Headline:

In global manufacturers, Integrated Business Planning (IBP) represents a significant opportunity to achieve step change improvements to the efficiency & effectiveness of Financial Planning and Analysis, treasury, risk management and record to report processes.  But this doesn’t always happen.  Therefore, Finance executives need to understand the reason for this and how they can avoid mistakes by learning from the experience of others.

Introduction:

Countless articles have been written about IBP and how finance will benefit from it.  While smaller manufacturers may realize these benefits, global manufacturers are not.  There is a significant difference between the theory and reality of IBP, in complex settings.  The purpose of this article, and the video it describes, is to help Finance executives separate IBP facts and myths.  It will help them understand what they should expect from IBP, so that they can articulate their requirements of IBP leadership teams.

This blog is organized around a YouTube video that delivers these insights.  Provided below is a summary of the sections within the video, along with links to each section.  Also provided (in these section descriptions) are other reference materials that are available on this web site.

Overview (Click Here to View)

Approximately 2 minutes: Provides an overview of the video, along with a brief summary of why traditional IBP processes are not meeting the needs of Finance and the organization as a whole. Further details can be found in the following video:

• • • • • Strategic IBP: Driving Profitable Growth in Complex Global Organizations (Click Here to View).  Describes key differences between strategic and tactical IBP, two forms of IBP having different levels of maturity

Key Messages (Click Here to View)

Approximately 4 minutes: Explains key factors that Finance executives need to understand to successfully leverage IBP to improve Financial processes. Further details can be found in the following video:

• • • • • IBP For Finance Executives (Click Here to View).  Explains why IBP capability gaps contribute to challenges in the areas of cash flow forecasting, scenario planning and cost optimization.  Describes how Strategic IBP addresses the limitations of rolling forecast processes and why there should be no difference between this process and sales and operations planning

Why is This? (Click Here to View)

Approximately 3 minutes: Explains where IBP projects often go wrong when it comes to meeting the needs of Finance.  Identifies 6 specific factors that Finance should understand, which are explained in the sections that follow.

Factor 1: IBP Vision (Click Here to View)  

Approximately 2 minutes: Explains basic benefits that Finance should realize from IBP, expressed in terms of activities that should be eliminated by mature processes.  These basic requirements, on their own, can often be sufficient enough to modify the direction of IBP projects. Further details can be found in the following article:

• • • • • Finance as a Driver of Operational Excellence Via Productivity Management (Click Here to View).  Describes key changes that finance must make to processes to support strategy and drive value.

Factor 2: Maturity Target (Click Here to View)

Approximately 3 minutes: Explains what mature IBP processes entail, from the perspective of CEOs, business unit leaders and CFOs.  That being a process whereby cost structures self adjust to market changes, based on the direction of segment leaders having effective accountability for revenue, profits, inventory levels and customer satisfaction and retention. Further details can be found in the following article:

• • • • • Integrated Planning and Performance Management Maturity Model (Click Here to View). Includes a 1 hour video that explains the maturity model in greater detail.

Factor 3: Value Proposition (Click Here to View)

Approximately 2 minutes: Introduces strategic IBP as a term that achieves the above.  Describes the difference in value between strategic IBP and tactical IBP, the latter referring to traditional 5 step IBP processes. Further details can be found in the following article:

• • • • • Four Critical Capabilities for Planning, Managing & Governing Performance in Complex Global Manufacturers (Click Here to View). Describes why the absence of these four capabilities undermines the value of IBP and their ability to drive strategy, while also supporting the needs of finance.

Factor 4: Technology Alignment (Click Here to View)

Approximately 3 minutes: Explains why traditional financial and S&OP / IBP technologies don’t always make the best choice for strategic IBP processes.  Also explains why finance must have a say in the selection of supply chain optimization tools, which are a form of prescriptive analytics.

Factor 5: Prescriptive Analytics (Click Here to View)

Approximately 3 minutes: Explains the nature of prescriptive analytics, in terms that are relevant to finance executives.  Also explains why traditional supply chain optimization tools support immature forms of prescriptive analytics that are not always suitable for the needs of Finance.  Describes critical requirements that Finance should seek when selecting these tools. Further details can be found in the following articles:

• • • • • Realizing the full potential of prescriptive analytics requires effective platforms (Click Here to View)

 

Factor 6: Finance Requirements (Click Here to View)

Approximately 2 minutes: Identifies specific capabilities that Finance should expect from IBP that can be communicated to IBP leaders in the form of requirements. Further details can be found in the following article:

• • • • • Finance as a Driver of Operational Excellence Via Productivity Management (Click Here to View).  Describes key changes that finance must make to processes to support strategy and drive value.

For further information, additional articles and videos can be found in our Perspectives (Click Here to View) and IBP Video (Click Here to View) library.

Summary (Click Here to View)

Approximately 4 minutes: Describes actions Finance leaders may want to undertake, based on the insights provided.  The following is a summary of the slides titles and what key points raised.

• • • • • Why is this: Summarizes the 6 factors noted above
        • What are the Symptoms: Describes what Finance could be experiencing when an IBP project is headed in a direction that won’t meet their needs
        • Questions to Ask: Identifies questions that Finance executives should be asking when they are experiencing these symptoms
        • Action: Identifies 5 tasks that Finance can undertake to determine what, if any, action is required to get IBP programs back on track
        • IBP Videos: Identifies specific video titles in the IBP Video Library that viewers may want to review to get a deeper understanding of the subject matter addressed