integrated business planning activities

What Is Integrated Business Planning and Why Is It Important?

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

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

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

What Is Integrated Business Planning?

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

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

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

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

Key Takeaways

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

Integrated Business Planning Explained

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

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

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

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

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

Why Is Integrated Business Planning Important?

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

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

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

Alignment and accountability 

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

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

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

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

Who will execute: The R&D team

Financial goal: Diversify revenue streams

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

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

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

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

Informed decisions and actions 

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

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

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

Transparency/visibility 

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

Four success metrics for the IBP process include:

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

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

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

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

What Is the Difference Between S&OP and IBP?

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

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

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

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

Some major differences between S&OP and IBP are:

6 Steps in the Integrated Business Planning Process

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

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

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

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

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

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

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

Traditional vs. Rolling Forecasts

5 tips to succeed at integrated business planning.

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

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

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

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

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

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

Benefits of Integrated Business Planning

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

Three additional key benefits:

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

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

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

Integrated Business Planning Adoption Challenges

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

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

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

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

Steps of Zero-Based Budgeting for 2021

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

Elements of Integrated Business Planning

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

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

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

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

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

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

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

Integrated Business Planning Components

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

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

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

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

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

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

Integrated Business Planning Examples

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

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

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

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

History of Integrated Business Planning

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

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

#1 Cloud ERP Software

Applications of Integrated Business Planning

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

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

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

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

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

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

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

Business Strategy

Business Process Automation: Ultimate Guide

A well-run business is always analyzing business processes and finding ways to make them more efficient. It also searches for ways to review, update, change, replace or eliminate its processes on a regular basis in order to…

More On This

Trending Articles

Learn How NetSuite Can Streamline Your Business

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.

Before you go...

Discover the products that 37,000+ customers depend on to fuel their growth.

Before you go. Talk with our team or check out these resources.

Want to set up a chat later? Let us do the lifting.

NetSuite ERP

Explore what NetSuite ERP can do for you.

Business Guide

Complete Guide to Cloud ERP Implementation

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?

• 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

• 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

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)…

Harness the power of Integrated Business Planning with your guide to success

Great news for businesses looking to streamline their planning processes and achieve strategic alignment! We’re…

Be the first to comment on this post Cancel reply

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

• Webinar Replays
• News & Press
• User Groups
• Brand Ambassadors
• OneStream Press
• Solution Exchange
• PartnerStream
• Financial Close & Consolidation
• Financial Signaling
• Reporting & Analytics
• Financial Data Quality
• Account Reconciliations
• Transaction Matching
• Compliance Solutions
• Tax Provision
• ESG Reporting & Planning
• Planning, Budgeting & Forecasting
• AI Financial Forecasting
• People Planning
• Capital Planning
• Sales Planning
• Profitability Analysis
• Manufacturing
• Financial Services
• Public Sector
• Higher Education
• Oracle Hyperion Conversion
• SAP ERP Customers

• Consulting Services
• Certification Program
• ONECommunity

• Customer Success
• News & Press

What is Integrated Business Planning and What Are The Benefits?

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

What is Integrated Business Planning (IBP)?

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

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

IBP Process: How Does it Work

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

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

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

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

IBP Business Benefits

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

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

Get Started With a Personal Demo

Streamline Financial Processes

Integrated Business Planning

How to Integrate Planning Processes, Organizational Structures and Capabilities, and Leverage SAP IBP Technology

• © 2018
• Robert Kepczynski 0 ,
• Raghav Jandhyala 1 ,
• Ganesh Sankaran 2 ,
• Alecsandra Dimofte 3

Zurich, Switzerland

You can also search for this author in PubMed   Google Scholar

SAP LABS LLC, Tempe, USA

Walldorf, germany, sap switzerland, regensdorf, switzerland.

• Describes the Integrated Business Planning from the perspective of business and technology practitioners
• Covers in one book people, process and technology integration as key to success
• Considers operational, tactical and long term process implications

Part of the book series: Management for Professionals (MANAGPROF)

21k Accesses

12 Citations

1 Altmetric

This is a preview of subscription content, log in via an institution to check access.

Access this book

• Available as EPUB and PDF
• Read on any device
• Instant download
• Own it forever
• Compact, lightweight edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info
• Durable hardcover edition

Tax calculation will be finalised at checkout

Other ways to access

Licence this eBook for your library

Institutional subscriptions

Table of contents (9 chapters)

Front matter, recent past disconnected planning.

• Robert Kepczynski, Raghav Jandhyala, Ganesh Sankaran, Alecsandra Dimofte

Why Move to Integrated Business Planning

What makes integrated business planning, how to run ibp: use cases, how to manage organization and capability change, how to enable change with sap ibp technology, how to measure transformation success, how to build transformation path, “quo vadis” integrated business planning.

• sales and operations planning
• business transformation
• demand planning
• demand management
• finance in sales and operations planning
• organizational structures
• capabilities

About this book

Authors and affiliations.

