Companies have been discussing integrated planning for decades, but most have not been able to pursue it. Planning is generally time-consuming; underlying processes are often poorly structured, and information and workflows are repeatedly broken. Managers then claim that they are confronted with many alignment processes and that their input layouts, models, and functions are linked in complex ways. In a nutshell, planning is often not integrated, is slow and inflexible, which leads to poor resource allocations and wrong management decisions. However, recent state-of-the-art planning software solutions allow a company to establish integrated planning with underlying end-to-end (E2E) connected subplans and processes.

Bridging the gaps between distinct subplans is essential for fully integrated planning

It is worth revisiting integrated planning because technology has brought exciting new options to connect subplans and processes E2E. Integrated planning is a powerful lever for advanced planning topics such as simulations and scenario analyses or value driver-based and predictive analytics. Across all trending planning topics, integrating different subplans and integrating strategic with operational plans are where a lack of knowledge (expertise and experience) is the main limiting factor for companies. The following generic planning landscape shows distinct gaps between subplans that we usually identify with our clients.

We usually find six significant gaps – illustrated with flash symbols in the depicted planning landscape – between larger 'planning silos' such as Sales & Operations Planning (S&OP) on one side and Financial Planning on the other. Furthermore, we also find smaller 'planning islands' within these two major silos. Considering the issue of planning islands, there are usually large gaps between the subplans in the S&OP. Subplans in Financial Planning are usually better interlinked, such as the Profit & Loss Statement (P&L), the Balance Sheet, and the Cash Flow Statement.

The above mentioned six significant gaps are as follows:

  1. Sales to Revenue – If sales planners fail to transfer demand plans with corresponding selling prices (e.g., from market analyses) into revenue plans, cost planners cannot monetize a demand-oriented use of resources
  2. Sales to Production – Unintended deviations of assumed demand volumes regarding production and sales planning result either in a high cost of idle capacity (production volume > demand volume) or a loss of market shares (production volume < demand volume)
  3. Production to Resources – Resource planners (e.g., HR or supply chain) struggle to derive the required workforce (e.g., number of new hires or their qualifications) or materials (e.g., order dates or purchase volumes) based on the production volumes
  4. Product Cost Allocations to Cost Centers – Poor product cost allocations between HR and cost center planning violates the costs-by-cause principle and leads to resources being built up in the wrong place
  5. Investments to Financials – Capital expenditure (CAPEX) within investment planning must be harmonized with amortization and depreciation in the P&L and with capitalized own services in the Balance Sheet for financial planning consistency
  6. Interorganizational Alignment – Data granularity should be aligned across the group and subsidiaries, or plan consolidation will be more difficult

The maturity of integrated planning differs between companies. A maturity assessment is essential to evaluate where to start to 'slice the elephant'. We approach the integrated planning topic with our clients by first drawing a client-specific planning landscape and identifying and prioritizing the individual gaps. Second, our planning tool monitor helps us find an appropriate software solution together with the client. The following sections describe how best-in-class software solutions help overcome existing gaps of planning.

Digitalization helps improve cross-hierarchical and cross-functional E2E-oriented collaboration

Nowadays, many companies face challenges across different vertical hierarchies and horizontal functions when considering their planning activities, such as budgeting and forecasting. One of the main reasons from our experience is the complex upstream and downstream work and information flows. These complex work and information flows can hardly be managed with separate, unconnected Excel spreadsheets, thus causing gaps between subplans. Planning, budgeting, and forecasting software solutions offer new opportunities for improved integration of E2E-connected subplans and processes.

Some of the major benefits of state-of-the-art planning software solutions are the following:

  • Planning Process Management – Improve work and information flows following the idea of E2E planning processes
  • Virtual Planning Teams – Improve cross-departmental and cross-functional collaboration with the goal to establish E2E-oriented responsibilities
  • Big Data Repository – Improve the use of large data sets that can be consolidated and linked together centrally
  • Plan Data Validity – Improve the integration of E2E-connected plan data from one subplan to another subplan
  • Digital Analytics – Improve the imputation of information to the planning from various sources like websites, mobile applications, among others
  • Ad-hoc Analyses – Improve the evaluation of planning assumptions through dynamic reports and scenario analyses

The transformation from inefficient work and information flows to a digitalized integrated planning with an E2E-orientation is shown in the following depiction. The overarching goal of integrating different subplans on different levels is to overcome the vertical hierarchies and horizontal functions. BearingPoint’s experience from client projects shows that companies can overcome the abovementioned gaps by introducing new planning software solutions by making small steps while considering the overall picture of E2E-connected subplans and processes. Such an iterative approach can start with a functional integration from Sales to Revenue, continuing with Sales to Production to inter-organizational alignments. The subsequent logical expansion step is a higher degree of planning automation and the introduction of predictive forecasting supported by machine learning and artificial intelligence in a final expansion step.

Digitalization helps to solve issues of existing organizational structures that inhibit or even prevent integrated planning. Thereby, the finance department is best suited to reinvent integrated planning since many threads come together in Financial Planning. Recommended for introducing a new planning approach is a step-by-step and comprehensible change process that takes the departments and employees along with it (e.g., through agile approaches). Increased cooperation between the specialist departments and the finance department is just as essential as accepting any new approach.

We have the right team and the right capabilities to design and implement your E2E-oriented integrated planning process and system.

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