3 ways Integrated Business Planning helps organizations to manage uncertainty

17 Mar 2021

3 ways Integrated Business Planning helps organizations to manage uncertainty

By Oliver Wight Partner, Andy Walker and Oracle EMEA Strategy Director, Jaime Marijuán Castro

 

A recent webinar hosted by Oracle and Oliver Wight found that 60% of organizations are dealing with significantly more uncertainty than before. Unsurprising really, given the last 12 months of pandemic-generated disruption. As uncertainty occurs, business responses differ greatly. Those with a mature Integrated Business Planning (IBP) process are able to make faster decisions, avoid business latency, and capitalize on opportunities that may otherwise be missed. In this blog, I will discuss how IBP unlocks the ability for organizations to better manage uncertainty.

But first of all, I would like to answer a couple of key questions for those readers who may not be familiar with Integrated Business Planning.

 

What is Integrated Business Planning (IBP)?

Integrated Business Planning is most simply described as a business planning process that manages the medium to long-term horizon (typically 4 to 36 months), drives transparency across an organization, delivers one set of numbers, and enables organizations to successfully deploy and deliver strategy. 

 

What are the key differences between traditional Sales & Operations Planning and modern-day Integrated Business Planning? 

Oliver Wight invented Sales & Operations Planning (S&OP) in the late 80s. It has since evolved to become Integrated Business Planning. Traditionally, S&OP was very short-term focused and concentrated on balancing demand and supply.

What sets IBP apart from its predecessor is its ability to manage the entire organization across all business functions and offerings in line with the overall strategy. Every activity that absorbs resources and consumes time in the window of four to 36 months is reviewed as part of IBP and uncertainties are made fully visible. Crucially, with IBP everyone in the organization works from one set of numbers. 

So, how does Integrated Business Planning help to manage uncertainty? 

1. Use of assumptions: Since IBP manages the long-term business horizon, over time the things we know to be ‘facts’ gradually diminish. We may be able to predict a customer’s behavior two months from now, but we must use assumptions when we are looking two to three years ahead. Assumptions form the basis of a good IBP process. The better you are at managing assumptions, the better your plans will be and the quicker you will be able to understand uncertainty as it relates to your assumptions. Having aligned and consensus-driven assumptions is absolutely critical. Functions must have a common understanding of the assumptions underpinning the plan and how they are changing so that a correlation (cause and effect) can be agreed to determine how best to respond.
2. Opportunities and vulnerabilities: Once you have created a plan of the ‘most likely outcome’ based on assumptions and facts, you want to be able to define that uncertainty over time. Opportunities and vulnerabilities are linked to assumptions, with opportunities representing positive uncertainty and vulnerabilities representing negative uncertainty over the entire planning horizon.
3. Scenario planning: Now that you can identify uncertainty over the planning horizon, you are working with one core set of numbers, and the organization is fully integrated, you can use scenario planning, analytics, and modeling to drive a greater understanding and increased level of preparation for future scenarios. 

 

Fundamentally, Integrated Business Planning allows you to think beyond what is happening and drives you to ask, “So what?” Something has changed – so what? So what is the impact on my organization, my strategy, and the long-term visibility? 

IBP enables you to go beyond just the “So what?” and determine the consequence (“now what?”) of what the change is, driving enhanced decision-making and ensures you are no longer just surviving but supercharging your organization against its strongest competitors. 

 

Finally, how does advanced technology support the IBP model?

IBP will help you build the discipline required to deal with uncertainty, by implementing processes that are designed upon best practices, and which will allow you to adopt the right behaviors within the organization. Having the right technology solution in place will provide you with one set of numbers and will help you predict events that can affect your future performance, run what-if analysis of future scenarios, and evaluate the alternatives to manage the mid/long-term planning and ultimately maintain or improve your business targets during uncertain times.

Oliver Wight IBP Powered by Board is a holistic IBP solution combining Oliver Wight’s industry-leading Class A and implementation change management processes with Board software. Click here to learn more.

 

For further advice and insights watch the webinar recording on demand here.

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