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    Implementing Integrated Business Planning: A Guide Exemplified With Process Context and SAP IBP Use Cases
    Implementing Integrated Business Planning: A Guide Exemplified With Process Context and SAP IBP Use Cases
    Implementing Integrated Business Planning: A Guide Exemplified With Process Context and SAP IBP Use Cases
    Ebook809 pages6 hours

    Implementing Integrated Business Planning: A Guide Exemplified With Process Context and SAP IBP Use Cases

    By Robert Kepczynski, Alecsandra Dimofte, Raghav Jandhyala and

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    About this ebook

    This book provides comprehensive guidance on leveraging SAP IBP technology to connect strategic (to be understood as long term SC&O), tactical and operational planning into one coherent process framework, presenting experience shared by practitioners in workshops, customer presentations, business, and IT transformation projects. It offers use cases and a wealth of practical tips to ensure that readers understand the challenges and advantages of IBP implementation.
    The book starts by characterizing disconnected planning and contrasting this with key elements of a transformation project approach. It explains the functional foundations and SAP Hybris, Trade Promotion Planning, Customer Business Planning, ARIBA, and S/4 integration with SAP IBP. It then presents process for integrating finance in IBP. Annual planning and monthly planning are taken as examples of explain Long term planning (in some companies labeled as strategic). The core of the book is about sales and operations planning (S&OP) and its process steps, product demand, supply review, integrated reconciliation and management business review, illustrating all steps with use cases. It describes unconstrained and constrained optimized supply planning, inventory optimization, shelf life planning. We explain how to improve responsiveness with order-based allocation planning, sales order confirmation, and big deal / tender management coupled with simultaneous re-planning of supply. The book closes with a chapter on performance measurement, measurement of effectiveness, efficiency, and adherence.   
    LanguageEnglish
    PublisherSpringer
    Release dateJul 23, 2018
    ISBN9783319900957
    Implementing Integrated Business Planning: A Guide Exemplified With Process Context and SAP IBP Use Cases

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      Book preview

      Implementing Integrated Business Planning - Robert Kepczynski

      © Springer International Publishing AG, part of Springer Nature 2019

      Robert Kepczynski, Alecsandra Dimofte, Raghav Jandhyala, Ganesh Sankaran and Andrew BoyleImplementing Integrated Business PlanningManagement for Professionalshttps://doi.org/10.1007/978-3-319-90095-7_1

      1. Move Away from Disconnected Planning

      Robert Kepczynski¹  , Alecsandra Ghita², Raghav Jandhyala³, Ganesh Sankaran³ and Andrew Boyle⁴

      (1)

      Zurich, Switzerland

      (2)

      SAP Switzerland, Regensdorf, Switzerland

      (3)

      SAP LABS LLC, Tempe, Arizona, USA

      (4)

      Ingolstadt, Germany

      Robert Kepczynski

      1.1 Disconnected Planning Diagnosis

      We have seen that broadly understood planning processes happen over short-, mid- and long-term horizon. Many used to call those processes as operational, tactical, and long term planning processes. Short-term operational planning processes happen over 4–12-week horizon, tactical planning processes cover up to 3 years, and long term planning processes shape business even up to 10-year horizon.

      If we take a closer look into those three planning horizons, we have come to the conclusion that planning processes executed in respective time horizon were characterized differently by:

      Objective

      Impact

      Stakeholders decision power (position in the company hierarchy)

      Stakeholders degree of connection to operational execution or long term directives

      Frequency

      Granularity

      Time bucket

      Degree of embedding financials into decision-making process

      Degree of embedding product/technology information into decision-making process

      Degree of embedding of customer/market information into decision-making process

      Industry needs

      Systems and technology support

      Since those characteristics are different for each of the planning type, many companies face enormous amount of challenges to integrate planning processes under one coherent framework called Integrated Business Planning. Companies struggle to unlock value of those planning processes being integrated and managed holistically. In order to understand how to integrate planning processes, let’s attempt to describe them one by one as per long term, tactical, and operational planning.

      Strategic Planning

      We have realized that companies have one long term planning process which defines business direction and strategy for long-term horizon and the other one which was focused on long term assets/products but impacting mid-term horizon. Both processes were highly important and had high impact on company performance.

