Three essentials for choosing integrated business planning software

When it comes to planning and budgeting methodologies, integrated business planning (IBP) is the nirvana to which many organizations aspire. At a time when corporate agility and a deep insight into business performance are paramount, its attraction is that it weaves together all the disparate strands of strategic, operational, and financial planning typically managed in a plethora of stand-alone spreadsheets and siloed applications into a single system.

While organizations can incrementally work towards full integrated business planning by first introducing driver-based models for all forms of planning and budgeting then linking them together, achieving fully functional IBP can still prove difficult. Until recently, there were no solutions allowing companies to follow an evolutionary path and grow into IBP. The only alternative was for companies to set out on an expensive, enterprise-wide implementation on the scale of a full enterprise resource planning (ERP) replacement. Understandably, most organizations parked the idea and made do with other tools.

Today, all that has changed. Platforms such as Anaplan provide functionality for all aspects of financially oriented EPM along with sales and operations planning (S&OP) and all other facets of enterprise planning. This allows finance professionals to collaborate with their colleagues in other lines of business to steadily work towards the common goal of integrated business planning and deliver transformational benefits in terms of agility and insight, which are sought after capabilities in today’s uncertain world.

Essential functionality in integrated business planning software

That is not to say implementing integrated business planning is now a walk in the park. It still involves manipulating and managing a huge amount of highly variable data — everything from pack sizes through individual employees to organizational structures. It is not just big data; it is rapidly changing data, so models need to be constantly replenished to stay aligned with changing inventory levels. The assumptions underpinning the business rules that connect strategic, operational, and financial plans are constantly changing, too. They also need to be easily flexible so users can analyze the outcomes of different scenarios before committing to a particular course of action.

If finance and operations are going to share a single planning and forecasting platform to deliver integrated business planning, then it needs to meet these exacting requirements by providing these three critical elements of functionality:

• User-friendly modeling. Embedded modeling logic users can manage themselves is essential. With a few clicks, no coding, and no dependence on IT, users can adjust business rules, update drivers, and refresh dimensions and hierarchies.
• Process a lot of data. The ability to process large volumes of data across multiple dimensions is also key. Data is growing by the second, across the world but also within individual businesses. The ideal system can grow with you, handling millions or billions of pieces of data, without you having to rip and replace when your company grows as big as you want to be
• Immediate ripple effect. Beyond data roll-up, you want real-time calculation so changes instantly ripple through all connected plans to reveal the impact right across the enterprise — all the way to the profit and loss account and cash flow forecast.

From a tactical point of view, having both finance and line of business users work with the same solution reduces the cost of ownership and eliminates many non-value-added activities that result from fragmented EPM and S&OP processes and systems. Working with a single, self-managed solution across all parts of the enterprise also makes it easier for members of the finance team to provide decision support to their peers and finally fulfill their long-held promise to become strategic business partners.

However, having finance and operations working together to achieve a common vision of end-to-end integrated business planning is far from inevitable. Unless the leadership team establish a vision to work towards, individual departments still tend to go off and adopt a localized solution for their planning needs. You could argue that such behavior is reinforced by software vendors who tend to focus on a single line of business, and by industry analysts who continue to evaluate EPM, S&OP and supply-chain software separately. Such parochialism misses the bigger opportunity of getting far more value that would be delivered by pursuing integrated business planning.

Some people believe if they use software vendors providing both EPM and S&OP applications, IBP nirvana will be inevitable. Others believe in-memory processing will be their savior. Neither of these beliefs stands up to scrutiny. IBP only works when financial and operational planning models share the same embedded logic. Without that as a foundation, in-memory calculation engines simply generate unreal answers in real time.