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Improving Controls Through Integrated Business Planning

Posted by Protiviti KnowledgeLeader on Mon, Nov 13, 2017 @ 08:49 AM

Most organizations are struggling with a disconnect between financial planning and the planning that goes on in operations/production, which leads to challenges in execution of strategy and errors in planning. This makes it difficult for businesses in general (and CFOs in particular) to deliver predictable results. The goal of integrated business planning (IBP) is to connect these disjointed teams, currently planning in their own silos with limited regard for the business realities of the other teams. 

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The obstacle on the road to strategic execution is the inability of most companies to accurately measure true strategic performance in terms of the key performance indicators. Too many organizations focus measurement efforts on lagging financial outcomes (lag indicators) instead of key drivers of performance (leading indicators).

To address these issues, here are some key messages to take home:

  • Align financial goals with operational feasibility. Assess financial metrics and operational constraints on an ongoing basis to ensure a well-aligned plan.
  • Link the strategy to planning, planning to performance management, and performance management to metrics and their measurements to ensure realization of expectations.
  • Maximize FACTS and minimize ASSUMPTIONS—create an infrastructure that allows finance and operations to interact, leading to responsive, fact-based decision making.
  • Integrated business planning doesn’t replace financial planning and operational planning systems—it compliments them and helps move away from spreadsheets.
  • Integrated business planning is not a “quick-fix”—it is a modern avatar of planning to address ever-increasing uncertainties and complexities.

This guide on KnowledgeLeader outlines the current state of business planning, desired end-state IBP, the integrated business planning process, and the need for change. It provides questions to consider, shares survey findings, discusses integration with the existing framework, and offers key messages to take home. This guide also outlines key questions to consider:

  • Is your organization effectively leveraging all of the data being generated via its automated systems and processes?
  • Has your finance function developed effective and informative KPIs that define and measure progress toward organizational goals?
  • Are you partnering effectively with other departments and functions in the organization, both on key projects and overall strategic initiatives?

Other related resources include:

Business Planning Policy

SWOT Questionnaire: Sample 2

Opportunity Cost Risk Key Performance Indicators

 

Topics: performance management, internal controls, performance measurement, accounting/finance

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