesses meet customer demand for products while minimizing excess inventory and avoiding supply chain disruptions. Demand planning can increase profitability and customer satisfaction and lead to efficiency gains. This team brings together members of sales, marketing and finance to determine whether they’re targeting the right markets, the right way. They work up an optimized demand plan. Relevant KPIs include sales forecast accuracy, inventory turns, fill rates and order fulfillment lead times.

3. Then, the ball goes to the supply planning team. These supply chain experts work out the optimal way to meet projected demand in a cost-effective way. The key is to have visibility into complex supply chains; a formal supply chain visibility (SCV) project helps spot and fix weaknesses, such as inventory shortfalls or order fulfillment issues, before they become major problems. Lower cost of goods sold (COGS) is the North star.

4. The integrated reconciliation team pulls together the initial product, demand and supply plans and consolidates them into one holistic business plan based on a 24- or 36-month projection; for iterative updates, teams highlight material changes. Decisions that could not be made by individual teams are prepared for executive review.

5. The executive team resolves conflicts and rolls the updated plan out to the entire company.

Integrated Business Planning Components

The components of integrated business planning comprise three buckets: Plan, execute and monitor and adjust.

Specific actions falling into each bucket vary depending on the consultancy or technology supplier. Some are more aligned with supply chain planning, while others center on S&OP or financial planning with plug-ins to other functional areas. Others are very industry-specific.

Let’s look at Oracle’s IBPX (Integrated Business Planning and Execution) for Manufacturing solution as an example. Key components include:

• Top-down and bottom-up, driver-based planning and forecasting
• Risk modeling for M&A and strategic initiatives
• Full financial statement structure for strategic and operational planning
• Predictive and prescriptive analytics and planning
• A preseeded S&OP process
• Near-real-time demand and supply balancing
• Real-time backlog management
• Automation of predictions and correction actions based on actuals
• AI-enabled operational planning, such as for sales territories and quotas
• IoT and sensor data flows integrated with automated decisions

Items like backlog management and enhanced support for IoT and sensor data are important to manufacturers like PickerBots. A retailer might be more interested in advanced inventory management. What’s important is that any solution, whether purchased as a suite or pulled together by an integrator or in-house team, supports the ability to do long- and medium-range and short-term planning based on a single, up-to-date data set that’s accessible to all authorized stakeholders.

Also look for the ability to easily model “what-if” scenarios, robust budgeting and costing and a roadmap to advanced technologies like AI and predictive analytics.

Integrated Business Planning Examples

We mentioned the Oliver Wight customer that whittled 120,000 SKUs down to about 10,000. That firm, Uponor Group, looked to IBP after a string of acquisitions left it with swelling inventories, an extremely complex portfolio and a lack of communication between siloed functions and far-flung locations. The Finnish company sells products for drinking water delivery as well as radiant heating and cooling equipment and has 3,900 employees in 30 countries. Uponor had a hard time getting a singular view of financial information across its subsidiaries, and each unit had its own practices for inventory management. Small events, such as holidays, would drive some sites to build up “just in case” inventory, and double-stocking in warehouses was common. Subsidiaries in different countries had different SKUs for the same items, and R&D was localized, with no collaboration across the company.

Upinor focused first on its supply chain and implemented S&OP processes, then advanced to IBP the following year. The results have been an increase in net sales of $1.1 billion euros, a 30% improvement in on-time in-full deliveries, a 50% reduction in inventories and increased visibility.

U.S.-based technology provider Juniper Networks also undertook an IBP project focused on implementing a digital supply chain with IBP, where the business planning process would extend S&OP throughout the supply chain, product and customer portfolios, customer demand and strategic planning.

Since undertaking the project, Juniper’s lead-time attainment is up 55%. and its inventory costs are down by 15%, allowing it to realize a positive ROI on the IBC project.

History of Integrated Business Planning

Oliver Wight developed S&OP in the 1980s as a methodology for a client that wanted to balance supply-and-demand volume. In the years since, the process evolved to integrate financials, inventory and new-product introductions.

The consultancy renamed S&OP as integrated business planning in the late 1990s to reflect the process of integrating all functions of the business behind one optimized plan. Since then, a newer term, “enterprise integrated business planning,” has emerged. EIBP includes scenario planning and extended supply chain collaboration and discusses how large companies will adopt new technologies, such as AI, big data and advanced analytics.

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Applications of Integrated Business Planning

IBP makes planning and operations much more transparent, so it’s ideal for companies moving to “just in time” manufacturing. It’s also predictive, once a company builds up some data. That can help with customer satisfaction.

PickerBots, as an example, found that it typically sees constrained supply chain capacity for motherboards in Q3. With that insight, sales and marketing can work to encourage customers to take delivery of systems in Q2 or Q4, manufacturing can prebuild products and supply chain leaders can work on alternate sources for parts that pose challenges.

Looking ahead to the future of IBP, we expect it to help companies:

• Work on ever-longer-range strategy planning, modeling and M&A activities with a higher degree of confidence.
• Detect and notify stakeholders of unanticipated events before they impact the business by using advanced technologies, including real-time sensor information and machine learning (ML) pattern recognition.

As companies build comfort with automation, advanced IBP systems can be set to take action based on analysis without human intervention. Consider a chain of bakeries; a system plugged into a long-range weather forecast system might detect a tropical storm that could raise the price of vanilla and automatically order extra.

Cloud-based technology such as ERP underpins all these advances. For example, PickerBots always set its sales goals monthly. But often these plans were delayed to let the executive team review and approve any changes, meaning operations was caught unawares. A tool like NetSuite Planning and Budgeting automates planning processes and centralizes company financial and operational data, so finance teams can disseminate updates quickly.

The next frontier? Expending IBP to business partners and suppliers, even customers. But first, companies need to get their own cultural and technology houses in order.

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By Michael Huthwaite , Director of Product Management, Intelligent Reporting at Walmart

Integrated Business Planning is a complex alignment of people , processes, and technologies that can provide immense value creation for the business and end-user efficiency when brought together under a single unified framework.

For Integrated Business Planning to stand a chance of success, all stakeholders involved must align on the same goal. It often requires strong leadership and a pragmatic/visionary mindset to achieve.    

Is your organisation ready for the challenge?

FP&A’s Role in Integrated Business Planning

The FP&A function is the logical team for most organisations to lead an organisation’s IBP transformation . 

But for the organisation to adopt a world-class IBP, FP&A must establish a unified framework that focuses on the big picture and is inclusive to everyone involved in financial planning.

Taking a top-down approach to IBP means considering all organisational levels of the business, all levels of financial detail (from Cash flow down to transactional drivers) and all time ranges (both short-term and long-term).

FP&A cannot work in a sandbox but rather needs to be better business partners . Integrated Business Planning is not a single, one-size-fits-all approach to planning . Instead, it is the recognition of multiple business processes working together to add more value than simply the sum of the parts.

Key Business Processes

As indicated above, IBP is a unified framework of different business processes.

In more candid terms, trying to solve Integrated Business Planning using a single business process is not only naive but also a recipe for disaster.

I suggest starting your IBP journey with four key business processes:

• Strategic Planning
• Tactical Planning
• Operational Execution
• BI / Analytics

A quick definitions of these processes are as follows:

Strategic Planning  is the process of evaluating alternative strategies in order to maximise shareholder value (or long-term viability for organisations that don’t have shareholders).

Tactical Planning  is the process of communicating and coordinating business plans across the organisation. It is often synonymous with Budgeting and Forecasting .

Operational Execution  is the process of setting daily or weekly objectives using operational metrics.

BI/Analytics  is the process of building a unified data model (a centralised hub for data collection) and aligning financial and non-financial data as it flows through both historical and planning processes. 

Evaluating IBP based on a Forecast-Cascade Construct

Now that we have defined the four basic Integrated Business Planning Processes, we can shift our focus towards how they operate under two different constructs.

As you will see, the best approach to integrate multiple processes is to orchestrate a series of handoffs that not only have a healthy overlap but also operate fluidly (data flows in a bi-directional way).  

Construct 1: Business Process by Organisational Level

In the diagram below, we plot the four business planning processes against the organisation level in the Y-Axis.

Figure 1: Key Planning Processes by the Organisational Level

Doing so provides a clearer understanding of where each business planning process typically operates and a good understanding of where the overlaps exist.

Just as it is important to define the key business processes at play, it is equally important to recognise where the optimal overlaps exist. Overlaps are important as these are your integration points.

Too much overlap creates complexity, but too little overlap creates disconnects.

In the diagram above, we have highlighted the traditional budgeting and forecasting sweet spot (the space between the two dotted lines). This occurs between the Cost Center and Strategic Business Unit (SBU) for most organisations.

The areas above and below the dotted lines illustrate where Integrated Business Planning expands the realm of business planning.

It includes Strategic Planning, which is challenging to do in most EPM/CPM solutions primarily due to its agile and what-if nature, and Operational Planning, which is often too detailed for most organisations.   

Construct 2: Business Process by Driver Level

Swapping out the organisation level for the driver level provides another key distinction worth exploring.

Figure 2: Key Planning Processes by the Driver Level

For most organisations, traditional budgeting and forecasting is done either at a GL level or perhaps one of two levels higher (at an “Account” level, for example). This is where most FP&A teams who only deal with Tactical Planning feel most comfortable.

But in an IBP world, there are advantages to planning at different levels of detail.

For example, at the strategic level, the emphasis should be more on driving shareholder value at the SBU level. Trying to produce a 5+ year forecast view by GL or even at an individual P&L line item for that matter is often fraught with error. A more realistic approach to Strategic Planning is to focus on the life cycle of a given SBU from its initial inception (cash investment) through the key life cycles (Investment, Growth, Plateau and Decline).

This approach requires more than just financial account drivers; it also requires forecasting the Cost of Capital and the Duration of the SBU (the life cycle).

In Tactical Planning, there is often no need to consider either of these drivers. Still, without these two drivers, making valuation projections is impossible (DCF models require both Cost of Capital and Duration assumptions). That is why we use Value Drivers and not just financial accounts.