      We have seen that long term planning which set company direction was executed on annual base (sometimes twice a year) and was normally led by business development or business planning team. Let us call this process as annual business planning.

      We have seen that long term planning process that is focused on long term assets/products was executed on a monthly basis and was typically led by senior supply chain planning managers. Let us call this process as monthly long term product/assets planning.

      Annual Business Planning

      This process addresses a global view on business development and business strategy where long term initiatives affecting technology investments, market positioning and developments, and channel growth are captured, discussed, reconciled, and monetized.

      On the demand side, this process addresses issues associated with introduction of new sales channels, entering new markets, and competitor’s trends.

      On the supply side, this process addresses internal or external manufacturing footprint assessment, investments in operations, warehousing, and long-term capacity challenges to be solved with internal or external manufacturing/tolling/3–4PL/CAPEX discussion. Quite often as part of this process, large technology shifts or extensions are being discussed. Length of long term horizon is much aligned to R&D of the products or technologies.

      On the financial side, this process addresses financial risk and opportunities like exchange rate fluctuations, macroeconomic trends, and impact of potential acquisitions and mergers.

      This process is typically executed once per year and does cover inputs from various functions considering up to 10-year future horizon. Process is being led or managed by global senior management of the company which have decision power to make changes in company strategy and approve long term initiatives but do not hands on influence short-term execution.

      Experts who support execution of this process prepare data and analysis on aggregated level like product lines or business lines, regional or global scope, and profit or cost center groups. Normally data is being prepared on annual bucketing and mainly in monetary terms.

      Decision-making process fundamentally is based on evaluation of assumptions and pros/cons discussion of the financial impact on future company performance. Decision-making process in essence is about developing what-if business risk and opportunity scenarios and aims to visualize to the management scenario impacts like CAGR (compound annual growth rate). The output of this process was communicated to various functions in the organizations including local management.

      Monthly Strategic Product/Assets Planning

      This process addresses regional or global and mid- to long-term view on long term products, raw materials, and assets. Examples of those could be:

      Active ingredients in the chemical industry

      Active pharma ingredients (drug substances) in the pharma and healthcare industry

      Steel in kitchen appliances

      Seed varieties in the agriculture industry

      Those long term products are very often linked to high cost contribution in the final products, sometimes even above 70%. This process regularly generates impact and improves transparency on monthly tactical S&OP process executed on country to global level but where products discussed have higher form of customization. Link between long term products planning and tactical S&OP enables organizations to reach objective of:

      Raising awareness

      Managing feasibility of tactical SOP plans realization in better way

      Analyzing projected performance against budget on a regional/country/product family level

      Typically, this process was executed in a mix of the so-called top-down (by marketing as demand for long term form of the product) and bottom-up (by supply chain as demand based on consumption of long term form of the product), where two streams of inputs are being compared and reviewed.

      This process runs on monthly basis with monthly time bucketing for horizon of up to 5–7 years.

      Key stakeholders who lead and manage the monthly long term product planning are typically on level of functional manager on global and regional level, mostly from marketing and supply chain. Typically they are not accountable for business strategy but have influence and provide inputs to annual business planning.

      Decision-making process fundamentally is based on evaluation of demand inputs and unconstrained and constrained supply planning linked to supply propagation to countries/markets. Fair share of profitability is often used as criterion to allocate long term form of the product to demand locations. Allocation in tactical horizon is supported with what-if business risk and opportunity scenarios which aim to visualize the impact of budget realization and operating profit on the company as a whole and its business units (markets, countries).

      This process and stakeholders have stronger impact on execution of the country/market operational plans.

      Tactical Planning/Sales and Operations Planning

      This process addresses a country-regional-global view on product, demand, supply, financial and volumetric reconciliation (integrated reconciliation meeting), and sign-off by management (S&OP meeting). It does focus on addressing issues associated with top-line revenue and volumetric projections, definition of country or product group or channel price tactics, bottom-line profits exposed from constraints, gaps to budget, financial elements projection (like exchange rates), and alignment to long term initiatives. It is a main process which impact realization of operating plans like budget.

