objective of integrated business planning

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.

Would you like to learn more about our Operations Practice ?

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.

Transforming supply chains: Do you have the skills to accelerate your capabilities?

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.

Explore a career with us

Related articles.

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

Supply-chain resilience: Is there a holy grail?

What is Integrated Business Planning?

The origins of integrated business planning, how integrated business planning differs from traditional business planning methods.

• How Integrated Business Planning Aligns FP&A with Overall Business Strategy
• Strategic Role of FP&A

Enhanced Decision Making

• Benefits of IBP for FP&A Teams

1. Better Budget Processes

2. improved forecast accuracy, 3. agility and responsiveness, 4. cross-functional collaboration, 5. resource optimization.

• Key Elements of Effective Integrated Business Planning for FP&A Teams

Accurate Demand Forecasts

Scenario planning and sensitivity analysis, performance management, technology and data integration, cross-functional communication.

• How IBP Connects FP&A and Extended Planning & Analysis (xP&A)

IBP as a Bridge

Collaboration across functions.

• Future of FP&A with IBP and xP&A
• Embracing Integrated Business Planning in FP&A

Additional Resources

Integrated business planning (ibp) in fp&a.

Integrated Business Planning (IBP) enhances financial planning, forecasting, decision-making, and strategic alignment between finance and other business functions

Integrated Business Planning (IBP) is a strategic approach that aligns various functions within a company — such as finance, operations, supply chain, and sales — into a unified planning process. It’s designed to ensure that all business units work together towards common goals, improving decision making, resource allocation, and overall business performance.

Within Financial Planning and Analysis (FP&A) , IBP is a potential game-changer. IBP allows FP&A professionals to forecast more accurately, make data-driven decisions, and ensure alignment between financial strategy and the company’s broader strategic objectives. This alignment helps businesses achieve financial targets and drive sustainable long-term performance.

As businesses increasingly rely on Integrated Business Planning, FP&A professionals who can adopt this approach can make significant contributions and create strategic value for their organizations.

Key Highlights

• Integrated Business Planning (IBP) breaks down silos, unifies various business functions, and ensures alignment between FP&A and overall business strategy.
• IBP supports improved forecasting accuracy and scenario analysis so FP&A teams can better anticipate outcomes, optimize resource allocation, and deliver realistic and strategically aligned financial plans.
• Extended Planning & Analysis (xP&A) and IBP expand the scope of traditional FP&A to integrate cross-functional business insights, positioning FP&A professionals as significant contributors to driving strategic value.

Integrated Business Planning has its roots in Sales and Operations Planning (S&OP), a process that emerged in the 1980s. S&OP was initially developed to align production and sales, ensuring that supply met demand efficiently. The process focused primarily on balancing supply-chain management with market demand.

As businesses grew more complex, the limitations of S&OP became apparent. Organizations needed a more comprehensive approach that included financial and business strategies in addition to sales and operations planning. IBP emerged as an extension of S&OP, combining financial planning, strategic planning, sales, and operations planning into a unified process.

IBP stands apart from traditional business planning by breaking down silos, maintaining a dynamic and responsive approach, and ensuring that planning efforts are strategically aligned with the company’s long-term goals. This makes IBP a far more effective approach to modern business planning, particularly for organizations seeking to remain competitive in today’s fast-paced market.

How Integrated Business Planning Aligns FP&A with Overall Business Strategy

Strategic role of fp&a.

FP&A has evolved from a purely financial function to a critical player in shaping and supporting business strategy. FP&A teams are expected to go well beyond budgets and forecasts to driving strategic decisions that impact the company’s long-term success.

IBP as a Strategic Tool

Integrated Business Planning (IBP) empowers FP&A to connect financial goals with the company’s broader business objectives. By integrating financial planning with operational and strategic plans, IBP ensures that FP&A’s budgets and forecasts are aligned with the company’s overall strategy. This alignment helps the organization allocate resources more effectively, prioritize investments, and achieve strategic goals.

With IBP, FP&A teams can use cross-functional data and insights to provide more accurate and actionable recommendations. This data-driven approach enhances decision making across the entire organization, enabling leaders to make informed strategic choices based on comprehensive, integrated financial and operational information.

Benefits of IBP for FP&A Teams

IBP ties operational plans to financial outcomes, enabling FP&A teams to develop budgets that are aligned with the company’s strategic goals. This budgeting process ensures that financial plans are realistic and achievable, based on integrated data from various business functions. Creating budgets that are aligned with strategic objectives, managing financial resources, and setting financial targets that drive business performance.

IBP enhances the accuracy of financial forecasts by integrating data from various business functions. This comprehensive view allows FP&A teams to create more precise and reliable forecasts that reflect the current state of the business. By using up-to-date information, FP&A can anticipate financial outcomes more effectively, reducing the likelihood of surprises and improving overall financial planning.

The dynamic nature of IBP enables FP&A teams to quickly adapt to changes in the business environment. Whether it’s a sudden market shift, a new competitor entering the space, or an unexpected supply chain disruption, IBP allows FP&A to adjust financial plans in real time. This agility helps the organization stay resilient and responsive, making informed decisions that keep the company on track to meet its goals despite changing circumstances.

IBP fosters collaboration between FP&A and other departments, with key benefits in breaking down silos and ensuring that all parts of the organization are aligned. By working closely with teams across the company, FP&A can develop more cohesive and actionable financial plans. An understanding of financial implications by all departments leads to more effective execution of business strategies with teams working towards the same objectives.

Resource planning ensures the company has the necessary financial and operational resources to execute its strategy. For FP&A, this collaborative planning also involves aligning financial resources with capacity requirements to optimize resource allocation and manage cash flow effectively. Ensuring that financial plans account for resource constraints and capacity needs, thereby supporting efficient and cost-effective operations.

Key Elements of Effective Integrated Business Planning for FP&A Teams

Certain elements are especially critical to effectively implement and leverage IBP in FP&A. Key components include demand planning and forecasting, supply-chain planning, scenario planning, performance management, technology and data integration, and cross-functional communication. These are crucial for FP&A teams to effectively implement and leverage Integrated Business Planning within their organizations.

Integrating accurate demand forecasts into financial planning can directly affect revenue projections, budget planning, and resource allocation. IBP allows FP&A professionals to create more reliable financial forecasts that reflect real customer demand and market conditions, ensuring that financial plans are based on actual business conditions. This integration helps in aligning supply chain, production, inventory management, and sales efforts with financial goals, reducing the risk of over- or underestimating future demand and financial projections.

Example: You work in FP&A at a company planning to expand into a new market.

• As an FP&A professional, you collaborate with sales, marketing, and operations on demand planning to gain insights into customer demand in this market.
• By integrating these insights into your financial forecasts, you can develop an expansion plan that accurately reflects future demand.
• This holistic approach reduces risks and increases the likelihood of greater customer satisfaction and achieving the company’s financial objectives for market expansion.

Scenario planning within IBP enables FP&A professionals to prepare for various business conditions by evaluating potential outcomes based on different “what-if” analyses. By modeling various scenarios and sensitivities — such as changes in market trends, pricing fluctuations, or supply chain disruptions — FP&A can assess the financial impact of each scenario and develop contingency plans. This proactive approach ensures that the company is better prepared to handle uncertainties and make informed strategic decisions.

Example: You work in FP&A for a company that is evaluating whether to launch a new product line.

• Using IBP, you can perform scenario analysis and sensitivity analysis by integrating data from various departments, such as sales, marketing, and operations planning.
• You might create multiple scenarios — such as different market adoption rates or varying production costs — and assess how each scenario impacts the company’s financials, from revenue forecasts to cash flow and profitability.
• Additionally, sensitivity analysis can be used to identify which variables (e.g., cost of materials, pricing strategy) have the most significant impact on the outcomes.
• This comprehensive analysis allows leadership to fully understand the potential risks and rewards under different conditions and make decisions accordingly.

IBP plays a vital role in tracking and reporting financial performance against strategic goals. This component enables continuous monitoring of key performance indicators (KPIs) , variance analysis, and reporting, helping to keep the organization on track to achieve its financial objectives.

By continuously monitoring key performance indicators (KPIs) that are aligned with the company’s strategic objectives, FP&A teams can provide management team with timely insights into how well the business is performing. This ongoing performance management allows for quick adjustments to strategies and plans, ensuring that the organization stays on course to achieve its long-term goals.

Effective IBP relies heavily on the use of technology, advanced analytics, and integrated data systems. Advanced software tools that can aggregate and analyze data from across the organization are essential for FP&A teams to develop accurate demand forecasts, conduct scenario analyses, and monitor performance. Advanced analytics, combined with integrated data, ensures that all departments are working with the same information, reducing discrepancies and enhancing the accuracy of financial planning.

Encouraging collaboration and communication across departments is key to the successful implementation of IBP. When finance, operations, sales, and other departments regularly share information and insights, FP&A teams can ensure that financial plans are cohesive and aligned with the company’s overall strategy. This cross-functional communication improves planning accuracy and helps build a unified approach to achieving business objectives.

How IBP Connects FP&A and Extended Planning & Analysis (xP&A)

Extended Planning & Analysis (xP&A) expands traditional FP&A beyond finance, incorporating other business functions like operations, HR, sales, and marketing. xP&A creates a holistic approach to planning, aligning all parts of the organization with strategic objectives.

As companies increasingly value integrated planning, xP&A is becoming essential in modern finance. IBP is essential for connecting FP&A with xP&A, fostering integration, and advancing a more strategic approach to the business planning process.

IBP unifies financial, sales, and supply-chain operations and planning, enabling a seamless transition to xP&A. This integration ensures that all planning activities support the company’s overall goals, resulting in a cohesive approach to business planning.

By breaking down silos, IBP enables FP&A to work closely with other teams, leading to more integrated planning and decision making. This collaboration ensures that financial insights are incorporated into operational decisions and vice versa, enhancing overall operational efficiency and effectiveness.

Future of FP&A with IBP and xP&A

Embrace IBP and xP&A practices as your career in finance evolves. Position yourself to lead in a more connected, strategically aligned FP&A environment by developing skills in:

• Communication and cross-functional collaboration.
• Advanced analytics
• Strategic planning processes

Embracing Integrated Business Planning in FP&A

Integrated Business Planning (IBP) aligns financial planning with broader business processes and strategies, breaking down silos and enabling more dynamic and accurate decision making. By integrating demand forecasting, scenario planning, and performance management, IBP enhances FP&A’s effectiveness and serves as a bridge to xP&A, expanding FP&A’s influence across the organization.

As finance evolves, FP&A’s role will become increasingly strategic. Embracing IBP and xP&A is essential for staying ahead. Integrating financial insights with operational data, leveraging advanced analytics, and fostering cross-functional collaboration will position FP&A teams as key drivers of business success. Early career finance professionals who adopt these practices will be well-prepared to lead in this new era of integrated planning.