The Operational Execution level is where we’ve seen most of the recent technical advances in financial planning. Several years ago, it would have been comical to think that FP&A should be planned by Vendor or Customer. It would have taken far too long and been outdated quickly.

However, with the more recent adoption of Artificial Intelligence/Machine Learning by FP&A, this is exactly where organisations can start to take advantage of this granular level of planning. Not only can a machine run the calculations quickly, but it can also run the calculations often (once a week, for example).

It helps organisations stay on track and adapt when hurdles crop up.  

With the rise of AI/ML, this is also a great opportunity to point out that AI/ML is not a replacement for Strategic Planning or Tactical Planning. This is a common misconception that many people fall victim to. AI/ML shouldn’t set targets; rather, AI/ML should help us reach our targets by telling us how to get there based on the latest hurdles or headwinds.

After all, AI/ML relies on data. Much of the efforts into Strategic and Tactical Planning are about creating new business opportunities that do not exist today. As a result, little data is available to fuel AI/ML. AI/ML is a complement, not a replacement, for other planning processes.

Integrated Business Planning provides a competitive advantage for organisations able to integrate these individual business processes successfully.

The speed at which an organisation can take a business idea, stress test that idea with various scenarios and then cascade that strategy down through the business in order to set tactical goals that can realistically be achieved is no easy task. 

The need for Integrated Business Planning also grows as organisations grow, yet the challenges required to unify people, processes and technology under a single framework also become tougher. It is where FP&A needs to step up and help close the gap. This article was first published on the SAP Blog .

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Integrated Business Planning

For integrating functional plans, deploying business strategy, and driving business management, what is integrated business planning (ibp).

Integrated Business Planning (IBP) is a common-sense process designed for effective decision-making and led by your leadership team. True business integration means senior management can plan and manage the entire organization over a 24-36 month horizon, aligning strategic and tactical plans each month, and allocating critical resources, people, equipment, inventory, materials, time, and money; to satisfy your customers in the most profitable way.

Integrated Business Planning represents the evolution of Sales and Operations Planning (S&OP) from the supply and demand balancing process developed in the early 1980s. Today it is a process that drives the alignment of all functions across an organization, models and creates readiness for alternate outcomes, drives deployment of strategy, and enhances collaboration across supply chains.

What is the difference between S&OP and IBP?

There are many differences between Sales & Operations Planning and Integrated Business Planning, but firstly it’s important to note that IBP is not a supply chain process ; it has a much broader reach. IBP is the process that connects your strategy and business plan to ensure both are delivered.

The purpose of IBP is not to drive a better forecast with which supply chain can plan. It is the process that brings focus to the deployment of your business strategy and provides a framework for effective decision-making to drive growth.

It's also much more than just a monthly meeting. IBP is a company framework to surface and solve problems and continually re-optimize plans as circumstances change. IBP enables businesses to create an aligned, cross-functional plan for the future, based upon key assumptions. These assumptions, documented and updated each month, are based on insights.

Read our white paper to learn more about what sets Integrated Business Planning apart from Sales & Operations Planning.

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Oliver Wight IBP Powered by Board is a holistic solution combining Oliver Wight's industry-leading Class A and implementation change management processes with Board software. Fully align people, processes, and technology and embed IBP and its benefits for years to come.

This offering combines IBP technology and process in one package for rapid time to value. You will benefit from Oliver Wight consulting and education + Board Intelligent Planning Platform + specialist implementation services. 

Find out more.

How mature is your organization's true level of maturity in IBP?

Before embarking on any performance improvement program, it is imperative to identify your organization's true level of maturity. The Oliver Wight Maturity Model characterizes an organization as being in one of four key phases of maturity: Co-ordination, Business Process Control, Automation, or Integration. Assess your business maturity in Integrated Business Planning using our free online self-assessment tool .

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How you can benefit from Integrated Business Planning

Early identification of gaps in the business plan and strategy deployment, creating time to close them

An integrated view of performance and projection of your business over a 24-36 month horizon

Alignment of functional operating plans and financial projections with ‘one set of numbers’

Application of scenario planning and modelling to areas of your business where there may be uncertainty or impact

Increased responsiveness to uncertainties and unplanned events to minimize negative impacts and seize opportunities

Creation of transparency and clear accountability across the business/organization

Simplification of the budgeting or annual planning process

Integration of strategy deployment with operational plans

Increased employee engagement and efficiency

Growth in revenue

Reduced costs

Improved customer service

Reduced inventory

Visibility of planned product changes, future demand from sales and marketing, supply chain performance, planned supply chain capability and flexibility, plus bottom-up plans and the actions and decisions required to deliver ‘best for business' outcomes

You should consider Integrated Business Planning for your business if:

You are constantly in ‘fire-fighting’ mode

You have a misaligned management team

You are continually missing the financial plan

You are experiencing rapid growth and can no longer manage effectively using an informal process

Your budgeting process is ‘painful’

You are struggling to get on top of service issues

You cannot keep up with growth in demand

You have excessive inventory

You are experiencing excessive rework and cost

Departments or sites are working in silos

There is no ‘single source of truth’ or ‘single set of numbers’ to run the business

You feel like you never have time to look at the strategy

There is poor deployment and execution of the strategic plan

You have poor employee engagement

You feel like you are not getting a return on the effort put into your existing S&OP/IBP process

How we can help

A diagnostic assessment of your current S&OP or IBP process, including its effectiveness and identifying any performance issues

Transfer of our knowledge to your people so they can create and manage an effective IBP process

Change management – plan, monitor, and support the implementation of change and its impact on your people

Facilitate the design of an IBP process to best fit your organization and its needs

Scoping of an action plan to address issues and take advantage of the opportunities identified, including resourcing, timelines, and performance improvement expectations

Coach IBP process users as you introduce the new ways of working

Assess and validate that your IBP process has achieved a Class A level of effectiveness – firmly embedded as the ‘way you do things’ and delivering the benefits you wanted

Integrated Business Planning is a cutting edge process which creates cross-functional alignment and enables businesses to re-focus to meet the ever-changing environment. IBP generates readiness for alternative outcomes, enhances collaboration, and ultimately drives deployment of strategy in an uncertain world. The chosen process of some of the world’s most progressive and best-known organizations, IBP is a common-sense process that maximizes profit and enables leaders to manage risk with confidence.

Integrated business planning resources to help you improve.

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What is Integrated Business Planning and What Are The Benefits?

If there is one thing any business analyst can forecast is this: sustained uncertainty. And organizations can’t do much to change this. What organizations can do though, is to prepare to deal with market variability by addressing the business challenges internal organizations may have: disconnected and lengthy planning processes, an insane amount of time collating data, siloed decision-making, lack of forecasting accuracy, poor sight into operational assumptions and what is driving margin. That’s what Integrated Business Planning is aiming for.

What is Integrated Business Planning (IBP)?

Integrated Business Planning aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. A trusted, common view of the numbers provides a robust baseline for agile decision-making and keeps all teams together, collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line is that IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

IBP Process: How Does it Work

The Integrated Business Planning process is a framework to address the C-suite needs and help them implement the business strategy and manage uncertainty to improve decision-making. The secret sauce of IBP is a collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance, that’s how the C-suite gets value from it. Consequently, finance plays a central role within IBP.

IBP typically focuses on 24- 60 months horizons, as opposed to short term: that’s Integrated Tactical Planning or Sales and Operations Planning and Execution. The process must be fully integrated, so it should remove the departmental silos and it must adapt to the organizational construct of every business (it is not a one size fits all type of process).

Figure 1 outlines the five core elements of the IBP cycle with its responsibilities:

The most efficient way to foster this collaboration is by having a unified solution and data model that caters the needs of the various agents involved on each review.  Figure 2 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

IBP Business Benefits

The benefits an organization can expect from an IBP implementation are diverse. In the big picture, IBP can certainly improve financial and business performance. Figure 3 outlines some of the most remarkable KPI improvements.

Want to learn how you can maximize the benefits of your IBP process and get your CEO onboard, read our blog on the 5 Considerations to Help Your CEO Trust the IBP Process .

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What is IBP? Process, Strategy & Benefits

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The platform for orchestrating performance.

Integrated business planning (IBP) continues to grow in popularity and adoption. And no wonder—when implemented, it provides a solid foundation to meet key goals. But with many stakeholders and processes involved, it’s not always easy. Where should you start in order to succeed on your journey to true IBP?

What is Integrated Business Planning (IBP)

Integrated business planning — the subject of a new report from the Association for Finance Professionals (AFP) — is a single holistic plan that seamlessly connects strategic plans with sales plans, operational plans, and financial plans while balancing practical constraints about the availability of resources and funding with the business’s financial objectives.

Benefits of Integrated Business Planning

When you’re looking for IBP best practices, a great place to begin is by taking advice from experts like Ken Caron and Ken Olsen of Deloitte. In a webinar (now available on demand), they shared their definition of IBP, discussed some core ideas behind it , and described how you can kick-start your efforts to incorporate IBP into your enterprise. We’ve recapped some of their message here, starting with an important question: Why should a company do IBP? They offered three reasons:

• Alignment and accountability. Instead of spending time and energy debating which plan to follow, all stakeholders agree on one plan—and understand their role in accomplishing the goals of that plan.
• Better decisions and actions. The structured process that comes from a well-built IBP approach enables companies to focus on making better-informed decisions and taking the best action based on those decisions.
• Increased visibility. IBP enables companies to incorporate insights from supply chain projections, financial projects, and strategic plans. And the more insights incorporated into projects, the better informed a company’s decisions will be, which, in turn, will be more likely to contribute to business goals like profitability and efficiency.

So now that you know the potential benefits of IBP, where should you begin?

6 Tips to Succeed at Integrated Business Planning

You need executive alignment and a clear vision before starting anything else. Find an executive willing to sponsor your efforts, “sell” the process, align stakeholders, and consult on change management. When you have a champion in high places, you’re on the right track.

IBP is a journey, so you need a roadmap of prioritized actions that drive quick wins and sustainable benefits. But before you can plan that roadmap, you need to understand the basic elements of an IBP framework, which we detail below, along with the benefits each element brings to the table.

