• Yehen Jayasena, Senior Manager |
5 min read

It has long been a nirvana for businesses to create a joined-up planning environment where all parts of the organisation feed into a coordinated, agile and responsive plan that can be flexed and updated on an almost continuous basis. Doing so will significantly enhance forecasting accuracy, improve operational efficiency and performance, manage risk and ultimately boost profitability and ROI. The pandemic has only highlighted the importance of this. For some sectors, including FMCG, retail, pharmaceutical, manufacturing and engineering it is especially critical.

Integrated Business Planning (IBP) as it’s called is one of those disciplines that sounds quite simple in theory but is actually very hard to do.

If it was simply a case of collating the plans from key functions in a business – Operations, Manufacturing, Sales & Marketing, HR etc – checking them for conflicts or inconsistencies, and then greenlighting them – everyone would be doing it.

IBP is challenging on a number of fronts:

  • It requires considerable amounts of collaboration and joint commitment within the business
  • Different parts of the business gear themselves to different time horizons – weekly, monthly, quarterly, annually
  • ‘Above market’ priorities (related to the organisation’s overarching strategic aims and targets) need to be linked to ‘In market’ conditions (customer demand, market fluctuations)
  • An integrated technology platform is needed to make it effective: it won’t work on spreadsheets and individual laptops

In a sense, IBP is like bringing together all the pieces of a jigsaw puzzle, through a common process, cadence and tools. But what we often find is that businesses are working hard on individual pieces rather than the whole picture.

Post-pandemic opportunity

As hard as it is though, I believe that organisations now have a real opportunity to make significant headway in implementing effective IBP. Businesses have lived through extraordinary times with the COVID-19 pandemic, and the result has been that levels of collaboration between functions have hugely increased, through necessity. In many of the businesses I work with, silos have been significantly broken down. Colleagues have learned a lot about how to work together more effectively for innovation and problem-solving, which are precisely the behaviours and practices which IBP is designed to encourage.

It has also taught organisations some major lessons about planning. One of these is that, in an unpredictable market, there is no point in striving for ultra-precision in some aspects of forecasting when events can quickly make previous assumptions irrelevant. Instead, planning should enable the identification and prioritization of critical activities, risks and opportunities. Indeed, IBP does this through a system and process that can help a business to maintain alignment during times of crisis, thereby facilitating rapid decision-making. The business will then be in a much stronger position to respond quickly to unpredictable challenges (and opportunities) such as COVID-19.

Key IBP principles

There are a number of key principles that can help organisations capitalise on the new mood music post-COVID and drive an IBP approach forward:

  • Have a single owner for IBP supported by a cross-functional taskforce
  • Tackle the planning process itself first – map it out across functions, creating a single unified plan
  • Assess your data and technology – do you have the right platforms and real-time feeds?
  • Maximise your ERP system, if you have one – can it look beyond the transaction layer to create a common data model that can form the building blocks of an integrated plan? Can it help the business enhance forecasting and automate some parts of the planning process?
  • Build on in-flight initiatives and look for ‘quick wins’ to create momentum
  • Monitor the effectiveness of change – feedback results in terms of improved forecasting accuracy or process cycle times to demonstrate progress

Finance in the front seat?

Who should the owner of IBP be? This will vary of course from business to business but I believe that the Finance function should, at the very least, have a prominent role. Finance can be the integrator across business functions. Finance teams are naturally proficient in forecasting – it’s what they do. In many cases, Finance is already at the heart of improving the performance management agenda, and IBP is a natural extension of this. What’s more, Finance has a strong vested interest in optimising IBP, because of the opportunities to reduce cost through elimination of duplication and low value effort.

Finance can also provide an independent voice between the demand and supply sides of a business and help create resolutions. They are a trusted party, seen as providers of objective insight.

There are some common challenges however that Finance teams will need to overcome:

  • Finance will need to accelerate their mindset-shift to one that is far more partnering with the business. CFOs will need to be mindful of this as they develop finance capability and resourcing plans
  • Functional engagement in IBP may vary between functions and this could result in poorly integrated plans and consequently diminished quality of finance planning products and metrics. Finance can provide an independent voice to encourage the right behaviours
  • The common data model within ERP provides the data foundation upon which IBP is maintained. Finance has a key role to play as sponsor and change catalyst

If these hurdles can be overcome, Finance will be in a strong place to take a lead. After all, in many respects they have the most to gain from getting IBP right.

Plan to Perform

The opportunity is ripe to take IBP to the next level. Business planning across an organisation should form part of the same truth – a coherent and connected picture that helps the business improve its performance and drive excellence.

At KPMG, we are helping organisations ‘Plan to Perform’ right now through our multi-functional planning expertise and technical alliance with Oracle.

We held a webinar with Oracle in which we discussed the future of IBP in a post-COVID world. Please watch on-demand