What is Integrated Planning?

 

ntegrated 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. 

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?

1. Determine your organization’s goals
2. Analyze your current environment to identify whether you have the resources necessary to meet current and future needs
3. Assess gaps in your resources
4. Initiate strategies to close any gaps and to get what resources are required
5. 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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.  

https://bit.ly/3cx5IIA

Integrated business planning (IBP) is a process for translating desired business outcomes into financial and operational resource requirements, with the overarching objective of maximizing profit and / or cash flow, while minimizing risk. The business outcomes, on which IBP processes focus, can be expressed in terms of the achievement of the following types of targets:

• Revenue & demand
• Service levels
• Inventory levels
• Profits & margins
• Cash flow

Integration elements

Integrated Business Planning is defined in different ways. One challenge in developing a common definition of IBP is that there is no universally agreed way of describing different degrees and forms of integrated processes. Mature IBP processes enable organizations to bring together different elements of planning into a single process. This includes, but is not limited to, the following:

• Supply & demand
• Finance & operations
• Functions & business processes
• Strategy / Outcomes & business processes
• Financial and non-financial measures
• Cash flow, costs and revenues

The role of IBP is to balance these different objectives in a way that achieves the best overall result. One way of accomplishing this is with prescriptive analytics. These tools are often employed in these processes to mathematically optimize parts of a plan, a classic example of which is inventory investment. The most mature IBP processes try to mathematically optimize all aspects of a plan.

History

The term integrated business planning is an outgrowth of sales and operations planning (S&OP) a term referring to processes that balance demand with manufacturing resources.

There has been a lot of focus on integrated business planning in the context of sales and operations planning. Gartner refers to a 5-stage S&OP maturity model, wherein IBP is referred to as the Phased 4 & 5.^[1]
Integrated Business Planning however is broader than S&OP. It is an approach that combines Enterprise Performance Management (EPM) and S&OP to provide incremental capabilities that neither provides individually. In so doing, IBP platforms address long-standing challenges that financial and operational professionals have struggled to overcome. The result: opportunities for step change improvements to how manufacturers plan, manage and govern their business.^[2] Here, the focus is on strengthening the financial integration and reconciliation of plans, as well as increasing the responsiveness of the supply chain using ad-hoc reports and what-if scenario analyses.^[3] To better predict customer demand, machine-learning technology helps to identify correlation patterns and automate the detection of demand changes. ^[4]

Components

Integrated Business Planning requires the following capabilities to be enabled:

a) Enterprise Model

• Ability to create a demand chain model
• Ability to create a supply chain model
• Ability to create a finance chain model

b) Integrated Planning

• Ability to create a plan across multiple functions
• Ability to create predictive and collaborative plans

c) Enterprise Optimization

• Ability to create optimized plans across multiple constraints
• Ability to create financial integration across optimization

Applications

IBP has been used to model and integrate the planning efforts in a number of applications, including:

• Product profitability
• Customer profitability
• Capital expenditures
• Manufacturing operations
• Supply chain
• Business processes (human and information-based)
• Business policy
• Market demand curves
• Competitive strategy

All of the above can be summarized as Enterprise Optimization use cases.

Criticism

Some argue that IBP is not any different from S&OP. Patrick Bower has described IBP as a marketing hoax, ⁣^[5] a name developed to create confusion and sell consulting and system services. The main proponents of IBP are consulting companies. In response to this criticism, it has been asserted that IBP is not a marketing hoax, ⁣^[6] but an important part of Enterprise Performance Management (EPM) system.

Another criticism is that IBP is not academically defined^[7] and is supply chain biased in its definition. The lack of academic standard leaves room for interpretation to what IBP is, which is confusing practitioners. In a 2015 S&OP survey, ⁣^[8] 32% of participants answered that there is no difference between S&OP and IBP, 20% "did not know", and 71% of participants answered that there is a need for more industry standards around S&OP.

It has been called out that IBP has a lack of governance and in need of an industry group to create a unified definition. Due to the lack of academic and industry standards, there has been an attempt to create an open source definition for IBP:

A holistic planning philosophy, where all organizational functions participate in providing executives periodically with valid, reliable information, in order to decide how to align the enterprise around executing the plans to achieve budget, strategic intent and the envisioned future.

— Supply Chain Trend, 2015^[9]

References

1. ^ "Gartner - Introducing the five-stage Sales & Operations Planning maturity model".
2. ^ "IBP Industry Week cite web".
3. ^ "Integrated Business Planning (IBP) - Camelot - Management Consultants". www.camelot-mc.com. Retrieved 2017-07-17.
4. ^ "SAP Integrated Business Planning (IBP)".
5. ^ http://www.jaguar-aps.com/wp-content/uploads/2019/06/IBP-is-a-Hoax.pdf^{[bare URL PDF]}
6. ^ "Integrated Business Planning Is Not Just a Marketing Hoax". industryweek.com. Retrieved 2022-06-25. Manufacturers can achieve step change improvements to how they plan and manage their business by developing strategies that combine EPM and S&OP.
7. ^ "The rise and fall of S&OP". 27 February 2015.
8. ^ https://supplychaintrends.files.wordpress.com/2015/12/supply-chain-trend-sop-pulse-check-2015.pdf^{[bare URL PDF]}
9. ^ "A new definition for Integrated Business Planning". Supply Chain Trend. 2015-11-25. Retrieved 2022-06-25.

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