Published on the 06/06/2023 | Written by Heather Wright

IT is failing to support integrated business planning with companies across Asia Pacific reporting widespread dissatisfaction with the IT systems being used to support effective aggregate medium to long term business planning.

Synchronising supply and demand has never been an easy task, with a steady diet of disruptive and often challenging events, from 2008’s global financial crisis to the pandemic, putting increased focus on a company’s ability to prepare for all eventualities and respond rapidly to change.

Globally companies are making strides in replacing their sales and operations planning (S&OP) processes with more sophisticated approach of integrated business planning (IBP) with its integration of financials and portfolio management, according to McKinsey.

“The disparate nature of many systems in place, and the basic nature of their functionality, is causing great frustration.”

But while IBP specialists Oliver Wight agree that many organisations have already moved from the demand and supply balancing of S&OP to IBP, a recent survey by the company found found the majority of organisations surveyed across Asia Pacific didn’t have access to a dedicated planning system.

Fifty-six percent of the executives polled by Oliver Wight reported they used a combination of technologies – and 28 percent admitted they were still wedded to Excel spreadsheets, often partnered with PowerPoint.

Stuart Harman, Oliver Wight partner, says the ‘unrelenting disruption’ of recent years has proven the empirical value of robust planning processes – but it’s also exposed the shortcomings of IT solutions used to support planning processes.

“It’s clear that the disparate nature of many of the systems in place, and the basic nature of their functionality, is causing great frustration among IBP teams,” Oliver Wight says.

“People and process are and always have been, fundamental to effective business planning, but the complexity of operating within the modern world requires an increased dependency on technology to support the planning process, providing faster access to more accurate data, so businesses can make the most effective and timely decisions,” the survey results note.

“However, the range of IT tools available to support business planning is varied in sophistication and variable in effectiveness. Some businesses major on the use of an enterprise resource planning (ERP) system, perhaps with a dedicated IBP module, whilst others rely on spreadsheets and PowerPoint decks.”

And while it’s often said that the implementation, rather than the system itself, is the reason for the high failure rates of IT implementations – Gartner says 75 percent of ERP implementations don’t meet their objectives, while McKinsey has said only 30 percent of digital transformation projects resulted in improved corporate performance – Oliver Wight says that’s not the case here.

“In more than half the cases of those surveyed by Oliver Wight, the evidence indicates the solution is at fault,” the report says, noting the high prevalence of use of multiple technologies – or Excel.

“Gathering data from multiple sources not only introduces problems with reconciliation, human error and data accuracy, but it also takes a huge amount of time to prepare for monthly plan review meetings,” Harman says.

“This leaves people with no time or energy to understand what has changed, the impact of change and actions needed to be taken as a result.”

The report, which surveyed 88 executives across companies including Fonterra, Laminex Australia,  Lion, Coca Cola, L’Oreal, and Stanley Black and Decker, shows in some organisations 20-plus working days every month are used just compiling information decks for IBP meetings.

Earlier research by McKinsey suggests that too often, IBP is an ineffective process.

It wasn’t from a lack of effort, McKinsey concluded.

Instead it found a failure to implement the five ‘essential building blocks’: A business-backed design; high-quality process management including inputs and outputs; accountability and performance management; the effective use of data, analytics and technology; and specialised organisational roles and capabilities.

Few companies, it says, use the IBP process to support effective decision making. In particular McKinsey flagged IBP meetings being periodic business reviews for two-thirds of organisations it looked at, rather than being an integral part of the continuous cycle of decisions and adjustments needed to keep organisations aligned with strategic and tactical goals.

Oliver Wight notes ‘something of an if only attitude’ towards technology among the Asia Pacific companies surveyed, with the majority reporting that the capability of their own technology was a long way from offering the support they need for the planning features they consider most important, such as providing one source of truth, documenting and quantifying assumptions supporting IBP plans and providing real-time scenario planning an modelling capability.  

The majority of respondents rated every one of the 14 planning features of technology support assessed in the survey as ‘important’ or ‘very important’, yet few scored their own systems highly. In fact, on average 20 percent of respondents rated each of the 14 elements for their in-house system as zero.

One hundred percent of respondents said access to one set of numbers was an important feature of a planning system – but a mere 32 percent rated their own system highly for that function. On the real-time scenario planning and modelling front, 92 percent said it was important but a meagre seven percent said their system did this well.

Getting IBP right, lead to financial payoffs, with McKinsey noting ‘mature’ IBP companies saw one or two additional percentage points in EBIT, with freight costs and capital intensity 10-15 percent lower and service levels five to 20 percentage points higher.