Why integrated business planning is the next big thing in Singapore

Integrated Business Planning (IBP) is a management process, which enables effective decision-making and control over an entire organisation.

Whilst IBP sits at the heart of many organisations across the globe, until recently it has been a fairly unknown entity in the Singapore market, but now it is fast becoming the management process of choice. Here’s why I’m predicting it will be the next big thing:

1. It’s firmly rooted

IBP has evolved over more than 30 years. It roots lie in sales and operations planning (S&OP), a widely used process for co-ordinating the commercial and supply sides of a business. In fact, IBP is often referred to as Advanced S&OP.

Over time, the focus of S&OP has shifted towards a better understanding of the external environment as well as ensuring alignment and synchronization among the internal company functions.

Where Integrated Business Planning differs from S&OP is it doesn’t just align demand and supply, it aligns marketing, R&D, operations, logistics, finance, HR and even IT too into one company plan.

2. Those who already use IBP are seeing significant returns

Integrated Business Planning is being championed by independent research firms, including AMR, Ventana and Gartner, which says IBP “will enable companies to model and align business strategies, ensuring significantly improved supply chain and business performance”.

Not only that, but studies also show organisations that do IBP well, achieve greater benefits than companies that do not. According to Aberdeen Research Study, enterprises that deploy S&OP programs strategically consistently outperform, by an average of 20% in % gross margin, those companies whose approach to S&OP is more tactical and less integrated.

At Oliver Wight we are seeing substantial ROI - and quickly - for those companies that successfully implement IBP; typically anything from 300 to 3,000 per cent.

3. IBP takes the pain out of annual planning

For many Singaporean companies, the creation of the annual plan or budget is a major event that consumes significant time and resource across the organisation, particularly in finance. As a monthly, rather than annual process, IBP regularly aligns the strategic and tactical plans from each individual business function to form one integrated, current operating plan.

Organisations that have successfully adopted IBP find at budget time they are able to use the Integrated Business Plan as their starting point for the next financial year. Moreover, by the fourth quarter of the current financial year they will have seen the business plans for the next financial year nine times already.

This familiarity with the integrated plan and the detailed action plans and assumptions that underpin it, as well as any resulting gaps between strategic targets and the latest estimates, removes a lot of the guesswork from the annual budgeting process. Thus eradicating a lot of the cost and stress from the process and reducing the burden on the finance department.

4. It removes waste that arises from multiple plans

Where a silo mentality and mistrust exist in an organisation inevitably there is much waste. By encouraging communication, discussing the truth ‘as we know it’ and establishing a single plan, IBP discourages gamesmanship and helps the entire company to pull together in one direction.

Integrated Business Planning uses top down messages from the strategy, business plan and measurement hierarchy to enable effective integrated decision-making and encourage bottom-up ownership. As a result there is a ‘we’ rather than ‘me’ mentality and a lot of the tension and conflict that arises from operating as individual, non-integrated departments is removed.

5. The tools now exist to support the process

More and more software providers are introducing solutions specifically designed to support Integrated Business Planning, including software giants Oracle, JDA, SAP and Infor. If implemented using an integrated approach - and in the correct order of people, processes, then tools - software can provide massive competitive advantage.

Supported by data integrity, IBP software allows enhanced scenario planning capability so organisations can prepare multiple plans to deal with numerous potential activities in the extended planning horizon.

Effective, regular scenario planning is not only essential for managing risk and contingency - a necessity in today’s dynamic business environment - it also provides a powerful mechanism for driving the business towards its strategic goals.