• Effective governance. Clear roles, decision rights, policies, and incentives create an atmosphere that enables everyone to work together as an organized unit to achieve the company’s mission.
• Clear mission. A defined aim sets the path for IBP and defines what IBP will deliver.
• Organized process. When processes are cross-functional and designed to align the organization toward one desired outcome, you can focus on meeting the goal instead of maintaining the process.
• Right talent. Build a talent base with the skills and core competencies essential to IBP, such as strategic planning, financial planning, and supply chain planning . With skilled and experienced employees on board, you’ll be able to more effectively implement IBP across the enterprise.
• Insightful analytics. With access to real-time analytics, you can run “what-if” scenarios, quickly respond to disruptions and market adjustments, and make insight-driven decisions the core of your business planning. This helps you be proactive and stay ahead of your market instead of relying on reactive decisions.
• Powerful technology. Since IBP is a cross-functional initiative, you need an agile, flexible, cloud-based technology to provide a central platform for IBP collaboration and execution.

In their webinar, our two Deloitte experts are joined by Vivek Soneja, Global Head of Supply Chain Solutions at Anaplan. They discuss how you can make IBP a success, as well as some common reasons why IBP initiatives fail. To learn more about how you can succeed at IBP, watch the webinar.

Strengthen the connection between business and supply chain

• Unveiling the Power of Integrated Business Planning (IBP) in Supply Chain Excellence
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Integrated Business Planning (IBP) plays a defining role in the overall growth of the business.  In the dynamic business landscape companies are looking for solutions that can seal the gap between various business functions that drive efficiency and agility.

Since the supply chain plays an integral role in the growth of the business, IBP or Integrated business planning in the supply chain becomes crucial.  

In this blog, we will delve into the intricacies of Integrated Business Planning, exploring its role in the supply chain, providing examples, understanding its implementation in SAP, exploring the framework, and deciphering the crucial processes and execution strategies.

Table of Contents

Integrated Business Planning in the Supply Chain

Integrated Business Planning is a strategic approach that integrates various business functions to streamline decision-making processes across an organization. In the context of the supply chain, IBP aims to align demand, supply, and finance functions, breaking down silos and fostering collaboration. By providing a holistic view of the entire supply chain, organizations can enhance their responsiveness to market changes, minimize risks, and optimize resource utilization.

Key Components of Integrated Business Planning

Demand planning.

At the core of Integrated Business Planning is demand planning. This component involves forecasting future demand based on historical data, market trends, and other relevant factors. By aligning demand projections with overall business objectives, organizations can optimize inventory levels and ensure a responsive supply chain.

Inventory Management

Another integral component of IBP is inventory management. This entails overseeing the entire inventory lifecycle, from procurement to storage and distribution. By integrating inventory management into the planning process, organizations can prevent stockouts, minimize holding costs, and enhance overall supply chain efficiency.

Financial Planning

Financial planning forms the financial backbone of Integrated Business Planning. This component involves aligning the budgeting and financial forecasting processes with operational plans. By integrating financial considerations into the overall planning framework, organizations can ensure that strategic decisions are financially viable and contribute to the bottom line.

Sales and Operations Planning (S&OP)

Sales and Operations Planning is the bridge that connects demand planning, inventory management, and financial planning. It involves a collaborative process where cross-functional teams work together to align sales forecasts with operational plans. S&OP ensures that all departments are on the same page, fostering coordination and minimizing conflicts.

Collaboration and Communication

While not a traditional “component,” effective collaboration and communication are intrinsic to successful Integrated Business Planning. This involves breaking down silos between departments, fostering transparency, and ensuring that information flows seamlessly across the organization. Clear communication enhances the effectiveness of the planning process.

Technology Integration

In the digital age, technology plays a pivotal role in the key components of IBP. Advanced analytics, artificial intelligence, and collaborative platforms empower organizations to make data-driven decisions. Technology integration ensures that the planning process is not only efficient but also adaptable to the dynamic nature of modern business.

Risk Management

A proactive approach to risk management is a crucial component of IBP. This involves identifying potential risks, assessing their impact on operations, and developing strategies to mitigate these risks. By incorporating risk management into the planning process, organizations can navigate uncertainties with resilience.

Scenario Planning

Scenario planning involves considering various possible future scenarios and developing strategies to address each scenario. This forward-thinking approach allows organizations to be agile in the face of changing market conditions. Scenario planning is a proactive component that adds a layer of flexibility to the IBP process.

Continuous Improvement

The final key component of IBP is a commitment to continuous improvement. This involves regularly evaluating the effectiveness of the planning process, identifying areas for enhancement, and implementing changes. A culture of continuous improvement ensures that IBP remains a dynamic and responsive strategy for the organization.

Integrated Business Planning Example

Consider a consumer goods company that utilizes IBP to align its sales forecasts with production schedules and inventory levels.

Through a unified platform, the sales team can communicate market demands directly to the production and procurement teams, ensuring that the right products are produced at the right time. This prevents overstock or stockouts, ultimately improving customer satisfaction and operational efficiency.

Nowadays companies have the option of choosing Integrated Business Planning in SAP. Through this, companies can leverage advanced analytics, machine learning, and real-time data to make informed decisions across the entire supply chain.

Integrated Business Planning Framework

Integrated Business Planning (IBP) is a strategic management process that aligns various business functions to ensure a cohesive and synchronized approach to planning and decision-making. It integrates key business processes, such as finance, sales, marketing, operations, and supply chain, to create a holistic view of the organization’s performance. Here is a general framework for Integrated Business Planning along with an example:

Strategic Planning:

• Define the organization’s long-term goals and objectives.
• Identify key performance indicators (KPIs) that align with the strategic direction.

Sales and Operations Planning (S&OP):

• Align sales forecasts with production and inventory plans.
• Create a consensus plan that balances demand and supply.

Demand Planning:

• Use historical data, market trends, and customer feedback to forecast future demand.
• Collaborate with sales and marketing teams to understand market dynamics.

Supply Planning:

• Evaluate the capacity and capabilities of the supply chain.
• Ensure that resources are available to meet demand in a timely and cost-effective manner.

Financial Planning:

• Develop a financial plan that aligns with the operational plans.
• Monitor and manage financial performance against targets.

Scenario Planning:

• Assess various scenarios and their potential impact on the business.
• Develop contingency plans to address potential disruptions.

Performance Monitoring:

• Implement key performance indicators (KPIs) to measure the success of the integrated plan.
• Regularly monitor and analyze performance data to identify areas for improvement.

Collaboration and Communication:

• Foster communication and collaboration among different departments.
• Ensure that information flows seamlessly across the organization.

Let’s consider a manufacturing company that produces electronic devices. The company wants to increase its market share over the next five years. The Integrated Business Planning framework is applied as follows:

• Set a goal to increase market share by 15% in the next five years.
• Identify KPIs, such as revenue growth, customer satisfaction, and operational efficiency.
• Align production plans with the expected increase in sales.
• Ensure that inventory levels are optimized to meet customer demand without excessive holding costs.
• Analyze historical sales data and market trends.
• Collaborate with the sales and marketing teams to understand the impact of promotions and new product launches.
• Assess manufacturing capacity and identify potential bottlenecks.
• Evaluate the reliability of suppliers and establish contingency plans for any disruptions.
• Develop a budget that supports increased production and marketing efforts.
• Monitor financial performance regularly to ensure alignment with the strategic goal.
• Consider scenarios such as supply chain disruptions, economic downturns, or unexpected increases in demand.
• Develop plans to mitigate risks and capitalize on opportunities.
• Track KPIs to measure progress toward the goal of increasing market share.
• Adjust plans as needed based on performance data.
• Facilitate regular meetings and information-sharing sessions among departments.
• Use technology and collaborative tools to enhance communication and coordination.

Integrated Business Planning Process

step-by-step explanation of the Integrated Business Planning process:

Strategic Direction:

• Objective: Define the long-term goals and strategic direction of the organization.
• Conduct a thorough analysis of market trends, competitive landscape, and internal capabilities.
• Engage with key stakeholders to establish a clear vision and strategic priorities.
• Objective: Understand and forecast customer demand for products or services.
• Analyze historical sales data, market trends, and external factors influencing demand.
• Collaborate with sales and marketing teams to gather insights and input.
• Objective: Align the organization’s capacity and capabilities with anticipated demand.
• Evaluate manufacturing capacity, production capabilities, and resource availability.
• Identify potential constraints and bottlenecks in the supply chain.
• Objective: Achieve consensus on a balanced plan that aligns demand and supply.
• Collaborate with cross-functional teams to reconcile demand and supply plans.
• Resolve conflicts and establish a unified plan that meets organizational goals.
• Objective: Develop a financial plan that supports the operational and strategic objectives.
• Align budgeting and financial forecasting with the integrated demand and supply plans.
• Monitor financial performance against established targets.
• Objective: Anticipate and prepare for potential disruptions or changes in the business environment.
• Identify various scenarios that may impact the business, such as market fluctuations or supply chain disruptions.
• Develop contingency plans and strategies for different scenarios.

Performance Monitoring and Measurement:

• Objective: Monitor key performance indicators (KPIs) to track the success of the integrated plan.
• Establish relevant KPIs for each functional area and the overall organization.
• Objective: Foster collaboration and communication across departments.
• Facilitate regular meetings and communication channels between different functional areas.
• Utilize technology and collaborative tools to enhance communication and information sharing.

Continuous Improvement:

• Objective: Iteratively refine and improve the planning process based on feedback and changing circumstances.
• Conduct regular reviews and evaluations of the IBP process.
• Solicit feedback from stakeholders and make adjustments to enhance effectiveness.

Feedback and Adjustment:

• Objective: Gather feedback from the execution of plans and adjust future plans accordingly.
• Evaluate the performance of the integrated plan against objectives.
• Adjust the plan based on lessons learned and changing business conditions.

Frequently asked questions

Why is an integrated business plan important.

An integrated business plan is crucial for aligning various functions, fostering collaboration, and adapting to market uncertainties. It ensures a unified strategy, enhancing efficiency and decision-making.

What is the difference between IBP and S&OP?

