What is IBP – Integrated Business Planning?

Disjointed planning processes are standard practice for many organizations, causing a lack of visibility and efficiency across every department. But times are now changing, and forward-thinking companies are forging ahead with digital transformation, resulting in the implementation of an integrated business planning (IBP) approach. In this blog, we’ll explore what IBP is and the benefits of its implementation.

The definition of Integrated Business Planning

Integrated Business Planning (IBP) is an approach (considered to be best practice) which incorporates financial and operational data from across the organization. It enables companies to maximize their output by linking strategic plans with sales, operational, and financial plans, giving greater visibility of the relationships between resources, capabilities, and results. The organization can use IBP to collectively produce an agreed go-to-market plan, to which every department has contributed.

Why do traditional business planning processes hold organizations back?

Planning activities across the supply chain are typically very disjointed, with disparate spreadsheets and standalone business intelligence solutions being used to provide limited, localized knowledge to inform the process. Many firms have implemented S&OP principles to provide some level of collaboration, but they still lack unification across the entire organization.

The result is a collection of business silos which function almost entirely in their own bubble, creating inefficiencies and poor performance across the business due to:

• A lack of visibility of how each department is working and the impact of activities on the financial bottom line
• A disconnect between strategies and operational activities and lowered competitiveness, as the time taken to combine data from all departments and agree on the way forward results in slow reaction times to changes in the market
• The absence of a collaborative approach and accountability for overall results, as divisions focus on their own activities rather than seeing themselves as part of one business team
• A collection of point solutions and applications performing similar purposes in different divisions, increasing financial costs and adding to the count of disparate data sources

What are the benefits of Integrated Business Planning?

An integrated business platform can overcome these challenges by enabling the organization to augment its decision-making abilities and:

• Deliver alignment between strategic goals and financial and operational activities – with full visibility of what the organization wants to achieve, departments can see where their activities fit in to the overall picture and work towards a common goal
• Create transparency over the relationship between different departmental outputs – with one shared view of data, and the ability to conduct scenario planning, the effect of an increase or decrease in production quantity, headcount, sales, marketing campaigns, and more on both financial results and other departmental output
• Ensure accountability – employees are more aware of the impact their actions have on the wider business, and are also part of an agreed go-to-market plan to which their activities contribute

For companies like Coca Cola European Partners, IBP has become part of daily operational activities, driving transparency and efficiency across a fast-moving supply chain, from production through to delivery. And as increasing numbers of companies make the shift, those still taking a more legacy approach will be at a significant disadvantage.

For more information on the benefits of an integrated business planning process, take a look at our complimentary whitepapers:

• Digital Office of Finance – Integrated Business Planning from CFO.com
• Integrated Business Planning – The Cornerstone of Smart Decisions from FSN