The 21st century has not been easy to predict. Voters have upended the orthodoxies of political science. Technology has morphed in ways that few were able to imagine. Traditional business models have been rocked. Creative destruction has led to wipe-off of 88% of mid-20th century Fortune 500 companies by new ones. The rate and nature of change has altered and this has profound implications for business planners.
The emergence of a set of digital technologies into the mainstream has undermined old certainties and simultaneously given business a new set of tools to deploy. Planning, in the era of AI, robotics, Big Data and analytics, has become less predictable, exponentially more dynamic and demand-driven. Customer expectations change rapidly. Competition appears from unexpected quarters. Boundaries blur.
As the technology of Industry 4.0 has exploded around us, a new wave of business planning has unfolded. Integrated business planning (IBP) offers executives a framework within which to manage the uncertainty and volatility of the digital era. My whitepaper Unlocking Business Growth with Integrated Business Planning describes in detail the steps involved in measuring IBP maturity and the ways that companies can improve their capability in this exciting emerging area of corporate futurology.
IBP allows businesses to respond in an agile manner to four distinct phenomena associated with this latest industrial revolution. ‘Connected machines’ that deliver real time information are part of IBP’s DNA. The IoT allows companies using IBP to respond to fluctuating and granular demand patterns with agility. IBP thrives on the ‘constant disruption’ that comes from new business models, unconventional channels, and fast changing customer expectations. As these emerge and mature, an integrated plan can tweak or transform its approach depending on the threat or opportunity. The complex supply chains associated with ‘inclusive growth’ demand new ways of divining insights and IBP excels here too. Greater visibility lets a company extend its reach up or downstream where necessary. In a world where companies have to ‘influence or perish’ they have to break the silos that hamper new product and business model development. Here again IBP provides advantage because it provides a platform within which different departments and functions can contribute in a responsive manner.
Combining these capabilities in an integrated system lets companies iterate and simulate, test and refine in a manner previously unimagined. Their success depends on their ability to make the most of these emerging trends.
The benefits are immense but the path to success is not without its pitfalls and obstacles. The journey of IBP maturity requires progress on six vectors, defined as: People, Metrics, Process, Technology, Data Analytics, and Strategy & Culture. By measuring its current performance on each vector, a company can create a picture of its existing maturity levels. With this in place it can identify areas of priority and a transformation roadmap. IBP will deliver a series of benefits, as long-term plans become more flexible and short-term ones more agile and responsive. Supply chain costs will come down. Forecast accuracy will improve and the impact will be seen in better cash flow and reduced working capital requirements.
The market will likely become less predictable still. The companies that can respond with a model of integrated business planning will weather the storms most effectively.