Thank you for reading CFI’s guide to Integrated Business Planning for FP&A. To keep learning and advancing your career, check out the following resources:

• Extended Planning and Analysis (xP&A)
• FP&A Modeling Best Practices
• FP&A Manager: Skills and Responsibilities
• See all FP&A resources
• See CFI’s FP&A Specialization
• Share this article

Create a free account to unlock this Template

Access and download collection of free Templates to help power your productivity and performance.

Already have an account? Log in

Supercharge your skills with Premium Templates

Take your learning and productivity to the next level with our Premium Templates.

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.

Already have a Self-Study or Full-Immersion membership? Log in

Access Exclusive Templates

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

Already have a Full-Immersion membership? Log in

By Whitney Gillespie     April 16, 2024

Complete guide to integrated business planning (ibp).

Integrated Business Planning, or IBP for short, is a strategic management process that connects various organizational departments to align business operations with financial goals. How? By integrating business functions – such as Sales, Marketing, Finance, Supply Chain and Operations – to create a holistic view of the company's performance and future direction. This blog post offers a comprehensive guide to discuss what precisely IBP entails and how Finance can drive business results and collaboration within the organization via a robust and comprehensive IBP process.

What Is Integrated Business Planning?

While the business world and Finance have always had shared language and acronyms, some new (and reimagined) acronyms may now be flooding your feed. One such topic you may be hearing a lot about lately is Integrated Business Planning (IBP). Yet the concept of IBP isn't new. In fact, it's related to Sales & Operations Planning (S&OP) , a concept that's been around awhile.

Still, IBP may seem overwhelming in the context of all the different acronyms related to financial and operational planning floating around lately. For example, IBP, S&OP, eXtended Planning and Analysis (xP&A) and others are just a few acronyms muddying the waters. But this comprehensive guide to all things IBP aims to help demystify the process.

So what, exactly, is IBP?

IBP ultimately aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. In turn, a trusted, common view of the numbers provides a robust baseline for agile decision-making. That common view also keeps all teams 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? IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

How Integrated Business Planning Works

The IBP process is a framework to address the C-suite needs and help implement the business strategy and manage uncertainty to improve decision-making. So what's the secret sauce of IBP to make all of that happen? 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 IBP. Consequently, Finance plays a central role in the IBP process.

IBP typically focuses on horizons of 24-60 months, as opposed to the short term. That focus equates to Integrated Tactical Planning or Sales and Operations Planning and Execution. Since the process must be fully integrated, it removes the departmental silos. Plus, the IBP process must adapt to the organizational construct of every business (IBP isn't a one-size-fits-all type of process).

A typical IBP process involves several stages:

• Data Collection and Analysis : Gathering relevant data (e.g., sales forecasts, production capacities, inventory levels and financial projections) from different departments.
• Demand Planning: Predicting future demand based on historical data, market trends, customer feedback and sales forecasts.
• Supply Planning: Determining the resources and capabilities (e.g., materials, production capacity and distribution channels) needed to meet the forecasted demand.
• Financial Planning : Developing financial plans and budgets aligned with the demand and supply forecasts, considering factors such as revenue targets, cost structures and investment requirements.
• Scenario Planning: Creating alternative scenarios to assess how different strategies, market conditions or external factors impact business outcomes.
• Management Business Review : Collaborating across departments to make informed decisions on resource allocation, investments, pricing strategies and operational adjustments.
• Execution and Monitoring : Implementing the plans, tracking performance against targets, and continuously monitoring key metrics to identify deviations and take corrective actions.

The most efficient way to foster this collaboration is through a unified solution and data model that caters to the needs of the various agents involved on each review. In fact, Figure 1 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

Figure 1: A Unified Data Model for IBP

Core Elements and Stages of the Integrated Business Planning Process

The IBP process includes the following core elements:

• Governance Structure : Establishing a cross-functional team with representatives from key departments to oversee the IBP process, define roles and responsibilities, and ensure alignment with organizational goals.
• Data Integration : Integrating data from different systems and sources to create a single source of truth for decision-making, using technologies such as enterprise resource planning (ERP) systems, Corporate Performance Management (CPM) tools, business intelligence (BI) tools and data analytics platforms.
• Collaborative Planning : Encouraging collaboration and communication between departments to share insights, align objectives and develop consensus-based plans that support overall business objectives.
• Continuous Improvement : Implementing feedback loops, performance reviews and process refinements to enhance the effectiveness and agility of the IBP process over time.

Key Performance Indicators (KPIs) for Integrated Business Planning

Some key KPIs to measure the effectiveness of an IBP process include:

• Forecast Accuracy : Comparing actual sales or demand with forecasted figures to assess the accuracy and reliability of forecasting models.
• Inventory Turnover : Calculating how often inventory is sold and replaced within a specific period indicates efficiency in inventory management.
• Customer Service Levels : Monitoring metrics like on-time delivery, order fulfillment rates, and customer satisfaction scores to measure service performance.
• Financial Metrics : Evaluating financial KPIs such as revenue growth, gross margin, operating profit, and return on investment (ROI) to gauge overall business performance.
• Supply Chain Performance : Assessing metrics like lead times, supplier performance, inventory levels, and supply chain costs to optimize supply chain operations.

Technological Enablers for Integrated Business Planning

Several technological enablers support a robust IBP process:

• ERP Systems : Integrated ERP systems consolidate data from different departments, automate processes, and provide real-time visibility into business operations.
• BI and Analytics Tools : Business intelligence tools and analytics platforms enable data visualization, trend analysis, scenario modeling, and predictive analytics for informed decision-making.
• Collaboration Platforms : Cloud-based collaboration tools facilitate communication, document sharing, and workflow management among cross-functional teams involved in IBP.
• Advanced Planning Software : Specialized IBP software solutions offer capabilities for demand planning, supply chain optimization, financial modeling, scenario planning, and performance monitoring.
• AI and Machine Learning : AI-driven algorithms and machine learning techniques can enhance forecasting accuracy, identify patterns, optimize resource allocation, and automate repetitive tasks in IBP processes.

By leveraging these technological enablers, finance professionals can streamline the IBP process, improve decision-making, and drive business growth.

In conclusion, Integrated Business Planning (IBP) is a strategic approach that aligns business functions, integrates data-driven insights and fosters collaboration to achieve operational excellence, financial stability, and competitive advantage. By implementing a robust IBP process supported by technology and focused on continuous improvement, finance professionals can effectively drive sustainable growth, mitigate risks, and adapt to evolving market dynamics.

Want to learn how you can maximize the benefits of your IBP process and get leadership on board with the plan? Check out our eBook Unifying Integrated Business Planning Across Finance and Supply Chain . You'll learn how to unify IBP across Finance and Supply Chain teams and read about use cases as proof points. Plus, you'll gain an understanding of the unique capabilities OneStream's Intelligent Finance Platform brings to unify Finance and Supply Chain planning activities.

Related Resources

• United States

Integrated planning: The key to agile enterprise performance management

Facebook Twitter Linked In E-mail this page

Table of contents

What is integrated planning, change as a given: the truth about plans, planning across the organization, the ultimate integrated planning solution.

• Need for real-time insights
• Integrated planning
• Agile and ready organizations
• Integrated planning drives better results

Integration is key to streamlined planning, budgeting, and forecasting. In order to adapt to today's quickly changing business conditions, you need an enterprise performance management solution that creates a single source of truth and delivers speed and agility to your planning process.

Did you know that 33 percent of critical information is delivered late?

The delay of critical information can cause a ripple effect that drives poor decision making and poor results. Today’s business simply cannot afford this type of cost in our customer-centric environment, where data is one of our most valuable assets. To stay ahead of the competition, businesses rely on a solution that can deliver acceleration, agility, and collaboration in every part of the organization.

Integrated planning ensures all parts of the organization are connected and planning is streamlined.

A must in the culture of “now.”

In virtually all industries, work has become more interactive and collaborative. More sharing is required, and more data is available than ever before. Success means integrating information across strategic and operational perspectives, as well as different functional and external sources.

Integrated planning mirrors the modern way we do business — it elevates the critical value of collaboration and cuts through data silos, driving more access to information and faster insights. Leaders use highly collaborative approaches to plan, budget, and forecast. Business planning requires accurate and complete data and buy-in across the entire organization, both from the top down and the bottom up. It sounds simple, but organizational silos are some of the biggest obstacles to accomplishing good work because they hinder critical decisions that strategically steer the business. And at the modern enterprise, silos are everywhere.

Integrated planning starts with a sophisticated planning platform that everyone in the organization can use, creating one source of truth. Data from diverse data sources such as ERPs, CRMs, and HRMs is unified, so users can access the information they need when they need it. Integrated planning helps ensure that plans, budgets, and forecasts are created with a holistic approach. Trends are easier to spot and quickly act on with more accurate and reliable plans. According to analysts at the Aberdeen Group , those organizations that champion data accessibility and collaboration between stakeholders promote organizational accountability and decrease time-to-decisions while increasing revenue. 1

The fact of the matter is that without effective communication, coordination, and collaboration between stakeholders, there is no way to improve organizational performance. 1

Bringing together people, data, and technology leaves organizations well-poised for optimal performance. Most importantly, integrated planning enables employees to be agile in responding to changing circumstances and able make the best decisions possible — all at the speed of modern business.

According to an Aberdeen study, 1 leaders who adopt enterprise performance management tools show a keen understanding of the importance of collaboration. They recognize that to make data driven decisions, they need to make all information accessible by integrating data and breaking down silos. Figure 1 shows steps taken by leaders to democratize data and drive more accurate forecasts.

Leaders put a high value on data integration and accessibility. They see the value of providing real-time data to decision makers and taking the guesswork out of forecasting. These strategies create comprehensive, actionable visibility into overall company performance and drive better results.

Gartner Predicts by 2020, at least 25 percent of large organizations will increase planning accuracy by integrating key operational planning processes with financial planning and analysis. 2

Do you have an integrated view of your data?

I do not feel confident in where to find comprehensive data, even for just my department

I have a good handle on my own departmental data (but only mine)

I have access to my data and that of other departments that impact my planning

IBM Planning Analytics helps Deutsche Bahn unite its global enterprise

Deutsche Bahn AG is a German railway company, and one of the largest IBM Planning Analytics customers with over 6,000 users worldwide. Deutsche Bahn uses IBM Planning Analytics to unite their wide-ranging operations across the globe, ensuring that the most accurate data is being used to create critical plans and forecasts that drive their business forward.

The truth about plans is that they always change. The goal of a dynamic, integrated planning approach is not to create a perfect, fixed plan. It’s to use all the resources available to create the most accurate, flexible and transparent plan possible, using a solution that does more than just plan — it analyzes data, reveals trends, and allows for real-time iteration.

