pwc integrated business planning

A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of 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 specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

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In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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Supply Chain Transformation

Building connected and resilient digital supply chains

Never have supply chains experienced as much disruption as in the recent past. Organisations are seeking an integrated real-time view of their supply chains with their ecosystem of suppliers and customers. Hence, there is a need for organisations to reimagine their supply chain transformation strategy to become transparent, connected, resilient and autonomous. The pressures in today's volatile and disruptive world have made it incumbent on organisations to leverage digital capabilities across AI, ML, RPA and advanced analytics as they collaborate with their supplier partners and customers. Investments in supply chain transformation is an imperative for digital champions across the value chain of procurement, logistics and planning as they look to build trust while delivering sustained outcomes in terms of improved revenue and optimised costs and working capital while maintaining resilience and compliance.

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PWC SAP Integrated Business Planning- Manager Salary in the United States

How much does an SAP Integrated Business Planning- Manager make at companies like PWC in the United States? The average salary for SAP Integrated Business Planning- Manager at companies like PWC in the United States is $183,967 as of July 29, 2024, but the range typically falls between $145,518 and $222,416 . Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have spent in your profession. With more online, real-time compensation data than any other website, Salary.com helps you determine your exact pay target.  View the Cost of Living in Major Cities

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What does an SAP Integrated Business Planning- Manager do at companies like PWC?

A career in our SAP Supply Chain and Operations practice, within SAP Consulting services, will provide you with the opportunity to help our clients maximise the value of their SAP investment with offerings that address sales, finance, supply chain, engineering, and human capital. We provide comprehensive consulting, system integration and implementation services across multiple SAP applications, products and technologies. Simply put, we focus on delivering business led, technology enabled change for our clients including industry specific enterprise resource planning and the latest in mobile, analytics and cloud solutions. As part of our supply chain and operations team, you’ll work with our clients to transform their supply chain and operations by leveraging SAP applications to optimise their flow of goods, information, and money quickly and securely.

To really stand out and make us fit for the future in a constantly changing world, each and every one of us at PwC needs to be an authentic and inclusive leader, at all grades/levels and in all lines of service. To help us achieve this we have the PwC Professional; our global leadership development framework. It gives us a single set of expectations across our lines, geographies and career paths, and provides transparency on the skills we need as individuals to be successful and progress in our careers, now and in the future.

As a Manager, you'll work as part of a team of problem solvers, helping to solve complex business issues from strategy to execution. PwC Professional skills and responsibilities for this management level include but are not limited to:

• Pursue opportunities to develop existing and new skills outside of comfort zone.
• Act to resolve issues which prevent effective team working, even during times of change and uncertainty.
• Coach others and encourage them to take ownership of their development.
• Analyse complex ideas or proposals and build a range of meaningful recommendations.
• Use multiple sources of information including broader stakeholder views to develop solutions and recommendations.
• Address sub-standard work or work that does not meet firm's/client's expectations.
• Develop a perspective on key global trends, including globalisation, and how they impact the firm and our clients.
• Manage a variety of viewpoints to build consensus and create positive outcomes for all parties.
• Focus on building trusted relationships.
• Uphold the firm's code of ethics and business conduct.

Preferred skills

Demonstrates proven extensive knowledge and success with consulting, designing, implementing and leading SAP BPC-based medium-sized consolidations, planning, and consulting engagements, including:

- Leveraging financial consulting knowledge to assist clients in the implementation and support of SAP BPC packaged solutions and improving financial business processes;

- Understanding the common issues facing clients in the financial services industry (e.g., banking, insurance and/or investment management) or clients who provide products and services within one or more of the following sectors (e.g., aerospace and defense, automotive, consumer and retail, energy, industrial products, technology or utilities);

- Contributing to proposal development efforts.

Demonstrates proven extensive abilities and success with consulting, designing, implementing and leading SAP BPC based solutions, including:

- Medium-sized consolidation, planning consulting engagements;

- Financial consulting, emphasizing assisting clients in the implementation and support of SAP BPC packaged solutions and improving financial business processes.

Demonstrates proven extensive abilities and success with identifying and addressing client needs: actively participating in client discussions and meetings; communicating a broad range of Firm services; managing engagements including preparing concise, accurate documents and balancing project economics management with the occurrence of unanticipated issues.

Demonstrates proven extensive abilities and success as a team leader: creating a positive environment by monitoring workloads of the team while meeting client expectations and respecting the work-life quality of team members; providing candid, meaningful feedback in a timely manner; and keeping leadership informed of progress and issues.

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Doing the Right Deals: Getting integration planning right

Holger Hintze Partner, Value Creation, PwC United Kingdom 22 April, 2022

Even in a supercharged M&A environment, the challenges of identifying and realising value potential remain. We know that more than half of deals actually erode value – our research has shown that 53% of corporate acquirers underperformed their industry peers . The big question is therefore what deals deliver value and why? Could capabilities hold the key? And, if so, what role does integration planning play in making the most of the potential?

The findings from our Doing the Right Deals study were conclusive. Rather than strategic intent and fit, deals that enhance capabilities deliver the greatest value.

An understanding of the strategic intent remains important in helping to turn the transaction rationale into an integration strategy. However strategic intent doesn't guarantee deal success and, no matter what the strategic intent, deals that are more successful have a capability fit.

How capabilities create deal value

In our definition, capabilities are the things a business does (or must do) better than anyone else and that will help them differentiate in the market. If we look at the example of a leading technology business, the capabilities edge would not just include breakthrough innovation, but also intuitively accessible design and the ability to integrate the technology across different uses and platforms.