Robert Kepczynski

Raghav Jandhyala

Ganesh Sankaran

Alecsandra Dimofte

About the authors

Robert Kepczynski has more than 20 years’ experience in supply chain management and technology. Robert does assess, design and implement people capability models, process design and delivers efficient technology solutions. He is specialized in supply chain planning processes and technologies. Robert took business roles in plant supply / production planning and sequencing, inventory and materials management, warehouse and duty operations, costing and budgeting, in market IBP and S&OP, distribution planning, and in regional & global S&OP, forecasting, demand planning and demand management, and process ownership. Robert led x-functional transformation programs delivering functional optimization and differentiation. His production plant, market and global process experiences was valued in the 2nd worldwide SAP IBP implementation, which has started in 2013. This project proved that Robert has heart, head and hand for IBP.

Raghav Jandhyala is a Senior Director of ProductManagement at SAP for SAP IBP responsible for sales and operations planning and unified planning processes and best practices in IBP. Raghav has over 16 years of experience in different fields like Supply Chain Management, Retail and Banking along with strong technical background in development and adoption of business applications. Raghav held various roles in his career as business consultant, development architect, solutions manager and product manager. Raghav is responsible for developing the roadmap for S&OP solution and works with multiple IBP Customers for new innovations and as a trusted advisor for their global rollouts.

Ganesh Sankaran is a Supply Chain Management technology practitioner. Ganesh helps clients solve business problems and generate value from their supply chain processes, particularly in the planning domain. Ganesh possesses a skillset that combines deep theoretical insights in SCM and rich implementation experience in SAP solutions further enriched by around seven years of prior software development experience.

Alecsandra Dimofte is working for SAP where she started as a supply chain management consultant. Alecsandra was involved in several IBP / S&OP implementation projects which allowed her to play different roles, from integration consultant to functional design lead. Alecsandra contributed to the development of the S&OP practice within her delivery unit and to the growth of the IBP online community by active participation in the space dedicated to IBP.

Bibliographic Information

Book Title : Integrated Business Planning

Book Subtitle : How to Integrate Planning Processes, Organizational Structures and Capabilities, and Leverage SAP IBP Technology

Authors : Robert Kepczynski, Raghav Jandhyala, Ganesh Sankaran, Alecsandra Dimofte

Series Title : Management for Professionals

DOI : https://doi.org/10.1007/978-3-319-75665-3

Publisher : Springer Cham

eBook Packages : Business and Management , Business and Management (R0)

Copyright Information : Springer International Publishing AG, part of Springer Nature 2018

Hardcover ISBN : 978-3-319-75664-6 Published: 12 June 2018

Softcover ISBN : 978-3-030-09292-4 Published: 11 February 2019

eBook ISBN : 978-3-319-75665-3 Published: 31 May 2018

Series ISSN : 2192-8096

Series E-ISSN : 2192-810X

Edition Number : 1

Number of Pages : XIII, 265

Number of Illustrations : 237 b/w illustrations

Topics : Business Process Management , Information Systems Applications (incl. Internet) , Sales/Distribution , Supply Chain Management , Business Information Systems

• Publish with us

Policies and ethics

• Find a journal
• Track your research

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

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

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

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

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

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

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

Why put your planning processes in a broader perspective?

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

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

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

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

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

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

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

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

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

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

Unmatched benefits of integrated business planning

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

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

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

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

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

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

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

Make your business future-proof

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Real-time data and visual management

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

• Big data, analytics, and KPI control

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

• Cloud technologies

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

• Machine learning and artificial intelligence

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

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

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

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

Looking for the right IBP partner?

Share the article

Topics you may be interested in:, how to create a crypto payment gateway: our hands-on experience, business process transformation: the ultimate guide on accelerating out of crisis, top software development trends of 2021, “we pull our socks up and handle the chaos”: alexey spas on a new delivery methodology, how *instinctools delivers solutions – customers’ reviews, automated downfall check for the code. quick sql-injections search, freelancers. a blessing or a curse how to work with freelancers, who could be saved from the titanic of it business, get in touch.

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

Integrated Business Planning

Today’s market requires businesses to plan more rapidly and assess multiple scenarios at once. We help connect leading technologies and bespoke methodologies through integrated business planning to break down silos and unlock new routes to savings and growth.

Mike Ballestrin

EY Canada Finance Consulting Leader

KB Brinkley

EY Canada Integrated Business Planning Leader

What EY can do for you

Business, markets, expectations and technology have all changed. These monumental shifts necessitate a new framework for business planning, one that’s more integrated than ever before.

Integrated business planning is about connecting what finance and the business are doing, so the organization can react more quickly to any number of external changes, shocks or disruptions. That collaborative approach accelerates speed to impact.