Better, quicker access to data means faster and more informed decisions, laying the foundation for an organization to be agile and ready to pivot when changing business conditions demand.

If you’re reading this and thinking, “great, the finance team integrates all our plans, so we are off the hook,” think again. While we’d like to think that finance is the well-informed master of plans, miraculously weaving them together in perfect harmony and balance, that’s not always the case. In fact, it rarely is. Many, many finance teams rely on the manual collection of data into spreadsheets, which are often disconnected. Remember that much of an organization’s critical planning starts outside of finance and never gets communicated back up the chain or across the organization. There are simply too many top-down and bottom-up communication problems. Spreadsheets only complicate smooth communications. When a finance person is collecting and analyzing budget spreadsheets from across the organization, there is high risk for error in the process of combining and editing, causing confusion at the highest levels. Contradictory data can inhibit a clear picture of what is actually going on and identifying business drivers or detractors. Spreadsheets have proven over and over to be a highly imperfect yet highly common business practice.

With real-time access to data, companies take the guesswork out of planning, decreasing time involved in forecasting and increasing forecast accuracy. 3

Bye bye, silos. Hello, cross-functional planning.

A centralized, automated solution for performance data and planning allows coordination between different parts of the business and enables more streamlined, accurate plans. Leadership needs to understand what is truly driving the business — what causes increases and decreases in revenue or demand. At every level, access to a full range of data is critical to understanding how change (both internal and external) impacts the business. Though planning often starts with finance, other areas of the business can benefit from a dynamic planning solution as well. Let’s dive into a few use cases.

Supply chain planning

The term “operations” covers an enormous range of business activities. But one that’s almost universal is supply chain management. Supply chain planners are under constant pressure to reduce costs, increase efficiency and improve margins. Unfortunately, too many of them lack visibility into data and are misaligned with other teams. One centralized tool can help connect operational tactics with financial plans to allocate resources more effectively in response to market opportunities or competitive threats. This helps planners avoid mismatched data across multiple spreadsheets and enables them to pivot in the case of supply chain disruptions.

“ Our managers all have quick, easy access to the latest operational data via detailed reports that help them make better-informed decisions to improve the efficiency of the entire supply chain. ”

- Homarjun Agrahari, Director, Advanced Analytics, FleetPride

Learn more about supply chain planning

Infographic Webinar Learn more

Workforce planning

A company is only as good its people. That’s why it’s so important to hire and retain the right talent. Alignment between HR, finance and operations is crucial to ensure that the right people are in the right roles at the right time in order to meet organizational demands. This is rarely a simple task and too often it involves manual spreadsheet-based processes. Ensuring that departmental staffing targets are in sync with broader organizational objectives requires high levels of planning integration.

“ Our business is based on people. IBM Analytics is helping us manage that critical asset much more efficiently and effectively than ever before. ”

- Nadia Bertoncini, Coordinator of Governance, Projects and HR Analytics for Latin America, Natura Cosméticos

Learn more about workforce planning

Infographic Aberdeen report Learn more

Sales planning

Misalignment between finance, marketing and sales could lead to investment in the wrong initiatives, missed opportunities and inaccurate revenue forecasts that can severely hinder sales growth. And in a fast-moving market, manual processes and siloed systems are detrimental to agility. Decisions that are based on outdated information can lead to misguided sales strategies and thus lost sales and lost revenue. It’s critical to unite data under one roof for one single view to boost sales and effectively manage sales people.

“ The sheer level of detail that IBM Planning Analytics provides is very impressive … We can calculate our sales and gross margins for each SKU in IBM Planning Analytics and generate insightful reports at the click of a button. As a result, senior managers can rapidly access the comprehensive information they need to make effective strategic decisions. ”

- Vince Mertens, Group Accounting and Consolidation Manager, Continental Foods

Learn more about sales planning

Marketing planning

Constantly changing customer preferences and rising customer expectations require marketers to interpret high volumes of data and respond appropriately. But siloed data systems give only a partial picture and hinder smart decision-making. In addition, marketing teams can be fragmented and often disconnected from sales. Siloed planning causes misalignment with overall marketing goals, driving misallocated spend on the wrong elements of the marketing mix. Manual, siloed processes reduce visibility into how marketing activities affect one another, how marketing and sales touches move a lead through the funnel and how marketing helps achieve overall financial and business goals.

“ We first needed a better handle on our sales data. With so many lines of business, channels, and franchisees, collecting and consolidating this information was something that we knew we could do better. ”

- Donald Neumann, Demand Manager, Grupo Boticário

Learn more about marketing planning

Ventana report Learn more Infographic

IT planning

With IT, you need a business case for every dollar spent. But balancing the IT needs of an entire organization with digital transformation objectives and constant technology innovation is no simple task, and often requires additional resources. That’s why it’s so important leverage a planning solution that keeps IT focused on the projects that matter, automates planning tasks, gives a clear view into resources available and helps measure ROI. It’s also critical to coordinate with both finance and human resources to ensure the right resources are provided for IT initiatives and projects.

“ A few years ago, my team probably spent around half their time just keeping everything running — now it’s around 10 percent. With the move to IBM Analytics in the IBM Cloud, we have 40 percent more time to focus on working with the business to add value. Instead of asking ‘how do I make it work?’ we ask ourselves ‘how do I make it better?’ It’s a quantum shift in mindset. ”

- Vimal Dev, Vice President – IT, Global Enterprise Applications Leader, Genpact

Learn more about IT planning

Learn more IBV report

Operations, sales, marketing, human resources and other departments and disciplines all have a need for fast, flexible planning and analysis. And all of them can use the same tools to provide insight and manage performance. When people in one part of the organization see how their decisions affect other parts of the organization, all of the activities will be better coordinated and drive better results. In fact, according to Aberdeen, leading organizations are those who align planning across departments at double the rate of laggards in areas like sales, marketing and finance.

Become a leader

With IBM Planning Analytics , you can break down silos and generate an integrated view of your departmental or organizational performance. The solution enables you to create more accurate forecasts, identify potential performance gaps before they occur and make resource allocation decisions quickly and intelligently. Using multidimensional modeling and scenario analysis, IBM Planning Analytics lets you drill down into your data to examine the ripple effects of alternative courses of action and understand how your decision will affect related areas of the organization and ultimately impact the bottom line.

Using what-if scenario analysis to make smarter decisions

With IBM Planning Analytics, you can build multidimensional models and perform “what-if” analysis to explore scenarios or test business assumptions. Creating and maintaining sophisticated models with advanced sandboxing capabilities is simple. Easily test business assumptions and model scenarios to immediately see the impact of alternative courses of action on before deciding to implement changes.

IBM Planning Analytics offers all areas of your business — finance, operations, HR, sales, marketing, operations, IT and more — the ability to solve problems today and respond to new challenges with agility tomorrow.

Click on any quadrant for more information.

Headcount and staffing planning

Salary and compensation planning

Successions planning

Corporate planning and, budgeting and forecasting

Strategy planning

Operational planning

Capital planning

Expense planning

Profitability analysis

Demand planning

Sales and operations planning

IT project planning

IT budgeting

IT portfolio management

Sales territory planning and quota planning

Sales forecasting

Sales capacity planning

Resource allocation

Marketing revenue planning and forecasting

Campaign optimization

Dive deeper into the solution

Find out if IBM Planning Analytics is right for you.

Download the white paper

Download and save the PDF version of this SmarterPaper.

Try the interactive demo

Experience an interactive demo to get a real taste of functionality.

Shortfall: CFOs worry that their teams aren’t ready to weather the disruption

Here are four issues that are holding back many finance organizations and possible solutions.

Integrated Business Planning

Succession planning

Corporate planning, budgeting and forecasting

Strategic planning

Captial planning

What is Integrated Business Planning (IBP), and Why is It Important?

There’s nothing that can bring a business to grinding halt faster than lack of collaboration between different departments and poor visibility of processes within and between departments.

But creating a business plan that integrates all aspects of your organization can be challenging as each business process is often measured by its own, unique set of metrics, and some are more important than others, depending on which department is “running the metrics.”

For instance, while the demand forecast accuracy is a top priority for your supply chain managers, your procurement department may be more interested in reducing the price of raw materials, and your manufacturing division might aim to maximize its capacity utilization. Organizations with inconsistent planning practices risk running inefficiently, which can result in a substantial loss of time, energy, and money. 

So, how do you align the many strategies, operations and functions from each of your departments to make informed decisions about market policies, investments, and even new product or service introductions? 

One widespread method that is used to connect diverse business strategies is Integrated Business Planning (IBP). Developing and implementing an integrated business plan for your organization gives you a clearer understanding of your goals and how to plan to achieve them.

What is Integrated Business Planning (IBP)?

Companies have multiple operational functions – ranging from finance to supply chain, to product design and development, to marketing and sales, ad infinitum. By using IBP, you can link your strategic plans and be more aware of how resources, capabilities, and results relate to one another. This enables you to reach your maximum potential and enhance collaboration across supply chains. 

With digitization driving success, IBP is becoming a “best practice” tool for business planning. From sales to operations to finance, data from every facet of an organization can be incorporated seamlessly. This method of incorporation allows companies to maximize output and understand how their resources, abilities, and outcomes are all working together. It also helps companies analyze what role each sector plays in the business.

Why Is Integrated Business Planning Important?

How can your business benefit from integrated business planning? Let’s take a look at a few benefits:

• Increasing visibility Organizations can integrate data from financial reports, supply chain projections, and strategic plans into their business plans using IBP. By doing so, businesses gain insights into how each part of the supply chain works both independently and collectively. As a result, it enables businesses to discover and resolve problems in an efficient manner.
• Increasing accountability With more visibility, employees are more plugged in and aware of the impact their actions can have on the business as a whole. This makes them more accountable and provides a clear understanding of exactly what their responsibilities are, which increases employee engagement and boosts compliance with processes and procedures.
• Aligning goals and actions An organization with visibility and accountability can get a clearer picture of what it is striving for and helps to ensure that everyone is taking the necessary steps to achieve it. In addition to enabling individuals to do their jobs more effectively, this will also allow the whole organization to run more efficiently.
• Allowing for better decision making An integrated business process enhances a company’s ability to evaluate data, the relevant context, and the big picture at the same time. By analyzing the results, they can make highly informed decisions based on the information they are presented with.

These benefits are desirable for any organization, but implementing integrated business planning successfully can be a complex process. Following best practices for IBP increases your odds of success and improves your outcomes.

Tips and Best Practices for Successful Integrated Business Planning

IBP is potentially valuable for your business. However, when you try to integrate additional functions and strategic planning into your traditional sales and operations planning (S&OP) cycle, it can initially lead to many challenges. Let’s take a look at a few tips for successful integrated business planning.

