Integrated business planning (IBP) is a process that does exactly what its name implies—it brings together fragmented strands of strategic, financial and operational planning and performance management. Establishing mature IBP processes can be difficult, especially for larger and more complex manufacturers. While many factors contribute to this difficulty, the primary one has been the absence of technologies that fully support it.
What’s changing is what I call IBP platforms—technologies that combine enterprise performance management (EPM) and sales and operations planning (S&OP) to provide incremental capabilities that neither provides individually. In so doing, IBP platforms address long-standing challenges that financial and operational professionals have struggled to overcome. The result: opportunities for step change improvements to how manufacturers plan, manage and govern their business.
Integrated Business Planning: Bridging the Gap between Finance and Supply Chain
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Behind the IBP Marketing Hoax
Historically, IBP has been used to describe processes that extend S&OP beyond balancing supply and demand, by integrating aspects of financial planning. Proponents are typically supply chain professionals. They argue that integration enables a more advanced form of S&OP—one that is more profit-driven and that effectively engages executives in enterprise-wide decision-making.
Detractors, however, believe that IBP is nothing more than a rebranding of S&OP by consultants and software companies. They argue that what is now called IBP is what S&OP practitioners have been doing for years. Moreover, they further believe that what is being sold as IBP software supports elements of IBP, but not enterprise-wide planning. Such beliefs have led some to conclude that IBP is a hoax.
This criticism is not always warranted, particularly among smaller and less complex manufacturers. There are different ways to support IBP processes. For example, some use EPM software to support financial planning and budgeting, as well as S&OP. Others use a combination of S&OP and EPM tools. But as manufacturers start exhibiting the complexity characteristics shown below, these approaches quickly become less effective.