We’ve created a distinctive, integrated approach to business planning that can set your organization apart. Our approach is scalable to meet the specific needs of any given business, at any stage on the growth journey. We work with organizations to build a customized integrated business planning framework that:

• Dismantles operational silos and aligns processes so functional groups can make better decisions around strategic direction and tactical execution
• Employs machine learning, AI and proprietary EY accelerators to deliver up-to-date insight
• Empowers clients to better understand the state of play
• Surfaces insight to help decision-makers buy, invest, manage and save
• Creates a sustainable, transparent and controlled method of planning ahead
• Cultivates shared planning ownership between finance and operations
• Leverages world-class strategic alliances to help organizations abandon outdated, manual ways of working and embrace new possibilities

Our IBP services include:

• Full-service process and technology implementation
• Upfront collaboration session to define and align key business objectives with stakeholders across functions
• EY wavespace session to co-create an action plan and build out the future vision for your organization on IBP
• Rapid assessment to baseline performance, applying advanced EY tools and building transformation business cases
• Prioritization and implementation of use cases to realize benefits of IBP 

Applying integrated business planning is key to navigating market complexity and long-term financial health. The best-performing companies merge operational and financial planning to foster agility and drive valuable bottom-line results. By bringing together better tech, better thinking and better cross-functional teaming, we can tailor our approach to your specific industry or business journey. This is how we empower clients to overcome today’s challenges, drive material improvements to financial performance, scale up and set ambitious new organizational and growth goals.

EY alliance and ecosystem relationships for integrated business planning

Our roster of key alliances and partnerships enables accelerated transformations tailored to the most specific industry and business journeys.

Our latest thinking

Like what you’ve seen? Get in touch to learn more.

Connect with us

Our locations

Legal and privacy

Accessibility

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

EY | Assurance | Consulting | Strategy and Transactions | Tax

EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

© EYGM Limited. All Rights Reserved. 

EYG/OC/FEA no.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

Welcome to EY.com

In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services: Functional cookies to enhance your experience (e.g. remember settings), and  Performance cookies to measure the website's performance and improve your experience . , and Marketing/Targeting cookies , which are set by third parties, allow us to execute marketing campaigns, manage our relationship with you, build a profile of your interests and provide you with content or service offerings in accordance with your preferences. 

We have detected that Do Not Track/Global Privacy Control is enabled in your browser; as a result, Marketing/Targeting cookies , which are set by third parties that allow us to execute marketing campaigns, manage our relationship with you, build a profile of your interests and provide you with content or service offerings in accordance with your preferences are automatically disabled.

You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.

Review our  cookie policy  for more information.

Customize cookies

I decline optional cookies

Logility Delivers GenAI for Supply Chain Planning. Learn More.

Want to Make Integrated Business Planning a Success? Here’s How.

Share this:.

Integrated business planning (IBP) is gaining traction as more companies look at refining their sales and operations planning (S&OP) process. It’s worth the effort to document what IBP means for your business, if for no other reason than you can’t implement what you can’t define. To that end, let’s reiterate the distinction between IBP and S&OP before we dive into some tips on how to make integrated business planning a success. 

The quick take:  integrated business planning is  long-range strategic business planning that combines volumetric and financial data into a single, highly visual comprehensive planning platform that delivers greater global visibility, more powerful multi-scenario analysis over longer planning horizon s, tighter collaborative workflow, and a wider spectrum of alerts.  

Research firms, solution providers, and pundits have struggled to standardize the nomenclature. Some refer to it as  sales and operations planning  (S&OP or SOP). Some call it ‘sales, inventory and operations planning’ (SIOP). And then there’s ‘merchandising, inventory and operations execution’ (MIOE), for the retail sector.  

It’s useful to analyze these terms based on three overlapping planning horizons: executional, tactical, and strategic. 

Executional  deals with balancing demand and supply over the near term, often within the span of the planning cycle.  Tactical  deals with the mid-term, which may mean anything from a few months to 18 months or more.  Strategic  deals with high-level alignment over longer horizons. Some call this Integrated Business Planning (IBP), while others also include tactical activities under the IBP umbrella. Here are some useful definitions: 

Sales  and operations p lanni ng (S&OP or SOP)  A traditional term whose definition doesn’t stretch far enough to cover all the bases including volumetric balancing of supply and demand. 

Sales, inventory and operations p lanning (SIOP)  An attempt to emphasize the importance of inventory. Part of the basic S&OP process is the optimization of inventory. 

Merchandi sing, inventory and operations e xecution (MIOE)  This is a retail industry synonym for S&OP. MIOE deals with the tactical level.  

Integrated business planning (IBP)  Covers S&OP, SIOP and MIOE across all time frames. Whether you are in Sales, Inventory, Marketing, Purchasing, Production, or Finance, you are from the same business and are engaged in planning activities that are closely connected. 

The Power of Integrated Business Planning

According to industry research comparing the performance of companies that follow an IBP approach versus those that don’t, IBP users are:  

• Better able to align supply and demand over the entire horizon  
• More effective at collaborative planning and building real trust between stakeholders  
• Able to reserve capacity at key suppliers earlier and more efficiently  
• Faster to react to unexpected disruptions in the supply chain  
• More likely to use alert-driven responses and adjustments  
• Better at handling promotional demand. 

Tips for a Successful IBP Implementation 

From experience with thousands of customers, here’s Logility’s list of what the most effective IBP implementations have in common.  