• Effective governance To make an IBP work, everyone needs to work together as a team and fulfil the company’s objective. Charting the roles and responsibilities of your employees and implementing policies and incentives to create an environment where everyone can work together can help improve team cohesion.
• Clear goal Start with a clear goal for implementing an IBP and how it will benefit your business (and individual contributors).
• Organized process When your process is already designed to align with your organization, it is easier to achieve the desired outcome.
• Right talent The backbone of an organization is its workforce. Choose your employees wisely; look for the skills, experience, and core competencies that are vital to IBP. You’ll need team members who are well-versed in strategic planning, financial planning, and supply chain planning. You will be able to more successfully adopt IBP across the company if you have talented and experienced people on board.
• Insightful analytics Businesses need to be proactive to remain ahead in their respective markets. Real-time analytics enables you to adapt swiftly to disruptions and market changes and make data-driven decisions based on your business strategy.
• Powerful technology Businesses are moving ahead with digital transformation. IBP, being a cross-functional initiative, needs a strong cloud-based technology platform to perform.

IBP has become an integral element of the day-to-day operations of many businesses, ensuring transparency and efficiency throughout the fast-paced supply chain right from procurement through manufacturing and delivery. As an increasing number of companies make the shift to digitization, the implementation of an integrated business planning (IBP) approach is vital.

No products in the cart.

The Ultimate Guide To Integrated Business Planning

Are you looking for a way to streamline your business planning process? Integrated Business Planning (IBP) is the perfect solution. It’s an approach that combines all aspects of business planning into one comprehensive strategy, allowing you to make decisions quickly and accurately. This guide will help you understand how IBP works and how it can benefit your organization.

With IBP, you can save time by having all of your data in one place, making it easier to identify trends and opportunities as they arise. You’ll also be able to make more informed decisions based on real-time data analysis instead of relying on outdated information or guesswork.

What Is Integrated Business Planning?

Integrated business planning (IBP) is a powerful process that could become central to how a company runs its business. It is one generation beyond traditional sales and operations planning (S&OP) and combines financial and operational data from across the organization to create an aligned, cross-functional plan for the future. IBP enables businesses to make decisions based on key assumptions that are documented and updated regularly, helping them to achieve corporate goals.

IBP solutions help align financial and operations plans, giving companies greater planning accuracy and operational performance. This process also incorporates forecasting and demand response , demand-driven supply management, inventory optimization, production scheduling, transportation optimization, and more. With business planning processes in place, companies can make better decisions faster by leveraging real-time data from across their organization.

What Is the Difference Between Sales & Operations Planning and IBP?

Sales And Operations Planning (S&OP) and Integrated Business Planning (IBP) are two different integrated processes used to manage the supply chain. S&OP is a cross-functional process that focuses on aligning demand forecasts and supply in volumes in a tactical range, while IBP has a broader scope that looks at aligning all aspects of the business to ensure better decision-making.

Sales and operations planning processes typically have medium-term planning horizons that rarely extend beyond 18 months, while IBP naturally has a longer time scale. Additionally, IBP starts at the executive level, and each month or planning cycle culminates in a performance review against plans.

Both S&OP and IBP are important for managing the supply chain and ensuring successful operations. However, it’s important to understand their differences to choose which process best meets your needs.

What is an example of an integrated business model?

An example of an integrated business model is a supply chain management system. This type of system links different parts of the organization, from the production and inventory to customer service and sales. It leverages data to streamline operations, improve efficiency, and reduce costs. By integrating processes across departments, businesses can gain greater visibility into their operations and make better decisions faster than ever before.

Benefits Of Integrated Business Planning

The main benefit of implementing IBP is increased revenue, followed by forecast accuracy and improved Perfect Order Delivery. Other benefits include creating transparency between strategic goals and financial and operational activities, unlocking P&L performance through coordinating strategies and tactics across traditional business functions, creating more collaborative decision-making, providing higher agility in responding quickly to the business environment and market volatility, and generating insights on developments in the market.

IBP is important because functional and technical silos across organizations can result in flawed decision-making. Transitioning to IBP can help companies enhance their performance by improving their ability to respond quickly to changes in the market.

Challenges Of Integrated Business Planning

Integrated Business Planning (IBP) is a powerful process that can revolutionize how companies run their business. However, it is not without its challenges. IBP requires an organization with the right technology, processes, and people to succeed.

One of the biggest challenges of IBP is getting all departments within an organization on board with the process. It requires buy-in from all levels of the organization, including executives, operations, and finance teams. Without this unified approach and skilled and experienced employees, getting everyone working together towards a common goal can be difficult.

Another challenge of IBP is data integration. In order for IBP to be successful, data must be collected from multiple sources and integrated into one system. This can be difficult due to different systems used by different departments or even different countries within an organization. It also requires a high level of accuracy and consistency in order for the results to be meaningful and actionable.

Finally, IBP requires constant monitoring and adjustment as market conditions change over time. Companies must stay up-to-date on changes in demand, supply chain disruptions, and other factors that could affect their plans. Without regular monitoring and adjustments, companies risk making decisions based on outdated information, which could lead to costly mistakes down the line.

Why Is Integrated Business Planning Important?

Integrated Business Planning (IBP) is an important process for businesses to align their goals with their financial, supply chain, product development, marketing, and other operations. It helps companies to create a unified plan that can be used to make better decisions and reach corporate objectives.

IBP is a powerful tool that allows businesses to consider all the different elements of their operations when making decisions. This means they can make more informed choices about allocating resources, developing products and services, and managing their finances. By taking into account all these factors, IBP enables companies to make better decisions and more informed strategic plans that will lead them toward success in the long run.

Another benefit of an Integrated Business Planning process is that it helps businesses become more agile and responsive to changes in the market. With IBP in place, companies are able to quickly adjust their plans based on new information or changing customer needs. This allows them to stay ahead of the competition and remain competitive in an ever-changing business landscape.

Overall, Integrated Business Planning is essential for businesses looking to stay ahead of the competition and reach their goals. By considering all aspects of operations when making decisions, IBP provides companies with a unified plan that can help them succeed in the long run.

Elements Of Integrated Business Planning

The three main parts of integrated business planning are categorized as “Plan,” which involves creating a strategy, “Execute,” which involves carrying out the plan; and “Monitor and Adjust,” which involves reviewing and making changes as needed.

The Plan element involves the initial step of creating a strategy. This includes identifying key goals, objectives, and expectations around the company’s products and services to understand better how those should be used in an overall strategy. Additionally, it includes developing plans for specific initiatives that will help advance those goals.

The Execute element is about carrying out those plans. This includes everything from setting timelines, allocating resources, and developing procedures to ensure the plan is implemented properly.

Finally, the Monitor and Adjust element involves reviewing progress on the strategy and business performance and making any necessary changes or adjustments. This could include changing timelines for certain initiatives, modifying business processes, or introducing new initiatives to stay ahead of competitors. This element is important to ensure the plan remains up-to-date and relevant in an ever-changing business environment.

The Integrated Business Planning Process

To be successful, integrated business planning needs to occur on a regular basis, usually every month or every quarter. This strategic planning process should be undertaken to align the different parts of the business and create a unified plan that everyone can work towards.

1. Product Management

A cross-functional team meets monthly to review the status of all product-related projects. This includes managing the entire product portfolio, identifying any new risks or opportunities, prioritizing high-value products, and aligning them with business goals. The ultimate aim is to ensure that raw materials and manufacturing floor capacity are available as needed. Whenever necessary, product managers update and publish a master plan that outlines the required resources for delivering the changes.

2. Demand Planning

Demand planning is a team effort that involves members from sales, marketing, and finance. Its goal is to meet customer demand and reduce excess inventory while avoiding supply chain operations issues. Improving profitability, customer satisfaction, and efficiency are all benefits of demand planning. The team works to create a demand plan that accurately estimates future demand, tailored to the right markets and methods. KPIs such as sales forecast accuracy, inventory turns, fill rates, and order fulfillment lead times are used to measure success.

3. Supply Chain Planning

Supply chain professionals aim to find a cost-effective way to meet expected demand efficiently. To achieve this goal, having visibility into complex supply chains is crucial. One way to accomplish this is through a formal supply chain optimization project, which helps identify and fix potential weaknesses, such as low inventory levels or order fulfillment challenges. The ultimate goal of supply chain management is to reduce the cost of goods sold (COGS) .

Supply chain leaders should deeply understand the production process from raw materials to finished goods. By understanding upstream and downstream processes, supply chain professionals can better anticipate customer needs, uncover new opportunities for cost savings, and mitigate risks. Additionally, they should build relationships with key suppliers and develop strategies to ensure a consistent flow of materials.

4. Financial Planning

Financial planning involves setting short-term and long-term goals for a company that are achievable through the best use of resources. This includes understanding financial trends, managing budgets, monitoring cash flow , financial forecasting, and making decisions about investments.

Financial planning gives organizations an understanding of their current economic environment and helps them create plans to achieve their objectives. It also helps to reduce risk and maximize profits. Ultimately, financial planning is essential for success in any organization.

Integrated planning can be challenging for organizations used to a traditional budgeting process. However, companies can improve their overall financial performance and better meet customer needs by taking a more strategic approach. This requires data-driven insights to inform decisions and the ability to quickly shift resources in response to changing market conditions. The finance team’s influence is driven by their ability to analyze and recommend quickly.

5. Customer And Channel Plan Development

Customer and channel planning are integral components of a successful business. These plans involve researching customer needs, segmenting target audiences and creating strategies to reach them. Additionally, customer and channel plans help determine the most effective marketing tactics for each target audience with the goal of increasing sales and brand loyalty.

This includes selecting the best delivery channels (offline or online) that suit certain markets and target audiences and considering customer preferences when designing products or services. Through customer and channel planning, organizations can create a more successful marketing strategy and reach their desired goals.

4. The Integration Team

The integration team, which is usually composed of individuals from the finance organization, combines the initial product, demand, and supply plans into a single strategic plan that covers a 24- or 36-month period. As necessary updates are made, significant changes are identified by the teams. Decisions that require higher-level approval are prepared for executive review.

The integration team also leads scenario planning . This process involves considering different potential business plan outcomes and helping identify risks. The teams then help develop strategies to mitigate risk, thereby ensuring the success of the overall planning process.

5. The Executive Team 

The executive leadership team addresses disagreements and shares the revised plan with the entire organization. This management team is responsible for making final decisions on the plan and ensuring it reflects the organization’s objectives. Additionally, they review progress made against the plan and make adjustments as needed.

The executive team also considers external factors such as market conditions, customer expectations, competitive environment, and other factors to ensure the organization is on track to reach its desired goals.