      Process is very cross-functional and, since it’s executed from local to global level, stakeholders can have different accountability and impact on execution. Main process objective is to deliver balanced plan in volume and value with documented assumptions. The process is not focused on resolving very short-term issues but rather focused on how to achieve business objectives for the current year and current year plus one.

      Decision-making process consolidates inputs through product-demand-supply-reconciliation to management review meeting. In each of the steps what-if business scenario planning is used to model risk and opportunities. Very often scenarios go across process steps like for tender demand to supply and integrated reconciliation or for a new product launch to demand, supply, and financial impact assessment.

      Data which was being used had a monthly granularity on various levels on product and commercial-geographical hierarchy. Process on country/market level was often executed on SKU/product group/sales zone/country level. Process on regional/global level was reviewed on product lines/country/group of country level. Process on site level was executed mainly on key manufacturing assets or key long term product level. Time bucketing was typically monthly, with specific focus on subtotaling like:

      Year to date, year to go, and full year

      Weeks, months, quarters, and years which help to quickly assess situation

      We have observed that time horizon of this process varies from current year to current year plus 2.

      In the last few years, we have observed that tactical S&OP process is more and more tightly integrated with financial planning, but this is not yet very common. There are a lot of companies which run their S&OP process in volume only and disconnected from financials.

      Tactical S&OP process in many industries is linked tightly at minimum once per month with operational planning. Tactical S&OP sets detailed framework for operational planning in which it is even further optimized and resolved especially in demand-supply balancing but on more granular level.

      S&OP has many forms, variations, and definitions but let us bring one from leading practitioner:

      Sales and Operations Planning is communication and decision making process:

      To balance demand and supply

      To set plans for volume that will guide the detail mix and

      To integrate financial, product development and operating plans

      (Gray 2006)

      Operational Planning

      This process addresses in country, very often in country/sales zone demand and supply imbalances. This process was very down to earth and operated with resources and assets which were available at a certain point in time for short horizon. We have seen that operational planning was introduced in the companies when monthly S&OP process was not granular enough to solve demand-supply imbalances driven by product type or channel. We observed various frequencies of this process from daily to weekly to bi-weekly. What we have found very interesting is that this process was switched on and switched off during the year especially in case of:

      Highly seasonal products

      Limited life products and offers

      Short peak seasons

      Large promotional campaigns

      Customer-specific products

      Commodity business

      This means that operational planning can be driven by product or industry characteristics.

      We have observed that time horizon of this process varies from few days up to 12–16 weeks.

      Operational planning focuses to extract the biggest value from available materials, manpower, machines, and money. These four dimensions may be called "4M."

      Data which was typically needed had a very high granularity, very often order level (sales/production, inventory) on daily/weekly bucketing. Due to the amount of highly granular information, exception management did play an important role in the process.

      Participants/contributors of operational planning process were very hands-on experts in the organization, subject matter experts who were doing the job.

      You can understand operational planning as sort of optimization to tactical S&OP. There was tight integration between those two processes ensured by especially aligned calendar of activities. At minimum once per month, outputs of operational planning were integrated into tactical S&OP. The operational process was executed typically on a single meeting where product, customer, demand, supply, and financial information were available to make short-term decisions. Even though this process was tightly connected to execution, you still can look at it as execution steering, a way to get alignment with framework defined in tactical S&OP. We have seen that operational planning can be done within country on sales zone level or across countries but then driven by brand/product group tactics and specifics.

      View Across All Planning Types

      In Fig. 1.1, you see summary of observations about key characteristics linked to planning types, horizons, and levels. We have observed very often that many organizations struggle to connect those planning processes because of their differences and lack of focus on organizational and technology aspects.

