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Integrated Business

Planning: Is It a Hoax
or Here to Stay?
By Patrick Bower

E X E C U T I V E S U M M A R Y | Integrated Business Planning (IBP) is not new; it is just another name of a mature
S&OP process. Comparing forecasts to the operating budget, aligning tactical plans to strategic plans, having a portfolio
management process, and going over alternative scenarios for better decisions have always been the vital components of
S&OP. The interest of businesses will be best served if vendors put their energy in improving the S&OP technology than in
promoting it as a new and improved process technology.

PAT R I C K B O W E R | Mr. Bower is Senior Director, Corporate Planning & Customer Service at Combe Incorporated,
producer of high quality personal care products. A frequent writer and speaker on supply chain subjects, he is a
recognized demand planning and S&OP expert and a self-professed “S&OP geek.” Prior to that, he was a Practice
Manager of Supply Chain Planning at a boutique supply chain consulting firm, where his client list included
Diageo, Bayer, Unilever, Glaxo Smith Kline, Pfizer, Foster Farms, Farley’s and Sather, Cabot Industries, and American
Girl. His experience also includes employment at Cadbury, Kraft Foods, Unisys, and Snapple. He also worked for
the supply chain software company—Numetrix—and was Vice President of R&D at Atrion International. He was
twice recognized as a “Pro to Know” by Supply and Demand Chain Executive Magazine.

C
all it what you will, but people believe you. Unfortunately analyzed countless articles, white
Integrated Business Planning the purveyors of Integrated Business papers, blogs, and other points
is nothing more than a mature Planning (IBP) software, services, of reference regarding IBP. I was
Sales and Operations Planning and research have taken the latter searching for something truly new
process. If you want to succeed in approach, claiming to have developed and innovative, some fundamental
business, build a better mousetrap—a a better model—a better mousetrap— improvement. I went out of my way to
truly new product or service that offers than Sales and Operations Planning give the most favorable interpretation
fundamental value to consumers. Or, (S&OP). Well that’s a load of bunk. to these various points of view. I
at least make that claim and hope Before reaching this opinion, I was hoping my research would

Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Spring 2012 11
reveal quantifiable findings, a new weekend of reading, I set about the seemingly nonstrategic S&OP
thought leader—something unique. summarizing the key points of environments most likely suffer
What I found, however, was that IBP difference drawn from this research. from a lack of executive-level
is nothing more than a restatement I have to admit, during my research, participation as a result of an
of the characteristics of a mature I was shocked with the prevalence of incomplete/poor implementation
S&OP process. IBP is the intellectual the words—More, Improved, Robust, of S&OP, and because of a failing
equivalent of refried beans. It is a Easier—used by a variety of authors, in the process model itself. S&OP
junk innovation, a Pet Rock, a novelty and in some cases I have drawn has always been positioned as
of little value, a useless fad. This on these verbatim. Consider these a strategic process, with sub
purportedly hot, new, and must-have counterpoints to several of the “key processes established as forums for
management tool offers nothing new, differentiators” mentioned: addressing alignment issues with
and is therefore a hoax. – More, Robust, or Better Financial regard to overall business strategy.
Projection/Integration. Financial Strategic alignment to tactical plans
A ROSE BY ANY integration has been part of the has always been a vital component
base S&OP model for years. The Pre- of S&OP. To propose introducing it
OTHER NAME S&OP or Integrated Reconciliation as a shiny new concept unique to
While participating in a panel meeting is the “place” in the S&OP IBP leaves me scratching my head
discussion about “advanced” S&OP process where the forecast is valued and asking, “Really?”
at a recent conference hosted by the and compared to the operating – Improved Executive Participation.
Institute of Business Forecasting, I budget. It ’s also the forum Many S&OP processes do not
referred to IBP as “I’ve Been Played.” The where alternative supply/demand have executive participation.
line was a hit, but I wasn’t playing it for scenarios including competitive, In my mind, without executive
laughs; I was serious. I felt compelled customer, and market-based participation, S&OP is not S&OP.
to take a “Stop the Insanity!” stance activities and events are discussed, The best practice for S&OP is
on the subject. After concluding my valued, and vetted for presentation to have VP’s of Ops, Sales, and
quasi-rant, I was greeted by a number to senior management. To the Marketing chair each of the Supply,
of S&OP practitioners who agreed with learned practitioner, financial Demand, and Portfolio Review
my statements. They saw through the integration has always been part meetings, respectively. Does this
fog and recognized IBP as nothing of the S&OP process model. It’s always happen? No. Does having
more than an attempt to differentiate nothing new. As for technical more executive involvement in
without a point of difference. What integration, I have personally the meeting merit a process name
is clear, however, is the disconnect observed Cognos, Hyperion, change to IBP? Absolutely not,
between so-called “experts and Comshare, Steel Wedge, Interlace, executive involvement is assumed
purveyors” who would propose to and homegrown Excel financial in the S&OP process model. Most
treat IBP as a noun—a cure-all elixir— models used to place valuation organizations have what I describe
and their intended audience, everyday on plans and alternate scenarios. as goldilocks dialogues regarding
S&OP practitioners, the wisest of Again, for S&OP practitioners, the level of executive involvement.
whom see IBP for what it really is, a financial valuation is old hat. The porridge is either too hot, too
verb—a series of actions equivalent – Inclusion, Alignment to, Use or cold… and rarely is just right. No
to a mature S&OP process done well, Integration of Strategic Plans, one is ever 100% happy with the
and thus in need of no separate (and Initiatives, and Activities. Really? level of detail in the dialogue. The
costly) name. This is a point of difference? I executives often feel there is too
find it unusual that proponents much detail, and the planning
THE EMPEROR’S FEW cite this as an IBP differentiator organization often sees too little.
because one of the most common The concept of using product family
CLOTHES complaints about S&OP is that it groupings was intended to bridge
Not convinced that IBP is just is too strategic, and not detailed that conversational divide.
a gussied up S&OP? After my long enough. I would suggest that – Addition of More, Robust, or

12 Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Spring 2012
Better Product and Portfolio and risk management.” Of course, however, this extended horizon is
Management. Portfolio manage– all these elements are inherent in a classic characteristic of a mature
ment has been part of most S&OP mature instances of S&OP and not S&OP process, and not something
process models since at least the anything new, as IBP advocates more, new, or improved.
late 1990s. Product and portfolio might have you believe. The Pre- – Better, Robust Understanding of
management within the monthly S&OP sub-process, also known the External Supply Chain, Market,
S&OP cycle is considered to be as Integrated Reconciliation to Customers. Some authors and
base S&OP (or foundational S&OP, some, has always been the forum analysts suggest that one of the
or competent S&OP, depending for generating alternate scenarios, differences between S&OP and IBP
on the nomenclature). I guess demand or supply shaping, risk is that the latter leads to a better
what we really need is a definition assessment, market assessment, understanding and integration of
of “more and robust” offered by strategic project follow-ups, etc. the external environment. They
some authors, but I did not find And the outputs of Pre-S&OP opine that S&OP processes to
any specifics. While there are many planning are typically well-vetted date have been more inwardly
companies that do not have a problem statements, sometimes focused and less customer-and
portfolio management process, this / often with alternate-resolution market-aware. While it may be
is not a legitimate case for changing opportunities, costs, and trade-offs. true that some S&OP instances are
the name of S&OP to IBP. I can offer So, while less mature processes introverted; a mature S&OP process
my opinion why many companies are demand consensus and supply should extend outside the four walls
are missing this process step; one balancing oriented, mature S&OP of any organization. A Demand
of the older schools of thought processes really work the Pre-S&OP Consensus process, for example,
on S&OP did not include portfolio sub-process to arrive at well-vetted should incorporate all demand
management in the process model. issues and alternative scenarios to signals: Point-of-Sale data, VMI/
This “old-school” of S&OP was serve up to senior management. CPFR data, market research, etc.
focused more on demand, supply, – Plan Gap Identification Leading Product Portfolio processes should
and inventory, with an overall goal to Improved / Better Decision discuss competitive products
of achieving balance among these Making. Many authors suggest an and the intended reaction from a
elements. For companies that don’t intermingled dynamic; IBP has a product development perspective.
yet have a portfolio management longer horizon process—up to 24 Customer and vendor supply chain
process, they’d be better served by months, and the longer view enables integration is not just good S&OP, it
simply augmenting their existing better gap identification and longer- is also a good supply chain planning
S&OP process with the addition of term (strategic) decision making. process. Pushing S&OP to be more
a portfolio management step— In this case, one author suggests externally driven is a very smart
bringing it to full S&OP maturity— that an “extended planning horizon idea; it’s just not a particularly new
rather than chasing the shadow enables better decision making one.
promise of IBP. involving what is commonly called Part of my research effort was about
– Addition of, or Improved What gap management.” I hate to say, but trying to understand the rationale
Ifs, Scenario Planning, Simulation this is garden-variety S&OP. Mature behind the S&OP to IBP name change.
Alignment to Operating Plans. S&OP processes are expected to If I were to paraphrase and integrate
According to a leading consulting detect gaps at the sub-process level a number of the different reasons
firm, IBP is “responsive optimization (the Supply, Demand, Portfolio, and for changing the name to IBP (from
of the business in pursuit of Pre-S&OP process steps), which are a variety of authors), I would likely
business strategy. The process then vetted, valued, and elevated come up with the following stream of
focuses on the use of alternative to senior management for decision consciousness: Because S&OP is stuck
scenario planning to reconcile making. The 24-month “longer- in the middle management level and
gaps between latest projections term” or “extended” view of forward therefore not strategic; or because it
vs. business plan and strategy and plans cited is a time frame with is viewed as a supply chain function
to perform contingency planning which I completely agree. Curiously, that focuses on demand, supply, and

Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Spring 2012 13
inventory planning; or because it has reached out to several colleagues in seek to promote the notion of IBP?
stopped developing or maturing as the supply chain consulting arena What’s the motivation? In trying to find
a process — there is now a need to regarding their thoughts on IBP. an explanation, I was drawn to a great
reposition S&OP as IBP, a broader, Mark Wells, a Principal at End-to-End marketing book, The 22 Immutable
higher-level process than S&OP to Analytics, offered this: Laws of Marketing, by Al Ries and
help reengage senior management, Jack Trout. In this book there are two
finance, and marketing in the process, “S&OP is being renamed many specific rules that standout:
leading to better decisions and things—SIOP (Sales Inventory • Rule #1, The Law of Leadership: It’s
engagement. Of course, all of these Operations Planning), IBM better to be first than it is to be
reasons are in fact symptoms of a poor (Integrated Business Marketing), better.
implementation or lack of continuous and IBP (Integrated Planning and • Rule #2, The Law of the Category: If
improvement within the S&OP process. Budgeting, more often in service you can’t be first in a category, set up
One argument common to industries), but most of this is a a new category you can be first in.
the blogosphere is that the S&OP distinction without a difference. I In fact, the “first to market or new
moniker carries with it some amount think this has happened, in part, category” deception trick works so well,
of supply chain ”baggage” that because competing consulting it has been used over and over again
seemingly can only be overcome by firms insist that their S&OP by marketers of all sorts and types.
renaming the process. Interesting, approach is different from all The authors offer a great example of
but doubtful. If structural issues like others. how this works in real life. Can you
a lack of interdepartmental synergies name the first person to fly across the
or poor executive involvement are Mark adds, “I believe the process of Atlantic? Charles Lindbergh, of course.
hindering the effectiveness of Sales intentionally incorporating all of The second person? In fact, it was Bert
and Operations Planning, it seems the relevant tradeoffs in business Hinkler. He flew faster and consumed
likely the problem that warrants more decision-making is essentially the less fuel, but he is a footnote. The third
substantive attention than a mere same, regardless of the moniker or person? This answer you probably
name change. label.” know: Amelia Earhart. Why? Because
Another rationale posited is that she was first in a new category: The first
many companies may think they In one telling white paper on IBP, woman to cross the Atlantic.
are doing S&OP well, yet they are the authors suggest how the boxes in I thought of a few of my own
only executing some of the process their IBP process model are the same as examples: The first team to win a Super
steps. Certainly, when I was working in their S&OP process model. So, while Bowl? The Packers. The first AFL team
as a consultant I encountered many all these arguments certainly present to win the Super Bowl? The New York
organizations that claimed to be various reasons and opportunities Jets. The team that won last year? Hard
doing S&OP, yet all they were really to refocus, to reeducate, or to re- to recall right? Can anyone name the
doing was demand consensus implement with regard to S&OP, I am crew of Apollo 12? I am guessing it is
with a little balancing and maybe not convinced that globally renaming probably not easy for most, but with a
a “reporting out” for a Senior the S&OP process is a viable solution. little prodding most people can name
Management review meeting. In these And while I suspect these various the crew of Apollo 11—Armstrong,
environments, it seemed that the authors are sincere in their intentions, Aldrin, and Collins. Being first or
initial implementation of S&OP failed many of their explanations fall flat. defining a new category is important
to gain senior-management support, There is no real difference between IBP when marketing. With this concept in
was poorly implemented, or did not and S&OP. mind, it is not a surprise that so many
promote continuous improvement of people have claimed ownership or
the S&OP process that would enable a WHY IBP? authorship over the S&OP process. Now
maturation that well-formed processes that S&OP has become somewhat old
can eventually achieve. So then, if one accepts the premise hat, people are lining up to claim IBP. I
As I was still unsure of whether I was that IBP is nothing more than S&OP can see the ads on TV now—“Next up
looking at IBP with jaundiced eyes, I done well, why is it that so many folks on the Maury show— the DNA results

