Andrea Montecchi and Ben Sellers, business advisors with Oliver Wight, explain the basics of integrated business planning (IBP), and why it’s such an important process for companies today.

IBP is about “building trust and capabilities in the organization,” Sellers says. Too many companies draw up annual budgets that are made almost instantly obsolete by changes in the marketplace. IBP allows them to realign the business in line with those changes. “It gets everybody back on the same page, with new priorities and realities,” he says.

The dynamic driving businesses today is change, Montecchi says. Companies need to be able to link their long-term strategies with day-to-day execution. That’s especially important in light of recent disruptive events like the COVID-19 pandemic, which resulted in sudden and unanticipated pressures on cash and liquidity.

Implementation of IBP, however, must be done with care. “Don’t treat it as a supply chain initiative,” Sellers says. “It’s a business initiative.” The goal is to break down functional siloes that might be harboring their own set of numbers and expectations, rather than planning across the organization. “We’re trying to get people to change their mindset from ‘taking care of my department’ to what’s best for the business.”

Secondly, Sellers says, IBP is “about people.” Companies tend to get hung up on the mechanics of implementation, but what’s really needed is engagement by leadership and the assignment of the right people in key roles. At the same time, the effort must be sold to everyone. “The leadership team needs to understand what will be different, and why this will be worth their while.”

Technology does have an important role to play, but once again, it needs to be paired with the right people and an emphasis on organizational culture. “There’s a tendency to over-focus what the tool can deliver, and under-prioritize the people and change aspect of it,” Montecchi says.