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig1_HTML.png

      Fig. 1.1

      Planning horizons-types-levels and their key characteristics

      What we have found very interesting is that activities in all planning types can be mapped against well-recognized sales and operations planning process dimensions. Just a reminder—S&OP have the following process dimensions (Fig. 1.2):

      Product

      Demand

      Supply

      Reconciliation (integrated reconciliation)

      S&OP

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig2_HTML.png

      Fig. 1.2

      Planning types versus S&OP process dimensions

      Observations about planning types and S&OP process step were visualized in Fig. 1.2. As we can see on above figure, activities across all planning types can be mapped against same S&OP process dimensions, but they have different objective, focus, and stakeholders. We are bringing up mapping of activities across all planning processes to illustrate that they have similarities. Those similarities should be leveraged when putting all of planning types into one coherent business management and planning environment called Integrated Business Planning.

      1.2 How to Operate Integrated Business Planning

      1.2.1 Design and Operate IBP in Holistic Way, Extend S&OP

      Integrate Design

      Different planning types are often not integrated therefore companies have big challenges to:

      Operationalize their strategies

      Connect long term, tactical, and operational planning with execution

      Anticipate and/or react on changes in performance or business environment

      Understand business risk and opportunities

      Allocate and leverage right investments in processes, people, and technology to maximize company profit

      To understand what IBP is and to address those pain points, we wanted to share some hints about integrated design enabling connection to what drives and enables successful IBP transformation.

      The word which makes a difference in the term Integrated Business Planning is Integrated. In this chapter, we will define key dimensions of integrated design (see Fig. 1.3).

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig3_HTML.png

      Fig. 1.3

      Integrated design for IBP

      What makes integration so important and challenging is that all above dimensions coexist and cofunction like in living ecosystem. Connecting them, finding right trade-offs is what makes a difference and impact to your business performance and to expand competitive advantage to your business in the digital era.

      Business Priorities

      Knowing your pain points and inefficiencies is of indisputable value for the organization which want to do something with it. We have faced misinterpretation of pain caused by organizational unit pushing for change. One example was a company that wanted to improve supply planning but had the true pain point of lack of integration between functions, lack of sales engagement in S&OP process, and lack of transparency as regards financial information, resulting in huge variations and firefighting in supply. Some say knowing business priorities is like knowing your enemy; if you know them, you have a chance to make a successful change.

      Organizational Design and Integration

      We can define organizational design and integration as:

      Organizational structures

      Roles and responsibilities

      Competencies and skills

      Capability to influence and change way of working to enable integration between processes and to remove walls and obstacles, which are needed to make IBP happen on local (market), production site, regional, and global level for long term, tactical, and operational planning

      There are two major organizational integration flows:

      Horizontal integration between S&OP process steps and operational and long term planning process steps

      Vertical integration across organizational levels

      Here are some hints to consider in organizational design:

      Define global organizational structure which ensures country, regional, and global levels are connected by reporting lines and positions.

      Introduce differentiated seniority and differentiated competencies to ensure connection between long term, tactical, and operational processes on various levels (country, site, region, global).

      Embed differently focused demand planning and demand management to ensure certain competency are in place to execute tasks with various functions like product, sales, marketing, finance, supply, IT, and management.

      Embed finance role across all S&OP process dimensions with clear background in controlling and not accounting.

      Connect demand planning, demand management, and finance with respect to the integrated process steps to help the whole organization to analyze and recommend what to do and how to connect risks and opportunities in product, demand, supply, and finance.

      Build and extend existing capabilities to shift from supply chain-driven volumetric process to cope with financial elements as integral part of IBP process framework.

      Under organizational integration, we should understand as well:

      Change management

      Change governance implications on transformation

      When driving change, you will need to find out what responsibilities/authority transformation project and line organization should have. Does configuration where line organization owns change and results, but project organization owns design and enables transformation, sounds logical to you?

      You should define governance and accountability in the transformation program which will reflect the interests/goals of both project and line organizations. You may think to look at it from the early beginning of the transformation journey.

      Take it as friendly hint based on many gray hair experiences and invest appropriate amount of efforts into people factor.

      We have paraphrased a quote from Steve Jobs and came up with

      Design is not a word document or power point but the way process, organization, system operates in business

      Which makes a lot of sense to many of our customers. We bring this up to connect it to organizational design and lines of responsibilities; e.g., the organizational unit co-responsible for design (normally part of project organization) should be at least co-responsible for how it works in business (with line organization) and maybe co-accountable for business case delivery (see Fig. 1.4).

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig4_HTML.png

      Fig. 1.4

      Design is not how it looks but how it works in business

      E2E Process Design and Integration

      Can be understood as:

      Set of activities to achieve expected and agreed IBP outcomes (e.g., unconstrained forecast and constrained plan in volume and value, top-line revenue, bottom-line profit, risk, and opportunities with verified assumptions on each level of the organization).

      IBP outputs which need to be leveraged in other adjacent processes (e.g., integrated business plan in value used in financial processes and system to project P&L)

      IBP inputs from adjacent processes (e.g., average sales price, shipments, invoices)

      Design principles (e.g., demand review meeting is about signing off realistic unconstrained (free from supply constraints) forecast for current and next year which need to be available globally on work day 5, or integrated business plan represents actuals in the past and constrained volume and value projection until end of current year plus one, with incorporated risk and opportunities available on work day 10)

      Globally aligned and synchronized calendar of activities across long term, tactical, and operational planning processes (e.g., in tactical planning in week 2, integrated business plan has to be defined with input with recent updates from operational planning)

      Globally aligned and synchronized calendar of milestones of activities, e.g., consensus forecast being agreed by work day 5

      Understanding of how long term process outputs will influence and connect in bidirectional way tactical processes

      Understanding of how tactical process outputs will influence and connect in bidirectional way operational planning processes

      Understanding how financial, commercial, supply, and demand processes will interact in order to generate integrated business plan

      Finally understanding how operational planning processes should be linked to execution processes

      Enabling process integration in a large-scale company is not a trivial task, mainly due to fact that those companies do not have homogenous business models. What makes it hard to do is that one needs to find balance and trade-offs between flexibility expressed in process variants linked to different business models and process standardization/harmonization required to manage them on global level. Let us try to explain this problem further. Would you apply the same rules and same process step timelines to countries which are small in your revenue portfolio and which do not have sophisticated capabilities and skills in place versus the countries with big revenue, complex and demanding process, and sophisticated competencies? This is what we meant when we talked about balancing flexibility with standardization; this is when we think alignment on process milestone, design principles, and objectives are sufficient. A more tailored approach in process design is needed then. In highly heterogeneous conglomerates of business models, alignment on having key milestones in the process is crucial, but experience says that one size does not fit all. Do not try to control everything; it does not make sense these days. Size, importance, maturity, and degree of integration of a specific business model in the whole operating model could make a difference in the definition of end-to-end process design, transformation, and implementation approach.

      End-to-end IBP design should take care of touch points with adjacent processes. Let us bring few examples of those touch points and decisions which need to be reflected in IBP design principles.

      When and how to integrate sales prices for forecast valuation

      What currency exchange rates should be used

      When and how to integrate costs for profit calculations

      When supply systems in short horizon will deliver reliable optimized 3 months schedule

      When and how data should be bidirectionally exchanged with ERP system for detail supply scheduling and supply execution

      Does sales community need to update account plans or forecast in SAP IBP or CRM system

      Will integrated business plan be on net level

      What should be the source system of material master data attributes and how and when in the process they should be integrated

      What should be the source system of customer and commercial hierarchy master data attributes and how and when they should be integrated in the process

      What should be the source system for financial master data attributes and how they should be integrated

      Initiatives Integration

      Could be understood as a set of activities leading to understating interactions required between IBP and finance, commercial, supply, master data, or even ERP initiatives. Connecting with other initiatives at least on design principles and integration principles is a minimum. In large organization knowing what left and right hand is doing is not that easy. Initiatives integration will help you to:

      Avoid duplication of work in process design

      Make integration between processes coherent

      Get understanding of complexity and importance of each other function input

      Define required inputs and align implementation timelines

      Sequence design and implementation plans

      Understand and address initially contradicting designs

      Understand cost and value realization impact potentially causes by lack of alignment between process areas and initiatives

      Technology Design and Integration

      Today’s business models are complex, data availability grows exponentially, and system landscapes are not homogenous anymore. The Integrated Business Planning platform should enable data and system integration. You should understand what you have and define what is needed already as part of preparation to transformation or initial phase of it. System integration may form even up to 30% of implementation costs.