The CEO owns the p rocess.  The CEO enables acceptance and delivery of IBP at all levels in the business, and must inspire the team to view IBP not as “another project laden with department-level redundancies” but simply how the organization operates. 

Sales  contributes to  the demand p lan.  Those closest to the customer have the best grasp of activity at the point of consumption, and therefore must be strongly involved and prepared to contribute to the demand plan.  

Finance is at the table, not a mere o bserver.  The finance team’s participation is critical for testing different scenarios and protecting the integrity of financial projections. 

Think beyond the annual b udget.  IBP done correctly integrates the strategy with the business plan and ensures the delivery of both. In fact, you may find that IBP nudges your business toward a continuously updated two- or three-year financial plan.  

Don’t let details d erail . Too many organizations make the mistake of plunging down rabbit holes and forming committees to explore minutiae. Looking at the bigger picture frees the organization to focus on higher-level planning needed for sustaining growth and improving margins. 

Get the culture right.  Not surprisingly, IBP efforts often focus on process and data. However, the best deployment plans consider the cultural context and never lose sight of the following: 

• A basic requirement for effective IBP is a culture that celebrates  cross-functional collaboration  not as a ‘nice-to-have’ but as a requirement for executing company strategy 
• A culture accustomed to ‘delegating upward’ will bog down the executive review portion of IBP and reduce the speed of decision-making. IBP thrives when the lowest levels of the organization are  empowered  
• IBP places a premium on data-driven decision-making. But many challenging decisions will continue to rely on  judgment . The culture should value seasoned judgment and not recast it as “guesses we made before we had all the data.” 

So get started on your journey to realizing the power of integrated business planning . Markets and competitors aren’t waiting for you. There are real insights and lasting business benefits to be had from managing strategic, tactical and operational planning with one platform.   

Take a look at  this short video  to see how Logility’s IBP solution supports accelerated planning and decision-making across the enterprise.  

Recommended

Life Sciences Supply Chain Inventory Optimization

Accelerate Decision Making with a Dose of Digital Transformation Over the last 100 years, the human lifespan on Earth has…

Dispelling Untruths: 10 Generative AI Myths

Leveraging AI for Faster, Strategic Decision Making There is a lot of information out there around generative AI, and it’s…

How AI is Revolutionizing Inventory Planning and Optimization – InventoryAI

Everywhere we look, artificial intelligence (AI) is pushing the boundaries of everything businesses and their people do. The opportunity to…

What is Integrated Planning? (And How to be Successful at it!)

Amber Larkins

January 19, 2022

In this article

What is integrated planning.

Integrated planning is a cross-functional process that ensures all stakeholders are involved at the right time to align priorities across an organization.

Integrated planning gives a complete view of resources and commitments. It makes sure that financial and capital resources are aligned in order to support strategic decision-making. Without integrated planning, planning activities can becomes fragmented, resulting in confusion about priorities and use of resources.  

Integrated planning helps to set strategic priorities and to better coordinate the use of resources. It also can assist with showing transparency and accountability in activities throughout a public sector organization. 

What is the difference between strategic planning and integrated planning?

Integrating involves merging distinct elements to create a cohesive entity. While strategic planning anticipates and adjusts for the future, and operational planning handles short-term resource allocation, integrated planning delves into how an organization can coordinate across various functions, levels, locations, and other divisions—both natural and artificial. This planning approach extends beyond the organization's internal efforts, aiming to examine external economic, social, political, and environmental impacts.

By combining internal and external integration, integrated planning enables a comprehensive evaluation of all available options, facilitating the formulation of well-suited courses of action. Moreover, it encompasses various social dimensions and hinges on active participation from all stakeholders and entities affected by the process.

Features of Integrated Planning Process

• Transparency – Your planning process should be known, understood, and accessible to those in the organization. Communication amongst stakeholders is key to effective integrated planning.
• Comprehensive – Participation from all relevant stakeholders is necessary to best integrate organizational goals.
• Structured – integrated planning should be completed using a framework that includes timelines and deadlines throughout the planning cycle.
• Results – Integrated planning should include real decision-making results, with resources attached to those decisions. It should be tied to a common purpose or mission that propels the organization’s vision and priorities forward.
• Consultative – Stakeholders should be involved and there should be opportunities for leadership to offer advice and guidance for emerging initiatives.
• Action-oriented – The budgeting and planning process should be robust and principled so that it results in decisions on the allocation and re-allocation of resources.
• Streamlined – Efficiencies should be built into the process to reduce duplication of effort. Organizational effort should be focused on selected strategic initiatives, keeping bureaucracy to a minimum.
• Flexible – The process should provide a way to respond to changing conditions and emerging opportunities.
• Accountability – The process should link decisions to responsibilities and results. There should be a way to explain those decisions to a variety of communities and stakeholders. Budgeting should be delegated to operational decision-making. Information should be provided on what resources are needed, organizational data, budget projections and other documentation.

Integrated planning creates the foundation for evaluating and understanding the needs of an organization, both now and in the future. It helps to identify the best strategies and activities for mitigating risks and choosing the best course for action.

