Your Complete Starter Guide to Understanding Integrated Business Planning

Integrated business planning

Integrated business planning gives you a 360 degree view of the business by connecting all your business applications. Here's how to get started.

Text Link
Priyaanka Arora
September 23, 2022
·
11
min
Share on social media
Your Complete Starter Guide to Understanding Integrated Business Planning

Summary

Integrated Business Planning (IBP) has emerged as the hallmark of businesses undertaking concentrated digital transformation efforts.

While business planning has been a standard part of every organizational strategy, it has been a disjointed process until recently. Different departments ended up formulating their own strategies which impeded the organization's growth potential. Without a cohesive planning process in place, companies were unable to get a 360° look at the business and were unable to plan for the future.

Realizing the bottlenecks created by disjointed business planning, companies are now migrating to IBP as their default strategy.

What is Integrated Business Planning?

Integrated Business Planning (IBP) can be described as a process that offers management a 360° view of organizational functions like sales, marketing, finance, accounting, and others. These insights enable decision makers to prepare a comprehensive strategy to carry the business towards a promising future marked by enhanced growth potential.

Integrated Business Planning (IBP) has been a buzzword in the corporate sector for quite a few years, but its importance has increased exponentially in the last decade. IBP can be considered as a refined mashup of financial planning, operational best practices, and supply chain optimization to not only mitigate the risks but also deliver savings, responsiveness, and speed for the company and improve customer experience.

What is an Integrated Business Strategy?

Integrated Business Strategy (IBS) is a set of processes that companies can employ to bolster their efficiency and competitiveness in the market through expansion in different avenues.

These areas could include logistics, distribution, or competition. Businesses can use the IBS to enhance their sway in the distribution network to forge ahead of the competition and have a strong market presence. When compared, IBP is more focused on creating a cohesive business strategy that is in harmony with organizational objectives, while IBS is more about executing the IBP to achieve the desired goals.

What’s the difference between Sales & Operations Planning (S&OP) vs. Integrated Business Planning (IBP)?

There is a constant debate amongst experts if there is any difference between IBP and S&OP. While some argue that these strategies are complementary, there is a slight difference between these two integral tactics. 

S&OP is described as a cross-functional planning process undertaken to maintain the balance between supply and demand through the communication of changes in market demand to management. Finance, production, and supply chain departments utilize this data to optimize their production planning and purchasing decisions. S&OP empowers the organization with shorter lead times, improved management control, better customer service, and superior supply chain management. 

In comparison, it is evident that IBP is an extension of S&OP. Where S&OP is more inward-looking, IBP attempts to strike a balance between internal and external factors. After an organization has achieved a higher maturity level in S&OP, it must embark on the journey towards incorporating IBP as a standard business process. 

What are the key benefits of integrated business planning?

In the modern business environment, management must ensure alignment across cross-functional groups to maintain a competitive edge. IBP helps an entity overcome challenges posed by disjointed business planning to augment the decision-making processes. Some of the noteworthy benefits of IBP are:

  • Accountability: Departmental teams are aware of the impact of their actions on other departments and the entire organization. Managers can fix individual responsibilities of employees to determine employee accountability.
  • Transparency: IBP offers a consolidated view of data that enables departments to undertake scenario planning for different possible situations in sync with other departments. Such transparency in operations bodes well for the company's future.
  • Alignment: With IBP, departments can understand the overall organizational objectives and then align their operations with syncing with those objectives. 
  • Optimization: Management can ensure optimal resource utilization by addressing common bottlenecks that impede the operations of multiple departments. 

What is the purpose of integrated business planning?

IBP is a process designed to enhance the efficiency of the decision-making process for the entire organization. It enables management to lay down a detailed plan for managing the enterprise with a long-term horizon. Some of the key aspects that IBP addresses are allocating crucial resources, supply chain management, personnel requirement, financial analyses, and time management to ensure a balance between profitability and customer satisfaction.

IBP is the next step in the evolution of S&OP which in itself originated in the 1980s from supply and demand balancing processes. IBP ensures alignment of all departmental functions to prepare the entity for possible scenarios through accurate strategy deployment and better cooperation between key stakeholders.

Why do you need integrated business planning?

Whether you are a start-up looking to establish a strong presence in the market or an established enterprise interested in consolidating your market position, IBP must be an integral part of your strategy. Companies need IBP to devise a set of concrete actions to achieve different objectives. 

  • Quality of inputs, outputs, and processes: Companies can maintain a uniform demand and supply plan that is in sync with the financial goals by attending meetings attended by cross-functional decision makers.
  • Organizational capabilities: IBP promotes cross-functional collaboration across multiple layers of the organization to encourage functional excellence and problem-solving.
  • Accountability and Performance: IBP helps design incentives to encourage transparency and accountability of performance. Shared metrics made available promote collaboration between key stakeholders. 
  • Data systems: IBP promotes integrating data systems across departments to deliver a single point data source for all requirements. Automated data flows and system detection promote real-time decision-making. 
  • Process design: IBP helps bridge the gaps left by short-term and long-term planning by enabling flexible strategies for addressing issues arising between these two time horizons. It also promotes strategy via management-level operational planning and target setting. 

How do you implement integrated business planning for your company?

Many companies struggle with implementing IBP as crucial responsibilities and metrics are not aligned across functions. This might pose difficulties with steering the operations collaboratively. Thus, it is important to clearly understand implementing IBP for your company. 