While both involve planning, Integrated Business Planning (IBP) is a broader process that includes financial planning, demand forecasting, and more. Sales and Operations Planning (S&OP) specifically focuses on aligning sales forecasts with operational plans.

What is the meaning of integrated planning?

Integrated planning refers to a holistic approach that synchronizes various organizational functions. It involves aligning strategies, processes, and resources to work cohesively toward common goals, promoting efficiency and adaptability.

What is an integrated strategic business plan?

An integrated strategic business plan combines strategic goals with operational plans, financial considerations, and cross-functional collaboration. It provides a comprehensive roadmap for an organization, ensuring that every aspect works in tandem to achieve long-term success.

In conclusion, Integrated Business Planning stands as a strategic imperative for organizations looking to enhance their supply chain efficiency.

By breaking down silos, fostering collaboration, and leveraging advanced technologies, IBP empowers businesses to make informed decisions, optimize resources, and respond swiftly to market changes.

As the business landscape continues to evolve, Integrated Business Planning will undoubtedly play a pivotal role in shaping the future of supply chain management. Additionally, newer technologies like

Data Science is reshaping the way organizations operate.

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As a master of the art of data analysis, Raghu possesses a unique ability to convert raw data into valuable insights that lead to tangible results. Armed with exceptional critical thinking skills, Raghu employs a meticulous approach to problem-solving that involves leveraging cutting-edge statistical and mathematical techniques to drive informed decision-making.

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5 Elements of an Integrated Business Planning Framework

Posted by Thai Pham on Sun, Nov 18, 2018

Integrated Business Planning ( IBP) has delivered significant benefits to practicing businesses. According to a recent study conducted by Aberdeen Research, companies with a well-structured IBP process achieved the following benefits over a two-year period post IBP implementation:

• 17% improvement in profitability
• 10% increase in gross margin
• 7.5% increase in return on net assets (RONA)

Many companies are still running S&OP processes in Excel spreadsheets in fragmented siloes . This is simply no longer effective. The low hanging fruit has been picked, and in order to improve processes and stay competitive, companies must innovate their planning processes.

5 elements of an Integrated Business Planning Framework

1. Strategy

The first critical step is to align corporate and business unit strategy to the overall supply chain strategy, and then migrate to an aligned operating model. This model provides the framework for the IBP process. With a comprehensive understanding of corporate strategy, an optimal supply chain structure and operations can be designed.

A strategically-aligned IBP process can deliver game- changing benefits to the business. Rather than focusing solely on sales revenue, or simply balancing supply and demand projections, IBP can help practitioners make decisions that generate the highest profit for the entire company.

2. People

The IBP project lead is ideally assigned from the senior management team. This means either the CEO or one of his/her direct reports would fulfill this role since the process will align myriad functions with the overall business strategy and unite the different functions into one homogenous process.

As with any project, there must be a plan, and it must be communicated effectively so everyone is aligned and aware of their role and the team's expectations.

To be successful, the plan must also have well-defined and achievable milestones for the project team. Discipline is a critical factor in the success of an IBP project and creating a solid foundation will ensure a successful implementation process.

3. Processes

The key to implementing a fully integrated and optimized planning process is to follow a structured approach in line with the integrated business planning framework.

A successful IBP implementation process relies on the following steps:

• Define where you are now
• Define where you need to be
• Leverage keys to success
• Kaizen (constant improvement)

IBP is not simple—it requires both the right people, and the right supporting software infrastructure. Excel spreadsheets, and even most business intelligence (BI) solutions , are not designed for this purpose and do not have the power to support the complexity required in a straightforward and scalable way.

The right technology becomes the enabler for the entire IBP process. The right solution should be built on supply chain modeling and optimization. It will enable overall profit-driven decision making through “what-if” scenarios. At a tactical level, it will give the best inventory management answers considering a complex range of factors such as expiry dates, lead times, storage capacities, and resource and asset utilization. It will take a holistic view of the entire supply chain network and deliver the best plan that considers all business factors.

5. Metrics

Effective IBP systems are dependent upon accurate and actionable data. Data integrity is essential and accurate data is a key enabler in the process needed to apply precepts of science to data management.

Establishing data governance model over the IBP process ensures consistency and data integrity, and a focus on continuous process improvement.

In addition, key performance indicators (KPIs) are vital to accurately measure the effectiveness of strategic execution, including:

• Forecast accuracy
• Obsolete stock
• Inventory turnover rate
• Procure cost to sales
• Utilisation rate

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Unveiling the Power of Integrated Business Planning Framework

Welcome to the world of Integrated Business Planning (IBP) Framework, a strategic approach that can revolutionize the way businesses operate. In this article, we’ll explore the key components, benefits, and implementation strategies of the IBP framework. Our guide through this journey is Stanton Dixon, a renowned expert in business software and technology trends.

  Introduction: Understanding IBP

In this section, we’ll lay the foundation by understanding what Integrated Business Planning (IBP) is all about. Stanton Dixon will shed light on the core concepts and why IBP is crucial in today’s dynamic business environment.

  The Components of IBP

Let’s delve deeper into the IBP framework. Stanton Dixon will dissect the key components of IBP, including demand planning, supply chain management, financial planning, and collaborative decision-making. Discover how these elements work in harmony to drive strategic excellence.

  Benefits of Implementing IBP

Why should your organization consider adopting IBP? Stanton Dixon will present a compelling case by outlining the benefits. From enhanced visibility to better resource allocation and cross-functional collaboration, discover how IBP can elevate your business performance .

  Implementing IBP: Strategies for Success

Moving from theory to practice, this section will explore the implementation journey. Stanton Dixon will provide insights into best practices, change management strategies, and the role of technology in ensuring a smooth transition.

  Continuous Improvement and Adaptation

In today’s ever-changing business landscape, adaptability is key. Stanton Dixon will discuss the importance of continuous improvement within the IBP framework. Learn how organizations can stay agile and responsive to evolving market conditions.

Key Points at a Glance

  expert insights: stanton dixon.

Get to know Stanton Dixon, an expert with a rich background in business software and technology trends. His expertise is grounded in years of research and practical experience, making him the perfect guide through the world of IBP.

  Conclusion: Embrace IBP for a Brighter Future

In the concluding section, we’ll summarize the transformative potential of IBP and why it’s a crucial tool for businesses seeking success. Stanton Dixon’s insights will leave you inspired to explore IBP as a strategic imperative.

With Stanton Dixon as our guide, we’ll embark on a journey to uncover the incredible potential of the Integrated Business Planning framework. Whether you’re a business professional or a decision-maker, this article will provide valuable insights into how IBP can reshape your strategies and set your organization on the path to success in the ever-evolving business landscape.

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Integrated Business Planning: How to Pave Your Way to End-to-end Orchestration

What is integrated business planning, market uncertainties, holistic data analysis, customer centricity, short product life cycles, smaller margins, globalization, being ready for ‘what-if’ scenarios, collaborative and decentralized decision-making, enhanced customer experience, ibp vs s&op: different names for the same process, prioritize the p&l owner, decide on the apt design and cadence, apply consequential thinking to facilitate decision making, support ibp with appropriate technology, a framework for ibp success.

“We plan, God laughs”. True. However, planning is not about knowing the exact outcome. It’s more about gearing up for what-if scenarios, in case something goes awry. 

To adapt successfully to evolving market needs and work around economic turbulence businesses need the collective effort of the whole organization — from finance to marketing.

But how can you align the mashup of a company’s strategy, operations, and financial performance? Enter an integrated business planning process.

Once a legacy of Fortune-500 companies, the IBP strategy can be leveraged to transform businesses of all sizes. IBP solutions help both industry giants and young companies manage growth-related risks and help establish disruption-tolerant processes.

An integrated business planning (IBP) process refers to scaling and connecting the planning activities across each business function, silo, and department. Hailed as the enabler of an innovation-ready environment , IBP also syncs business targets, budgets, operations, and business units across the entire organization. At its core, IBP includes technology and applications that connect the planning and operational functions of the company.

Why put your planning processes in a broader perspective?

According to McKinsey , businesses that have fully integrated business management are in the minority, with only a handful of companies implementing IBP to its fullest. Two-thirds of companies confine unified strategic planning to occasional business reviews.

This means that most companies leave their business decisions to the mercy of siloed planning solutions with limited process visibility and one-sided insights. Conversely, integrated business planning solutions cast their nets wide to deliver value across the entire business and help battle ever-growing business challenges.

In a world of interconnected economies, each company can be affected by the overall market resonance. This is why the pandemic’s disruptions to logistics in China have echoed through global supply chain operations, resulting in a shortage of components. International political uncertainties can reduce the trade openness of a given country, destabilizing the whole world. It means that the success path of a single company depends on a whole lot of political and economic levers involved in internal management.

At least 2.5 quintillion bytes of data are produced every day. However, instead of generating actionable insights, around 95% of companies are unable to make sense of unstructured data — a fundamental building block of business decision-making. The growing amount of big data and its complexity also prevents companies from landing new growth opportunities.

Focus on a customer is a beacon for successful companies and higher profits with over 70% of consumers considering it a basic expectation. However, isolated planning doesn’t factor in all touchpoints. Unable to create a unified customer image, companies struggle to deliver personalized services and initiatives.

Along with granular offerings, customers expect new products to be released faster in regular cycles. However, rolling out new products like a conveyor belt is not enough. To keep up with quickly-changing customer preferences, companies require robust analytical capabilities that consider an entire landscape of opportunities and predict current demand areas.

The world? Volatile, to say the least. Over the last few years, shrinking margins have made a comeback driven by cutthroat competition, market saturation, and inflated costs. Since 2020, margins have been falling down the curve with a negative of at least 0.04% .

As a result, the traditional supply and demand balancing has been rendered ineffective, jolting companies into optimization based on a patchwork of metrics, market trends, and forecasts.

Despite ample opportunities, border-free supply chains have exposed businesses to the ripple effect of global bottlenecks and equipment availability. Differences in standards and regulations, harder planning, and budget constraints require unmatched agility from companies.

To pivot and flex, an organization requires an integrated business planning process flow that eliminates communication lags and steers the whole organization towards its goals despite global instability.