Though some organizations in the public sector have taken innovative approaches to planning, there is a need for sound integrated planning across every level of the government.

Why should I use integrated planning?

• It aligns every part of the organization to higher echelon priorities, and to the organization’s mission, strategic plan, and budgetary resources.
• It supports both current and future needs of the organization
• It helps to justify how resources are used
• It helps reduce the politics of budgetary planning by creating common organizational goals
• It helps managers and leadership to meet their responsibilities and to be accountable to one another
• It promotes initiatives that support, attract, and retain an engaged and competent workforce
• It leads to a supportive workplace and culture of learning
• It helps performance to improve through the development of performance measures that require regular reporting

What are the key principles of good integrated planning? 

• Planning that occurs at all levels – Integrated planning should take place at all levels of an organization.
• Data-driven planning framework– Information needs to be up-to-date to inform planning processes and decisions based on current and future needs.
• Risk and challenge identification – Integrated planning helps to find challenges and key risks to deliver on priorities and find methods for mitigation of potential issues.
• Transparent, justifiable decision-making – Integrated planning should be values-based, transparent, and communicated regularly to employees and stakeholders.
• Regular reporting – The organization should establish regular intervals for reporting that shows planning efforts and results.
• Monitored, measured, and evaluated – Performance and progress towards objectives should be monitored.

What are the five steps to determine current and future needs in integrated planning?

• Determine your organization’s goals
• Analyze your current environment to identify whether you have the resources necessary to meet current and future needs
• Assess gaps in your resources
• Initiate strategies to close any gaps and to get what resources are required
• Review, monitor, and measure progress and success towards efforts

How to be Successful at Integrated Planning

Linear function-driven planning (the traditional approach to planning), no longer works. At many organizations planning is managed by multiple functions, but each of these functions operate separately and are only responsible for one part of the plan. Different parts of an organization may have different plans, with different measures of success, and different systems and sources of data rather than operating from a single source of truth. This creates a disjointed planning process where hours of work must be spent reconciling numbers.  

Traditional planning makes it challenging to ensure everyone is aligned and can execute on projects because information ends up siloed, and opportunities and potential risks are identified too late.

To implement integrated planning, an organization needs clearly defined roles and responsibilities from the get-go, as well as a coordinated calendar that aligns various functions so that they can work as efficiently as possible. Using integrated planning, your organization can ensure alignment on key organizational objectives.

What are the benefits of Integrated Planning?

Below are the benefits of an integrated planning approach over traditional planning: 

• Iterative vs. Linear – Cross-functional partners work together to develop and refine the plan continuously.
• Collaborative vs. Siloed – Groups across functions unite to share data and make decisions.
• Aligned vs. Disjointed – Definitions of metrics and goals are common knowledge to the organization and data is from a singular source of truth, which aligned across all planning groups.
• Strategic vs. Reactionary – The line of sight to strategy is clear and all decisions and plans are made based on looking at the bigger picture to support the organization’s overall mission.

Integrated planning ensures that all functions within your organization are speaking the same language and that everyone can work together towards a common strategy.

What are the five factors for integrated planning success?  

Integrated planning often involves big changes within your organization’s people, processes, and technology. You can have success if you keep the following tips in mind:

• Share your organization’s vision.  Make sure that your long-term strategic plan is well-documented with clear objectives, and that it is communicated across your organization. Your organization’s strategy should clearly define how you plan to reach your objectives and what milestones are along the way.
• Involve the right stakeholders. Good integrated planning decisions are made when all key stakeholders across the organization are involved to provide information and take part throughout the planning process.
• Ensure the right timing. In order to act quickly and efficiently requires that some planning decisions be made quickly. Though directions may change, based on organizational needs or input from leadership, the overarching mission of the organization and activities that support that mission should be prioritized and worked towards.
• Use a common language for performance indicators. Ensure that those across the organization understand key performance indicators and that measures of success are agreed upon and in alignment to improve trust in the information and facilitate communication. A single source of truth is essential in today’s rapid-paced planning environment.
• Use tools to support your planning. A single system to host your data with some level of analytics and reporting tools, as well as tools to support you in managing your portfolio and developing your 1-n list is essential to integrated planning success. Your organization can benefit from reliable integrated planning tools that ensure you are always at the ready with information to present to leadership.  

What tools can help with integrated planning? 

Finding new tools to support your integrated planning efforts, rather than relying on outdated tools and linear methods can help your organization to fulfill its requirements and be successful in its mission. Decision Lens has been modernizing public sector planning for 15+ years, evolving our solution to meet the needs of today while delivering the cutting-edge capabilities of tomorrow.

Related Articles

The Top 4 Challenges with Stakeholder Engagement

The Best Ways To Boost Stakeholder Engagement

How to Align Portfolio Strategy to Agency Mission

Discover how federal agency portfolio managers can align their strategies to mission objectives with Decision Lens for o...

PPBE: Everything You Need to Know

Learn everything you need to know about the Planning, Programming, Budget, and Execution (PPBE) process for DoD acquisit...

Our best content in your inbox

Get the weekly newsletter keeping thousands of government agencies in the loop.