6. Supporting Software

Many organizations use software to support their IBP process. This software may include budgeting and forecasting tools , customer relationship management (CRM) systems, financial analysis programs , and inventory tracking applications. Such software assists in streamlining the process of gathering data from multiple sources and increasing overall efficiency within the organization. It can also assist with scenario planning.

7. KPI Assessment

At regular intervals, organizations assess the performance of their plans using key performance indicators (KPIs). These KPIs provide a snapshot of progress and help determine whether or not the plan is on track to achieve its desired outcomes. By evaluating KPIs on an ongoing basis, organizations can identify areas that need improvement and adjust their plans accordingly.

Software To Support IBP

Software solutions are available to support Integrated Business Planning processes. These enterprise performance management solutions provide a comprehensive view of the entire business, allowing you to analyze financial data in real-time data analysis from multiple sources. This helps organizations make informed decisions based on accurate information and forecasts. Additionally, software solutions can automate many of the manual processes associated with IBP, such as data collection and analysis, which helps streamline operations and reduce costs.

Organizations looking to transition to Integrated Business Planning should consider investing in cloud based technology and software solutions supporting their IBP initiatives. Many software solutions can support financial forecasting processes with new tools like predictive analytics ,and feed right into your financial plan.

Related Posts

• Your Flux Analysis Step-By-Step Survival Guide
• How To Do Account Reconciliation Without Pulling Your Hair Out
• Taking Vertical Analysis To The Next Level
• Your Unconventional Guide To Managing Working Capital
• The Easy Way You Can Calculate Free Cash Flow
• Crafting Your Business Plan Financials: A Step-by-Step Guide

FP&A Leader | Digital Finance Advocate | Small Business Founder

Mike Dion brings a wealth of knowledge in business finance to his writing, drawing on his background as a Senior FP&A Leader. Over more than a decade of finance experience, Mike has added tens of millions of dollars to businesses from the Fortune 100 to startups and from Entertainment to Telecom. Mike received his Bachelor of Science in Finance and a Master of International Business from the University of Florida, laying a solid foundation for his career in finance and accounting. His work, featured in leading finance publications such as Seeking Alpha, serves as a resource for industry professionals seeking to navigate the complexities of corporate finance, small business finance, and finance software with ease.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

To provide the best experiences, we and our partners use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us and our partners to process personal data such as browsing behavior or unique IDs on this site and show (non-) personalized ads. Not consenting or withdrawing consent, may adversely affect certain features and functions.

Click below to consent to the above or make granular choices. Your choices will be applied to this site only. You can change your settings at any time, including withdrawing your consent, by using the toggles on the Cookie Policy, or by clicking on the manage consent button at the bottom of the screen.

• Recognition

Integrated Business Planning

Embracing change: the power of integrated business planning.

In today’s dynamic business landscape, conventional planning processes riddled with departmental silos often hinder visibility and efficiency. However, a transformative shift is underway. Forward-thinking companies are embracing digital transformation and adopting Integrated Business Planning (IBP) to empower their activities with enhanced coordination and collaboration. This blog delves into the definition of IBP and explores the substantial benefits it’s brings to organizations in a modern setting.

What is Integrated Business Planning?

IBP is considered a best practice approach that seamlessly integrates financial and operational data from across the organization. This strategic method allows companies to optimize their output by connecting strategic plans with sales, operational, and financial plans. The result is enhanced visibility of the intricate relationships between resources, capabilities, and results. Through IBP, organizations collectively develop a comprehensive go-to-market plan that reflects contributions from every department.

Main objectives of Integrated Business Planning

IBP establishes a framework to achieve the following key goals:

• Align company plans and resources with corporate strategy: IBP ensures that all parts of the business are aligned with the strategic goals, focusing on financial performance as much as on operational capabilities.
• Improve visibility and collaboration across the business: By bringing together various functions—such as sales, production, logistics, and finance—IBP fosters collaboration and transparency across departments.
• Enable more accurate and forward-looking decision-making: With a unified view of business data and forecasts, companies can make more informed decisions, anticipate market changes, and react proactively.

Core elements of Integrated Business Planning

IBP consists of a series of interconnected processes that work together to create a unified business plan:

• Product and portfolio management: Managing the life cycle of products and aligning the product portfolio with market demands and strategic objectives.
• Demand planning: Estimating customer demand to guide supply chain and business planning.
• Supply planning: Ensuring the organization can meet the demand plans with optimal resources.
• Financial review and integration: Tying operational planning to financial planning and analysis to ensure that business plans are financially viable and aligned with financial goals.
• Strategic business planning: Aligning all business plans with the company’s long-term strategic goals, including financial objectives.
• Integrated reconciliation: Harmonizing plans across the business to ensure alignment and commitment from all departments.

Key benefits of Integrated Business Planning

IBP offers a multitude of advantages, including:

• Enhanced agility: Respond faster to market changes and capitalize on new opportunities.
• Improved financial performance: Make data-driven decisions that optimize resource allocation and profitability.
• Better risk management: Proactively identify and mitigate potential risks that could impact your business.
• Increased collaboration: Break down departmental silos and foster a culture of teamwork.
• More accurate forecasting: Gain a clearer picture of future demand and supply to optimize inventory levels.

While IBP requires a mature planning process with the right technology and tools, successful implementation also depends on strong leadership, clear communication, and a collaborative culture across all levels of the organization. It’s a strategic approach that, when executed well, can significantly enhance a company’s performance and competitive edge.

Challenges of traditional business planning processes

Conventional planning activities are often disjointed, especially across the supply chain. The use of disparate spreadsheets and standalone business intelligence solutions creates isolated pockets of knowledge, hindering a holistic approach to planning. While some firms implement Sales and Operations Planning (S&OP) principles, true unification across the entire organization remains elusive. This fragmented approach leads to inefficiencies and suboptimal performance due to:

• Limited visibility into departmental activities and their impact on the financial bottom line.
• Disconnection between strategies and operational activities, resulting in delayed responses to market changes.
• Lack of a collaborative approach and accountability, fostering business silos rather than a unified team.
• Multiplicity of point solutions and applications across divisions, increasing costs and data disparities.

Overcoming these challenges requires a shift towards a unified planning process. IBP offers a comprehensive framework that breaks down departmental silos, integrates financial and operational data, and fosters a culture of collaboration. By implementing IBP, organizations can gain a clear view of their business, make better decisions, and achieve their strategic objectives.

Integrated Business Planning vs Sales and Operations Planning: What’s the difference?

IBP and S&OP are both strategic processes used by companies to align various functions within the organization. While they share similarities in aiming to improve business performance through better planning and alignment, there are distinct differences in scope, focus, and depth.

Here’s a comparison between the two:

Key differentiators

• Breadth: IBP takes a more comprehensive approach, encompassing the entire organization’s planning processes. S&OP has a narrower focus on aligning supply chain operations.
• Time horizon: IBP has a longer-term perspective, considering market trends and setting strategic direction. S&OP prioritizes short-term efficiency and meeting near-term targets.
• Financial emphasis: IBP integrates financial planning with operations, ensuring financial viability. S&OP gives less weight to financial considerations, focusing on operational costs.
• Decision-making: IBP empowers decision-making across all levels, while S&OP primarily supports operational-level choices.

IBP builds upon the foundation of S&OP. It extends the principles of supply chain alignment to encompass broader financial and strategic planning. While both processes are valuable, IBP offers a more holistic and future-oriented approach for businesses seeking to optimize performance across the entire organization.

Case in point: Coca-Cola European Partners

Automating 90% of financial data input, slashing data transfer time from 24 hours to 15 minutes, and enabling digital, driver-based planning from production to delivery.

Coca-Cola European Partners (CCEP) leveraged IBP to transform their supply chain finance function. They implemented driver-based planning, which integrates financial and operational data, enabling them to make data-driven decisions and optimize resource allocation. IBP also improved collaboration across departments by providing a single platform for all users to access and analyze data.

This resulted in:

• considerable savings in time: a 90% reduction of manual tasks
• improved efficiency of data transfers: from 24 hours to 15 minutes
• a streamlined consolidation process: just one-click to incorporate 48 plants and 85 warehouses

Overall, IBP increased transparency, streamlined processes, and empowered informed decision-making at CCEP.

The future of business planning

The era of disjointed planning processes is giving way to the transformative power of IBP. Companies adopting it can unlock improved visibility, collaboration, and efficiency—setting the stage for sustained success in today’s rapidly evolving business landscape.

For further insights, explore our complimentary whitepapers and reports on the benefits of an IBP process.

From the author

Advancing beyond S&OP: Is IBP the right approach for you?

As businesses mature and markets fluctuate, the need for adaptable planning processes increases. Transitioning from…

Unlocking value through Integrated Business Planning: the experts share their thoughts

Tired of siloed departments and disconnected planning? There’s a better way. Integrated Business Planning (IBP)…

Be the first to comment on this post Cancel reply

Your email address will not be published. Required fields are marked *

The 2024 Intent Group Guide on IBP

A comprehensive resource for organizations considering Integrated Business Planning

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.

Share this article with a friend:

About the author.

Inspired Economist

Related posts.

Accounting Close Explained: A Comprehensive Guide to the Process

Accounts Payable Essentials: From Invoice Processing to Payment

Operating Profit Margin: Understanding Corporate Earnings Power

Capital Rationing: How Companies Manage Limited Resources

Licensing Revenue Model: An In-Depth Look at Profit Generation

Operating Income: Understanding its Significance in Business Finance

Cash Flow Statement: Breaking Down Its Importance and Analysis in Finance

Human Capital Management: Understanding the Value of Your Workforce

Leave a comment cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Start typing and press enter to search

This website does not support Internet Explorer. Please, switch to Edge, Chrome, or Firefox browser to view this page.

What is IBP? (Integrated Business Planning)

Video: What is IBP?

Why is IBP important?

IBP Framework

IBP best practices by o9 solutions

Summary: ibp software by o9 solutions.

Integrated Business Planning is a best-practice process that aligns Commercial, Financial and Supply Chain activities. In doing so, they are performed as coordinated business decisions with the intent to deliver increased revenue, improved service levels, reduced supply chain costs, greater productivity, better cash flow and higher profits. In short: your integrated business planning process (IBP process) will never be the same.

Integrated business planning (IBP) is important because functional and technical silos across organizations result in flawed decision-making. Within every enterprise there are many thousands of decisions being made and business processes to be aligned, resulting in a final business strategy.

Among those decisions are: commercial decisions related to new products, marketing and sales decisions, supply chain decisions (across the full supply chain and supply chain management, related to positioning of material and capacity and then fulfilling customer demand). Last but not least, financial decisions (related to setting budgets and targets, allocating resources and the forecast that you hold to external stakeholders).