There are two routes to capabilities-driven growth. On the one hand, the buyer can harness its capabilities to improve the target (leverage deal). On the other hand, the target brings in the talent, technology and other capabilities the buyer needs (enhancement deal). So if we take the technology business as an example again, the leverage route might include acquiring a growing grocery business with an existing footprint. By moving into the buyer’s group, the acquired business can increase supply chain efficiency and increase revenue - for example Amazon’s investment in Whole Foods in 2017. In turn, an enhancement deal might include acquiring a movie studio to leverage its back catalogue of movies or a self-driving start-up to use autonomous technology in its delivery network - in this case see Amazon’s investments in MGM and Zoox over the last two years.

Why integration planning is so critical

What’s clear from both the leverage and enhancement deal examples used here is that they require effective integration to make the deal a success.

The guarded nature of deal negotiations also makes it harder to identify value-driving capabilities up front. Indeed, I’ve worked on transactions where the ‘crown jewel’ capabilities only came to light when integration was already well underway. Even in private deals where the prospective buyer tends to have more inside data, key capabilities can still be missed.

The risk of missing the capabilities fit is heightened by the fact that most transactions are driven by a small group of deal makers and the people who are best able to identify the distinctive value creating capabilities, for example those in operations, are generally only brought in after the deal is signed and sealed.

Realising the potential

So how can you make sure integration plans make the most of the capabilities fit? Drawing on both my experience and findings from the Doing the Right Deals research, three priorities stand out:

Make integration planning a strategic priority and start early

Drive discovery and dig deeper, unlock the culture that drives value.

Integration should certainly be on the strategic agenda from outset, rather than being left to when the deal has already been agreed or closed. The strategic rationale for an acquisition can generally be determined up front. But the capabilities fit can be quite distinct from the strategic fit. Experience also underlines the importance of tailoring integration planning to identify, protect and make the most of the capabilities in a deal.

It’s important to identify capabilities to protect and maximise value from the deal up front - or as early as possible given the limited access during the early stages of a deal. Ideally this evaluation should be led by the operational teams who will be responsible for implementing the integration and managing these capabilities. It’s also important to go in with an open mind. Buyers always go in with the best intention of wanting the ‘best of both worlds’ but then want to make progress quickly and default to their known position. But the acquired business may have hidden pockets of strength and even transformational capabilities that should be nurtured and enhanced.

The most valuable capabilities often depend on a small but critical selection of key people. Even if the capability being targeted is a process or technology, the real value often lies in how the process was developed, how it’s operated and the people who make this possible.

It’s therefore important to build employee engagement in the vision for the future. That requires a well-defined strategic vision that employees can ‘buy-into’ and be part of. You only have a brief window of opportunity to engage and build deal momentum, so use it well - engagement with the target and the ‘moments that matter’ start in the due diligence process when leadership teams will begin to assess their fit with the future business. It’s not always the ‘what’ that you’re buying, but the ‘how.’ That could be specific expertise as above. But it could also be a way of doing things and the culture that underpins. It’s therefore important that you have a plan for culture that will maximise new capabilities.

If you would like to know more about integration planning, please feel free to get in touch. You can also check out our Doing the Right Deals report for more insights into how to capitalise on capabilities-driven deals.

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Holger Hintze

Partner, Value Creation, PwC United Kingdom

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Accountancy giant PwC to exit Russia as multinational exodus grows

PricewaterhouseCoopers has decided to cut its Russian firm adrift from its global network, affecting 3,700 partners and staff in the country, Sky News learns.

By Mark Kleinman, City editor

Sunday 6 March 2022 21:51, UK

PricewatwerhouseCoopers (PwC) is to cut its Russian firm adrift from its global network in arguably the most significant exit so far by a multinational company since the Putin government's decision to invade Ukraine.

Sky News has learnt that PwC, one of the world's big four accountancy firms, will announce publicly on Monday that it is cutting its Russian business adrift, a move that will affect 3,700 partners and staff in the country.

The decision will pile pressure on its main rivals - Deloitte, EY and KPMG - to follow suit, but is expected to trigger a fiendishly complex process that could take months or even years to complete.

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PwC's exit from Russia will make it the latest in a string of major companies cutting ties with the country in the aftermath of the invasion of Ukraine.

The exodus has spanned industries from retail and consumer goods - including companies such as Marks & Spencer and Next - to media and sport, with ITV announcing that it would stop selling its content there and the Russian Grand Prix being removed from the Formula One calendar.

American Express announced on Sunday that it was suspending operations in both Russia and Belarus .

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PwC's decision was communicated internally on Sunday evening in a memo from Bob Moritz, the firm's global chairman.

Multinationals have deserted Russia in their droves in the last 10 days, although many have halted or paused their operations there rather than announcing a permanent withdrawal.

The most significant corporate announcement from a British company has been BP's decision to offload its stake in the state-backed Russian oil company Rosneft.

In response to an enquiry from Sky News on Sunday evening, PwC said: "As a result of the Russian government's invasion of Ukraine we have decided that, under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the network.

"Our main focus at PwC continues to be doing all we can to help our Ukrainian colleagues and support the humanitarian efforts to aid the people of Ukraine who have been devastated by this invasion.

"We are also committed to working with our colleagues at PwC Russia to undertake an orderly transition for the business, and with a focus on the wellbeing of our 3,700 colleagues in PwC Russia."

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PwC and KPMG exit Russia and Belarus in wake of Ukraine invasion

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