Drive your Business with Integrated Business Planning

Integrated Business Planning is the next step of business planning after implementing S&OP, which helps integrate all the different departments in the planning process. This helps in aligning every department and employee of the company to work towards attaining a single goal. Home > Insight > Drive your Business with Integrated Business Planning

The business planning process is essential to running a successful business. Earlier, the business planning strategies across the supply chain were disjointed, as disparate spreadsheets and standalone business intelligence solutions provided limited knowledge, due to which companies lacked unification across the entire organization. Due to a lack of interdepartmental synchronization between the planning of the activities that impact the financial bottom line, silos were created, leading to more resource utilization and less productivity.

The traditional business planning process lacks a collaborative approach, and hence there was no accountability for overall results; every division focused on their activities rather than considering a part of one business team. Integrated business planning was introduced to overcome the problems of traditional business planning. The organization uses that to create an agreed dependable market plan to which every department has contributed.

Table of Contents

• Similarities between IBP and S&OP
• IBP vs S&OP
• Users of Integrated Business Planning
• Working Mechanism of the IBP Process
• IBP Challenges
• Significance of Integrated Business Planning
• Seeking Assistance with IBP Software

What is Integrated Business Planning (IBP)?

Integrated Business Planning (IBP) is the business planning process that uses financial and operational data from across the organization. In other words, IBP is an amalgamation of supply chain management, financial planning, and operational best practices. One of the primary benefits of integrated business planning is optimized output by linking strategic plans with sales, operations, and finances to provide better visibility of the relationships between results, resources, and capabilities. It aligns business goals and financial targets with decisions and execution across the entire business. Since this planning gathers data from across the enterprise, organizations are better at predictive analysis. Thus, if the analysis forecasts a parts shortage, supply and operations adjust and prevent customers from getting affected.

Most of the time, the argument arises that IBP is just an extended form of S&OP that includes finances and operations. While there are some similarities between IBP and S&OP, it is wrong to say that IBP is an extension of S&OP. Let’s discuss it further.

Regarding the similarities between IBP and S&OP, both processes need extensive supporting data to make correct forecasts. Both align forecasts with the capabilities, and both techniques help senior management make the right planning decisions. While there are similarities between IBO and S&OP, there are certain things that cannot be attained through S&OP alone, and to bridge that gap, IBP is used.

One of the significant differences between IBP and S&OP is that IBP aligns the different departments of an organization towards a single goal. IBP measures the performance in terms of finances, which helps in planning the business activities according to the financial target of the organization. S&OP tends to focus on medium-term planning targets, whereas the IBP process supports long-term, short-term and medium-term strategies.

Who uses Integrated Business Planning?

Integrated business planning is ideal for any company to improve the forecast through IBS, maximize profits and reduce the risks associated with the company’s growth. Companies that adopt this planning obtain several practical benefits, such as reduced holding costs, proactive customer service, demand fulfillment, less time to market for new products, and better collaboration between demand planning and completion. It makes planning and operations more transparent. Thus, companies moving to just-in-time manufacturing find it ideal. IBP is also predictive, so once the company builds up some data, it will improve customer satisfaction. Seeing the future of IBP is expected to help companies to work on strategy planning, modeling, and M&A activities with great confidence. It will also allow companies to inform stakeholders of unanticipated events that affect the business using advanced technologies like machine learning pattern recognition.

How does the IBP Process Work?

There are mainly six steps towards integrated business planning process flow.

• Determining Business Hindrances The first step in Integrated Business Planning is determining the business hindrances holding the company back. It can be a lack of growth and profitability, a complex product portfolio, or a loss of competitiveness. Proper planning and implementation are only possible after identifying the problem.
• Employee Education Once the problem is identified and goals are set, the goals must be effectively communicated to the employees at different ranks. Unless everyone is aware of the goals set by Integrated Business Planning, attaining the business goals is not possible. Companies must organize employee engagement programs to educate employees about the company goal and keep them invested in the business’s success.

What are the Challenges of Integrated Business Planning?

Once the company has appropriately implemented the S&OP processes, the next step is to implement integrated business planning, where the finance is integrated with all other departments involved in planning. Integrating finance may sound like a simple task, but it is not easy. A major challenge companies face while implementing the components of IBP is interdepartmental communication about the IBP elements and their importance. People involved in the physical side of the supply chain use a different form of language than that used by the finance people. Mostly, supply chain people talk in terms of units, product groups, and products, whereas finance people talk in terms of currency and money. This results in different KPIs used for measuring performance, creating a silo-like situation among the departments.

Other than that, communicating the goals with every company employee and maintaining the same motivation to reach that goal is another major challenge for the company management.

When a company adopts integrated business planning to improve forecasts and enhance productivity, there are some risks the company must be aware of. Below are some of the pitfalls that companies need to avoid while implementing IBP.