14 Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Spring 2012
for fathering IBP.” The fact that IBP is a at the speed of thought, though as sometimes it is quite a valuable
clone of S&OP does not matter much. far as I can tell they’re often nothing insight. However, one only needs to
I had the luck (if you can call it that) more than reworked versions of remember that several years ago,
of seeing this “new and improved” S&OP white papers, often with the some of today’s IBP proponents
dynamic play out more than a few original benefit statements left tried foisting a “nine-step” S&OP
times during my career. I worked for intact. model on industry. Let’s not forget
two software companies and one – The Experts Are Confused. The some software companies may try
boutique consulting firm, so I believe emergence of new and more to rechristen S&OP as S&OM, calling
I have a pretty good understanding of seamless technologies to support it the next latest and greatest
the real rationale behind this name- S&OP has made technology innovation and claiming ownership
change imperative; to wit, I offer the vendors and analysts seeing this of it will be a big deal.
following: as a Eureka moment. It is possible – We Encourage the Bad Behaviors.
– It’s Something New to Sell. Simply they honestly believe that S&OP has Business leaders are always looking
put, IBP gives sales personnel a been transformed by the availability for some competitive advantage.
new reason to call their customers of integrated planning tools. I We hear a buzzword and want to
or to make a new contact. Having would agree that S&OP supporting know more. Maybe we don’t know
something new to sell is very technology is at a transformational how to discriminate between IBP
important in the consulting and moment in time—detailed plans and S&OP. Maybe we buy into the
software marketplaces. Further– can now be generated, optimized, argument that everyone is doing
more, the marketing of IBP as a aggregated, valued, and alternative “base” S&OP, so we’d better jump
must-have strategic process gives realities determined pretty easily. aboard the IBP bandwagon or be
people a cover story to sell into Detailed planning can be done in left at a competitive disadvantage.
corner offices—to executives. If it hours instead of weeks. However, Sometimes the problem is us.
hasn’t started already, be prepared this is not an advanced form of – There Is No Governing Body.
for your CXOs to be harassed by S&OP—it is just the fulfillment of the S&OP has no governing body to
the purveyors of IBP as something promise of what S&OP has always assure unified understanding and
latest and greatest. been. S&OP has been waiting for education. This allows re-inventors
– S&OP Is Getting Harder to Sell. Moore’s Law and software support to sweep in and try staking claim
Most large to midsized companies to catch up to some long-stated to their own brand of mind-share. I
have at least tried to implement requirements. While it may seem am sure a governing body on S&OP
S&OP, leaving the purveyors with like technology makes for more would probably say “Not so quick
fewer opportunities to sell their integrated planning, the reality bub!”
wares, and with smaller potential is that many of the best S&OP I asked an old colleague of mine,
deal sizes. Re-invention of S&OP is implementations have already Glen Fossella, to weigh in on this
needed for growth and, of course, leveraged technology. Does tech– subject. Glen ran marketing and sales
everyone is lining up behind nology make S&OP better? No, it for a couple of software companies,
the IBP concept because it is a makes the decisions better, smarter, including Numetrix and Logility; he
potential gravy train if the concept and quicker, thereby making fully also spoke frequently with members
attenuates within the business enabling S&OP, not improving it. of the research community. Glen offers
community. S&OP is a process model, not a the following opinion: “Companies
– Buzz Begets Buzz. If a topic is technology model. We have been thrive and grow on their ability to
perceived to be hot, no one wants waiting for the technology to catch deliver new value through their
to be left out. This leads competing up to the process, and it is now products and services. Re-spinning
service and solution providers to almost there. old soap as an excuse to call on
announce “me-too” versions of – Research Analysts Want to Seem you is the last refuge of cowards.
IBP, even though they’re likely no Smart. It is in their best interests So if a vendor, either through their
different than their S&OP offerings. to “invent” something new. They marketing or selling, comes at you
And white papers seemingly appear sell their opinion and insight, and with something ‘new’ that turns out

Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Spring 2012 15
just to be repackaging, then you know anyone, software vendors need to
everything you need to about how
HOW TO have a better idea of what S&OP
they operate.” Some people may see ADVANCE S&OP really needs in terms of support. For
my reasoning to be slightly cynical. example, there are vendors hyping
Maybe. But absent logical and real At the IBF conference where I slice-and-dice capabilities and
points of difference between IBP and participated on the forum about data manipulation/integration tools
S&OP what are my options? “advanced” S&OP, instead of feeding but have yet to develop a working
into the IBP ruse, I chose to present version of a Supply Demand
SO, WHAT’S THE ideas on what should be done to Inventory/Production, Sales, and
advance the current state of S&OP. In Inventory (SDI/PSI) graph. In
PROBLEM? my humble opinion, I believe this is manufacturing companies, this is
A friend of mine asked why I was where all the purveyors and experts a must have. Some vendors have
so adamant about this subject; a should exert their efforts. developed a nice SDI presentation,
valid point that raises the question: – Develop an Industry Group but cannot save different,
Why is recasting S&OP as IBP such to Create a Unified Definition alternative scenarios of supply and
a bad thing? No doubt, marketers of S&OP. Think of this as the demand balancing. I viewed one
play games with branding all the equivalent of SCOR for S&OP. such vendor without this capability
time. Companies throw in fairy-dust Have this industry group develop earlier this week. Others have nice
quantities of a “good” ingredient open-source process models and top-level presentations but can’t
with alleged benefits, and customers content. Imagine a governing body drill down to the detailed plans. A
line up for the new and improved. for everything from standard S&OP governing body / industry group
So is touting IBP really that much project plans and process models would enable defining these
different? to checklists, project plans, and requirements.
To me, S&OP is a process maturity checklists. I think some – Create a Top Five or Dirty Dozen Set
model that is just now being truly consulting companies fear exposing of Standard S&OP Metrics. Let the
understood. Adding confusion into such information to the public same industry group determine and
a marketplace that is just gaining domain, but at the end of the day, agree on metrics and calculation
critical-mass knowledge never bodes S&OP is still a process that is best methods. While some measures
well for a good outcome. IBP, nine- implemented with outsiders able to are unique to certain industries or
step models, advanced or executive tell management the truth. There will markets, there are generic measures
S&OP, S&OM—all are variations on still be plenty of money to be made, that should be used in support of
the theme of S&OP, yet none of these and sales of books and training on any S&OP process, yet surprisingly
has expanded the thinking around the subject will not decline. many companies still struggle with
the original premise, and now all the – Develop a Certification Pathway measuring success. All the more
talk of IBP just adds more confusion for S&OP. To me, S&OP is a capstone reason to drive toward continuous
to an already effective process that is discipline requiring knowledge improvement of installed S&OP
still firming its definition. Confusion of demand planning, supply processes rather than reinventing
in any marketplace hurts consumers. planning, and financials as well as the wheel with an IBP cure-all.
It leaves them unclear about what the process itself. Let’s define a set – Deepen the Understanding of
they’re buying. And in the case of of criteria and corresponding tests Process Steps and Tools. Instead
IBP, it promises all new and improved for understanding the basics, and of reinventing the top-line
when what companies really need then establish a nonproprietary S&OP process, create enabling
is a continuous improvement effort certification process. If I were discussions and white papers aimed
on their existing S&OP model. Rather implementing S&OP, there’s no at deepening the knowledge of sub
than buy new, S&OP process owners doubt I would want someone process elements. Where does trade/
need to reengage, rethink, and certified to be at the helm. price promotion management fit
reenlist everyone and every step of – Define a Set of S&OP Requirements in the S&OP process? What are the
the process they already have. for Software Vendors. More than best approaches/tools to be used

