How Integrated Business Planning (IBP) Helps Linking Strategy & Execution

In every organization, extensive planning and analysis are considered during the decision-making process. And the economic impact of every decision is measured carefully before taking action. So, if we talk about integrated planning, it is generally considered sustainable and an aligned approach that establishes a link between overall planning and strategic resource allocation. It makes it easier for the organization to measure the progress at regular intervals while considering the utilization of resources necessary to meet the business goals. Today, we are here to discuss the concept of integrated business planning in detail and its importance in aligning the business strategy with the overall execution.

We are going to consider the importance of aligning the strategy and its execution by taking into account the finance team as an example. So, let’s go through and understand in detail.

Integrated Business Planning

More and more companies are utilizing the benefit of IBP to increase their overall performance. It helps accomplish business goals by aligning the product development function with sales and marketing. Since it extends the principles of sales and operations planning through the value chain, it bridges the gap between the overall execution and strategy.

The main objective of integrated business planning is to maximize the profit but minimize the risk simultaneously. Its implementation results in greater benefits when it is followed across all the verticals such as the inventory levels, service levels, cash flows, profits and margins, revenue and demand.

The common goal of Integrated business planning is to balance the organization's objectives in a way that achieves efficiency with reduced costs as much as possible. Every IBP initiative focuses on assisting the departments within the business in making informed decisions about product market strategy.

The essential steps involved in aligning the strategy with the execution process include-

Identification of what is keeping a company away from its goals

Each function in the organization differs widely in terms of complexity. For example- the finance process of a company might not achieve its full potential if the processes are not integrated with other financial functions. The absence of integration might act as a bottleneck that prevents a company from reaching its full potential. Hence, the first step in the IBP journey is identifying the factors keeping the company from achieving its goals.

Educating Employees

Once a company has defined its goals and identified the hindrances it faces. It must engage the entire workforce to overcome these. This is because, without the commitment of a workforce, your company may not achieve success. Keep your employees motivated and set up an employee engagement program to let them know of your expectations and how they are expected to perform. It is the responsibility of the organization to regularly educate the employees and let them know of the changes being implemented in the organization.

Establishment of processes

One of the most important aspects to consider when executing the project is identifying the expected profit and loss it will incur. When you implement IBP, choose the projects guaranteed to bring success with resources. Accordingly, rank the products. Often when a company identifies limited growth potential in a specific project, it might have to stop its production altogether. In such scenarios, cost-benefit analysis becomes important when implementing IBP. Hence, the managers who wish to execute the projects in the organization must conduct a cost-benefit analysis to ensure the expected cost and benefit aligns well with the business goals. It will help increase the business's overall efficiency and chances of success.

Strategy Planning

Once your company has identified its goals, it is time to ensure it is on track to meet them. The company must communicate its progress on a regular basis effectively to ensure the goals are being met that too within the budget.

During this, the company must also identify the capabilities it will use to implement the strategy. For example, risk management, innovation, knowledge management, collaboration, supply exploration, etc.

Expansion of the finance team influence

The finance team plays an important role whether you are looking for product planning, optimization in the supply chain or conducting a sales strategy meeting. Hence, choosing a team that is well aware of how the company will run is imperative in ensuring its goals are met.

Adoption of technology

The tracking process while implementing the IBP is essential for its success. Therefore the finance teams must be regularly updated with the help of data from each operational area to manage its performance. Without the data, the team will never know what input quantity is needed and how they are performing. Plus, it will also guide the teams in defining their next steps and taking necessary steps accordingly.

IBP- Integrated business planning goes well with cloud-based technologies such as the ERPS. The IBP systems make the decision-making process easier for companies that are based on accurate numbers and analysis. And guess the best part- it is without the need for humans to intervene. It is essential to promote transparency, visibility, and complete communication with the processes in the organization. Usually, it is the execution of the strategy that results in failures. So it is important to define the right strategy and implement it according to the organization's goals.