Integrated business planning: embracing volatility as a competitive advantage
September 16, 2021
Delivering value for clients and shareholders is a continued focus of business. The frequent and dispersed waves of COVID-19 cases over the past 18 months have presented significant challenges to every enterprise’s value proposition. Regular market and supply chain disruptions only exert more pressure on businesses to predict, assess and adapt to continuously changing conditions.
Integrating planning capabilities across the traditional functional siloes are essential for limiting the risks and maximizing the opportunities inherent to creating value. Instead of being a defensive capability, Integrated Business Planning (IBP) provides a competitive advantage in volatile markets by responding to market demands before slower reacting competitors even acknowledge them.
IBP leverages disruption through two main channels. Firstly, it greatly enhances the speed and depth at which your business can generate insights on developments in the market. It consecutively enables a rapid response by considering the impact of alternative responses across the value chain in great detail, at great speed and with tremendous reliability.
With up to a 30% reduction in operational costs and a 10% reduction in working capital1, IBP programs can produce tangible, financial results while providing essential support to your security posture. IBP does not just create value as an end result but secures it at every level of the value chain. It does so by bringing together business functions to bridge the different perspectives and objectives.
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Reduction in operational costs
Reduction in working capital
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Independently developed functions are a significant factor keeping organizations from realizing a successful IBP capability. Limited cross-functional knowledge, disconnected processes, system landscapes and data environments restrict a holistic understanding of organizational functions.
Businesses that attempt to amend this issue often suffer from the absence of a common language and terminology across functional siloes, deterring clear communication between different areas of the business. Unfortunately, this is only one by-product of a larger issue. Most businesses tend to compartmentalize objectives, focusing their financial, operational and service-oriented workforces on different goals achieved through differing ways of working.
This often results in, for example, financial planning being conducted without a sufficient recognition of the dynamics of the business’ key value drivers. The lack of an integrated view across functions hinders the optimization of decision-making processes. Adopting a more cohesive approach unlocks value across the business landscape, whether the metric be stock levels, product portfolios or overall profitability.
Integrated Business Planning has certainly been fueled by the increasing volatility of market conditions. The provision of integrated data capabilities, enhanced processing power, enabled by cloud solutions, and a revised business approach, all enable the technological and behavioural changes essential to a successful IBP program.
The timing is opportune to start your journey towards IBP. New cloud solutions provide the technical opportunity to make the necessary cross-functional integrations in your ways of working. Just like cloud transitions, IBP programs can be initiated and developed in a variety of ways. To help make program decisions most appropriate for the specific context of your organization, our IBP framework provides some important guidance.
In its application, this framework naturally aligns decision-making and planning cycles across functional siloes, allowing the timely transfer of relevant knowledge and established hierarchical roles inherent to the process. The domain of People & Organisation focuses on generating cross-functional expertise that integrates multiple operational fields. By aligning on mutual incentives and establishing a collaborative organizational mindset, the integration of dispersed workforces is supported.
This provides a common ground on which the business’ technological framework can be built. Harmony between systems of data and knowledge ensures an efficient and effective flow of information, supported by architectural developments like digital decoupling and responsive cloud services.
To establish which IBP areas are worth your business’ investment, consider the different maturity stages –
Our research shows that Integrated Business planning enhances value far more than a traditional, siloed approach through several key capabilities:
Tethering, for example, commercial planning with financial planning capabilities, allows businesses a clearer understanding of their value chain. A plethora of analytical tools can develop a real-time assessment of alternative commercial scenarios across the value chain with a clear perspective on value contribution at each level of the organization.
Leveraging an integrated view of the value chain is a crucial competitive advantage. The planning cycle can be informed of trend drivers at a significantly earlier stage, providing cross-functional teams more accurate and insightful data to allocate funds with more certainty.
Monte Carlo simulations run on integrated planning models generate clearer consequences for the commercial and supply chain. An understanding of the potential financial implications provides the opportunity for your business to identify the most optimal strategy for mitigating potential risk and maximizing potential reward.
Above and beyond the immediate benefits of IBP programs, the erosion of organizational siloes serves as a key, long-term value driver. With a common language across the organization, multiple areas of the business can collaborate on decisions.
IBP supports the translation of sales and operations numbers into metrics that can be linked to your P&L and cash flow impact. The provision of end-to-end visibility on profitability across markets, products and systems, allows leadership access to all the necessary information for making optimal trade-offs and decisions.
Perhaps the greatest benefit of an integrated system is the consistency of functional metrics and drivers which enable different departments to work towards the same goals.
Incorporation of IBP capabilities have proven to provide deeper insights, greater agility and speed to plot an organizational course through the most volatile enterprise landscapes. But along with a financial investment, every IBP program demands an investment into the workforce as well.
People are the differentiating factor between failing at IBP and delivering true value through its programs. The focus needs to be on making key decisions that are in line with the company’s operating model and ultimately support its long-term value propositions. And unlocking that latent value always begins with leadership.
Management must take the lead in IBP development and be vocal proponents of the actions and behaviours essential to a successful IBP program. Executives need to champion the importance of IBP to their unique business and provide personal targets, rewards and recognition that directly tie into the key performance indicators of IBP.
Participation is most fruitful when all those involved are assigned roles and tasks which focus on clarifying the core competencies that can drive the business’ value. Only building on such ground allows growth in maturity as improving and optimizing your IBP program demands deep functional expertise and cross-functional experience.
Such a capability is not built overnight but needs to be instilled into your existing workforce. Only by developing the appropriate habits can an IBP team create an objective picture of your business and adapt to deal with deviations or changing conditions. Across all layers (functional, geographical) IBP participants need to understand and accept the different functional objectives that exist within the company. This provides a clear framework within which acceptable trade-offs can be made within and across divisions.
Lastly, a high-performing IBP team embraces conflicting interests constructively and understands that the true value of IBP lies in the differences between functions and reaching consensus between them. The difference between constructive and unproductive conflict is the difference between ownership and accountability. Each employee should feel accountable for their work but understand that their end-goal is the benefit of the overall organization, not just their own department.
Along with people, technology and data play an integral part in enabling the IBP cycle. To ensure success in IBP, you need technology that supports dynamic and real-time decision making based on data that can be understood and processed by all different divisions. Touchless and self-learning technology can drive efficiency and effectiveness in rule-based elements of the IBP process. Structurally, planning solutions have moved to cloud-platforms, enabling much faster deployment of new functionalities across the enterprise.
This frees up organizational capacity for the value-add interpretation and allows your company to make complex data-driven decisions across functions, like identifying how the supply chain can enhance the customer experience.
Integrated Business Planning does not just bring together all your functional siloes into one integrated process; IBP ties them together based on their inherent function in the value chain, embracing volatility through accelerated and value-creating decisions across functions.
1 Accenture experience
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If you want to discuss how to improve your IBP capability and increase its business impact, reach out to the following team: