Posted: 11 Oct. 2022 4 min.

Can one planning system do everything?

Topic: Integrated Business Planning

What is THE best system that supports Integrated Business Planning (IBP)?

Somehow this question always comes up in my discussions with Deloitte’s clients about Integrated Business Planning – and of course I understand why people are asking. Selecting the right system is a decision that will not only have a huge impact on financial and operations planning but can also alter the strategic direction of a company by creating new business opportunities and paving the way for a whole new level of transparency and control.

System selection, however, is not a simple process with a simple answer. It all depends on what business needs the system must cater to. Is the primary driver to support an integrated planning process in a complex supply chain with many sourcing opportunities in a large production ecosystem? – or is it rather tying together marketing, sales, supply chain and finance in a single planning cycle? – or everything at the same time?

To get the answers right, you need to ask the right questions, because there isn’t a single system (yet!) that can do everything at once. However, the technology IS evolving at a rapid speed, and companies can indeed take advantage of these new advancements to create an agile and resilient value chain. 

New technology has taken huge leaps forward

To get closer to the question of what system to select, we need to look at the technology market where the major system providers right now are investing significant resources in getting ahead of competition and offering the kind of IT solution that will take companies’ planning to the next level.

Gartner has described this trend very well in one of its latest ‘Magic Quadrant’ publications[i], highlighting that “extended planning and analysis (xP&A) is the next generation extension of financial planning and analysis (FP&A) solutions and is a vendor response to the challenges faced by enterprises seeking to exploit new digital business models and navigate current and future economic uncertainties.”

Gartner continues: “Although best-of-breed (BoB) operational planning solutions, such as workforce and sales and operations planning (S&OP) will remain popular, FP&A will begin to incorporate more of these functional capabilities as it evolves into xP&A (a platform-centric approach capable of supporting and integrating both financial and operational planning).”

At the same time, we see classical supply chain planning tools starting to provide simple P&L projections of revenue, gross profit and inventory balance.

My own take on this development is that financial planning solutions are increasingly moving into the supply chain planning space – while supply chain systems are increasingly moving into financial planning to take their share of the IBP space. From a business point of view, this development is extremely interesting, and although most of these shifts are ‘work in progress’ it is most certainly a trend that will change the technology landscape in the coming years with more and more companies taking advantage of integrated business planning.

Where to start?

Choosing a planning solution takes careful consideration, but in my experience, it is a process that can be managed through a logical approach and a broad team of people with deep knowledge of both business and technology.

Here are a few tips on how to get started:

  1. Bring together the best people: To think holistically about planning – and to bridge areas such as operations and finance – you need to find people in your organisation that have both a broad and deep understanding of financial, commercial and supply chain business processes as well as technology.
  2. Get the vision right: Start with the end; establish a shared vision and ambition in the executive team and among the team members of what Integrated Business Planning can deliver for the organisation. 
  3. Find out who you want to partner with: Implementing new planning technology is also about entering a partnership for the business. Therefore, you need a thorough assessment of factors such as vendor capabilities (e.g. customer experience and track record, support model (on/off-shore + market insight), financial viability and price, maturity and innovation), technical capabilities (best of breed or best of suite, performance/scalability, customizability and integration) as well as functional capabilities (industry specific capabilities, financial, commercial and supply chain planning as well as risk and opportunity modelling, scenario simulation and so on).
  4. Go through a structured process: Typically, a managed system selection process takes between 4 and 12 weeks, depending on the size and complexity of the organisation. Besides making a complete scorecard of relevant systems based on the identified business criteria, the process will also layout the plan for implementing IBP in the organisation going forward. Following this, it will be much easier to ask potential providers to demonstrate their capabilities and thus save a lot of internal time and insecurity, while also laying the groundwork for a successful implementation.

Now is the time to get started

As I wrote in my last blog, many companies still build their commercial, supply chain and financial plans in isolation, working off separate data sources. These plans may be aligned conceptually, but not truly integrated. Secondly, some companies have confused IBP with just expanding the S&OP process with revenue and gross profit estimation. But IBP is also about identifying risk and opportunities, assess scenarios and make pro-active decisions for the entire company across Commercial, Operations, Finance, Procurement, Logistics and even HR. 

With the help of new technology, companies can achieve a whole new level of integration across both financial and operational planning. IBP is a collaborative process where tactical plans across portfolios, customers, production- (or service-) resources are aligned and calibrated against business targets. At the same time, risk and opportunities are identified and evaluated in scenarios, providing leaders with a transparent overview of the company’s situation and thus the opportunity to make the appropriate and agile decisions to keep the company aligned with business plans and strategic goals.

Forfatter spotlight

Camilla Thuge Lund

Camilla Thuge Lund

Partner

             

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