How Finance Help Create an Integrated Business Planning Framework

Published on:

July 29, 2021

employees gathered around a desk collaborating

The finance function is evolving, fast. Where finance used to focus on traditional activities such as account management and act in an advisory role to the C-suite, the finance function of the future will be focused on driving business performance by leading strategic planning through data-led decisions.

Rethinking finance means rethinking the way businesses plan.

Integrated business planning presents a significant opportunity to develop the role of finance to meet future business needs. It offers a framework for finance to use that matches their new purpose of creating value adding activities for businesses. 

Finance Function is Developing Naturally Across Industries

Research shows that finance function, particularly the role of the finance leader, is developing across industries. An average of five functions other than finance now report into the CFO.

Further research reveals that four in ten CFOs say they spent more time over the course of a year focusing on activities that weren’t traditional finance activities. The survey revealed that these non-finance activities were predominantly strategic leadership, organisational transformation, performance management, capital allocation and big data and analytics. 

This shift in finance function makes perfect sense. Businesses face an increasingly challenging economic landscape alongside increasingly competitive markets. Finance is perfectly placed within the business to harness data, operational knowledge and analytical thinking to drive business performance.

What is an Integrated Business Planning Framework?

Integrated business planning (IBP) is an alternative approach to business planning.

Traditional business planning often silos different business activities. Marketing has their strategy, HR has theirs, IT has theirs and so on. What this means for businesses is that the larger strategic goals are often disjointed from departmental strategies and activities may not align well with larger business goals. This results in poor business performance and business productivity for many companies.

Instead, an integrated business planning framework seeks to align strategic business planning with operations and finance. It looks to create one single, cohesive business plan for everyone in the company. It achieves this by:

  • Being one process of continuous improvement
  • Having both short and long term strategic planning
  • Using advanced data analytics that are shared across the business
  • Cross-functional collaboration and communication between all departments
  • C-suite adoption and sponsorship

Finance Has a Key Role to Play in an Integrated Business Framework

So, where does finance fit into an integrated business framework?

IBP can be a driving element in developing the function of finance. As discussed above, finance has increasingly been tasked with more and more responsibilities outside traditional finance activities, with many more departments reporting into them.

As finance begins to play a more strategic role in businesses, an integrated business planning framework gives finance a methodology to use to align these different responsibilities successfully, resulting in better outcomes for the business.

Integrated Business Planning Framework Enables Financial Excellence

An integrated business planning framework has several aspects that enable financial excellence for businesses, including:

  • Planning Efficiency
  • Quality data
  • Transparency
  • Risk management
  • Performance management

More Efficient Business Planning

Integrated business plans aren’t a static document like many other traditional plans.

They give businesses both a short and long term strategic plan. The long term view tends to span between 24 to 36 months, while the short term view tends to span between 3 to 6 months. The short term view is also reviewed at least monthly by a collaborative IBP team spanning across departments. 

These combined views allow for finance to create realistic and adaptable long and short-term goals based on quality data. Finance can focus on strategic value adding activities for both short and long-term.

Improved Data Quality

Integrated business planning relies on quality data. There are a huge wealth of advanced analytics available for finance that can give better insights into both internal and external performance factors which many businesses have yet to invest in.

To create a successful integrated business plan framework, finance must have the right tools to do the job. This quality data allows for better analysis and insight, leading to better decisions with better financial outcomes for the business.

Increased Business Transparency

Silo syndrome within businesses breeds problems. Teams are disjointed, lack common goals and values and often fail to see the connection between their departmental goals and wider business goals.

A key element of an integrated business framework is transparency. An IBP process includes as many relevant stakeholders as possible, across departments. Then everything created is shared across the entire business including data and business goals.

This transparency in business has numerous benefits. For teams, it allows employees to continuously develop their understanding of how their role aligns with larger business goals, helping them to feel like a more valuable asset to the company. 

For finance, this open and transparent communication and cross-functional collaboration helps them develop a better understanding of the business. This in turn can help them identify the unique challenges and opportunities for different operations across the business.

Better Risk Management

Quality data in combination with the adaptability of short-term business goals in IBP allows finance to better navigate both risks and opportunities. The business has improved reactivity to ever-changing markets and economies, so when the tides do turn, the business is better placed to adapt accordingly. 

More Effective Performance Management

Performance across a business can be disjointed at best. The C-suite may be concerned with market share and profit margin, while marketing is concerned with year on year traffic and conversion rates and HR is concerned with employee retention rates and absence rate.

Some of these performance metrics align, and some don’t.

Businesses need a standard for performance management across the business, and an IBP framework provides this. Finance can then more easily identify and address any performance gaps within the plan, as well as report business-wide performance seamlessly. 

Finance Leaders Can Support the Adoption of an Integrated Business Framework

As you can probably tell from the above, finance has a key role to play in adopting an integrated business framework as its function is so intrinsically linked to the success of IBP.