Integrations

To save crucial time and resources for different departments, it is important to select an IBP platform that seamlessly integrates with your existing tech stack. This will help eliminate data transfer errors and reduce data consolidation time, as well as maintain critical data security standards. Therefore, the first and foremost requirement for implementing IBP is to ensure seamless integration of the IBP software with your tech infrastructure, including ERP software, CRM software, Billing Systems, Data Warehouses, and more. 

Consolidating data sources into a single source of information 

Duplicate and inconsistent data sources pose challenges for an organization at multiple levels, leading to a waste of precious resources and impacting the bottom line. It is, therefore, important to have a single source of information that can act as a reference point for multiple departments. After integrating the IBP software with your tech stack, your next focus should be ensuring accurate data collection and aggregation in real time. This approach would provide a single source of truth for all the departments, eliminating errors due to omission or duplication.

Building forecasting models

Forecasting in IBP is used for demand sensing in the short, medium, and long term. To create a forecast model with your IBP software, you must define the algorithms and key figures related to outputs and inputs. A forecast model features three steps, i.e., pre-processing, forecasting, and post-processing. But a forecast model only works as a container of functionality, and it is you who must define its aggregation level and timing of running.

Financial forecasting methods

There are different financial forecasting methods that you can opt for per specific requirements according to different situations.

  • Straight Line Forecasting: - This method is used to get a simple view of continued growth at a consistent speed to derive predictions for guiding financial and budget goals.
  • Moving Average Forecasting: - This method calculates average performance for different metrics in a specified time frame. Companies use this method for the identification of underlying patterns for varied financial metrics.
  • Simple Linear Regression Forecasting: - This method helps create a trend line based on the relationship between an independent and dependent financial variable. 
  • Multiple Linear Regression Forecasting: This method uses two or more financial variables to make a projection. This forecasting model helps understand the relationship between different financial parameters and possible outcomes.

Scenario planning

Use your IBP platform to eliminate being caught off guard while executing your strategies. You can run multiple “what-if” scenarios within minutes to analyze the aspects affecting your business. You can create new scenarios using existing scenarios and compare different scenarios per your requirements. Representations like line charts, bar diagrams, tables, and other visualizations can be used for easy understanding of data for informed scenario planning. This allows you to improve the accuracy of predictions based on a single source of truth.

Scheduled imports

With the option of scheduling data imports built-in, IBP platforms are taking the hassle out of data collection and consolidation. With the scheduling option, you can define the import requirements and get all the data presented to you in a consolidated manner. With access to real-time data, you can ensure higher data integrity and accuracy, as well as data access autonomy. You circumvent investing heavily in setting up IT infrastructure, as cloud-based IBP software solutions can operate seamlessly on your existing infrastructure.

Analytics and data visualizations

Why stick to cells, rows, and columns for data analysis when you can access stunning data visualization solutions with your IBP software? Visual analytics helps draw meaningful insights from data by offering multiple ways to look at the same dataset. IBP platforms allow you to clean and enrich your data in seconds, allowing you to spend more time on data analysis and exploration rather than on manual data collection and consolidation.

Building beautiful presentations 

The true value of data analysis lies in the decisions it enables leaders to take. Storytelling, by incorporating the data and visualizations in a beautiful presentation, is essential to reaping the benefits of an integrated planning and analytics platform. You can use your IBP platform to import and export your data from sources including Google Sheets and create impressive presentations that drive positive impact.

Measuring ROI and impact on the business

Always ensure the measurement of return on investment (ROI) with key metrics depending on the use case. For example, your Finance team might have spent several days on data preparation before achieving actual insights from financial reporting. An integrated business platform has the potential to reduce this data prep time by 80% — metrics like this can be a great way to measure your team’s efficiency post implementing an IBP.

Integrated business planning by the department

The best part of an integrated business planning platform is its ability to support a wide array of business use cases - Sales, HR, Marketing, Finance, RevOps, CX, and more:

Finance and FP&A teams 

IBP platforms empower finance teams to build, maintain, and visualize data in real-time to deliver informed forecasts. Finance teams can save considerable time and resources as they can clean and enrich data in seconds and run models in hours instead of days with up to 20x fewer formulas than Excel. 

Revenue and Sales teams 

IBP platforms enable revenue and sales teams to unlock revenue growth potential through flexible financial modeling options. Therefore, teams can spend more time on strategy by reducing planning cycles for non-productive tasks. 

Executives 

Management teams and key executives are empowered to deliver well-rounded business results as the IBP platforms offer a single data source for all stakeholders. With a 360° view of the business, informed decision-making becomes the new standard practice.

Choosing the best business planning software 

To avail the complete benefits of IBP, selecting the best business planning software is essential. When compared based on power, flexibility, and design, Pigment emerges as the clear leader and is trusted by industry leaders across domains.

Pigment is one of the most feature-rich and user-friendly business planning softwares that offers you a one-stop solution for all your planning requirements. 

Pigment allows your teams to be more efficient as they gain single-point access to enriched data and can spend more time on data analysis to draw meaningful insights.

You can quickly create impressive models with real-time previews to bring all the decision makers at speed quickly. You create a seamlessly shared understanding of numbers across multiple departments, breaking down the silos affecting operational efficiency.

Pigment removes the element of surprise from all your decisions as you can forecast and run multiple scenarios to identify suitable opportunities and risks for your business.

Book a demo today and experience the unparalleled power of Pigment for yourself.

Product Tour

Sales planning

Your Complete Starter Guide to Understanding Integrated Business Planning
Register now

Related articles