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14 November 2016

76% of top business leaders fail to recognise ‘improving profitability’ as IBP’s top business benefit

During a recent Oliver Wight webinar, held on 16th October 2016, a survey revealed that although leaders are keen to achieve business transformation through Integrated Business Planning (IBP), the majority (75%) have failed to incorporate sales, marketing, innovation, supply chain and finance into a single, overarching business planning process.

The decision to introduce IBP into an organisation is often driven by supply chain, resulting in a predominant focus on efficiency and improvement. This emphasis on process rather than profits mean that organisations are ‘missing a trick’ by failing to recognise IBP’s full capabilities.

Les Brookes, Oliver Wight CEO, says “It’s encouraging that organisations are striving to streamline their processes, but IBP isn’t just about improvement;; it’s about transformation. By failing to fully recognise IBP’s potential, organisations are limiting their own success by side- lining margins and revenue when as a business, growth should be a primary goal.” This is reflected in the survey data, with 54% of those polled identifying IBP’s top business benefit as ‘improved forecast accuracy’. This was more than double than ‘improved profitability’ (24%), which ranked in last place, after ‘reduction of inventory’ (37%) and ‘improvements in customer service’ (33%).

The sample reveals a disquieting trend; that the full benefits of IBP are being stalled by the limited ambitions of those overseeing its implementation. Business transformation is further stymied by the lack of ‘top level buy-in’, with almost half (47%) of those surveyed identifying it as an obstacle. However, this was not as high as ‘getting out of a short term focus’, which 75% considered to be the biggest obstruction in the full integration of IBP within their business planning process.

The audience were introduced to Enterprise Integrated Business Planning – the next evolution of IBP where strategic planning is used to drive the business and systems support enhanced decision making across the entire organisation. As Class A organisations move from IBP to Enterprise Integrated Business Planning (EIBP), only 2% of those surveyed considered themselves to be fully integrated in the skills, technology, process and big data needed to transition to EIBP, with the majority – 45% – conceding that they weren’t integrated at all. This is supported by the admission that 68% don’t use analytics and modelling in IBP to deliver greater predictability, leaving them woefully underprepared to make the move to EIBP.

Les Brookes concludes, “Understanding the journey is critical, and this means acknowledging that improvement of processes is only part of the picture. Once leaders fully recognise IBP’s potential, they can flush out a good view of their strategy and refocus on driving growth and profit.”