      Technology design and integration could be defined in two layers:

      In the first layer, you should understand technology landscape affecting Integrated Business Planning, define systems which need to be integrated and platforms on which they operate now and in the future, and understand improvement initiatives affecting systems to be integrated as part of IBP solution. This activity normally should happen before or in initial phase of the transformation program.

      In the second layer, you should be able to define data model and detail data integration requirements to support end-to-end process design. This activity normally happens in process design phase of the transformation program.

      In some companies due to poor quality of data or very heterogeneous IT landscape, special project stream was formed to address not only master data but transactional data challenges. You may consider to position such stream as part of technology.

      Operate IBP in Holistic Manner

      Let us connect this to integrated design:

      Integrated design approach will help you to make IBP happening and navigate via inevitable changes in scope, focus, stakeholders, and business environment and address key pain points of disconnected planning.

      Integrated design helps to find out what Integrated Business Planning can mean for your company.

      Figure 1.5 was made to illustrate that with Integrated Business Planning we connect:

      All planning process, e.g., long term, tactical, and operational

      Volume and value inputs

      Risk and opportunities described by assumptions

      All levels from local market and production and distribution plants to regional and global level

      All dimensions of operating model (process, people, technology)

      Connecting long term, tactical, and operational process will improve your business.

      Connecting volume with value will make planning important.

      Connecting risk and opportunities in IBP will make planning real.

      Connecting local, regional, and global level will make IBP stakeholders as team.

      Connecting operating model dimension will help you make IBP happen.

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig5_HTML.png

      Fig. 1.5

      Holistic way to operate Integrated Business Planning enabled on SAP IBP

      Extend S&OP

      S&OP operating without integration to other planning processes and without value-added extensions like financial integration or end-to-end what-if business risk and opportunity simulations could hinder possibility to achieve competitive position in dynamic, complex marketplace. More tailored products and more sophisticated services require higher adaptability and flexibility in planning processes, all based on richer sets of source data and larger number of source systems. Clear rationale behind maturing S&OP and extending it is to cope with market dynamics and constant changes.

      Integrated Business Planning transformation can be understood as:

      Maturing and extending S&OP with IBP value drivers

      Embedding matured S&OP into IBP operating framework which connects long term, tactical, and operational planning processes

      Enabling organizational and capability connection between processes into IBP coherent organization

      Enabling with SAP IBP technology integration of various data sources into one data model for discussed planning processes

      Enabling management of volume and financial information in one framework

      Enabling end-to-end what-if business risk and opportunity simulations in volume and value

      Why do we highlight IBP transformation in this chapter? We wanted to explain that making your S&OP process more mature with new value drivers is a major but not the only element in IBP transformation.

      For the purpose of this book, we wanted to characterize IBP as follows (this does not mean we want to challenge existing terminology):

      I ntegrated B usiness P lanning is a business management process which aims

      to connect long term, tactical, and operational planning

      on local (markets, sites), regional (incl. production sites), and global level,

      to assess risk and opportunities, to verify assumptions,

      and to generate with cross-functional collaboration

      a feasible integrated business plan in volume and value.

      We see quite a confusion or freedom in interpretation of what Integrated Business Planning is, whether it is just a new term for S&OP, whether this is S&OP with financials, etc. As highlighted in the IBF article by Bowe, some of the above value drivers should have been accelerating well-established and mature S&OP process. Unfortunately, transformation projects often poorly address these. Also, there is no institution to define S&OP reference standards like SCOR/APICS (Bower 2012).

      Let us keep Integrated Business Planning as term in the business and let us not throw it away; do not neglect the value it created for companies needing a second chance for their S&OP and especially for those who see that IBP can help them to connect long term, tactical S&OP, and operational planning process on organizational and technology dimension.

      Based on the discussions with our customers, prospects, and colleagues and on our own experience, we have listed key value drivers which should be considered when maturing your S&OP process to make it fit into IBP holistic business management process framework (see Fig. 1.6).