16 Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Spring 2012
for SKU management? How does is a lesson I learned seven years ago one of the slides: “S&OP is Integrated
S&OP work best in short product while attending an Oliver Wight “train Business Planning.” Hmm. Imagine that.
lifecycle businesses? And how can the trainer” class on S&OP. Now, in my (info@ibf.org)
one use Six Sigma to improve the mind the Oliver Wight organization has
S&OP process? There are a hundred defined a process model that makes (This article expresses only my opinion, and
potential topics around how to “do” sense to me and that I can believe I do not represent any other organization.
S&OP better. Re-invention of S&OP in. I applaud them for their thought I do not sit in an advisory capacity to any
to the IBP terminology should be leadership. As I prepared for this consulting firm, research firm, or software
the last thought on anyone’s mind. article, I went back to my training company. All copyrights, quotations etc.,
Perhaps most telling of all in this materials. The following expression are the property of their owners, and this
debate over the IBP/S&OP disconnect was the header across the top of article is for educational purposes only.)

(Continued from page 10)


How to Improve the Global S&OP Process: Hollister’s Journey
By Michael Kelleher

external market forces. January 30, “People plus Process = Prosperity” company. Treat people like family and
2012, marked the beginning of my they will treat and protect the business
18th year in the forecasting and I prefer the term prosperity instead as their own. The most powerful
demand planning field (with a couple of profit. Profit is a financial goal and positive word of mouth for any
of brief excursions into Internet whereas prosperity is an attitude, a company’s community is the persons
marketing, production planning, and belief system. With that said, train employed, their families, and their
copywriting). I was fortunate to work the right people to be our eventual friends. And the process rule, when
for Dayton-Hudson Corporation, and replacements or our equals. One idealized, is developed and nurtured
then Target, upon graduating from the doesn’t need to be a statistician or by the very people who believe in it,
University of Wisconsin-Madison. As mathematician to succeed in this live by it, and faithfully apply it, yields
I reflect upon my experience and the field. One of the people I respect the maximum benefit. No process is
subsequent journey that continues tremendously was extremely know– perfect. No person is perfect. But what
to unfold, they were pretty cutting ledgeable about demand planning; a magnificent wonder appears when
edge in this field at the time. Each she had a French History degree and they come together unified in purpose,
company that I worked for after Target rescued injured falcons and eagles headstrong in desire, and powered by
built upon the knowledge I gained by in her spare time. Eventually, she faith in the journey. So get on the road.
implementing APO-DP. Through it all, became a highly successful senior And don’t forget to take along a good
one formula remains the same: vice president with a Fortune 500 map and a compass. (info@ibf.org)

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