Making the right decisions is not easy and many decisions counteract each other, which may lead to poor business outcomes. Let’s look at some of the fundamental challenges that enterprises face.

1. Isolated decisions are being made

Planning decisions need to be made in a synchronized fashion, but for practical purposes organizations sometimes have to create functional planning departments.  For example, the demand planning and supply and operations planning processes are used to manage the supply chain. Then, you have commercial & sales and operations planning processes driving commercial decisions and finally, financial planning processes to set the budgets and targets.

These plannings and processes are the core of functional planning processes, but they are largely operating in silos today.

2. Cycles are not properly synchronized

Not only do organizations have departmental silos, a second challenging factor is that the siloed teams perform their planning processes in what are called ‘planning cycles’.  A business planning process can involve daily planning cycles for operational planning, weekly and monthly planning cycles for tactical planning and annual cycles for strategic planning.

If these planning cycles are disconnected then the execution of each can be flawed and will almost certainly end up deviating from the intended strategy. In short: an integrated business planning process is very important to connect the planning teams, their processes and their schedules.

3. Technology stacks don’t communicate

The third major challenge to successful Integrated Business Planning (IBP) is the decision-making technology stacks. Historically, many technologies have been used to aid enterprise decision-making and performance management. There are data stacks, planning stacks and reporting stacks. Plus, there’s technology for importing data and then technology used for insights, learning and algorithm development.

All of these types of technology aid decision-making and may lead to integrated business planning (IBP). Still, they can also make the lives of business users much more complex and the adoption of integrated business planning (IBP) more difficult to achieve.

Integrated Business Planning

Functional silos, disconnected cycles and separated technology stacks mean that commercial, financial and supply chain decisions are not easily synchronized. As a result, enterprises will typically suffer from service level issues, inventory issues, excess costs in the supply chain and lower returns on investment from marketing and sales spend.

What this translates to is a significant amount of value leakage. Integrated Business Planning is the strategy and methodology of bringing all these planning processes together and connecting them to respond effectively to market risks and opportunities. IBP can help with your business performance – for example supply chain optimization – and help to develop an effective business planning process, enabling the right decisions to be made to reach your company’s business goals.

Webinar: A Future-proof approach to Merchandise Financial Planning

By providing a comprehensive view of a retailer’s operations, MFP enables better, faster decision-making about pricing, promotions, and inventory allocation to maximize profitability and minimize risk. Gain actionable insights and best practices for successful MFP implementation and utilization from industry experts. 

Integrated business planning framework

Integrated business planning (IBP) is a journey with many steps requiring a roadmap of prioritized actions that drive quick wins and sustainable benefits. But, before you can plan that roadmap and the business planning process, you need to understand the basic elements of an IBP framework (which we detail below) alongside the benefits each element brings to the table.

Establishment of accountability

The first element to consider is defining the correct roles and responsibilities as well as setting effective governance to ensure the establishment of accountability.  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.

Alignment with Leadership

The next element is to detail the objectives with a high-level action plan and seek leadership alignment.  Having a clearly defined aim sets the path for integrated business planning (IBP) and defines what IBP will deliver.  Strategic plans, strategic goals, a business strategy as a whole and scenario planning will help with defining a clear mission.

Alignment among the leadership team is vital if integrated business planning is to achieve its goals.  A clear mission provides the pathway people can follow and ensures that the actions and goals are correct, rather than simply the integrated planning process itself.

Achieve Organizational alignment

When processes are cross-functional and designed to align the organization in one desired outcome, you can focus on meeting the goal instead of maintaining the process. This is why both scenario planning and business strategy are important.

You can write down different processes and define operations planning next to financial planning. Still, if the overall strategy is not clear enough, it’s impossible to reach an organized cross-functional process.

Build Talent base

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 implement IBP across the enterprise more effectively.

Not only that, but new possibilities will equate to new opportunities and the imagined future state will garner enthusiasm and bring new energy to the business.  Successful Integrated business planning will transform process efficiency and motivate the workforce to achieve even greater improvements.

Real-time 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 to be proactive and stay ahead of your market instead of relying on reactive decisions. This way, tasks like financial forecasting and predicting business performance become simpler and easier.  Scenario planning encourages thinking about ranges of possibilities.  Allowing planning teams to have a recognised and structured approach to future states reduces the likelihood of being blindsided by events and being unable to react to risks or leverage opportunities.

Usage of 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.  Next-generation planning solutions will provide advanced AI/ML capabilities, but equally important for integrated business planning should be the collaborative functionality, dashboards, volume-to-value conversions, metrics and exception handling, automation, performance and security.

The technology you use for implementing integrated business planning throughout your entire business should not only help supply chain management, but also the integrated processes used by the highest management team.

o9 solutions came up with a single integrated plan for all planning processes across the horizon. o9’s Graph Cube Data Model allows for aggregation and disaggregation to the right level of detail for each planning horizon to support end-to-end synchronization.

09 solutions offers  IBP software  that can be used throughout the entire organization and will solve the future demand of business-wide business planning. A few reasons why this software works:

Complete P&L and KPI visibility

The software summarizes scenarios with connected financial KPIs and strategic plans. It understands financial metrics, such as margins, revenues, and working capital and molds this into operational data.

With the help of the Graph Cube Data Model, most companies can use financial performance, financial reasoning and reconciliation within the integrated planning process of your business.

Cross-functional and interactive plan review & publication

o9’s integrated business planning uses Natural Language Processing (NLP) based search & discovery. With this IBP process platform, you can create interactive views instead of static dashboards and turn cross-functional processes, review and alignment into a fluid process.

Live on platform meeting capability

Your management or business leaders can create live presentations step by step with live data for S&OP meetings, removing hundreds of hours of manual work. The business planning process will take up less time, and the complex supply chains and their ways of working will be easier to understand.

Big data enabled

With the help of the IBP software, you can leverage real-time structured and unstructured data from the market, customers, and operations to drive insights into trends and potential disruptions and thus set up a strategic plan for the future.

o9 Solutions’ Integrated Business Planning provides an intelligent, automated planning solution that bridges all the functional silos across the planning cycles in a unified technology stack that can drive up user adoption and enable better decision-making.

o9’s Integrated Business Planning solution uses automation to bring together finance, marketing, sales, and supply chain to address risk and opportunities in an online live platform.

It provides full visibility and complete transparency on the gap vs. the annual strategic plan in revenues, cost, margin and volumes, and therefore enables management to quickly come up with a strategic plan and informed decisions. This results in predictive analytics, profitable growth that balances strategic, financial and operational objectives and many more benefits for your business.

Want to learn more about Integrated Business Planning (IBP)?

View our collection of white papers regarding IBP, tailored to your industry.

About the author

o9 Solutions is a leading AI-powered platform for integrated business planning and decision-making for the enterprise. Whether it is driving demand, aligning demand and supply, or optimizing commercial initiatives, any planning process can be made faster and smarter with o9’s AI-powered digital solutions. o9 brings together technology innovations—such as graph-based enterprise modeling, big data analytics, advanced algorithms for scenario planning, collaborative portals, easy-to-use interfaces and cloud-based delivery—into one platform.

View our related articles, white papers, use cases & videos

Consumer electronics: state of planning 2024.

Transforming Packaging Supply Chain Planning & Collaboration

Transformative IBP - Driving consequential decision-making across functions

Collaborative platforms combat global shortages

Next-generation Integrated Business Planning (IBP) with o9

Driving greater efficiency in decision-making and execution at PepsiCo

Next-gen Integrated Business Planning for CPG

Why Brand Manufacturers and Retailers are moving to a Direct-to-Consumer model

Look for the APO replacement that adapts with your business

Integrated Planning: Interactions between Commercial and Supply Chain

o9's Next-Generation IBP Solution for Food & Beverage

Building Trust in Touchless Planning

5 Steps To A Successful Integrated Business Planning (IBP)

Too long to read? Enter your email to download this post as a PDF. We will also send you our best business tips every 2 weeks in our newsletter. You can unsubscribe anytime.

Integrated Business Planning (IBP) is a method for identifying the gap between company objectives and expected outcomes. IBP is a cyclic monthly procedure that enables collaboration planning and departmental alignment through cross-functional inputs. 

Which Businesses Can Use Integrated Business Planning? 

Integrated business planning can assist any company, whether you’re a big company with many assets or a small business.   

IBP isn’t prescriptive. It can be customized to your company’s needs. Regardless of size or complexity, an integrated business planning approach can align departments. 

1. Identify What Is Preventing The Company’s Success

2. create a product prioritization system .

When IBP is enforced, only the initiatives that are assured to be profitable are funded. Similarly, products are ranked. A company may also have to discontinue a product line with minor growth prospects, even if it’s currently profitable. 

When IBP is implemented, cost-benefit analyses (CBA) become critical. Project managers must first conduct CBAs to ensure that the estimated costs and benefits line with the company’s aims. 

3. Ensure IBP Process Is On Track 

A strategically aligned IBP process can transform a firm. Rather than just balancing supply and demand predictions, IBP can assist professionals in making decisions that maximize overall corporate profit.  

Once a corporation has determined its strategic competencies, it needs to implement or improve them. It will include an update on the plans’ status, risks, mitigations, and progress. The update provides sensitivity analysis around the techniques to achieve the strategic capability’s goals. 

4. Set Common KPIs 

5. adopt ibp-supporting technologies.

 Finance teams must have easy access to data from all operational areas. Rolling forecasts and better data usage require technology and transparency. You can’t manage well without the right tools. Modernize the planning process. Modern planning requires an IT-integrated planning solution to support all planning phases and provide reliable plan values and real-time analysis. For example, EPM software lets you assess, comprehend, and report on your business. It also encourages transparency, collaboration, and success across departments. 

Conclusion 

You may also like: The Perfect Software Development Process for Your Business

Digital Marketing Agency

Business partner magazine.

More From Forbes

How to transition to integrated business planning for enhanced performance.

• Share to Facebook
• Share to Twitter
• Share to Linkedin

Guru Rath is the managing principal at Grath and Associates and is a supply chain and digital transformation expert.

The business environment is constantly evolving, and companies must adapt to remain competitive while balancing customer expectations with shareholder goals. One way companies can do this is by transitioning from sales and operations planning (S&OP) to integrated business planning (IBP). S&OP is a planning process that aims to align sales, marketing and operations with the overall business strategy. On the other hand, IBP takes this a step further by incorporating financial planning, product development and risk management into the process.

Basic demand, supply and inventory management processes are achievable through traditional S&OP, but there is not much progress beyond a certain threshold limit. Hence the problem is: How do we manage the volatility of the business environment while dealing with business process management?

Benefits Of IBP

Here are some of the benefits of switching to IBP.