• All department employees do not share the same level of commitment to achieving the financial goals set by the IBP process.
• Business planning is a step-by-step process. First, companies must ensure that the S&OP process is properly implemented and stable in the business processes. Without S&OP, implementing IBP is a huge step.
• Targets and forecasts may get mixed up and take the business process off track.
• Unavailability of proper data and information is one of the biggest causes of failure of IBP.
• Discussing only short-term goals and ignoring midterm goals and assumptions can reduce the efficacy of the IBP process.
• A lack of thorough understanding of trade-offs can lead to misunderstanding between departments leading to lagging operations.
• Not using Integrated Business planning solutions such as AI/ML-based software applications for decision making.

What is the significance of Integrated Business Planning?

Research revealed that the major impacts of implementing integrated business planning are increased revenue, accurate forecast, and improved order delivery rates which signify the importance of IBP. Besides, there are several other factors of integrated business planning that ensure better performances across the business; some of the factors are discussed below:

• The primary feature of IBP is that companies buy the correct quantity of materials at the right time and at the best price to cater to market demand.
• Successful IBP also ensures more trust and better collaboration among departments, further leading to improved decision-making.
• Companies that adopt IBP have a direct line from purchasing, production, and inventory to sales and marketing, budgets, and financial targets.
• With IBP, companies can align supply chain projections, financial projects, and strategic plans into one strategy.
• With better visibility across all business departments, decision-makers can devise a single plan to drive the integrated business planning objective.
• With IBP in place, companies can easily focus on making an informed decision and reduce decision latency.

Looking for help in Integrated Business Planning Software?

As we discussed earlier, incorporating technology is the best way to consolidate and analyze big chunks of data more accurately and implement integrated business planning more efficiently. As advanced analytics technologies such as Artificial Intelligence have evolved and have been out of the lab, they are helping businesses in various ways. The benefits of using AI in business planning are proven by customer behavior analysis or business operation automation. At 3SC, we provide integrated business planning consulting services and supply chain management solutions tailor-made for businesses. We analyze the challenges faced by supply chains of different industries and find solutions to those challenges that can make business processes smooth and seamless. Our comprehensive AI/ML-based solutions, such as Visilog and Carbonex, not only optimize supply chain management and business planning but also help reduce businesses' carbon footprint and promote environmental sustainability in business.

What are the applications of Integrated Business Planning?

The application of integrated business planning makes operation and planning in different departments in a company more transparent which helps in better forecasting and implementation of data to ensure better customer satisfaction and lower business costs.

What are integrated business planning examples?

One prominent example of integrated business planning is the Uponor Group, which implemented IBP and brought down the number of SKUs from 120,000 to 10,000, bringing down the inventory costs by 50% and a 30% increase in one-time in-deliveries.

Another US-based technology company, Juniper Networks, implemented IBP, which helped them attain 55% lead time and reduce inventory costs by 15%.

What is an integrated planning tool?

An integrated business planning tool is an AI-based software that collects big chunks of data from different departments, analyzes it, and gives demand forecasts that help in the seamless and efficient planning of business processes.

Get In Touch

Thank you for contacting us. Our executive will get back to you shortly.

Subscribe to our newsletter

Thank you for subscribing to our newsletter. Stay updated with supply chain industry insights with our weekly newsletter.

Take a Peek At Our Solutions

Thank you for showing interest in our products. Our Executive will contact you soon with the details of your requested demo.

An official website of the United States Government

• Kreyòl ayisyen
• Search Toggle search Search Include Historical Content - Any - No Include Historical Content - Any - No Search
• Menu Toggle menu
• INFORMATION FOR…
• Individuals
• Business & Self Employed
• Charities and Nonprofits
• International Taxpayers
• Federal State and Local Governments
• Indian Tribal Governments
• Tax Exempt Bonds
• FILING FOR INDIVIDUALS
• How to File
• When to File
• Where to File
• Update Your Information
• Get Your Tax Record
• Apply for an Employer ID Number (EIN)
• Check Your Amended Return Status
• Get an Identity Protection PIN (IP PIN)
• File Your Taxes for Free
• Bank Account (Direct Pay)
• Payment Plan (Installment Agreement)
• Electronic Federal Tax Payment System (EFTPS)
• Your Online Account
• Tax Withholding Estimator
• Estimated Taxes
• Where's My Refund
• What to Expect
• Direct Deposit
• Reduced Refunds
• Amend Return

Credits & Deductions

• INFORMATION FOR...
• Businesses & Self-Employed
• Earned Income Credit (EITC)
• Child Tax Credit
• Clean Energy and Vehicle Credits
• Standard Deduction
• Retirement Plans

Forms & Instructions

• POPULAR FORMS & INSTRUCTIONS
• Form 1040 Instructions
• Form 4506-T
• POPULAR FOR TAX PROS
• Form 1040-X
• Circular 230

National Small Business Week 2024 begins; IRS offers tax resources, information to nation's entrepreneurs

More in news.

