Maximizing business potential through integrated business planning

Integrated business planning (IBP) is a comprehensive framework that integrates strategic, operational, and financial planning to drive better business outcomes. By aligning functions such as sales, marketing, finance, and supply chain, IBP fosters collaboration and informed decision-making. Despite investments in leading practices, many organizations face challenges in aligning plans across functions post-change programs. IBP addresses this by considering the end-to-end process, including strategic planning through operational planning, mitigating misalignments, and promoting clarity. IBP empowers businesses to adapt to market changes efficiently, fostering proactive decision-making and creating a resilient business model.

Evolution and foundations of IBP

The idea of IBP originated from Oliver Wight to describe an advanced version of sales and operations planning (S&OP). IBP connects finance, marketing, sales, and supply chain data, driving profitable growth while mitigating risks. It facilitates scenario planning, cost optimizations, and process improvements, ensuring future demand supportability and key performance indicator (KPI) impact analysis.

Essential building blocks of IBP

Successful IBP implementation requires employee training, technological readiness, and cultural change to promote collaboration and transparency, ensuring a smooth transition and effective utilization of the IBP approach. IBP comprises demand, supply management, product management, and financial planning, ensuring alignment across key functional areas. Key components for successful IBP implementation include corporate performance management, business intelligence tools, collaborative planning solutions, data integration and automation, cloud-based solutions, and data governance and security. An effective IBP process comprises five essential building blocks:

• Business-backed design
• High-quality process management
• Accountability
• Effective use of data and analytics
• Specialized organizational roles

These elements enable companies to execute plans, monitor, simulate, and adapt strategic assumptions to succeed in their markets.

Decision-making and analytics in IBP

IBP requires autonomous decision-making at every step, with clear escalation paths. It fosters disciplined decision-making and participation, ensuring timely problem resolution and effective execution. IBP facilitates faster decision-making with a single source of truth and deeper analytics understanding. Relevant inputs are prepared before meetings to aid decision makers. The process ensures alignment with organizational objectives and supports responsive execution linked with planning iterations. Integrated business planning serves as a vital tool for guiding decision-making processes across different organizational levels, including operational, tactical, and strategic decision-making.

Output and scope of IBP

The aggregated output of IBP is a risk-evaluated business plan covering a midterm horizon. It provides a unified view of new products' impact, considers business variabilities, and aligns actions across stakeholders for plan execution.

Supply chain resilience through IBP

A sustainable, risk-resilient supply chain is built through synchronized planning, increasing visibility, agility, and meeting customer demand effectively. AI-driven forecasting and analysis of structured and unstructured data provide valuable insights for dynamic strategic planning.

IBP software capabilities improve overall planning, leading to better financial performance and operational efficiencies. The solution fosters collaboration, enhances decision-making, and integrates merchandise plans across the supply chain. To redesign IBP processes effectively, understanding decision-makers' needs and ensuring consistent data usage are crucial. Determining the frequency of the IBP cycle and integrating it with tactical execution processes enhances planning effectiveness.

Benefits, challenges, and best practices of IBP

IBP offers enhanced decision-making, improved alignment, agility, optimal resource allocation, and risk management. Challenges include change management, data integration, and technology infrastructure. Best practices include defining scope, engaging stakeholders, aligning processes and systems, providing training and support, and continuous monitoring and evaluation. All-in-all, behavior and culture, process improvement, and data and technology integration are of the utmost importance.

IBP bridges the gap between strategic ambitions and operational constraints, providing a holistic view of the business and facilitating informed decision-making. IBP ensures synchronization between strategic objectives, operations, and finances, facilitating effective decision-making and goal alignment. According to OneStream, mature IBP practitioners improve earnings before interest and taxes (EBIT) by 1 or 2 percentage points and service levels are higher by 5% to 20%. The data also reveals that freight costs and capital intensity are lower, and customer delivery penalties and missed sales are lower by between 40% and 50%. IBP technology and process discipline help planners become 10% to 15% more productive.

IBP and risk management

IBP enables organizations to align strategic, operational, and financial plans to manage risks effectively, around three core pillars:

• Assessing and managing risks: Continual assessment of potential risks and adjustment of plans based on comprehensive insights reduce the impact of unforeseen events and enhance business resilience.
• Identifying opportunities: IBP uncovers potential synergies, efficiencies, and strategic initiatives, allowing businesses to capitalize on market trends and innovate.
• Providing a holistic view of business landscapes: By providing comprehensive, cross-functional views, IBP helps businesses anticipate changes, react effectively, and seize opportunities.

Impact of IBP on corporate social responsibility (CSR)

IBP integrates CSR into business strategies, considering social and environmental impacts in planning processes, enhancing asset utilization for financial and CSR objectives, and ensuring environmental, social, and governance (ESG) compliance to improve market reputation. On top of that, the focus on minimizing waste and more efficient use of materials is also helping reduce supply chain costs. In a pilot study by Bosch, the product cost of a heat pump was reduced by 44% thanks to a new, simplified design.

Cognizant’s consulting approach

In partnership with Cognizant, companies can transform their integrated business planning processes into a catalyst for success. We have extensive experience with successful business cases across a wide range of industries and scenarios. By leveraging our consulting approach, organizations can align critical metrics and responsibilities across functions, enabling collaborative steering of the business. Our IBP solution seamlessly connects functional silos, boosts user adoption, and enables informed decision-making to enhance business outcomes. Through tight-knit collaboration within the planning process, we follow demand management review (DMR) and supply management review (SMR) steps to bridge plan-to-demand gaps and determine supply options.

At Cognizant, we focus on process integration, ensuring systemic alignment between strategic plans and operational execution while supporting the redesign of the annual budgeting process to enhance forecasting accuracy. Our attention to functional integration minimizes inconsistencies and maximizes opportunities for resource reallocation. With a keen eye on capacity investments, data governance, and security, as well as the integration of people and technology, we empower organizations to achieve operational efficiencies and drive sustainable growth. As a result, IBP becomes a unifying framework that links top-level strategic planning with day-to-day operational activities, eliminates departmental silos, and provides a holistic, transparent, and real-time view of the business.

We can help you navigate the complexities of IBP, optimize your decision-making processes, and realize your strategic objectives with confidence.