• Higher agility: Integrated business planning enables companies to respond quickly to the business environment and market volatility by providing a detailed and comprehensive view of their operations. This can help companies streamline operations and grab customer opportunities.

• Seamless collaboration: IBP requires and enables cross-functional collaboration between various business departments. This inhibits teams from working in silos and brings collaborative team effort, which can enable accurate decision making and operations execution.

• Financial planning: I've found IBP is the key integration process between operational and financial planning. IBP can help companies align their operational and financial goals, resulting in optimized material and financial allocations

• Better risk management: Due to an integrated and holistic end-to-end view between finance and operations, companies can catch the risks upfront and plan for mitigation.

Challenges Of Transitioning From S&OP To IBP

While the benefits of transitioning from S&OP to IBP are significant, there are also some challenges that companies may face. Here are a few.

• Change management: Transitioning from S&OP to IBP requires significant changes in processes, systems and organizational culture. Companies must manage this change effectively to ensure a successful transition.

• Data integration: IBP requires data from multiple sources, including sales, operations, finance and supply chain. Companies must ensure that this data is accurate, reliable and integrated to avoid errors and inconsistencies.

• Technology infrastructure: IBP requires a robust technology infrastructure to support data integration, analytics and reporting. It's important for companies to invest in the right technology to support IBP effectively.

Best Practices For Transitioning To IBP

To ensure a successful transition from S&OP to IBP, I suggest companies follow these best practices/

1. Define the scope.

Start by defining the scope of the transition, including the key business units and functions that will be included in the IBP process.

When thinking about the scope, consider the planning horizons (operations, tactical and strategic), the KPIs (customer satisfaction, on-time delivery, inventory turns, revenue growth, working capital), process governance structure, data and technology requirements. All of these should be in alignment with the organization's strategic objective.

2. Engage stakeholders.

IBP requires cross-functional collaboration, so it is important to engage stakeholders from across the organization in the transition process. The first step is to identify your stakeholders. Then, some of the best ways I've found to engage stakeholders are to discuss the benefits of deeper process involvement, address any questions or concerns that arise, provide training as needed and, last but not least, identify a measure to monitor the progress.

3. Align processes and systems.

Align your processes and systems to support IBP effectively. This includes integrating data sources, defining workflows and ensuring that technology infrastructure is in place. Avoid relying on unavailable or only partially available data.

4. Provide training and support.

Ensure that employees understand the new processes and systems and are able to use them effectively. To make this training effective, make sure you have the support of the management leadership. Consider customized training as per the organization's needs (generic content can be provided as an overview). Measure effectiveness, and ensure clear communication between the trainer and participants.

5. Monitor and evaluate.

Finally, monitor and evaluate the IBP process to ensure that it is delivering the expected benefits. This includes tracking key performance indicators (KPIs) and making adjustments as needed. Some of the KPIs that leaders should pay attention to include forecast accuracy, inventory turns, customer service levels, working capital, etc. The key would be to set a baseline before implementing IBP and measure against the baseline for benchmarking.

Transitioning from S&OP to IBP is a strategic move that can help companies to improve their business performance. IBP provides a comprehensive view of the business, enabling companies to make more informed decisions and respond more quickly to changes in the business environment. While there are challenges to the transition, companies can follow best practices to ensure a successful transition and reap the benefits.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?

• Editorial Standards
• Reprints & Permissions

By  Niels Van Hove , Supply Chain consultant, Mental Toughness coach and S&OP/IBP expert at  Truebridgese

As S&OP found its origin in the supply chain, IBP is often biased with supply chain terminology and reasoning. It can be argued that current IBP development is still driven by a supply chain bias. With this lack of diverse thinking, IBP innovation runs the risk of being not truly ‘integrated’.

Contrary to most current defined maturity phases of IBP, one can find on the internet, we also can define IBP maturity phases from a more strategic angle.

Many experts agree that IBP has a monthly check and balance with the budget and the strategic intentions of a business. Therefore, a well-executed IBP cycle will provide monthly visibility and measures progress against business objectives and strategy in the long-term horizon. Furthermore, we can say that a business strategy and the required strategic resources and capabilities have the goal to get a company closer to its vision.

According to Collins and Porras, a company vision exists from its core values, core purpose, a BHAG (big, hairy, audacious goal) and a vivid description.

• The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfill a strategy, you can’t fulfill a purpose.
• Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations.

Well defined, integrated and truly lived, purpose and values will drive companywide behavior. Imbedded company behaviors will drive a sustainable company culture, which will last over time.

A well-defined achievable BHAG with a vivid description provides employees with an envisioned future they can identify with and which creates an emotional attachment, which makes them go the extra mile. As CEO Bob McDonald says on the emotional component and innovation at P&G; ‘People will innovate for financial gain or for competitive advantage, but this can be self-limiting, there is a need for an emotional component as well – a source of inspiration that motivates people‘.

If a company wants to track its budget and strategy and we use this vision framework and IBP as the planning process to support the business, IBP can be defined with the following maturity phases:

1. Integrated planning:

In this phase, companies start to focus on integrated planning between previously siloed functional areas. Some functions are more advanced than others. A company might have focused on the state of the art finance processes and systems, but doesn’t reap the full benefits of that due to lack of integration of other functional areas into the finance process. Some integration exists, but not across all functional area’s and there is not enough integration with finance to make a monthly financial prediction on EBIT level in the long term horizon. S&OP as most define it will be in this phase.

2. Dynamic budget planning:

In this phase, enough functional areas plan in an integrated way for the process to provide their input to the P&L to create a fully-loaded forward projected P&L. Finance understands the ‘volume’ input and the other functional areas understand the financial ‘value’ planning. This will provide the company visibility on how it is tracking versus the budget or annual operating plan on a monthly basis on EBIT level.

Why EBIT level? Because I heard too many times in a boardroom the argument, when only gross profit was on the table; ‘we can’t decide on this because we don’t have EBIT a number’ . We can also expect these companies to deliver monthly balance sheet and cash flow prediction. For these companies, there is no separate budgeting or forecasting cycle. Every month can be the budgeting cycle. Dynamic indicates that opportunity and risk scenarios across all functional areas are integrated into the financial projection.

3. Dynamic strategy and capability planning:

In this phase, the company has defined its strategic goals, measurements, and targets and is capable of checking and communicating monthly if they are on track to meet the strategy in the horizon beyond the budget. The strategic intent, which can be defined on lower levels like product segment, country or business unit level, will also guide in decision making for decisions on the budget horizon.

The company has also defined its core strategic capabilities to meet its strategy. There are many strategic capabilities possible.  Ideally, a company shouldn’t have more than a handful as if it will define more it will erode the focus on these capabilities. Some examples are:

• Risk management: for companies that have extended and complex networks that are sensitive and dependent on changes in global and geopolitical events. For example companies with global supply chains, but also the Finance industry.
• Innovation: for companies that in a highly competitive market can outpace their competitors based on innovation and new product development. Often seen in the technology industry and CPG
• Commodity trading: for companies that are highly influenced by commodity cycles as the commodities can be more than 80% of the COGS of their core products. For example, food & beverage companies that have crops and livestock as core raw material.
• Demand is driven supply chain: for companies that can get the competitive advantage from driving their business from the front end of the supply chain. For example food, beverage and consumer package industry. Often in retail and consumer environment, which are promotional driven and where POS information is available,
• Knowledge management: for companies that are highly dependent on knowledge workers and the exchange of knowledge between people and business units. Companies that have IP to integrate, sell and protect. For example Consultancies and software industry.
• Supply exploration: for companies that have to spend high amounts of capital to find new or increase the supply of their core product. For example the oil and mining industry.
• Collaboration:  Collaborative IBP can be a separate phase for companies that see the strategic advantage in collaborating with their suppliers and customer in the longer horizon and therefore want to integrate their business plans. For companies that have the power in the supply chain through size or uniqueness of offering this will most likely not be a strategic focus.

The list can go on and on with Technology, Sustainability etc. Once a company has defined its strategic capabilities and has defined goals, measurements and targets for these capabilities, it needs plans to implement or improve these strategic capabilities. An update on status, progress, risks and mitigations for those plans will be part of the IBP cycle in this phase. Dynamic indicates that sensitivity analysis around the plans to reach the goals of the strategic capability is part of the update.

4. Integrated vision & purpose:

In this phase, companies have a well-defined purpose, values and an achievable BHAG with a vivid description that people can identify with and which create an emotional attachment. The company aims to integrate this with the IBP cycle.  A company can decide not to pursue strategic opportunities because doing so would compromise their core purpose or values.

A large multi-billion dollar beverage company, for example, decided not to enter the very lucrative market of premium RTD’s (Ready to Drink) alcoholic beverages because the alcohol content was too high. Although the opportunity was achievable and margins were very interesting, the alcohol content would not be in line with their core purpose of ‘bringing more sociability and wellbeing to our world’ . The purpose guided decision making in the strategic horizon.

The company values and the emotional attachment will be tracked in the monthly IBP process and have actions, goals, and measurement. Executives follow progress to understand if employees believe and identify with the companies values, BHAG, and purpose and show emotional attachment. This can be done by 360 degrees feedback, engagement surveys or roundtable discussion between executives and employees. Executives also have to lead by example in behaviour and actions. Their own behaviour will have goals and measurements and progress is tracked,

For all phases, communication is important , although it can be argued that it’s most important when developing an emotional connection. An IBP document on the key decision, outcomes, progress and wins in the IBP cycle can be communicated to a well-defined stakeholder group in the company. This will both give the stakeholders an understanding of business performance, priorities, improvement opportunities and successes, as well as keep the engagement with the company vision, purpose, and the IBP process.

Executives have to realize and appreciate that this communication document is the results of all the hard work from middle and lower management to gather all required IBP information for the executives to make decisions in the IBP meeting. This communication makes sure the IBP meeting is not seen as a ‘black hole’ which only sucks up information and doesn’t provide feedback.

Once a company masters these four phases, it tracks and plans on a monthly basis the budget, the strategic intent and strategic capabilities, the company values, and purpose and the emotional attachment of the employees. If a company then links these plans with shorter-term control plans and execution, we might call it real Integrated Business Planning.

Would these four phases be IBP innovation?

Related articles

Integrated Financial Planning (IFP) and Integrated Business Planning (IBP) mean different things to different people. Primarily because...

Anyone working in the FP&A space knows intermittent disruptions such as the COVID-19 epidemic are the...

By deploying integrated FP&A organisations see greater performance improvements compared with traditional FP&A processes. This is enabled by...

Integrated business planning (IBP) is not a new concept. Yet it’s still hard to find organisations...

The pressure of globalization and agile decision-making requires companies to improve their business modeling.  They must...

The future of IBP will be to plan across the whole value chain. A final step...

