Integrated Business Planning (IBP)

Integrated Business Planning is a holistic planning methodology that global enterprises can employ to generate maximum profit, cash flow, and return on assets. Through IBP, enterprises can eliminate silo views and partial financials. IBP creates a unified model of the entire enterprise - one that enhances decision support and operational planning processes and builds a complete set of financials.

When organizations incorporate IBP into their operational framework, they can truly leverage their information assets - enabling executives, business unit managers, and planning managers to evaluate plans/activities to determine what products, processes, and investments will deliver the most positive economic impact to the organization.

Benefits of Integrated Business Planning with Enterprise Optimizer®

IBP provides an integrated decision support, planning, and learning platform that delivers a decisive competitive advantage by:

•	Generating a holistic understanding of key drivers of profitability, cash flow, and Return on Assets (ROA)

•	Quantifying the financial impact and interdependencies across strategic options to maximize the effectiveness of investments in products, customers/channels, and operations

•	Balancing and optimizing the S&OP process to maximize profitability and ROA

•	Automatically aligning budgets and financial targets with the outputs of strategic decisions and the S&OP process

•	Supporting detailed profitability analyses by product, customer, channel, and asset

•	Increasing organizational agility to quickly and effectively respond to changes in the business environment

•	Enabling proper financial quantification of the impact of alternative sustainability strategies and business risk scenarios

IBP Enables Enterprise-wide Performance Management

Integrated Business Planning Exists Because Current Planning Processes Fall Short

In many organizations today, there are planning process limitations. Executives and other managers find that they have to make financial decisions with limited business context. Additionally, siloed processes and perspectives prevent optimal financial outcomes; policies are often not optimized for system-wide financials (e.g., pricing policy, inventory policy, staffing rules, etc.); and operational strategy is not integrated with policy and tactical planning.

With IBP, enterprises can:

•	Enable a cross-functional strategy to model relevant constraints and optimize to financials.

•	Optimize policies to enterprise-wide profitability, while maintaining alignment with strategy.

•	Enhance existing planning processes/systems to expand collaboration and optimize profitability.

•	Automatically feed the budgeting and financial planning process.

The Market for Sales & Operations Planning (S&OP) is Evolving towards Integrated Business Planning

"Integrated Business Planning (IBP) will enable companies to model and align business strategies to operational strategies, ensuring significantly improved supply chain and business performance."

Tim Payne, Research Director, Gartner
"Hype Cycle for Business Intelligence and Performance Management," July 23, 2007, p10.

"Integrated Business Planning is a truly cross-functional, multi-dimensional process that includes all elements of demand, supply and financial analysis in relation to the business goals and strategy...leading to significantly higher financial and operational performance.

Naria Viswanathan, Research Director, Aberdeen Group
"Technology Strategies for Integrated Business Planning," July 2006

"Current business performance management software cannot deal with performance trade-offs as most products focus on solving only one or two problems myopically...In contrast, IBP delivers the kind of enterprise-wide integrated decision-making capabilities that have been talked about for years."

Mark Smith, CEO/EVP Research, Ventana Research
Article ID: M07-34, June 2007

"Integrated Business Planning...is the process of constantly realigning short- and long-term decisions between the sales, marketing, operations functions, as well as synchronizing with the strategic financial plans to create consensus plans."

Noha Tohamy, Research Director, AMR Research
"S&OP Technology Landscape: Evolution to Integrated Business Planning is a Work in Process," May 2008

River Logic's Modeling Technology, Enterprise Optimizer, Delivers on the IBP Vision

Conventional modeling technology, such as those typically found in the corporate performance management or Sales and Operations Planning (S&OP) arena, address only isolated problems. While there are established standards like OLAP-data modeling, which has proven to be fast and flexible for management reporting and budgeting, it limits business modeling capability. Optimization-based constraint modeling (LP, MILP, and NLP) can optimize business processes within established parameters and provides dozens of solvers for different problem sets, but it limits flexibility. The sizes of models are limited by user capability and they require manual set-up and sequencing of equations.

Constraint-Oriented Reasoning (COR), as found in Enterprise Optimizer, automatically generates all the constraints in a system. Enterprise Optimizer provides cross-functional decision support, advanced and dynamic analyses, and the flexibility to reflect changes in a business environment. Enterprise Optimizer is the first commercially-available, Fifth Generation Language modeling technology – technology which meets all of the requirements of IBP by providing horizontal solutions and support for verticalization.

Cross-functional alignment and optimization of metrics to financials