This is particularly true for finance leaders like CFOs or finance directors.

Employees across the business look to leaders to execute major changes. Moving from traditional annual or bi-annual business planning to integrated business planning is quite the change.

The finance leader should develop and own the road map to achieve these changes, as well as promote the changes to other key stakeholders. Early on, this will involve mainly working with the C-suite, D-suite and other senior executives to ensure a full sponsorship of the implementation of an integrated business framework. 

In a sense, the finance leader should be the champion of integrated business planning; well informed of its potential benefits to the company and tackling any doubts of changing the status quo with forward planning.  Additionally, the finance leader should model the behaviours desired across the business to successfully adopt an integrated business planning framework. 

Another challenge for the finance leader is changing the finance function. While some businesses may have naturally developed finance functions within the company, others may not have. For these businesses, IBP represents a drastic change in the finance function.

The challenges presented by this change must be navigated by the finance leader. They need to address the current practices, identify the need for changes and identify and implement the new practices and responsibilities with the wider finance department to enable the new finance function to have the broad influence it needs to lead integrated business planning. 

Beyond the finance team even, the finance leader may have an additional role to play in building the new connections between commercial and operational teams to allow for cross-functional collaboration. Often, these teams have no existing partnership whatsoever. But the finance team has often worked with both. They can use their existing relationships with teams to help develop new IBP partnerships with open and trusting communication. 

We mentioned data management above. It is natural for the finance leader to take ownership of this, even if that is to delegate to the most capable team members. Finance leaders should identify the best technologies available to invest in to provide a standard, transparent data process that should be made available for all departments. 

The New Skills IBP Requires of the Finance Director

Integrated business planning calls for new skills from both finance leaders and the wider finance department which are beyond traditional finance skills. 

To deliver a successful integrated business planning framework, businesses must invest in developing these capabilities and skills or hire for desired behaviours. 

For starters, finance teams must have data experts. The scope has widened from traditional or speciality financial data, to a huge array of data that needs collating and analysing to give a cohesive picture of business performance. This means finance leaders and other finance staff need data analysis skills, data visualisation skills and critical thinking skills to enable them to use the advanced technologies available. This will aid finance in scenario planning, allowing for more accurate forecasting short and long-term and ultimately creating a more robust organisational strategy. 

Finance also needs to develop a wider commercial awareness or commercial acumen for IBP. Many finance leaders already possess this vital skill as their role has developed into one of more influence. Finance needs to possess a deep understanding of how the business runs and operates, as well as an understanding of the wider market it operates in. Simply reporting financial data did not require this skill, but to create a successful integrated business plan means finance must be able to contextualise data insights against the knowledge they hold about internal and external business factors. 

The entire finance department and the finance leader must possess excellent communication skills to successfully implement IBP. They’ll be faced with an array of key stakeholders across the business who will struggle to understand the concept or recognise the benefits of IBP. Finance must be able to communicate openly, honestly and transparently

For finance leaders specifically, implementing an integrated business planning framework requires leadership skills. They are uniquely placed within the business to have the connections to lead cross-functional collaboration, the data analysis skills to drive strategy and a position within the organisational hierarchy to influence C-suite decisions.

This means they must possess an array of business leadership skills such as:

  • Strategic thinking
  • Innovation
  • Commercial acumen
  • Planning skills
  • People management skills
  • Change management skills 
  • Communication skills
  • Influence and negotiation skills

Overall, integrated business planning requires new behaviours and mindsets from finance, with finance leaders at the helm. But the benefits of an integrated business planning framework for businesses are too good to ignore in favour of the status quo. IBP can ensure business resilience through aligned operations and increased business performance and productivity. 

Use an Integrated Business Planning Framework to Drive Business Productivity 

Research shows that businesses that adopt an integrated business planning framework can see an increase in business productivity of between 30% to 45%. Alongside this, businesses saw an increase of between 10% to 15% in sales revenue. 

This goes to show utilising the new function of finance through an integrated business planning framework can unleash new opportunities for growth for your business. 

In an uncertain world, an integrated business planning framework allows for adaptable, data-driven decisions and increased collaboration to create a more transparent business with better aligned operations.

Of course, implementing an integrated business planning framework cannot be achieved by finance alone. It must have full sponsorship across the business, starting with the C-suite, as well as the resources necessary dedicated towards this transformation.

Our continuous business improvement programme can help your business manage this transformation through our unique combination of project, people and business management. We work with finance leaders to implement new behaviours and processes that your business needs to thrive in the 21st century. 

About Paul Freudenberg

Paul Freudenberg is a business productivity coach and consultant with a focus on operational excellence delivering improved profitability and business performance, and Founder of Awardaroo in 2005. Paul has set the mission of Awardaroo to help raise UK Business Productivity from one of the lowest in the G7 to one of the highest by 2030. Connect on LinkedIn

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