Unmatched benefits of integrated business planning

According to KPMG , integrated business planning best practices stand to increase ROE up to 14 points, reduce costs by up to 10%, and ramp up revenue by 4%. But besides core metrics, what is the true value of IBP solutions?

‘How would the pandemic affect my company? Can I slash the costs to battle the recession?’ Within traditional business management, the answer to your questions is left to guesswork and historical analysis at best.

Paired with robust data analysis , integrated business planning software enables you to simulate the effects of potential actions and changes across the whole organization — from capital expenditures to workforce availability.

You can also mold your growth objective into different market opportunities based on the resources owned or quickly re-allocate the current assets for any transformation with no ad hoc firefighting.

With data sourced across all operations, the decision-making authority is distributed throughout a cross-functional team. Enterprise-wide activation of purpose promotes greater accountability and decision ownership where business units work collaboratively towards a general business goal.

At the same time, consolidated enterprise planning applications eliminate version control and spreadsheet complexity.

It is stated that agility improves customer experience by up to 30 points . A shared purpose and vision embodied across the organization are some of the qualities required to have agility. Besides enterprise adaptability, a bird’s-eye view and corporate alignment deliver a more unified customer image sourced from across the organization. As a result, customers are served more granular messages, desired products with on-time delivery, and customer-centered services.

Make your business future-proof

The difference between S&OP and IBP is challenging to spot as integrated business planning is generally considered an exercise of sales and operations planning. However, an integrated business planning framework makes evidence-based thinking more comprehensive, while S&OP prioritizes supply chain planning as the main benchmark.

Moreover, integrated business planning consultants devise a proactive plan that responds to challenges with the most benefits and least losses, while S&OP is more about satisfying customer needs at all costs.

Below, you’ll find the main differences between IBP and S&OP:

How to create real value? Four pillars of fully integrated business management 

According to McKinsey , ineffective consolidated strategic planning is the collective result of three factors. First, if an organization doesn’t include IBP in its regular decision-making process, the added value of unified orchestration tapers off. Secondly, some companies delegate unified planning to junior staff, who, naturally, often lack vision and authority for the function. Lastly, if the executors do not have a single vision of critical decision enablers, they won’t be able to navigate business thinking as a whole.

Yet, despite common reasons, there is no ultimate integrated business planning template that caters to all businesses with unique needs. However, some practices can bring your organization closer to the desired outcome of SAP integrated business planning.

In most cases, the owners of P&L at your company have a great read of the existing drivers of revenue and spending. Unlike the supply chain or production management, a P&L-focused integrated process has the most practical requirements based on a broad outlook.

When designing your planning regimen, make sure the groundwork also includes input from upper management so that decisions can be made regularly. This way, the footprint of decisions can be checked against financial thresholds.

At the same time, this business plan allows the P&L owner to align the trade-offs between perils and prospects with the affected area, be it local or global. To unlock this level of visibility, companies should employ robust data governance practices and tools which enable real-time data processing.

To make the most of unified strategizing, companies need to design an IBP flow with a focus on better visibility and critical data sourcing. The main objective of this fit-for-purpose IBP design is to equip the P&L owner with the right output that is clean, standardized, analysis-ready, and can be easily injected into templates. However, even industry-best design practices can fail if the initial input isn’t sifted through an established data infrastructure and effective processing systems.

Adopting the right reviewing rhythm is another salient part of a holistic IBP framework. Analysis-intensive initiatives, such as product releases, should be subject to regular reviews, while urgent issues such as material shortages or insufficient space should be resolved within a weekly agenda.

To facilitate regular feedback loops, companies also need to establish the right technology infrastructure that promotes seamless and real-time communication between business units.

The right integrated business planning example also stimulates an organizational shift within the company. Therefore, when adopting integrated planning, companies should factor in decision-making power, the value of the decision-making variable, and reporting hierarchy as well as giving key stakeholders more authority in the process.

In practice, collaborative and autonomous thinking can be supported with event classification and pre-defined troubleshooting guidelines based on the root cause approach. Also, the autonomous structure should dwell on the scope of operational thinking as well as the escalation mechanism to bring decisions to the appropriate level of responsibility for adequate resolution.

The right technology infrastructure allows each business function to keep its language and still collaborate effectively with each other. Since the operational data becomes paramount in this case, the technology suites have to be easy-to-use interfaces that demonstrate digestible, real-time insights — all within one platform.

From a technology standpoint, the building blocks of an IBP-friendly ecosystem include but are not limited to:

• Real-time data and visual management

Plotting the business course is impossible without seamless and real-time data flows. To enable collaborative thinking, your tech ecosystem should also support easy integrations among the modules and enable modeling of the supply chain in real time.

• Big data, analytics, and KPI control

KPIs dashboards allow your departments to monitor the performance, report the number of open opportunities, and share insights for other business units. Robust analytics, in turn, allows your dedicated team to drill down into specific metrics and initiate corrective actions for those metrics. Predictive analytics also accelerates your planning by improving assessments of your capacity, generates dynamic forecasts as well as supports scenario planning and optimization.

• Cloud technologies

By moving applications into the cloud , companies can more easily integrate them at a process level. Following a single data model, integrated business planning managers can cover all aspects of planning and arrive at the ‘single number’. Cloud technologies also enable better business continuity and drive down the costs of analytics.

• Machine learning and artificial intelligence

Injected with expert systems, planning systems offer advanced optimization techniques. The latter, in turn, automatically generates replenishment strategies, inventory optimization, and other response measures needed to embrace the volatility of the market. AI-based stress test simulations also help organizations model the scenarios of combined workloads.

A synergy of strategy and execution is what prevents companies from veering off the rails in chaotic times. This synergy is manifested in integrated planning and allows you to create a link between all business operations, uniting them into a cohesive whole driven by the same goal. Unlike traditional S&OP-enabled planning, IBP allows you to go beyond capacity levels and gain a broader foresight of possible business scenarios.

To achieve IBP excellence, you need to look beyond the internal processes and enable visibility into all pivots, from supply chain leaders to customers. Combined with agility, high visibility levels promote business resilience and maximized profits without low-risk exposure.

Data is also the pinnacle of this visibility, making a technology infrastructure critical to IBP success. That’s why the choice of the right technology partner can advance your planning and fine-tune the planning pathways to your unique business needs, making it a critical step in ensuring success.

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Integrated Business Planning: A Detailed Exploration of Strategy and Execution

✅ All InspiredEconomist articles and guides have been fact-checked and reviewed for accuracy. Please refer to our editorial policy for additional information.

Integrated Business Planning Definition

Integrated business planning is a management process that synergizes sales, marketing, finance, operations, and logistics to drive an aligned operational plan and business strategy, balancing demand and supply while also considering financial objectives and the allocation of critical resources. It embraces short, medium, and long-term business planning and assists in decision-making, reducing risks, and increasing profitability.

Importance of Integrated Business Planning

The crucial role of integrated business planning.

Today’s businesses exist in a world that is, to say the least, complex and full of rapid changes. In these circumstances, integrated business planning plays a pivotal role in navigating through the turbulent times by bridging the gap between the company’s strategic ambitions and their operational constraints.

As a unifying framework, the process provides a link between the top-level strategic planning and day-to-day operational activities. It eliminates silos between departments providing a holistic, transparent and real-time view of the business. By mapping all operations to strategic goals, it ensures that all decisions and actions are pulling in the same direction toward the fulfillment of those goals.

Aligning Strategic, Operational, and Financial Planning

With integrated business planning, synchronization becomes achievable at an elevated level. It enables businesses to align their strategic objectives with operations and finances, thus ensuring a smooth flow of processes. When strategy, operations, and finance harmoniously work together, it eliminates any disconnects, resulting in effective and efficient decision-making.

From a strategic perspective, the approach aids in prioritizing goals and developing responsive and realistic plans to achieve them. On the operations front, it identifies bottlenecks, assesses risk, and ensures that all operations are in line with strategic objectives. Lastly, the integration with financial planning leads to accurate financial forecasts, effective cash management, and robust financial control.

To put it another way, this integrated view of business planning is akin to a well-conducted orchestra. Each section of the orchestra, be it strategic, operational, or financial, knows its role, its tasks, and how it contributes to the overall performance of the melody; which in this case, becomes the successful completion of strategic goals.

The Outcome: A Resilient Business Model

In the face of evolving markets and shifting customer demands, integrated business planning empowers businesses to quickly identify, adapt, and respond to changes efficiently. The approach supports timely and informed decision-making, improves communication and collaboration, and nurtures a proactive business culture focused on future growth.

The process also provides a robust system that facilitates scenario planning and risk mitigation. It promotes informed and rational decision-making, thus creating a resilient business model capable of withstanding market uncertainties and disruptions.

In summary, integrated business planning offers a comprehensive, more intelligent approach to business management—one that aligns strategy, operations, and finance towards a common goal while driving performance and sustainable growth.

Core Components of Integrated Business Planning

At the epicenter of integrated business planning is demand. Understanding current customer needs and predicting future ones is key to running a profitable operation. This involves market research, analysis of historical data and forecasting. By getting an accurate approximation of demand, businesses can take proactive measures to efficiently meet those needs.

Supply Management

It’s not just enough to understand the demand. A business must have a competent supply management system that can meet the anticipated demand. This is achieved by coordinating all elements of procurement, production, and logistics to effectively fulfill customer needs. A successful supply chain management strategy incorporates everything from sourcing raw materials, managing inventory, production planning, to eventual delivery.

Product Management

Product management is a very significant part of integrated business planning. It’s the process by which a business decides what products to offer and how to position them in the market. Product managers work cross-functionally with other teams like marketing, sales, and engineering, to ensure that the product aligns with company goals and customer requirements. They also analyze market trends, competitive landscape, and customer feedback to inform product features and enhancements.

Financial Planning

Lastly, financial planning provides the fiscal framework for integrated business planning. It involves budgeting, revenue projection, expense tracking, and monitoring financial performance against these predictions. A detailed financial plan enables a business to execute its strategies within available resources, capitalize on opportunities and respond timely to market changes. Financial planning is indispensable for a sustainable long-term business growth.

