Imagine a symphony orchestra where each musician plays their own tune without listening to others. The result would be chaotic and dissonant, right? Similarly, in the business world, when decision-making happens in silos and planning processes are disconnected, it’s like having a group of individuals playing their own instruments without any coordination. The harmony is lost, and the organization becomes inefficient, misses opportunities, and struggles to keep up with the fast-paced market.

Integrated Business Planning (IBP) addresses these challenges by providing a comprehensive framework that integrates strategic, operational and financial planning, analysis, and reporting to drive better business outcomes.    A retail company experiences a sudden surge in online sales due to a viral social media campaign. Integrated planning incorporates supply chain planning, demand planning, and demand forecasts so the company can quickly assess the impact on inventory levels, supply chain logistics, production plans, and customer service capacity. By having real-time data at their fingertips, decision-makers can adjust their strategies, allocate resources accordingly, and capitalize on the unexpected spike in demand, ensuring customer satisfaction while maximizing revenue.   This blog explores the significance of IBP in today’s modern business landscape and highlights its key benefits and implementation considerations.

Integrated business planning framework

Integrated Business Planning (IBP) is a holistic approach that integrates strategic planning, operational planning, and financial planning within an organization. IBP brings together various functions, including sales, marketing, finance, supply chain, human resources, IT and beyond to collaborate across business units and make informed decisions that drive overall business success. The term ‘IBP’ was introduced by the management consulting firm Oliver Wight to describe an evolved version of the sales and operations planning (S&OP process) they originally developed in the early 1980s.

Making up the Integrated Business Planning framework are six key pillars:

1. strategic planning.

Integrated Business Planning starts with strategic planning. The management team defines the organization’s long-term goals and objectives. This includes analyzing market trends, competitive forces, and customer demands to identify opportunities and threats. Strategic planning sets the direction for the entire organization and establishes the foundation for subsequent planning roadmap.

2. Operational planning

Operational planning focuses on translating strategic goals into actionable plans at the operational level. This involves breaking down the strategic objectives into specific targets and initiatives that different departments and functions need to execute.

For example, the sales department might develop a plan to enter new markets or launch new products, while the supply chain department focuses on inventory optimization and ensuring efficient logistics. The key is to align operational plans with the broader strategic objectives to ensure consistency and coherence throughout the organization.

3. Financial planning

Financial planning ensures that the organization’s strategic and operational plans are financially viable. It involves developing detailed financial projections, including revenue forecasts, expense budgets, and cash flow forecasts. By integrating financial planning with strategic and operational planning, organizations can evaluate financial profitability, identify potential gaps or risks, and make necessary adjustments to achieve financial targets.

 4. Cross-functional collaboration

A fundamental aspect of IBP is the collaboration and involvement of various functions and departments within the organization. Rather than working in isolation, departments such as sales, marketing, finance, supply chain, human resources, and IT come together to share information, align objectives, and make coordinated decisions.

5. Data integration and analytics

IBP relies on the integration of data from different sources and systems. This may involve consolidating data from enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, supply chain management systems, and other relevant sources. Advanced analytics and business intelligence tools are utilized to analyze and interpret the data, uncovering insights and trends that drive informed decision-making.

6. Continuous monitoring and performance management

The Integrated Business Planning process requires continuous monitoring of performance against plans and targets. Key performance indicators (KPIs) are established to measure progress and enable proactive management. Regular performance reviews and reporting enable organizations to identify deviations, take corrective actions, and continuously improve their planning processes.

What are the benefits of Integrated Business Planning?

By integrating strategic, operational, and financial planning organizations can unlock the full potential of IBP and drive business success and achieve their goals.

Enhanced decision-making

IBP facilitates data-driven decision-making by providing real-time insights into various aspects of the business. By bringing together data from various departments, organizations can develop a holistic view of their operations, enabling them to make better-informed decisions.

Improved alignment

By aligning strategic objectives with operational plans and financial goals, IBP ensures that every department and employee is working towards a common vision. This alignment fosters synergy and drives cross-functional collaboration.