Subscribe to FP&A Trends Digest

We will regularly update you on the latest trends and developments in FP&A. Take the opportunity to have articles written by finance thought leaders delivered directly to your inbox; watch compelling webinars; connect with like-minded professionals; and become a part of our global community.

Create new account

Introducing SAP IBP for Demand

After completing this lesson, you will be able to apply SAP IBP to optimize their supply chain functions and improve demand management processes.

Introduction to SAP IBP for Demand

SAP Integrated Business Planning for Supply Chain solution (SAP IBP) is a complete system that can be leveraged to manage a corporation’s supply chain functions. It is a SAP HANA based cloud offering with several individual modules that manage a specific process. All of the modules can be used together for a robust supply chain, which gives individuals from various departments, end-to-end visibility into the health of the supply chain.

Many corporations today operate at a global level. Volatility and competition are high, and meeting customer service levels is critical.

In such a competitive, changing global market, agility, visibility, and accuracy are critical for a corporation's survival. SAP Integrated Business Planning brings data, people, and scenarios together in one place for greater business advantage.

SAP solutions help you to reach your goal using state-of-the-art business processes, connected planning processes, leveraging end-to-end visibility, and faster planning cycles.

SAP IBP is a world class integrated business planning solution that enables supply chain leaders to balance demand plans with network constraints and attain profitability goals.

One integrated model, based on a SAP HANA state-of-the-art architecture, ensures the ability of real-time planning and monitoring, flexibility, and integrated business processes.

This course focuses on demand management processes as covered by the SAP IBP for demand solution.

SAP IBP helps tackling today’s challenges in business and in daily work. On the one hand, a high market volatility increases variation in demand, and increases customer demand. On the other hand, poor forecast accuracy, inefficient operations, low service level, and excess inventory are the challenges.

Unfortunately, things rarely go exactly as expected on the demand side — and they multiply over the entire supply chain. Examples for demand factors are promotions or simply time-varying demand.

Compare the forecasting and planning activities to maps and GPS you use for navigation. Then, demand sensing would be a function that concretely provides interactive response from the current driving situation — like the opportunity for blind spot monitoring, lane sensing, or traction control.

Two major components feed the forecasting engine of SAP IBP for demand: the PAL (predictive analysis library, which is part of SAP HANA), and the SCAL (supply chain algorithm library). Based on these libraries, optimization is possible.

Here we show the major key capabilities and business values of SAP IBP for demand summarized on a single page.

With the two components mid-term or long-term forecasting and demand sensing, SAP IBP for demand has two integrated forecasting techniques on board. Demand sensing further specifies the short-term forecast taking into account short-term boundary conditions.

Due to the more granular time and data and the specific nature of demand sensing, the plan becomes closer to the execution requirements.

Demand sensing affects the 'execution' type of activities more as it is within a much shorter horizon than demand planning.

Log in to track your progress & complete quizzes

16th September, 2024

Implementing an ERP system: A step-by-step guide to a successful rollout

Implementing an ERP system is a major project that requires careful planning, effective change management, and strong cross-department collaboration.

When done right, an ERP implementation can transform how your business operates — improving efficiency, streamlining processes, and positioning you for future growth. However, without a solid plan, it can result in delays, cost overruns, and significant disruptions. In short, a successful ERP implementation begins with a well-thought-out strategy.

There are several implementation approaches to choose from, each with its own advantages and challenges. The best one for your business will depend on factors like your timeline, risk tolerance, and your team’s technical capabilities.

This guide covers the essential stages of ERP implementation and the strategies you need to ensure your business is set up for long-term success.

Why a well-planned ERP transition is critical

The process of transitioning to an ERP goes far beyond simply installing the software. ERP implementation touches every part of a business, from financial operations to supply chain management. A well-planned implementation ensures the transition is smooth, with minimal disruption to daily operations.

The old adage of ‘fail to prepare, prepare to fail’ has never been more apt when it comes to an ERP transition. Poor planning can lead to costly delays, weak user adoption, and a failure to realise the system’s full potential. With a structured approach and the right implementation strategy, businesses are positioned to maximise the benefits of their ERP investment.

The six stages of ERP implementation

A successful ERP implementation follows a structured process, divided into six key stages. Each stage is crucial, and businesses must work closely with their implementation partner to ensure everything is covered.

1. Discovery and planning

In the initial phase, it’s all about laying the groundwork. A cross-functional project team is formed, business-specific requirements are gathered, and vendor selection is finalised. Engaging key stakeholders at this point ensures everyone is aligned with the project goals. This is where your MYOB implementation team helps define the project scope, set timelines, and assign roles and responsibilities.

The design phase involves mapping out current workflows and analysing how the new ERP will fit into business operations. Critical ERP features are identified, and the MYOB team works closely with internal teams to document solution design, including configurations, customisations, and integrations.

3. Development

This is where the ERP is configured. Data migration, software customisations, and training materials are prepared. Your MYOB team will emphasise the importance of cleansing data, ensuring the ERP gets underway with clean, accurate data.

The ERP undergoes comprehensive testing, including unit testing, integration testing, and stress testing, to ensure functionality. User Acceptance Testing (UAT) allows businesses to confirm the ERP meets specific needs before going live.

5. Deployment (go-live!)

Deployment marks the phase where the ERP system goes live. Businesses must carefully plan their go-live strategy (see below). Your MYOB team will offer comprehensive support throughout deployment, ensuring smooth user adoption and addressing any issues that may arise.

6. Support and maintenance

Post-implementation support is essential. MYOB provides ongoing maintenance, system upgrades, and troubleshooting, ensuring the ERP continues to meet business needs.

ERP implementation strategies

There are several strategies businesses can choose from when implementing a new ERP, each with its own benefits and challenges.

1. Big bang implementation

This involves deploying the entire ERP at once. While this allows for a faster transition, it carries more risk due to the possibility of greater disruption. It’s essential that all data migration, training, and testing are completed before going live.

2. Phased rollout

A gradual implementation, starting with one department or module at a time. This approach reduces risk and gives time to adapt to the new system, but it can take longer to complete.

3. Parallel adoption

This approach allows a legacy system to run alongside the new ERP during the transition. This reduces disruption but can be resource-intensive since teams need to manage two systems.

4. Hybrid approach

The hybrid approach combines elements from both big bang and phased rollouts. For example, a business might deploy certain critical modules immediately while rolling out other features gradually.

How MYOB ensures a successful implementation with MYOB Acumatica

At MYOB, we understand that every business is unique, which is why our implementation methodology is designed to be flexible and customised to meet the specific needs of your organisation.

We offer specific editions of MYOB Acumatica for manufacturing , wholesale , and construction — each designed to fit the unique requirements of your industry and tailored to fit your business right from the start, with discovery and planning. Our goal is to ensure that the transition to MYOB Acumatica is smooth, strategic, and maximises the value of your investment.

The implementation process

When working directly with MYOB, our team takes a meticulous, well-structured approach. This process takes you through the six stages of implementation above, with ongoing planning and support at every stage.

We take the time to understand your business needs, involve your key stakeholders from day one, and craft a customised implementation plan to ensure that your business is set up for long-term success. By doing this from the outset, MYOB lays a strong foundation for the entire project, ensuring that everyone is on the same page and that implementation runs efficiently — minimising disruption to your business as much as possible. Business continuity is a key priority.

By the time you reach the Support and Maintenance phase, MYOB will have helped roll out MYOB Acumatica in an ordered, highly structured fashion. Going forward, this support will continue, incorporating ongoing user training to ensure your system remains current and continues to deliver value.

With MYOB as your implementation partner, you gain access to an expert team that’s dedicated to helping your business realise the full value of MYOB Acumatica.

MYOB’s partner-led implementation process

In addition to working directly with MYOB, businesses can also choose to implement MYOB Acumatica through one of our accredited partners. MYOB partners are implementation specialists with deep industry knowledge and a proven track record of delivering ERP solutions tailored to your business needs.

Our partners follow a similarly structured implementation methodology, starting with a thorough discovery process, defining project scope, and aligning the system with your business goals. They handle everything from customisations to data migration and testing, ensuring that the transition is seamless.

What sets our partners apart is their specialised focus on your specific industry, enabling them to deliver solutions that meet the nuanced demands of your business.

Throughout the process, MYOB remains closely involved, providing expertise and support as needed.

Tips for a smooth ERP transition

To ensure a smooth ERP implementation, consider the following tips:

1. Get senior management buy-in: Executive support is essential for driving user adoption and overcoming resistance to change.

2. Manage expectations: Set realistic expectations about the timeline, costs, and challenges involved. Regularly communicate progress to key stakeholders.

3. Define KPIs: Establish clear key performance indicators (KPIs) to measure success. This helps track ROI and ensures the system is delivering the desired outcomes.

What success looks like

A successful ERP rollout goes beyond installing new software — it transforms how your business operates. Implementing a system like MYOB Acumatica unlocks new efficiencies, streamlines operations, and provides better data insights you can use to your decision-making processes.

But what does success look like?

Increased efficiency and productivity

One of the clearest signs of a successful ERP implementation is improved operational efficiency. Processes that once required manual input or multiple platforms are now consolidated and automated.

Enhanced data accuracy and decision-making

A well-implemented ERP provides a “single source of truth,” consolidating all business data into one platform. This allows decision-makers to access real-time, accurate information, enabling more informed strategic decisions.

Improved collaboration and communication

ERPs break down silos, improving collaboration across departments. Integrated tools allow for real-time updates and shared visibility, ensuring alignment on goals and progress.

Scalable growth and future-proofing

A successful ERP rollout lays the foundation for future growth. A scalable system like MYOB Acumatica can handle higher transaction volumes, new data sets, and additional users as your business grows.

Strong return on investment (ROI)

When properly implemented, an ERP reduces costs, improves profit margins, and increases productivity. The long-term benefits of an ERP system will far outweigh the initial investment.

Achieving long-term strategic goals

A successful ERP implementation aligns with your long-term business goals. Whether your objective is to scale operations, improve profitability, or enhance customer experience, a well-implemented ERP system provides the infrastructure to support those goals.

With MYOB as your trusted partner, you have the tools, resources, and expertise to navigate every stage of ERP implementation. From discovery to ongoing support, MYOB helps businesses make the most of their ERP investment, ensuring long-term success.

By approaching the implementation with a structured plan, leveraging the right strategies, and partnering with MYOB, your business is poised for long-term success in an ever-evolving market.

If you’re ready to explore how MYOB Acumatica can transform your business, click here to learn more and schedule a consultation today.

Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.

You might also like

Erp tco: your guide to assessing total cost of ownership, 23rd aug, 2024 by myob team, myob acumatica wins at the saas awards, 14th aug, 2024 by myob team, myob acumatica named five-time finalist at the saas awards, 24th jul, 2024 by myob team.