As the saying goes, failing to plan is planning to fail. Jim McParlane discusses how an Integrated Business Plan can supercharge your organisation’s chances of success.
Businesses around the world are operating in an increasingly complex and uncertain environment. Forces such as the increasing speed of innovation, economic and political uncertainty, and changing customer demands are proving challenging to manage.
As a result, many are realising they need more visibility into their organisational operations and better insights into the requirements of their customers. Achieving this, however, is not an easy task.
Being agile and adhering to industry best practices are key factors if a business is to effectively respond to dynamic changes in its environment. A third factor is comprehensive planning.
Such planning should span all departments and lines of business and clearly spell out how they should work together most effectively – however this can be difficult to achieve.
Industry best practice for a comprehensive, business-wide plan involves the creation of an Integrated Business Plan (IBP). IBP is a common sense set of processes, practices and technologies used for aligning a company’s monthly and annual plans to allow for the effective allocation of critical resources such as staff, materials, time, money, equipment, and inventory.
Following an IBP strategy can provide a company with a range of significant benefits. These include:
- Integration of all business processes
An effective IBP is grounded in an organisation’s purpose and is led by senior management. It essentially allows for effective sales forecasting, supply chain planning, and strategic and commercial planning. An organisation’s purpose is a call-to-action statement that provides the aspirational reason for the organisation’s existence. Using its purpose as the plan’s foundation allows the organisation to align its purpose with its strategy, its value drivers and its KPIs.It allows management teams to prioritise financial, time and other resources and effectively communicate and activate the organisation’s broader purpose. Importantly, an IBP will achieve the integration of all components of the business management cycle. It will allow the organisation to adopt leading practices and include a proper breakdown and execution of the strategy with a common set of drivers across the enterprise for long-range planning, annual budgeting, forecasting and management reporting.
- A well informed and engaged workforce that is aligned to organisation’s strategy
If the organisation is to achieve its ultimate goal of focusing on value creation, all employees must understand its purpose, strategy, key drivers, priorities and the role they play in achieving these. An IBP helps to effectively translate an organisation’s purpose into financial and commercial drivers that will guide day-to-day behaviours and resonate with external stakeholders.It is extremely difficult, if not impossible, for an organisation to stick with its strategy through the daily routine and interruptions. A business plan would bear a summary of the main points of your strategy and serve as a reminder of what it includes as well as what it rules out.
- Early detection of performance gaps
An IBP ensures early detection and an ability to focus on any potential gaps in business performance, essentially allowing plenty of time to predict and respond positively to changing conditions.Such a plan, grounded in the organisation’s purpose, proves an invaluable management tool for helping to reduce risks and provides an organisation with a competitive opportunity for growth and improved financial performance, and for attracting and retaining customers and employees.
The integrated approach makes it easier to manage teams and track results as the format allows for timely reporting from all sections of the organisation and for following up on any differences between expectations and results with applicable corrective measures.
- Sustained growth and improved profitability
A key achievement factor for any organisation that successfully implements an IBP is increased profitability. Such businesses often realise tangible bottom-line gains within the first year of implementation. This comes as a result of management gaining visibility and the capability to make proactive strategic decisions.An effective IBP is driven from the top down. Its strategic and operational functions are well understood by senior management, and it drives business processes and accountability throughout the organisation on an ongoing basis. Businesses that successfully implement an IBP become more efficient and effective, and earn more revenue than those that don’t.
Guiding future growth
An IBP is a key annual operational and financial planning document that allows senior management to plan the growth of their organisation and associated capital requirements. They will also gain complete control of supply chains, stay ahead of the competition, develop annual month-by-month rolling business plans, easily get full financial appraisal of plans, and develop business scenario modelling.
An IBP brings a truly strategic perspective to an organisation’s business operations, allowing for the integration of diverse processes into one seamless management process.
Integrated areas of operation can include the extended supply chain, product and customer portfolios, and customer demand and strategic planning. The result is an organisation that is ready for whatever the future has in store.
Jim McParlane is APAC managing director, Anaplan.