Agility and responsiveness

In the rapidly changing business landscape, agility is crucial. IBP allows organizations to quickly adapt to market shifts, demand fluctuations, and emerging opportunities. By continuously monitoring and adjusting plans, businesses can remain responsive and seize competitive advantages.

Optimal resource allocation

Integrated Business Planning enables organizations to optimize resource allocation across different functions. It helps identify bottlenecks, allocate resources effectively, and prioritize initiatives that yield the highest returns, leading to improved efficiency and cost savings.

Risk management

IBP facilitates proactive risk management by considering various scenarios and identifying potential risks and opportunities. By analyzing data and conducting what-if analyses, companies can develop contingency plans and mitigate risks before they materialize.

Essential steps for implementing Integrated Business Planning

Implementing an effective IBP process requires careful planning and execution that may require substantial effort and a change of management, but the rewards are well worth it. Here are some essential strategic steps to consider:

1. Executive sponsorship

Establish leadership buy-in; gain support from top-level executives who understand the value of Integrated Business Planning and can drive the necessary organizational changes. Leadership commitment, led by CFO, is crucial for successful implementation.

2. Continuous improvement

Continuously monitor and adjust; implement mechanisms to monitor performance against plans and targets. Regularly review key performance indicators (KPIs), conduct performance analysis, and generate timely reports and dashboards. Identify deviations, take corrective actions, and continuously improve the planning processes based on feedback and insights.

3. Integration of people and technology

To foster cross-functional collaboration, the organization must identify key stakeholders, break down silos, and encourage open communication among departments. Creating a collaborative culture that values information sharing and collective decision-making is essential.

Simultaneously, implementing a robust data integration system, encompassing ERP, CRM, and supply chain management systems, ensures seamless data flow and real-time updates. User-friendly interfaces, data governance, and training provide the necessary technological support. Combining these efforts cultivates an environment of collaboration and data-driven decision-making, boosting operational efficiency and competitiveness.

4. Technology

Implement advanced analytics and business intelligence solutions to streamline and automate the planning process and assist decision-making capabilities.  These solutions provide comprehensive functionality, data integration capabilities, scenario planning and modeling, and real-time reporting.

Integrated Business Planning software

From a tech perspective, organizations need advanced software solutions and systems that facilitate seamless data integration and collaboration to support IBP. Here are some key components that contribute to the success of integrated business planning:

1. Corporate performance management

A platform that serves as the backbone of integrated business planning by integrating data from different departments and functions. It enables a centralized repository of information and provides real-time visibility into the entire business.

2. Business intelligence (BI) tools

Business intelligence tools play a vital role in analyzing and visualizing integrated data from multiple sources. These tools provide comprehensive insights into key metrics and help identify trends, patterns, and opportunities. By leveraging BI tools, decision-makers can quickly evaluate financial performance, make data-driven business decisions and increase forecast accuracy.

3. Collaborative planning and forecasting solutions

Collaborative planning and forecasting solutions enable cross-functional teams to work together in creating and refining plans. These planning solutions facilitate real-time collaboration, allowing stakeholders to contribute their expertise and insights. With end-to-end visibility, organizations can ensure that plans are comprehensive, accurate, and aligned with business strategy.

4. Data integration and automation

To ensure seamless data integration, organizations need to invest in data integration and automation tools. These tools enable the extraction, transformation, and loading (ETL) of data from various sources. Automation streamlines data processes reduces manual effort and minimizes the risk of errors or data discrepancies.

5. Cloud-based solutions

Cloud computing offers scalability, flexibility, and accessibility, making it an ideal choice for integrated business planning. Cloud-based solutions provide a centralized platform where teams can access data, collaborate, and make real-time updates from anywhere, at any time. The cloud also offers data security, disaster recovery, and cost efficiencies compared to on-premises infrastructure.