• Topics in the News
• News Releases for Frequently Asked Questions
• Multimedia Center
• Tax Relief in Disaster Situations
• Inflation Reduction Act
• Taxpayer First Act
• Tax Scams/Consumer Alerts
• The Tax Gap
• Fact Sheets
• IRS Tax Tips
• e-News Subscriptions
• IRS Guidance
• Media Contacts
• IRS Statements and Announcements

IR-2024-123, April 26, 2024

WASHINGTON — The Internal Revenue Service today offered helpful information to entrepreneurs in anticipation of the upcoming kick-off of National Small Business Week , celebrating and recognizing the crucial contributions America's small businesses make to the nation's economy.

Each year, the U.S. Small Business Administration spearheads National Small Business Week, helping entrepreneurs with resources, benefits and other important business startup information that small business owners can use to launch their enterprises. This year's celebration — Building on America’s Small Business Boom — runs from April 28 through May 4.

The Internal Revenue Service is a partner in the National Small Business Week celebration, and this year the IRS will be showcasing numerous resources to help small business entrepreneurs learn and understand their tax responsibilities and benefits. Throughout the week, IRS will be publishing helpful information in its popular tax tips e-News publications, as well as on IRS social media platforms including Facebook , X (formerly Twitter), LinkedIn and Instagram .

Next week, the IRS will share several important tax topics to help small business entrepreneurs prosper and grow:

• Monday, April 29. Best practices for small businesses — The IRS strongly encourages small business entrepreneurs to take advantage of the numerous resources available on IRS.gov. Knowing how to start a business and understanding best practices are essential for the success of small businesses.
• Tuesday, April 30. What to know when starting a business — Gain insights into key factors to consider when launching a new business venture. Access the Starting a business webpage to ensure a strong foundation for an entrepreneurial journey.
• Wednesday, May 1. Beware of scams — The IRS Dirty Dozen and more. Most cyberattacks are aimed at small businesses with fewer than 100 employees. Small business owners must implement data protection safeguards and always be on the lookout for tax-related scams.
• Thursday, May 2. Tips for tax pros who support small businesses — Stay informed with the latest IRS updates and access resources tailored for tax professionals.
• Friday, May 3. Expect the unexpected — The IRS can help small businesses after a disaster. A critical focus of the IRS is to relieve the federal tax burden of taxpayers who have been impacted by federally declared disasters. The IRS works with various agencies to provide assistance and coordinate disaster relief.

Seeking to start a small business involves several important considerations related to tax issues:

How to get an employer identification number

Most business owners need an employer identification number (EIN) , a permanent form of identification that, in many cases, must be used for filing a tax return and can be used for various business needs such as opening bank accounts. Businesses can get an EIN online immediately at IRS.gov, and it's free.

Choosing a business structure

Small business owners, as taxpayers, must decide on what the most appropriate business structure should be for their enterprise when they start their new business . The business structure they choose dictates the type of income tax return form that the business owner will file each year. Some common business structures include:

• Sole proprietorship . Individuals who own unincorporated businesses exclusively, by and for themselves are sole proprietors.
• Partnerships . A partnership is the relationship between two or more people to conduct trade or business, with each person contributing money, property, labor or skill and sharing in the profits and losses of the business.
• Corporations . In a corporation, prospective shareholders exchange money, property or both in order to acquire the corporation's capital stock.
• S corporations . An S corporation is a corporation that elects to pass corporate income, losses, deductions and credits to its shareholders for federal tax purposes.
• Limited liability company (LLC) . An LLC may be treated as a corporation, a partnership or as part of the owner’s tax return (e.g., sole proprietorship), depending on elections made by the LLC and its members. LLCs may also be subject to state regulations, which vary from state to state.

Understanding business taxes

Federal law requires all individuals, including small business owners, to pay taxes on all income earned. This typically involves making quarterly estimated tax payments for small business owners and self-employed individuals . How business taxes are paid depends on the business structure that an entrepreneur has chosen. The following are the four generally recognized business tax types:

• Income tax. With the exception of partnerships, all businesses must file an annual federal income tax return; partnerships must file an information return.
• Self-employment tax. A Social Security and Medicare tax primarily for individuals who work for themselves. Tax payments contribute to the individual’s Social Security system coverage.
• Employment tax. Small businesses with employees have certain employment tax responsibilities that must be paid, along with specific forms that must be filed.
• Excise tax. Imposed on various goods, services and activities, excise taxes may be imposed on a manufacturer, retailer or consumer, depending on the specific tax.

Choosing a “tax year”

A "tax year" is an accounting period for reporting income and expenses. Small businesses can choose which tax year works best for their operational needs:

• Calendar year. Twelve consecutive months beginning January 1 and ending December 31.
• Fiscal year. Twelve consecutive months ending on the last day of any month except December. A 52- to 53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month.

Be a responsible recordkeeper

Maintaining well-organized business records not only helps in tax return preparation, but also assists small business owners in preparing financial statements, identifying income sources, tracking deductible expenses and monitoring their business progress. Small business owners should retain their business records for at least three years.

More small business information

• Small Business and Self-Employed Tax Center
• 10 steps to start your business
• Hobby or business? IRS offers tips to decide
• Industries, professions and business tax centers

Finally, for more information on a broader range of topics and answers to small business tax questions, visit the IRS website at IRS.gov.

•  Facebook
•  Twitter
•  Linkedin