Each of these components works seamlessly with the others in integrated business planning. While demand, product, and supply chain management ensures that the business retains a competitive edge in the market, financial planning provides the necessary oversight to ensure the business remains profitable while doing so. This alignment across all the key functional areas is what makes integrated business planning so critical to the success of a business.

The Role of Integrated Business Planning in Corporate Decision Making

In a dynamic business environment, integrated business planning helps corporations quickly adapt and respond. It operates as a navigational tool, guiding decision-making processes at various levels of an organization, from operational to strategic.

Operational Decision Making

At the operational level, integrated business planning aids in managing immediate and short-term decisions. It provides a detailed view of the current business operations- from sales forecasts, customer demands, supply chain management to available resources.

For instance, consider a rise in demand for a product. An operational decision might involve assessing the production capacity and inventory levels, which integrated business planning can readily provide by unifying data from multiple business functions. This allows the organization to react swiftly and efficiently to unexpected changes.

Tactical Decision Making

Tactical decisions contributing towards achieving short-term goals also benefit from integrated business planning. It aids in providing a firm ground that aligns operational decisions with corporate strategy.

Key functions like marketing campaigns, collaborations, or prodigious investments often hinge on the insights captured through integrated business planning. It not only allows companies to seize up-to-the-minute market opportunities but also helps in mitigating potential risks.

Strategic Decision Making

At a strategic level – where decisions have long-term implications and contribute directly to the achievement of an organization’s mission – integrated business planning is instrumental. It provides organizations with forward-thinking views, predicting future scenarios, and laying out a roadmap to achieve the desired goals.

For instance, making decisions about entering new markets, launching new product lines, or obsoleting older ones are all powered by the insights from integrated business planning.

Thus, integrated business planning is central to decision-making processes, underpinning them with a clear, synchronized view of business functions. It enables corporations to respond effectively and swiftly to business environment changes, maintaining their competitive edge.

Integrated Business Planning and Risk Management

Integrated business planning (IBP) plays a crucial role in managing business risks. It enables organizations to align strategic, operational, and financial plans to achieve overall corporate objectives.

Assessing and Managing Risks with IBP

With IBP, an organization can continually assess potential risks and adjust its plans based on a comprehensive and timely understanding of possible implications. This process reduces the likelihood of sudden impact from unanticipated events and enhances the resilience of the business.

For instance, IBP can help in foreseeing economic downturns and prepare for them by diversifying income streams or increasing savings. Similarly, if a company anticipates a shortage of raw materials, it may use IBP to develop contingency plans such as seeking alternate supply sources, redesigning products, or adjusting manufacturing schedules.

Identifying Opportunities

On the flip side, integrated business planning also plays an essential role in identifying opportunities. This comprehensive approach can uncover potential synergies, efficiencies, and strategic initiatives that would otherwise go unnoticed. Leveraging integrated data, businesses can identify market trends early, allowing them to deploy new solutions or services ahead of their competitors.

Consider an organization that notices an increase in the use of sustainable materials via integrated data analysis. With IBP, the company can assess the possible financial and operational implications of shifting to eco-friendly materials, then devise strategies to capitalize on this trend.

Holistic View of Business Landscape

Furthermore, the holistic view provided by integrated business planning assists businesses with identifying both threats and opportunities. By providing viably comprehensive, cross-functional views of the business landscape, IBP allows companies to anticipate changes, react effectively, and seize the opportunities these changes bring.

In conclusion, integrated business planning’s role in risk management is immense. It promotes resilience by enabling organizations to anticipate potential risks and build strategies to navigate them. It also encourages innovation by highlighting emerging opportunities, leading to improved competitiveness and sustainability.

Tailoring Integrated Business Planning to Different Business Models

Applying integrated business planning (ibp) to service-based businesses.

The successful application of Integrated Business Planning (IBP) in service-based businesses can prove to be unique due to the nature of service delivery and customer expectations. Unlike in a product-oriented business where the primary goal is to manage the supply chain, service-based businesses encounter market variability and require a flexible planning process.

IBP helps these businesses by providing a platform to align their operational plans with strategic goals. For instance, the nature of the service can dictate the planning horizon and the frequency of revising plans. A healthcare provider may need a more immediate planning horizon compared to a consultancy firm due to the unpredictable nature of medical emergencies. Hence, IBP can be tailored to accommodate these different planning horizons.

Adapting IBP for Product-Oriented Businesses

Product-oriented businesses, on the other hand, often have tangible inventory and a visibly structured supply chain. Here, IBP comes in handy to integrate various components like sales, operations, and finance to ensure the business stays on track to achieve its strategic goals.

By synchronizing all critical business units, the company can ensure demand forecast accuracy, reduce stockouts and overstocks, and optimize cash flow. For instance, in a manufacturing business, the use of IBP can be pivotal in decisions ranging from raw material procurement to production planning to order fulfillment.

Implementing IBP in Hybrid Business Models

A hybrid business model, a mix of service and product-oriented business, calls for even more flexible application of IBP. Hybrid businesses need to balance the complexities of both models, and this can be achieved by integrating decisions about service delivery and product supply.

The outcome is a more harmonized strategic plan that accommodatively factors in both the intangible and tangible aspects of the business. For instance, a software company that offers both software products (product-oriented) and software services (service-oriented) may use IBP to synchronize the timeline for product development and service delivery.

In conclusion, while the fundamental elements of IBP remain the same, its implementation can and should be tailored to the unique needs of specific business models. The flexibility of IBP lies in its ability to adapt and accommodate the diverse patterns of businesses, ensuring alignment of strategic goals with operational plans. This is what makes IBP not just an effective planning tool, but an innovative business methodology.

The Relationship between Integrated Business Planning and Corporate Social Responsibility

In the application of integrated business planning, it’s important to consider its impact on a corporation’s social responsibility (CSR) practices. Integrated business planning has direct implications, as it can form a strategic platform for organizations to proactively manage their social and environmental responsibilities, in addition to driving financial performance.

When considering a business’s social and environmental responsibilities, it’s clear that these elements can significantly influence planning processes. This is because businesses, especially those operating in sensitive sectors such as mining or manufacturing, must account for the potential social and environmental impacts of their operations.

Effect on Planning Process

Understanding this, the planning process under an integrated business planning model needs to not only focus on traditional economic factors, but integrate CSR into the heart of their business strategies in a structured and systematic way. This might involve predicting potential social and environmental risks and planning appropriate mitigation strategies, or identifying socio-environmental initiatives and integrating them into the business’s operating model.

Asset Utilization and ESG Compliance

Moreover, integrated business planning can allow businesses to better utilize their assets in the service of both financial objectives and CSR. For instance, a manufacturing facility might plan to use more energy-efficient technologies, demonstrating commitment to environmental sustainability, while also potentially reducing operational cost.

Furthermore, a solid integrated business planning can enhance a company’s efforts in Environmental, Social, and Governance (ESG) compliance. It allows the business to consistently align its operational activities and financial planning with its CSR policies and governance standards. This, in return, may improve the public image, customer trust, and overall market reputation of the company.

Aligning Business Goals with Societal Values

Ultimately, a key aim of integrating CSR into the business planning process is to ensure that an organization’s business goals are well-aligned with societal values and environmental sustainability. Doing so not only helps businesses to fulfill their moral and civic duties, but is also increasingly recognized as a powerful driver of long-term financial performance.

Software Tools for Integrated Business Planning

In order to successfully implement integrated business planning (IBP), businesses need to make use of a variety of software tools. These tools not only make the complex process more manageable, but they also increase accuracy, improve collaborative efforts and provide meaningful insights for better decision-making.

Popular Software Tools

One popular tool is SAP Integrated Business Planning (SAP IBP) . This tool is lauded for its real-time supply chain management features. SAP IBP offers features for demand planning, supply and inventory planning, sales and operations planning, and response and supply control.

Another widely adopted software is Anaplan . Anaplan’s platform helps businesses model and visualize their data, and is known for its capability to handle extremely large data sets, making it ideal for large organizations.

Oracle Demand Management Cloud is also worth mentioning. It provides predictive analytics to understand and manage demand, and it integrates well with other Oracle applications, making it an attractive choice for businesses already using the Oracle ecosystem.

Kinaxis RapidResponse stands out for its scenario planning features, allowing businesses to simulate and compare various situations and their outcomes.

Role of Technology in IBP

Technology plays a pivotal role in IBP, simplifying and enhancing the process. With the vast amount of data businesses deal with today, manually managing such processes would be time-consuming and prone to human errors. Software tools automate most of these tasks, ensuring accuracy and efficiency.

Moreover, these tools often provide data visualization features, converting complex data into easy-to-understand charts and graphs. This not only makes data more accessible to all stakeholders, but also aids in quicker decision-making.

One significant advantage of using these tools is the ability to collaborate in real-time. Multiple users can work together on the same data sets, breaking down silos within the organization. With everyone on the same page, the alignment between different business functions improves, boosts the overall business performance.

Lastly, with features like predictive analytics and scenario planning, businesses can better anticipate future scenarios and prepare accordingly, reducing the risk associated with unforeseen changes in the market or supply chain.

Thus, with the help of software tools, integrated business planning becomes a more streamlined, accurate, and collaborative process.

Implementing Integrated Business Planning

Essential considerations for successful implementation.

To ensure a successful transition to using integrated business planning, several key aspects must be considered.

Employee Training

A central aspect of this change-over is the training of employees. Your employees need to understand the principles of integrated business planning and how they can apply these principles in their day-to-day activities. This training could be delivered through workshops, seminars, or e-courses, depending on what’s most effective for your employees.

Ongoing mentorship and support are also beneficial, helping employees adjust to the new system over time. By providing continuous learning opportunities, you keep your employees engaged and motivated, thus enhancing the adoption of integrated business planning.

Technological Requirements

The transition to integrated business planning is not only about changing mindset, but also about updating your technology stack, as this approach often relies on advanced software solutions. The exact technology needed may vary depending on the scale of your business and the nature of your operations, but a comprehensive business planning software suite is usually a baseline requirement.

