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How Connected is Your Planning?

In the world of business planning one of the hottest buzzwords in the market lately has been the concept of “connected planning”.  Seems like a twist on the concept of Integrated Business Planning (IBP) which has been around for years with plenty of research on it produced by the likes of Gartner and Ventana Research.  Several software vendors are touting their capabilities to support “connected planning”, however some planning solutions are more connected than others – so buyers need to look under the hood and understand what they are truly getting into.

planning blog 1
Integrated Business Planning (IBP) Revisited

Wikipedia defines Integrated Business Planning (IBP) as:  a process for translating desired business outcomes into financial and operational resource requirements, with the overarching objective of minimizing risk and maximizing profit and / or cash flow. The business outcomes, on which IBP processes focus, can be expressed in terms of the achievement of the following types of targets:

  • Revenue & demand
  • Service levels
  • Inventory levels
  • Profits & margins
  • Cash flow

Ventana’s Robert Kugel has been a leading voice on this topic and claims to have coined the term planning blog 2Integrated Business Planning.  In a 2015 research perspectiveRob wrote about the various business planning activities that occur across an organization, and how these plans were typically stand-alone efforts and only indirectly linked to each other.  Rob coined the term “integrated business planning” to emphasize the need to use technology to better coordinate the multiple planning efforts of the various parts of the company.  Ventana’s research showed that integrated plans are typically more accurate, and that the planning process worked better in the 44% of companies who embraced IBP.

Technology has clearly been a barrier to achieving IBP.  Think about all the companies using spreadsheets to manage their various planning processes. While use of spreadsheets for planning is most prevalent in small and mid-sized organizations, many large enterprises that have purpose-built planning software in place, often use spreadsheets to collect data from departmental users.  Non-integrated, legacy corporate performance management (CPM) applications have also been a barrier to achieving IBP, due to the silos of data these fragmented solutions create across the enterprise.

Fast-forward to 2019 and technology has certainly evolved and improved.  Now there are cloud-based planning applications available that can help improve adoption and collaboration across organizations to support IBP.  And in recent years, we’ve seen the introduction of the term “connected planning”.  Anaplan is one of the vendors leading the charge on this concept and defines Connected Planning as “a better way to accelerate business value. By joining people together with plans and data, you can harness the true power of your business and move forward with speed and agility.”  Oracle has also adopted the term “connected planning” in messaging related to their cloud planning solutions.

Reality Check - Not So Connected Planning

While a growing number of vendors are touting “connected planning,” the reality is that most of these solutions are actually quite disconnected. 

I don’t want to pick on anyone in particular, but if your cloud planning solution requires users to push or pull data back and forth between planning modules or cubes, e.g., strategic and financial planning, or financial and workforce planning – the solution is not really connected. 

planning blog 3If your connected planning is based on a series of linked departmental cubes, where data must be linked and moved from one model to the other, that’s also not the best solution for users.  In a truly connected planning scenario, user changes to a departmental plan, e.g. the Sales plan – should immediately and automatically impact the Financial plan, and vice versa.  If this isn’t the case, then it’s inherently not connected planning – it’s actually disconnected planning! 

Here’s an example of disconnected planning.  Consider the responsibilities of a VP of Finance for a business unit in a large enterprise.  Every month, he holds meetings with his line of business partners to review results and update their plans as a team.  As they plan the business together, it is critically important to be able to see how their specific business plans impact the financial forecast.  For example:

  • How do expected changes in pricing and product volumes translate to revenue? 
  • How do capital investment decisions contribute to revenue and expenses or impact the balance sheet?
  • How will planned hiring impact overall labor expenses?

With a disconnected planning platform, the VP of Finance and his team would have to input business planning assumptions into separate workforce planning, capital planning and sales planning modules – from which the data would then be transferred to the financial planning module. Once the data transfers are complete – the VP and team would then review the financial impact of their plans in the financial planning module – with no ability to drill back to the detailed operational plans while collaborating. 

These plans are not connected.  They are not real-time.  The business does not have the agility to change plans on the fly and dynamically see the financial impact.  It is truly disconnected planning and runs counter to the goals of integrated business planning.