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig6_HTML.png

      Fig. 1.6

      S&OP value drivers enabling step change into IBP framework. Revised based on (Palmatier and Crum 2013)

      1.2.2 Build Capabilities to Integrate and CoE to Sustain Change

      Roles and Capabilities Which Integrate

      A fundamental part of IBP’s success lies in building fit-for-purpose organizational structures and competencies. We see demand planner, demand manager, and finance controller as key roles to ensure process and organizational integration. Even though they need to focus on vertical and horizontal integration of long term, tactical, and operational planning, integration of S&OP process steps stays essential (Fig. 1.7). Identified focus area implies stronger integration and better overlap of capabilities between those roles opposite to work in silo.

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig7_HTML.png

      Fig. 1.7

      Demand planner, demand manager, and finance controller integration focus in IBP

      We see that those three roles cover whole spectrum of the process integration needed in IBP. Finding the right talent becomes a challenge then.

      IBP Center of Expertise Which Sustains Change

      Understanding how to sustain change in your organization should be on the top of your agenda. We are not saying how to reach a go-live but how to embed changes in the process and in people’s behaviors. It is a topic which addresses the importance of company culture. The Integrated Business Planning Center of Expertise could make transformation adaptable to changing business environment and could take ownership to introduce and sustain change in processes, organizational structures, capabilities, and technology.

      It has been proven by many studies that ca. 70% of the transformation programs did not deliver what was intended. Many problems with the realization of these programs come from the failure associated with the lack of a change sustainability framework and the lack of leadership and/or management support. There are many reasons for this: some important ones are the resistance to change and the lack of proper management buy-in. Transformation is often treated as an extra task for line organization senior management, tasks which are often not being measured. This makes it easy for the responsible person to agree to anything but apply my ways of working. When driving change, personal connection becomes critical, and the same goes for sustainability of change in organization. You should know what is in it for you, right? That is what business line experts and leaders expect to understand. We should understand some common pitfalls that transformation programs fall into:

      Make a change which is not lived

      Implement change without influencing behaviors

      Neglect relationship between project and line organization

      Lack of focus on cross-functional process excellence

      Lack of focus on knowledge sharing

      Lack of focus on proper documentation

      This is exactly what IBP CoE should focus on. Sustainability of transformation is mainly focused on people; therefore, the IBP Center of Expertise should focus its efforts on:

      Process improvement or lead transformation

      Transparency regarding project information and objectives

      Coordinating learning and development of various stakeholder groups

      Building education framework and knowledge sharing platform

      Continuous improvements by design

      Process governance

      Talent management

      The IBP Center of Expertise should leverage cross-functional expertise from:

      Demand planning

      Finance

      Supply and operations

      Sales and marketing

      IT/system

      Let us start from how to organize an Integrated Business Planning CoE. In most cases, there is a possibility to leverage existing excellence teams and form the IBP CoE as a virtual one but led and organized by an IBP champion.

      The other approach could be to form the IBP CoE as an organizational unit which truly holds IBP transformation and improvements together on a global scale (Fig. 1.8).

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig8_HTML.png

      Fig. 1.8

      IBP Center of Expertise (excellence) virtual vs direct model

      Which one is the better approach? There is no single, universal answer. You need to decide what you want to achieve or what is really possible to be achieved with an IBP transformation program and then pick a model which matches those expectations. Running CoE as a soft virtual link between existing functionally focused expertise teams may work, but it all depends on the IBP champions and teams. In the other model, you are less dependent on the interactions between the experts managed by different functional managers and driven by different KPIs. In both models, the challenge of business operating model transformation stays the same.

      You may think to adopt IBP CoE approach as (Fig. 1.9):

      Centralized, where IBP CoE will overarch business units

      Decentralized, where IBP Coe will be business unit specific

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig9_HTML.png

      Fig. 1.9

      IBP CoE decentralized vs centralized model

      The centralized approach is good in homogenous, relatively small or less complex organizations. The decentralized model may be good in large, heterogeneous, and very distinctive business models operated under the same formal umbrella. If you go for decentralized model, you would invest time to find synergies between business units and take as much efforts as required to unify the IBP CoE.