Additionally, you would need to evaluate your current IT infrastructure to check if it can support the new systems. It might be necessary to upgrade certain components to ensure seamless operation. Remember, your new software should be user-friendly to promote ease of use among your employees.

Embracing Cultural Change

Implementing integrated business planning can bring about a significant shift in your company culture. As an approach that emphasizes collaboration and transparency, it requires a shift away from organizational silos. Employees at all levels need to get used to sharing information and making collective decisions.

Promoting this cultural shift can be challenging. Clear, effective communication will be crucial. Explain the advantages of the new system, engage employees in the planning process, and make sure everyone understands their responsibilities. Celebrating small victories can also help to promote positive feelings towards the change.

By paying attention to these critical aspects – employee training, technology, and culture change – you can lay the foundation for a smooth transition to integrated business planning.

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How Finance Can Help Create an Integrated Business Planning Framework

An integrated business planning framework presents a great opportunity to develop the function of finance to drive business performance and productivity.

The finance function is evolving, fast. Where finance used to focus on traditional activities such as account management and act in an advisory role to the C-suite, the finance function of the future will be focused on driving business performance by leading strategic planning through data-led decisions.

Rethinking finance means rethinking the way businesses plan.

Integrated business planning presents a significant opportunity to develop the role of finance to meet future business needs. It offers a framework for finance to use that matches their new purpose of creating value adding activities for businesses. 

Finance Function is Developing Naturally Across Industries

Research shows that finance function, particularly the role of the finance leader , is developing across industries. An average of five functions other than finance now report into the CFO.

Further research reveals that four in ten CFOs say they spent more time over the course of a year focusing on activities that weren’t traditional finance activities. The survey revealed that these non-finance activities were predominantly strategic leadership, organisational transformation, performance management, capital allocation and big data and analytics. 

This shift in finance function makes perfect sense. Businesses face an increasingly challenging economic landscape alongside increasingly competitive markets. Finance is perfectly placed within the business to harness data, operational knowledge and analytical thinking to drive business performance.

What is an Integrated Business Planning Framework?

Integrated business planning (IBP) is an alternative approach to business planning.

Traditional business planning often silos different business activities. Marketing has their strategy, HR has theirs, IT has theirs and so on. What this means for businesses is that the larger strategic goals are often disjointed from departmental strategies and activities may not align well with larger business goals. This results in poor business performance and business productivity for many companies.

Instead, an integrated business planning framework seeks to align strategic business planning with operations and finance. It looks to create one single, cohesive business plan for everyone in the company. It achieves this by:

Being one process of continuous improvement

Having both short and long term strategic planning

Using advanced data analytics that are shared across the business

Cross-functional collaboration and communication between all departments

C-suite adoption and sponsorship

Finance Has a Key Role to Play in an Integrated Business Framework

So, where does finance fit into an integrated business framework?

IBP can be a driving element in developing the function of finance. As discussed above, finance has increasingly been tasked with more and more responsibilities outside traditional finance activities, with many more departments reporting into them.

As finance begins to play a more strategic role in businesses, an integrated business planning framework gives finance a methodology to use to align these different responsibilities successfully, resulting in better outcomes for the business.

Integrated Business Planning Framework Enables Financial Excellence

An integrated business planning framework has several aspects that enable financial excellence for businesses, including:

Planning Efficiency

Quality data

Transparency

Risk management

Performance management

More Efficient Business Planning

Integrated business plans aren’t a static document like many other traditional plans.

They give businesses both a short and long term strategic plan. The long term view tends to span between 24 to 36 months, while the short term view tends to span between 3 to 6 months. The short term view is also reviewed at least monthly by a collaborative IBP team spanning across departments. 

These combined views allow for finance to create realistic and adaptable long and short-term goals based on quality data. Finance can focus on strategic value adding activities for both short and long-term.

Improved Data Quality

Integrated business planning relies on quality data. There are a huge wealth of advanced analytics available for finance that can give better insights into both internal and external performance factors which many businesses have yet to invest in.

To create a successful integrated business plan framework, finance must have the right tools to do the job. This quality data allows for better analysis and insight, leading to better decisions with better financial outcomes for the business.

Increased Business Transparency

Silo syndrome within businesses breeds problems. Teams are disjointed, lack common goals and values and often fail to see the connection between their departmental goals and wider business goals.

A key element of an integrated business framework is transparency. An IBP process includes as many relevant stakeholders as possible, across departments. Then everything created is shared across the entire business including data and business goals.

This transparency in business has numerous benefits. For teams, it allows employees to continuously develop their understanding of how their role aligns with larger business goals, helping them to feel like a more valuable asset to the company. 

For finance, this open and transparent communication and cross-functional collaboration helps them develop a better understanding of the business. This in turn can help them identify the unique challenges and opportunities for different operations across the business.

Better Risk Management

Quality data in combination with the adaptability of short-term business goals in IBP allows finance to better navigate both risks and opportunities. The business has improved reactivity to ever-changing markets and economies, so when the tides do turn, the business is better placed to adapt accordingly. 

More Effective Performance Management

Performance across a business can be disjointed at best. The C-suite may be concerned with market share and profit margin, while marketing is concerned with year on year traffic and conversion rates and HR is concerned with employee retention rates and absence rate.

Some of these performance metrics align, and some don’t.

Businesses need a standard for performance management across the business, and an IBP framework provides this. Finance can then more easily identify and address any performance gaps within the plan, as well as report business-wide performance seamlessly. 

Finance Leaders Can Support the Adoption of an Integrated Business Framework

As you can probably tell from the above, finance has a key role to play in adopting an integrated business framework as its function is so intrinsically linked to the success of IBP.

This is particularly true for finance leaders like CFOs or finance directors.

Employees across the business look to leaders to execute major changes. Moving from traditional annual or bi-annual business planning to integrated business planning is quite the change.

The finance leader should develop and own the road map to achieve these changes, as well as promote the changes to other key stakeholders. Early on, this will involve mainly working with the C-suite, D-suite and other senior executives to ensure a full sponsorship of the implementation of an integrated business framework. 

In a sense, the finance leader should be the champion of integrated business planning; well informed of its potential benefits to the company and tackling any doubts of changing the status quo with forward planning.  Additionally, the finance leader should model the behaviours desired across the business to successfully adopt an integrated business planning framework. 

Another challenge for the finance leader is changing the finance function. While some businesses may have naturally developed finance functions within the company, others may not have. For these businesses, IBP represents a drastic change in the finance function.

The challenges presented by this change must be navigated by the finance leader. They need to address the current practices, identify the need for changes and identify and implement the new practices and responsibilities with the wider finance department to enable the new finance function to have the broad influence it needs to lead integrated business planning. 

Beyond the finance team even, the finance leader may have an additional role to play in building the new connections between commercial and operational teams to allow for cross-functional collaboration. Often, these teams have no existing partnership whatsoever. But the finance team has often worked with both. They can use their existing relationships with teams to help develop new IBP partnerships with open and trusting communication. 

We mentioned data management above. It is natural for the finance leader to take ownership of this, even if that is to delegate to the most capable team members. Finance leaders should identify the best technologies available to invest in to provide a standard, transparent data process that should be made available for all departments. 

The New Skills IBP Requires of the Finance Director

Integrated business planning calls for new skills from both finance leaders and the wider finance department which are beyond traditional finance skills. 

To deliver a successful integrated business planning framework, businesses must invest in developing these capabilities and skills or hire for desired behaviours. 

For starters, finance teams must have data experts. The scope has widened from traditional or speciality financial data, to a huge array of data that needs collating and analysing to give a cohesive picture of business performance. This means finance leaders and other finance staff need data analysis skills, data visualisation skills and critical thinking skills to enable them to use the advanced technologies available. This will aid finance in scenario planning, allowing for more accurate forecasting short and long-term and ultimately creating a more robust organisational strategy. 

Finance also needs to develop a wider commercial awareness or commercial acumen for IBP. Many finance leaders already possess this vital skill as their role has developed into one of more influence. Finance needs to possess a deep understanding of how the business runs and operates, as well as an understanding of the wider market it operates in. Simply reporting financial data did not require this skill, but to create a successful integrated business plan means finance must be able to contextualise data insights against the knowledge they hold about internal and external business factors. 

The entire finance department and the finance leader must possess excellent communication skills to successfully implement IBP. They’ll be faced with an array of key stakeholders across the business who will struggle to understand the concept or recognise the benefits of IBP. Finance must be able to communicate openly, honestly and transparently

For finance leaders specifically, implementing an integrated business planning framework requires leadership skills. They are uniquely placed within the business to have the connections to lead cross-functional collaboration, the data analysis skills to drive strategy and a position within the organisational hierarchy to influence C-suite decisions.

This means they must possess an array of business leadership skills such as:

Strategic thinking

Commercial acumen

Planning skills

People management skills

Change management skills 

Communication skills

Influence and negotiation skills

Overall, integrated business planning requires new behaviours and mindsets from finance, with finance leaders at the helm. But the benefits of an integrated business planning framework for businesses are too good to ignore in favour of the status quo. IBP can ensure business resilience through aligned operations and increased business performance and productivity. 

Use an Integrated Business Planning Framework to Drive Business Productivity 

Research shows that businesses that adopt an integrated business planning framework can see an increase in business productivity of between 30% to 45%. Alongside this, businesses saw an increase of between 10% to 15% in sales revenue. 

This goes to show utilising the new function of finance through an integrated business planning framework can unleash new opportunities for growth for your business. 

In an uncertain world, an integrated business planning framework allows for adaptable, data-driven decisions and increased collaboration to create a more transparent business with better aligned operations.

Of course, implementing an integrated business planning framework cannot be achieved by finance alone. It must have full sponsorship across the business, starting with the C-suite, as well as the resources necessary dedicated towards this transformation.

Our continuous business improvement programme can help your business manage this transformation through our unique combination of project, people and business management. We work with finance leaders to implement new behaviours and processes that your business needs to thrive in the 21st century. 

