Why is IBP still not the lead planning process in your business?

Why do we still see organisations scratching their heads and burning energy trying to reconcile budgets, financial forecasts, sales projections and operations plans? Data sources and assumptions are different, reporting systems are often divergent, and there is no common tool to corral the various business functions towards that elusive "one number" view.

Beyond the frustration and possible exhaustion that these efforts to square the business planning circle may cause, there is often real opportunity being missed. Imagine a pilot trying to navigate through the night with three contradictory views of altitude, speed, bearing and fuel reserves...the chances of a smooth landing at the desired location would seem slim. So how are execs to make critical decisions about the deployment of their constrained resources with the objective of optimising customer service and profitability when they are being fed conflicting and untimely information?

Integrated Business Planning (IBP) or Sales and Operations Planning (S&OP) are one and the same for the purpose of this blog. They both bring the promise of coordinated commercial, finance and operations functions through a unified cyclical process focused on medium to long-term business challenges. But the concept has been around for decades and does not seem to have been universally adopted. Why is this? And is technology part of the answer?

Purists might argue that the level of technology needed to enable an IBP revolution is minimal and that, actually, what will make the difference is an organisation, process and governance shift underpinned by standardised data. Of course, to a large extent, they are right. No amount of digital wizardry is going to fix a misaligned organisation that does not get the inherent value of one planning number. Moving beyond this argument, it is hard not to view currently available technology at least as an enabler of enhanced and integrated capability. A "big calculator" is clearly going to be useful when trying to process large volumes of sales and production data and when you need to be able to quickly simulate a variable change and instantly see the impacts propagated through the supply chain. Many vendors have recognised this need and have brought solutions to make 21st century planning more, well, 21st century.

These solutions bring together demand and supply data from diverse systems and enable the monetisation of product volumes necessary for financial analysis. Alert-driven interaction through control-tower environments with guided navigation to the root causes of issues transform the planning experience while simulated changes to demand and supply conditions can now be evaluated with the immediacy made possible by in-memory processing. Add to this collaborative working and IoT integration, all delivered through the Cloud, and you have the technology dimension that could turbo-charge the business planning ambitions of any organisation.

What do our customers want? Can we supply it and, in doing so, are we going to make money? All fair questions. Mix the right technology with the right business processes and you might get the answer...just the one answer.

In a future blog, I would like to explore how companies can get a fix on their current planning maturity levels and how they can shape a journey towards enhanced planning capability.