The Top 3 Trends In Business Planning

Gary Cokins

277920_l_srgb_s_glThere are three categories that I consider foundational for effective business planning: destination/purpose, information access, and integration. What are the trends with these three categories?

Business plans derived from a vision and mission

The primary responsibility of C-suite executives is to establish strategic direction by answering the question, “Where do we want to go?” The answer will depend on the vision and mission of the organization. An organization’s mission statement does not always need to be the often hollow words displayed on the wall of the company’s entry lobby (“We will be the best…”). It can be simpler. For example, in the 1980s when Bill Gates said, “A computer on every desk,” Microsoft employees understood his vision and their mission.

The trend in this first category involves answering a second follow-up question, “How will we get to where the executive want to go?” The digital vehicle to achieve and execute the C-suite’s strategy is the integration of the various components of the integrated business planning (IBP) framework. These include strategy maps; product, channel, and customer profitability reporting and analysis; driver-based rolling financial forecasts; enterprise risk management (ERM); and lean and quality management techniques for process improvement. Each component should have analytics embedded in them.

Access to information

Many organizations are drowning in raw transactional data but starving for information. The trend in this category involves converting data into information. This is typically accomplished via modeling.

For example, a one-page strategy map is a model of the executive team’s strategy. The process of costing to calculate individual customer profit and loss (P&L) statements is accomplished by modeling how resource expenses (salaries, supplies, and so on) are causally and proportionately consumed as calculated costs of outputs.

Associated with this trend is the emergence of business analytics. What analysts want are two capabilities: easy and flexible access to data, and the ability to manipulate it. The IBP framework enables this via the trend described below.

The integration of the IBP framework’s component methods

The more seamless the integration of the IBP framework’s components, the better will be an organization’s performance. The trends in this category involve cloud-based planning, real-time information flows, and analytics.

  • Cloud-based computing – The attractiveness of remote computing power and storage over on-premises computing, maintenance benefits, and the ability to easily extend use to enterprise users is commonly accepted today.
  • Information flows – Transactional data and its conversion into information today can flow bidirectionally between business operation systems (production, logistics, and customer demand) and financial systems (profit reporting, budgeting, rolling financial forecasts). And the flows can be in real time (or near real time) refreshed at short-term time intervals.
  • Analytics – The more savvy companies now embrace analytics as a competitive advantage. The goal of analytics should be to gain insights and foresight and solve problems, to make better and quicker decisions with more accurate and fact-based data, and to take actions

In a future blog I will answer this question of future trends in business planning. But for now consider that if you can imagine a digital capability, then it will eventually (and soon) be realized.

For more insight on developing a business strategy, see Do You Have The Fortitude To Be Strategic?

Gary Cokins

About Gary Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC He began his career in industry with a Fortune 100 company in CFO and operations roles, then spent 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013, Gary was a principal consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methods, Risk, and Analytics and Predictive Business Analytics.