6. Data governance and security

As organizations integrate data from multiple sources, maintaining data governance and security becomes crucial. Establishing data governance policies and ensuring compliance with data protection regulations are vital steps in maintaining data integrity and safeguarding sensitive information. Implementing robust data security measures, such as encryption and access controls, helps protect against data breaches and unauthorized access.  

IBM Planning Analytics for Integrated Business Planning

IBM Planning Analytics   is a highly scalable and flexible solution for Integrated Business Planning. It supports and strengthens the five pillars discussed above, empowering organizations to achieve their strategic goals and make better data-driven decisions.  With its AI- infused advanced analytics and modeling capabilities, IBM Planning Analytics allows organizations to integrate strategic, operational, and financial planning seamlessly. The solution enables cross-functional collaboration by providing a centralized platform where teams from various departments can collaborate, share insights, and align their plans.  IBM Planning Analytics also offers powerful data integration capabilities, allowing organizations to consolidate data from multiple sources and systems, providing a holistic view of the business. The solutions’s robust embedded AI predictive analytics uses internal and external data and machine learning to provide accurate demand forecasts. IBM Planning Analytics supports continuous monitoring and performance management by providing real-time reporting, dashboards, and key performance indicators (KPIs) that enable organizations to track progress and take proactive actions.  As the business landscape continues to evolve, embracing Integrated Business Planning is no longer an option but a necessity for organizations. To succeed in this dynamic environment, businesses need an integrated approach to planning that brings all the departments and data together, creating a symphony of collaboration and coordination.

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By  Niels Van Hove , Supply Chain consultant, Mental Toughness coach and S&OP/IBP expert at  Truebridgese

integrated business planning cycle

As S&OP found its origin in the supply chain, IBP is often biased with supply chain terminology and reasoning. It can be argued that current IBP development is still driven by a supply chain bias. With this lack of diverse thinking, IBP innovation runs the risk of being not truly ‘integrated’.

Contrary to most current defined maturity phases of IBP, one can find on the internet, we also can define IBP maturity phases from a more strategic angle.

Many experts agree that IBP has a monthly check and balance with the budget and the strategic intentions of a business. Therefore, a well-executed IBP cycle will provide monthly visibility and measures progress against business objectives and strategy in the long-term horizon. Furthermore, we can say that a business strategy and the required strategic resources and capabilities have the goal to get a company closer to its vision.

According to Collins and Porras, a company vision exists from its core values, core purpose, a BHAG (big, hairy, audacious goal) and a vivid description.

  • The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfill a strategy, you can’t fulfill a purpose.
  • Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations.

Well defined, integrated and truly lived, purpose and values will drive companywide behavior. Imbedded company behaviors will drive a sustainable company culture, which will last over time.

A well-defined achievable BHAG with a vivid description provides employees with an envisioned future they can identify with and which creates an emotional attachment, which makes them go the extra mile. As CEO Bob McDonald says on the emotional component and innovation at P&G; ‘People will innovate for financial gain or for competitive advantage, but this can be self-limiting, there is a need for an emotional component as well – a source of inspiration that motivates people‘.

If a company wants to track its budget and strategy and we use this vision framework and IBP as the planning process to support the business, IBP can be defined with the following maturity phases:

1. Integrated planning:

In this phase, companies start to focus on integrated planning between previously siloed functional areas. Some functions are more advanced than others. A company might have focused on the state of the art finance processes and systems, but doesn’t reap the full benefits of that due to lack of integration of other functional areas into the finance process. Some integration exists, but not across all functional area’s and there is not enough integration with finance to make a monthly financial prediction on EBIT level in the long term horizon. S&OP as most define it will be in this phase.

2. Dynamic budget planning:

In this phase, enough functional areas plan in an integrated way for the process to provide their input to the P&L to create a fully-loaded forward projected P&L. Finance understands the ‘volume’ input and the other functional areas understand the financial ‘value’ planning. This will provide the company visibility on how it is tracking versus the budget or annual operating plan on a monthly basis on EBIT level.