Here's another example of disconnected planning.  In the scenario above, the Director of Sales Operations is building his plan based on detailed drivers, that are most likely kept in Excel spreadsheets, outside the planning software.  So, when the VP of Finance has questions about the details behind the Sales Plan, there’s no ability to drill directly into the system – the Director of Sales Operations will need to go back into their “shadow plan” to find the answer. 

Unified Planning with OneStream

OneStream’s unified architecture makes it an ideal platform for supporting “connected planning” or better yet, what we call “unified planning.”  OneStream’s architecture features a single, unified database of actuals, budgets, forecasts etc. that all live together.  And there are two powerful features in OneStream that enable true unified planning.

  1. Through the power of OneStream’s Extensible Dimensionality® actuals can be captured at a different level of detail than budgets and forecasts. And operating units can plan and report at a more granular level than is required at division or HQ levels. The operating units can even have their own separate planning structure in the same application.  For example, sales plans travel expense by opportunity, marketing plans it by event, and operations plans it by plant but.  But it all automatically rolls through to impact total travel expense and P&Ls at every level - and the VP of Finance can drill down to see all the detail.
  2. The Relational Blending capability of OneStream aligns technology to your business process, instead of vice versa, by enabling users to capture detailed operational data and dynamically calculate the financial impact without compromise - all within a singular application. So, planning at the SKU level, position level, or other very granular level can all be without the performance issues or separate applications or cubes that plague other architectures.  The specialty planning solutions available in the OneStream XF MarketPlace, such as People Planning and Capital Planning, take advantage of Relational Blending to support budgeting and planning down to the individual position or asset level.  These MarketPlace solutions are not separate products or data stores that need to be “connected” or integrated, they are part of the platform.

And through its unified architecture, data that is entered or updated in one part of the planning model will automatically impact other parts.  For example, changes in the People Plan, or Capital Plan will automatically impact the overall Financial Plan.  Updates made to the Capital or Sales Plan, willplanning blog 4 automatically impact the Cash Plan.

There’s no pushing, pulling or synching of data required across various elements of the plan, it’s all connected and updated in real-time.  One of our executives recently summed up the difference very succinctly, “unified planning is what connected planning wants to be when it grows up!”

Real-World Customer Impact

Here’s an example of a OneStream customer who is leveraging the platform to support Integrated Business Planning (IBP).

Guardian Industries is a $4B diversified global manufacturing company with leading positions in float glass, fiberglass insulation, and other building materials for commercial, residential, and automotive applications.  Headquartered in Auburn Hills Michigan, Guardian, its subsidiaries and affiliates employ 18,000 people operating in 25 countries across 5 continents.  Having already implemented OneStream for financial consolidation, reporting, tax provision, and forecasting – Guardian extended their use of OneStream through the implementation of People Planning and a Driver-Based Annual Operating Plan (AOP). 

planning blog 5Driver-based planning is especially powerful for companies in the manufacturing, retail, and the consumer goods space.  For these industries, best practice planning is often completed using the key factors that physically drive the business such as specific products and/or plant level volumes, price changes, and mix.  Further, because operational and financial data all live together inside OneStream’s unified platform, Guardian can trace the movement of inventory, material costs, and product volumes across the internal supply chain in real-time during their planning process.

For Guardian’s finance team, this functionality is indeed a game-changer and eliminates the need to worry about managing multiple systems, and spending time integrating and reconciling data.  Instead, leaders can appropriately maximize their time to work with the business to manage inventory turns, material costs, and deliver shareholder value.  They can also simulate operational scenarios and immediately see what the financial impact would be from the lowest level all the way up to the corporate P&L.

Learn More

The concept of Integrated Business Planning (IBP) is being made easier thanks to recent advancements in CPM software.  Many vendors are touting the concept of “connected planning” as the evolution of IBP.  But buyers should be careful not to get too caught up in the hype - look under the hood and make sure the solution you are evaluating is not really supporting “disconnected planning”.  In a truly unified CPM platform, you can perform “unified planning” and eliminate the need to build and maintain connections between applications or departmental cubes. 

To learn more about the power of unified planning with OneStream, watch the replay of a recent webinar featuring Guardian Industries.

Guardian Customer Webinar

John O'Rourke

John O’Rourke is Vice President of Product Marketing at OneStream Software. With a background in accounting and finance, John has over 30 years of experience in the software industry, including 20 years of experience in product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in corporate performance management. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decisyon.

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