Integrated Business Plan

Integrated Business Plan-24
Hanna Hamburger is a director in the Strategy & Business Transformation practice at The Hackett Group based in Chicago.

When it tried utilizing its 20 spreadsheets, they continued to fall short of reaching targets and became well aware that they were missing out on major profit opportunities.

Spreadsheets may work for isolated scenarios but not integrating functions to solve one common goal (meeting demand) while aligning with strategic objectives (e.g., recognizing additional profit opportunities).

Most successful IBP implementations consist of three primary phases: IBP is an iterative process that gets better over time.

While it may not be perfect the first time through, if implemented effectively and run efficiently, IBP can be a powerful tool for driving vastly improved business results and creating a sustainable competitive advantage in the marketplace.

Despite knowing its importance, businesses have been slow to adopt integrated business planning. (Download the research perspective here for more insights and how to tackle problems with spreadsheet planning.) Here’s the problem: Inflexible tools like spreadsheets don’t allow for a cross-functional representation of the business.

Also, spreadsheets don’t provide forward-looking insights — a requirement for IBP.For example, is the operational plan represented in a cash flow statement?If not, what good is an operating plan that includes a product mix with margin contributions that put cash flow risk?Visualize aligning your company’s operational decisions with forward-looking financial performance across various timeframes, representing complex trade-offs, constraints, and real-time business realities the value chain; this is what a successful IBP looks like!For more than a decade, our customers have struggled with the term IBP and how it relates to sales and operations planning (S&OP), sales and operations execution (SOE) sales inventory operations planning (SIOP), sales and operations management (S&OM), and other processes. A few reasons include: A recent study shows that 79% of companies continue to use spreadsheet planning, yet only 39% say that spreadsheets support a collaborative planning process.Top-performing companies are moving beyond traditional S&OP to more integrated business planning (IBP) in order to confront this challenge.At its core, integrated business planning (IBP) is a collaborative decision-making process that links strategic, operational and financial objectives, and plans to improve overall business performance (see Figure 1).This comprehensive business plan increases business alignment through the sharing of performance strategies and helps quantify business risk so enterprises can rapidly adapt to meet challenges.Even in a good economy, financial pressure to perform is paramount to maintaining a competitive edge and interesting enough, no different than the factors driving IBP following the 2009 recession.He has over 10 years of experience performing operations and financial analyses, and delivering recommendations.Before joining The Hackett Group, Soss was a senior financial analyst focused on financial services and insurance.

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