Enterprise Business Planning in a connected world
Business planning tools that break down silos
Business planning has made great strides in recent decades, supported by technology that’s grown ever more sophisticated. What if you, as CFO, could combine multiple business planning processes supported by digital tools—resulting in a unified plan with real-time insights? Here’s a new approach that can help make it happen.
Connecting the dots
Many companies build their commercial, operational, and financial plans in isolation, working off separate data sources. These plans are generally aligned conceptually, but not truly integrated. So promotional plans get disconnected from inventory plans. Sales and production forecasts might not line up. Strategic targets may be hit, but financial goals still not achieved.
The problem isn’t new, but there is a new way to solve it. What if you, as CFO, could combine multiple planning processes into one integrated approach—resulting in a plan all key functional leaders are committed to and measured against? And what if digital tools supporting that plan, combined with human insight, could show you in real time the impact of financial, operating, and commercial decisions? As the chief transformation officer—a role commonly assumed by heads of finance—CFOs are well positioned to make this happen. In this guide, we’ll explore how.
Slow, error-prone, opaque
Planning is all about anticipating market conditions and customer preferences, recognizing potential opportunities and risks, and generating insights to manage the business effectively. Done well, it provides an enterprisewide view of what needs to happen by when to achieve positive outcomes. Having a good plan is critical, but applying that plan in the real world can be deceptively difficult.
Markets continuously respond to new information, negating prior assumptions. Planners often lack visibility into performance metrics outside their functions while relying on manual processes or outmoded technology to collect, analyze, and share data. Predictive insights can take days to generate through clunky procedures—rendering them obsolete on arrival—when immediate action is needed.
Accordingly, many organizations execute slow, error-prone, and opaque planning processes—not because they don’t see the need for change, but because fixing the problem is just too big a hill to climb.
Fast, automated, transparent
Enterprise Business Planning (EBP) offers a different approach—unifying people, processes, and information within a single integrated platform. With EBP, planners across the organization work in new ways, using digital technology to simultaneously access the latest company and market data. And when assumptions or requirements change, the change flows automatically throughout the enterprise so people can respond accordingly and make faster, better-informed decisions.
EBP can break down organizational silos by utilizing uniform source data, ensuring everyone works off the same information. This creates better visibility—regarding shared costs and margin implications, for instance—and fosters tighter integration. Here’s how it works:
Commercial planners provide the marketing perspective, modeling demand and the influence of strategic pricing, promotions, and advertising.
Supply network planners build off demand analysis to inform supply and inventory planning.
Financial planners integrate operational components within financial models to assess potential top- and bottom-line impacts, as well as the resulting impact on cash.
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Meanwhile, planners from additional functions access the same integrated data and adjust their plans as warranted. Human resources planners, for instance, might respond to new market needs by updating their recruiting forecasts, talent development strategies, and expense projections.
EBP benefits
At its core, Enterprise Business Planning provides five key benefits that can increase organizational agility, and, ultimately, profitability:
Enterprise Business Planning in action
With greater integration and transparency across planning functions, EBP helps companies cut the distance between planning and decision-making, creating practical advantages for the business.
Fueled by technology
To help make sense of continuously shifting market conditions in a connected world, EBP uses predictive algorithms powered by artificial intelligence. These digital tools can crunch reams of real-time information from employees, customers, suppliers, distributors, and external data providers—helping companies streamline operations, anticipate issues, and cascade changes in assumptions throughout the organization.
Many businesses gain access to this technology through integrated planning platforms used to collect, analyze, and share data across a range of EBP activities, including those shown in the diagram.
Next-generation planning platforms can also provide a single source of truth, common data definitions, and advanced data visualization capabilities. When the technology is used by a skilled workforce, it can enable Finance to provide better analytics and become a more valuable business partner.
Case study: One company’s journey
The bad
A $25 billion biopharmaceutical company had used a decentralized consensus demand planning and capacity management process, which hindered visibility into functional forecasts and created data inconsistencies across departments. Planners couldn’t readily model short- and long-term global capacity plans, so inventory levels and associated costs were higher than necessary. Moreover, the company’s global operations, R&D, and finance organizations lacked a single-source-of-truth operating expense planning tool. Instead, regions used multiple nonscalable tools and approaches—each requiring significant effort and resources to maintain—and relied heavily on spreadsheets to consolidate templates sent by business planners. As a result, duplicative data entries and slow information flows were standard operating procedure.
The good
The company designed and implemented a new supply chain planning process, including a monthly consensus plan that incorporated finance, commercial, and operational forecasts. The new approach enabled what-if scenario reporting, shed light on inventory levels, and let planners assess the impact of production changes based on historical and projected demand. To enhance operating expense planning, the organization built a zero-based budgeting OPEX planning solution that could capture forecasts and budget details in one location. The new tool—which was designed around how the business did detailed planning—automated data sourcing and exporting, added new functionality, and streamlined the actualization process.
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And the pretty
With these initiatives in force, the company ultimately achieved…
$400 million in inventory savings, driving a 14% reduction in working capital
Increased demand planning efficiency (with 95% of demand forecasted in the tool)
Custom product segmentation and forecast accuracy metrics
New reporting capabilities
Increased financial planning efficiency
Better management and governance of the sales incentive plan
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Getting results
The hardest part of connecting your company’s planning processes might be deciding where to begin. While every business will have unique needs, here are five key steps to consider.
Define your vision. Pull in representatives from key functions outside of Finance—e.g., supply chain, sales, marketing, HR, and others—and brainstorm ways to enhance how planning is done today.
Create a road map. Once you’ve defined your vision, set a strategy to realize your goals. Think about the basic people-process-technology equation.
Pilot use cases. Success drives adoption and interest throughout the organization, so choose a use case that can add value quickly.
Scale capabilities. Track the impact of each pilot test and look for ways to replicate impressive results.
Promote adoption. To build support and enthusiasm, don’t make this a Finance-driven exercise. Instead, engage leaders of key functions throughout the company early and often.
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Sounds like a plan
Enterprise Business Planning combines digital advancements with human insights to make the best possible financial and operational decisions. With the range of ambiguities in play, from individual biases to organizational politics to changing assumptions, planning is rarely a simple exercise. But new tools and approaches have made it much easier for organizations to gather, analyze, and share information in real time, taking much of the guesswork out of the process.
Through better integration, planning can make another leap forward—this time offering CFOs a connected, enterprisewide view of complex issues affecting business performance.
Ready to give it a try?
To learn more
Deloitte’s Design Lab can help you explore “the art of the possible” and define your vision for Enterprise Business Planning, bringing to life potential use cases, road map priorities, and future-state benefits. Contact us if you’re interested.
Philippe Podhorecki