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Integrated Business Planning and Execution

Oracle Integrated Business Planning and Execution provides end-to-end planning capabilities for manufacturing companies, enabling them to achieve their long-, medium-, and short-term performance goals. Oracle’s solution uses the Internet of Things (IoT), artificial intelligence (AI), and prescriptive analytics to transform plans into execution. It provides a what-if analysis of future scenarios and evaluates the alternatives to maintain or improve the company’s business targets. Once a new plan is generated that incorporates this information, Integrated Business Planning and Execution transforms plans into action using enterprise execution systems.

Watch the Oracle Integrated Business Planning and Execution Solution Demo (3:58)

Talk to a team member about Integrated Business Planning and Execution.

Integrated Business Planning and Execution benefits

Integrates plans and their execution to eliminate business latency.

Integrated Business Planning and Execution is the first solution architecture in the market that provides end-to-end integrated business planning (IBP) and execution. Oracle’s solution combines sales and operations planning with advanced technologies (IoT, AI, and prescriptive analytics) to monitor real-time planning execution. It detects future improvement opportunities, minimizing the business value lost by traditional processes where IBP and execution are siloed.

Enhance visibility across the organization

Integrated Business Planning and Execution uses a unified data model to provide a single view for all participants. It also utilizes advanced analytics to provide projections for business outcomes for each line of business, simplifying business complexity and enabling managers to make timely, appropriate decisions.

Consolidate planning in a single hub

Oracle’s solution enables long-range strategy planning; strategic modeling; mergers and acquisitions; financial, projects, capital, and workforce planning; sales and operations planning; and supply chain planning.

Juniper saves $15 million by implementing a digital supply chain

Juniper Networks stays connected with Oracle Cloud

Juniper's vision was to implement a digital supply chain with integrated business planning (IBP), where the business planning process would extend the principles of sales and operations planning (S&OP) throughout the supply chain, product and customer portfolios, and customer demand and strategic planning to deliver one seamless management system with supporting business processes. Since moving to Oracle Cloud, Juniper Network's lead time attainment is up by 55%, while their inventory cost has been reduced by 15%, allowing them to pay back 3.5X what they invested in the journey itself.

Related Integrated Business Planning and Execution products

Tomorrow’s supply chain, today.

The modern supply chain is very noisy. Digital feedback is everywhere—whether it's the voice of the customer through the internet, the voice of the factory through production or asset monitoring, or the voice of the product itself.

Gain agility and insights to outperform

Oracle Fusion Cloud Enterprise Performance Management (EPM) is the only complete and connected EPM solution. Adopt Cloud EPM's highly configurable business processes, which include industry best practices, features, and usability, and align your strategy with execution.

Insights into hidden profit and cost

Allocate resources more effectively with a deeper understanding of costs and profitability.

Analytics reinvented

Simplify how you analyze and act on information so you can scale insights across your entire organization.

Integrated Business Planning and Execution resources

Integrated business planning and execution: overview and key capabilities.

This paper provides a detailed overview of Oracle Integrated Business Planning and Execution’s key capabilities. Oracle combines industry-leading capabilities in enterprise performance management (EPM) and supply chain planning (SCP) with IoT, AI, and prescriptive analytics to deliver a complete integrated business planning (IBP) and execution solution that adapts to the demanding needs of global manufacturers. Read the paper: Integrated Business Planning and Execution: Overview and Key Capabilities (PDF)

The 5 Areas of Business Latency That Can Derail Your Integrated Business Planning and Execution

A recent study from consulting firm McKinsey found that “only 20 percent of respondents say their organizations excel at decision making. Further, a majority say much of the time they devote to decision making is used ineffectively.” Read the blog: The 5 Areas of Business Latency That Can Derail Your Integrated Business Planning and Execution

Leveraging Technology to Reduce Business Decision Latency

In today's world, global enterprises must be diligent in watching out for unexpected events that can impact company performance. There are a variety of advanced technologies that add value to business decision processes by reducing latency. Key areas where you can reduce latency with technology investments include prediction, detection, relevance, adaptation, and action. Reducing latency in each area has different effects in your business. Read the blog: Leveraging Technology to Reduce Business Decision Latency

Integrated Business Planning and Its Role in Manufacturing Transformation

Frost & Sullivan recently conducted a business planning virtual think tank with industry thought leaders GE, Juniper, and Oracle. This paper summarizes the critical issues these companies face during their planning cycles and highlights the strategic importance of an integrated business planning (IBP) framework. Read the analyst paper: Integrated Business Planning and Its Role in Manufacturing Transformation (PDF)

Bring Finance and Supply Chain Together with a Transformative End-to-End Planning Solution

Integrated business planning (IBP) solutions help you align financial and operations plans and make the best decisions to meet corporate goals. By developing a consensus operational plan and continuously monitoring key performance metrics, you can execute strategic decisions and ensure that the operating plan is working to deliver financial goals. Read the blog: Bring Finance and Supply Chain Together with a Transformative End-to-End Planning Solution

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How embracing integrated business planning could fuel the future for CFOs

EY Canada Finance Consulting Leader

Enthusiastic transformation consultant. Voracious reader. Avid traveller. Involuntarily quotes lines from his favourite movies, triggering eyerolls from his wife and kids.

EY Canada Integrated Business Planning Leader

Finance transformation leader. Dynamic project manager. Consummate team player with a collaborative approach.

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Today’s market requires businesses to plan faster and assess multiple scenarios. integrated business planning can break down silos, unlocking more savings and growth..

• Did your organization lose out on key market and growth opportunities due to the abrupt market shifts brought on by the COVID-19 pandemic?
• Are your organization’s disconnected processes hindering finance’s ability to react quickly to changes or disruptions?
• Could technology help you identify the gaps that are impacting your organization’s ability to make better strategic decisions?

Spearheading a more integrated approach to business planning can help transition Canadian chief financial officers to chief value officers in a market that necessitates unprecedented agility. CFOs who embrace this moment to reframe their role can simultaneously generate long-term value for their organizations — and a more meaningful path forward for their teams, and themselves.

Why is integrated business planning critical?

The COVID-19 pandemic has caused abrupt market shifts that drive the need to plan faster and assess multiple scenarios. From supply chain breakdowns to a dynamic labour market to logistical nightmares: organizations that failed to plan quickly or flexibly enough have faltered over the last 18 months. As planning fell short, companies in all sectors lost out on key market opportunities, earnings and growth. In response, EY market research shows CFOs globally are now drilling down to lead or co-lead unprecedented investments — in both size and scale — in planning transformations. They’re smart to do so, in an environment further characterized by a collective redefining of long-term value.

Applying integrated business planning (IBP) is key to navigating this complex market and driving long-term financial health. Based on EY conducted market research relating to IBP, we know organizations that get IBP right can:

• Increase sales
• Reduce cash cycles
• Ramp up EBIT
• Improve forecast accuracy
• Cut down inventory

Canadian CFOs have a unique opportunity to hone a competitive advantage by similarly linking demand, supply, capital, labour and financial planning through IBP frameworks that foster agility. Doing so now can prepare the organization for potential market shocks, increase opportunities as we navigate the new normal, and position finance itself as a trusted advisor, indispensable in the process of defining and supporting strategic priorities in any economic climate.

How can CFOs spearhead integrated business planning?

IBP not only requires good process and enabling systems. It also needs a high degree of cooperation across functional silos that are often challenging to break down. Making IBP work requires strong leadership and vision. Value-driving CFOs are seizing the opportunity to provide the necessary leadership to make IBP work. They begin by asking three questions.

How EY can help

Integrated business planning.

Our Integrated Business Planning professionals can help your business connect what finance and the business are doing to unlock new routes to savings and growth. Find out how.

1. Are internal silos holding us back and slowing us down?

IBP should be a connected process, developed and shared by finance and operations. Done well, it positions finance as a strategic ally, aligning processes across multiple areas to create a sustainable, transparent and controlled method of planning ahead. Integrated business planning is about connecting what finance and the business are doing, so the organization can react more quickly to any number of external changes, shocks or disruptions. That collaborative approach accelerates speed to impact.

• Identify the operational silos that may be holding your integration back and begin systematically dismantling them to encourage a more integrated, cross-functional approach to business planning. But don’t bite off more than your organization can chew. The end goal of IBP can be accomplished using a modular approach – breaking down one silo at a time – rather than a costly and higher-risk “big bang” strategy.

2. Do technology gaps stop us from hitting our goals?

Better decision-making now depends on an organization’s ability to use data predictively. Tech-enabled platforms unify ways of working, thinking and operating so functional groups can make better decisions around strategic direction and tactical execution — together. The modular and scalable planning tools of today combined with machine learning, artificial intelligence and other accelerators can transform data collection and processing behind the scenes. This makes business planning more accurate and better connected to what’s happening in real time. That’s important for stakeholders seeking to understand the state of play or apply insight to buy smartly, invest wisely, manage effectively and save comprehensively. When you use technology to surface analytics and insight, teams can focus on results and be nimble when correcting course.

• Assess your tech platforms to understand where the gaps lie and create a plan to connect the tools you have with the additional solutions you’ll need to support a more integrated business planning framework.

3. Is our talent agenda out of date?

Top talent is seeking higher quality jobs that offer the attractiveness and potential for longer-term relationships that come with an overarching career experience. Compensation alone is not enough to recruit and retain the leaders finance will need to support a more strategic function that’s capable of catalyzing cross-functional collaboration and change in the organization. When you embrace IBP, you empower yourself with an instrumental new driver that allows you to rethink your future — and the future of your workforce. Putting humans at the centre of your strategy can unleash meaningful value over the long term.

• Set a clear vision for what it will mean to work in finance going forward, where you’d like the function to go and what changes you’ll need to make to cultivate a corporate culture that talent will actively pursue.

What’s the bottom line?

There’s no better time for CFOs to forge a new path forward through IBP in ways that create agility and value for their organizations. Doing so now can reposition finance as a forward-looking, strategic ally committed to spurring growth, scaling reach and developing value.

Business, markets, expectations and technology have all changed. These monumental shifts necessitate a new framework for business planning. Integrated business planning is a connected process that can position finance as a strategic ally, aligning processes across multiple areas to create a sustainable, transparent and controlled method of planning ahead.

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