Bill Gates once said, ‘The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.’
According to his logic, organizations with overly complex supply chain processes, siloed work structures, high level dependency on out-dated legacy systems, poor data management practices, and poor planning are doomed to suffer from operational inefficiencies, regardless of automation implementations.
Is there truth to Gates’ proposition?
The tech industry seems to have expanded at an exponential rate in recent years. Artificial Intelligence and Machine Learning solutions, terms which were relatively unheard of a few years ago, are now part of the modern world’s everyday vocabulary. These technologies have been developed to an unprecedented degree.
So, with all this technological evolution, do the rules of technology proposed by Gates still hold water for organizations looking to make efficiency gains from automation?Maybe not.
By investing in our Connected Planning solutions like Integrated Business Planning (IBP), even the most inefficient organization stands to benefit from a domino of automation led efficiency gains. Read on to find out how.
According to Anaplan, ‘Integrated business planning… is a single holistic plan that seamlessly connects strategic plans with sales plans, operational plans, and financial plans while balancing practical constraints about the availability of resources and funding with the business’s financial objectives.’
Forbes, highlighting the importance of balancing customer expectations with shareholder goals in running a successful business, states that companies can achieve this by transitioning from‘ Sales & Operations Planning (S&OP)’ to IBP.
It goes on to define S&OP as a ‘planning process that aims to align sales, marketing and operations with the overall business strategy’. Forbes then contrasts S&OP from IBP stating that, ‘IBP takes this a step further by incorporating financial planning, product development and risk management into the process.’
The benefits of IBP are innumerable but here’s a list of the top 5 benefits organizations looking to invest can expect to experience.
In a 2022 article titled, ‘A better way to drive your business’, McKinsey highlights the following as essential components and actions in the implementation of IBP processes:
McKinsey suggests, organizations should redesign its planning processes from the perspective of organizational leaders and other decision-makers. For instance, consider the data types that a specific leader would require to arrive at an insight-driven decision and develop hyper specific scenario mapping to help him/her guide the company on the path of least resistance, the least risk and the most efficiency.
McKinsey recommends taking on a cyclical approach to your organization’s planning reviews and audits. While stating that an enterprise’s processes would require regular reviews to ensure it stays ahead of industry innovations and doesn’t fizzle out, McKinsey suggests a quarterly review for low maintenance organizations, and a monthly review of other companies where necessary.
In addition to holding meetings attended by cross-functional decision-makers, McKinsey recommends using agile forums to make decisions and resolve issues immediately while also maintaining a single feasible demand-and-supply plan aligned with financial plans.
McKinsey goes on to offer insight into the state of processes in inefficient companies: ‘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.’
Set Key Performance Indicators (KPIs) by segment and ‘regularly define, monitor and discuss metrics’ aimed at creating a corporate climate conducive for future growth. McKinsey also suggests incentivising accountability with shared metrics to encourage ‘collaboration across stakeholders’.
Fully integrate all systems and data sources to enable seamless access to information at any level of detail. Ensure data is updated in real-time to provide the most current insights. McKinsey also encourages empowering decision-makers with real-time tools that link ‘supply constraints’ and ‘gross-margin risks’ to facilitate robust scenario planning.
Finally, McKinsey suggests appointing a specific individual to oversee the integration across all relevant functions. This individual will collaborate with data scientists to create a real-time analytical engine that supports integrated business planning by processing inputs, generating scenarios, and producing outputs.
Integrated Business Planning (IBP), compared to Sales & Operations Planning (S&OP),empowers organizations to become more agile, responsive, and resilient in today's dynamic business environment.
By fostering collaboration, leveraging data-driven insights, and optimising resource allocation, IBP helps organizations achieve their strategic goals and drive sustainable growth.
Get in touch to ensure your organization’s Integrated Business Planning (IBP) implementation results in seamless and streamlined processes and automation-led enterprise-wide financial and operational efficiency gains.