Why Finance should go all-in on Integrated Business Planning

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Planning for your company’s future has never been more important. With the continuous acceleration of the pace of change, good planning is a critical capability to have as a company. Most companies have a significant challenge though. Their planning happens in silos and rarely gets integrated and aligned for optimal direction setting.

In Finance we usually consolidate the input we get from other functions in a financial plan that informs senior management, the board, and the market if relevant. However, we also know that, unfortunately, the input we get from other functions is created with little care for the receiver as it’s a one-way information exchange, and functions like Sales and Marketing don’t feel they get anything out of it. Instead, they spend most of their efforts on their own sales plans or marketing plans.

And no one can blame them because planning is needed throughout the company but for different purposes. Sales need to plan how to win business from existing and new customers. How many sales calls and sales reps are needed for this. Marketing needs to plan which campaigns to run and collateral to develop to bring in new leads.

All functions have their objectives and need to develop plans for how to deliver on them and subsequently execute the plans. Because the planning happens in silos, the roll-up of the plans and execution rarely leads to the results and strategy fulfillment that management wanted. How can we change this?

It’s time to go all-in on Integrated Business Planning

It’s clear that a new or unified approach to planning is needed. This is also the intention behind the advent of the term xP&A (Extended Planning & Analysis). However, we need not introduce new terms when we can use existing processes that are already inherent in the company. This is where Integrated Business Planning or IBP comes into the picture.

IBP is a business planning methodology that extends from Sales & Operations Planning (S&OP) as a means of translating strategy into execution. It’s the broadest planning process employed in companies today, however, still lacks true integration since for instance financial planning and human resource planning are rarely part of the process.

To fix this we should see IBP in the context of a strategy cascade. If we consider the Playing to Win strategy framework by Roger Martin. If we make it part of the management system that’s required to drive and follow up on strategy at every level in the organization, we ensure that an aligned approach to strategy and execution is taken.

Secondly, if we put Finance in charge of running the management system, we ensure that we have an objective party in all the planning processes. Finally, this also ensures an aligned financial plan that has buy-in and commitment throughout the organization.

This sounds good in practice but, it’s more complex of course. If it wasn’t then it would’ve probably been done like this today already. What does it then take to realize this idea?

Platform and partnering

In simple terms, it requires that the management system and associated planning can be done on one platform. The more systems and intermediary spreadsheets needed the less likely it is to achieve truly Integrated Business Planning. This is a key step for companies to upgrade their current platform or invest in a new that can do IBP.

However, the platform isn’t enough. For Finance to act as a neutral party and not be seen as a biased party we need strong business partnering skills. Business leaders need to feel and understand that we are there to help them be successful but also have the overall company interests at heart. If they start to doubt our motives, we will fail.

With platform and partnering skills in place though we’re set up to drive a successful IBP process and deliver better outcomes for the company to realize the strategy. What do you consider the best practice in the realm of planning, and do you think Finance can be the facilitator of Integrated Business Planning?

Let’s discuss…

This was a special feature article in collaboration with Jedox . Continue reading below to find previously published articles in this newsletter. And why not start with our current series "Re-branding the CFO"

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Anders Liu-Lindberg ?is the co-founder and a partner at?Business Partnering Institute ?and the owner of the largest?group dedicated to Finance Business Partnering ?on LinkedIn with more than 11,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk . I am the co-author of the book “Create Value as a Finance Business Partner ” and a?long-time Finance Blogger ?on LinkedIn with 210,000+ followers and more than 260,000 subscribers to my blog. I am also an advisory board member at?Born Capital ?where I help identify and grow the next big thing in?#CFOTech . Finally, I'm a member of the board of directors at?PACE - Profitability Analytics Center of Excellence ?where I support the development of new analytics frameworks that can improve profitability in companies around the world.