Enterprise Business Planning

Benefits of Enterprise Business Planning and barriers to change

Implementing elements of EBP has already enabled companies around the world to dramatically increase shareholder value through a variety of key drivers.

EBP drives revenue growth and increases market share through improved agility that enables adaptive, value-based pricing models and improved customer service and order fulfillment. It drives operating margins by enabling pricing optimization, improved forecast accuracy, and reduced manufacturing costs. And it drives asset efficiency by providing closer alignment between capital planning, market growth projections, improved working capital positions, and reduced inventories.

EBP also enables other benefits that are less tangible, but still important, such as improved product road map management and better financial guidance in quarterly earnings. Also, it can have a positive impact on total cost of IT ownership by requiring tightly integrated data and collaborative systems, which simplifies the IT landscape and reduces the number of planning platforms. Finally, adopting EBP can increase job satisfaction for employees involved in planning, giving them more opportunities to challenge themselves intellectually and to see how their work contributes to business performance.

Although the benefits of EBP are compelling, and many leading companies are well on their way to achieving the full EBP vision, many other prominent companies are still struggling to execute even basic sales and operations planning.

Until recently, technology was the main barrier to improved planning and adoption. Today, however, the main barriers revolve around people and organizations. Misalignment of incentives to really transform and adopt new processes and systems resulting in organizational inertia are the biggest barriers to EBP implementation and adoption. Also, organizational politics and functional silos invariably exert an influence. Misaligned priorities and unclear benefits are also common problems.

Fortunately, there are proven ways to address these organizational challenges. Start by aligning performance management elements (e.g., targets, incentives, rewards) with the strategic KPIs and targets associated with the planning process. This applies both to functional groups and key roles, helping to drive behaviors that are aligned around the same shared goals. Integration challenges are addressed through a clearly defined model of roles and responsibilities for key stakeholders.