      Let us scratch the surface of the challenges linked to deployment of CoE concept. You should define and agree with your senior management what kind of responsibilities IBP CoE should have. What do we mean by that? There should be a clear split of responsibilities between the organizational unit which run the processes and the one which takes care of transformation and improvements. We see CoE as responsible for the design, understood as in Fig. 1.4. Design is not how it looks but how it works in business, yet departments who run specific parts of IBP should be accountable for the results.

      As we have highlighted above, demand and forecasting excellence may be integrated virtually into IBP CoE but still should be understood as:

      Mix of people with high statistical skills (demand analytics) and people who work closely to market businesses (demand planners)

      Demand analytics as useful and meaningful input and KPIs to the demand planners, so that they can make the right adjustments

      Not to rely on gut feelings but on the right amount of competences mix

      Position demand champions to drive the journey to become demand driven (Chase 2016)

      Finally there were many books written about leadership, but exposing its importance in few words takes a talent; see Fig. 1.10.

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig10_HTML.png

      Fig. 1.10

      There are no bad teams only bad leaders

      1.2.3 Build Holistic Transformation Road Map

      A transformation project should start from the knowledge of the as-is situation. This is obvious, yet it is essential to make a step back and do it right. You need to assess your as-is maturity and the state of IBP from an organizational, capability, process, and system perspective. Framework explained here (is used by leading consulting company) helps you go through the steps leading to the development of road map and business case (Fig. 1.11).

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig11_HTML.png

      Fig. 1.11

      Key elements of Deloitte integrated supply chain assessment framework

      The assessment can be done on both qualitative and quantitative inputs. Combining both normally leads to the most valuable insights. The assessment should be done against the following dimensions: objective (business priorities), process, organization, performance management, and technology. These dimensions may have a different maturity, and therefore very often a differentiated approach should be followed. Selected dimension or part of the process may have different gap; therefore, approach to bridge gap could be different; see Fig. 1.12.

      ../images/462279_1_En_1_Chapter/462279_1_En_1_Fig12_HTML.png

      Fig. 1.12

      Gap analysis—current vs target state examples

      The assessment should be done against the following dimensions: objective, process, organization, performance management, and technology. These dimensions may have a different maturity, and therefore, very often a differentiated approach should be followed (Amber and Debashis 2015).

      The completeness of the maturity assessment is vital. You should assess and prepare output in selected maturity assessment approach. Check in particular if your organization structure fits the purpose, if capabilities are allocated in the right places, if the processes are robust, and if the technology can be put in the hands of users and key users. Ultimate outcome of assessment is identification of opportunities, prioritization, business case, and high-level deployment plan.

      Keeping above in mind, we can emerge into Integrated Business Planning. We start with a detailed view on SAP IBP technology overview, and then we proceed to long term, tactical S&OP, and operational planning processes explained with SAP IBP use cases.

      © Springer International Publishing AG, part of Springer Nature 2019

      Robert Kepczynski, Alecsandra Dimofte, Raghav Jandhyala, Ganesh Sankaran and Andrew BoyleImplementing Integrated Business PlanningManagement for Professionalshttps://doi.org/10.1007/978-3-319-90095-7_2

      2. Enable IBP with SAP Integrated Business Planning

      Robert Kepczynski¹  , Alecsandra Ghita², Raghav Jandhyala³, Ganesh Sankaran³ and Andrew Boyle⁴

      (1)

      Zurich, Switzerland

      (2)

      SAP Switzerland, Regensdorf, Switzerland

      (3)

      SAP LABS LLC, Tempe, Arizona, USA

      (4)

      Ingolstadt, Germany

      Robert Kepczynski

      2.1 SAP IBP Applications Overview

      SAP Integrated Business Planning is a real-time supply chain planning solution purpose built to profitably meet future demand by optimizing the supply chain. Built natively on SAP HANA and deployed in cloud, SAP IBP provides the flexibility, agility, and performance to meet complex planning requirements of the next-generation supply chain. SAP IBP is used by many customers in strategic, tactical, and operational planning on a unified integrated data model supporting sales and operation planning, demand planning, inventory optimization, response and supply, and control tower. Together with robust planning algorithms, real-time simulations, what-if analysis, dashboards and analytics, alerts, embedded social collaboration, and

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