Why EBIT level? Because I heard too many times in a boardroom the argument, when only gross profit was on the table; ‘we can’t decide on this because we don’t have EBIT a number’ . We can also expect these companies to deliver monthly balance sheet and cash flow prediction. For these companies, there is no separate budgeting or forecasting cycle. Every month can be the budgeting cycle. Dynamic indicates that opportunity and risk scenarios across all functional areas are integrated into the financial projection.

3. Dynamic strategy and capability planning:

In this phase, the company has defined its strategic goals, measurements, and targets and is capable of checking and communicating monthly if they are on track to meet the strategy in the horizon beyond the budget. The strategic intent, which can be defined on lower levels like product segment, country or business unit level, will also guide in decision making for decisions on the budget horizon.

The company has also defined its core strategic capabilities to meet its strategy. There are many strategic capabilities possible.  Ideally, a company shouldn’t have more than a handful as if it will define more it will erode the focus on these capabilities. Some examples are:

  • Risk management: for companies that have extended and complex networks that are sensitive and dependent on changes in global and geopolitical events. For example companies with global supply chains, but also the Finance industry.
  • Innovation: for companies that in a highly competitive market can outpace their competitors based on innovation and new product development. Often seen in the technology industry and CPG
  • Commodity trading: for companies that are highly influenced by commodity cycles as the commodities can be more than 80% of the COGS of their core products. For example, food & beverage companies that have crops and livestock as core raw material.
  • Demand is driven supply chain: for companies that can get the competitive advantage from driving their business from the front end of the supply chain. For example food, beverage and consumer package industry. Often in retail and consumer environment, which are promotional driven and where POS information is available,
  • Knowledge management: for companies that are highly dependent on knowledge workers and the exchange of knowledge between people and business units. Companies that have IP to integrate, sell and protect. For example Consultancies and software industry.
  • Supply exploration: for companies that have to spend high amounts of capital to find new or increase the supply of their core product. For example the oil and mining industry.
  • Collaboration:  Collaborative IBP can be a separate phase for companies that see the strategic advantage in collaborating with their suppliers and customer in the longer horizon and therefore want to integrate their business plans. For companies that have the power in the supply chain through size or uniqueness of offering this will most likely not be a strategic focus.

The list can go on and on with Technology, Sustainability etc. Once a company has defined its strategic capabilities and has defined goals, measurements and targets for these capabilities, it needs plans to implement or improve these strategic capabilities. An update on status, progress, risks and mitigations for those plans will be part of the IBP cycle in this phase. Dynamic indicates that sensitivity analysis around the plans to reach the goals of the strategic capability is part of the update.

4. Integrated vision & purpose:

In this phase, companies have a well-defined purpose, values and an achievable BHAG with a vivid description that people can identify with and which create an emotional attachment. The company aims to integrate this with the IBP cycle.  A company can decide not to pursue strategic opportunities because doing so would compromise their core purpose or values.

A large multi-billion dollar beverage company, for example, decided not to enter the very lucrative market of premium RTD’s (Ready to Drink) alcoholic beverages because the alcohol content was too high. Although the opportunity was achievable and margins were very interesting, the alcohol content would not be in line with their core purpose of ‘bringing more sociability and wellbeing to our world’ . The purpose guided decision making in the strategic horizon.

The company values and the emotional attachment will be tracked in the monthly IBP process and have actions, goals, and measurement. Executives follow progress to understand if employees believe and identify with the companies values, BHAG, and purpose and show emotional attachment. This can be done by 360 degrees feedback, engagement surveys or roundtable discussion between executives and employees. Executives also have to lead by example in behaviour and actions. Their own behaviour will have goals and measurements and progress is tracked,

For all phases, communication is important , although it can be argued that it’s most important when developing an emotional connection. An IBP document on the key decision, outcomes, progress and wins in the IBP cycle can be communicated to a well-defined stakeholder group in the company. This will both give the stakeholders an understanding of business performance, priorities, improvement opportunities and successes, as well as keep the engagement with the company vision, purpose, and the IBP process.

Executives have to realize and appreciate that this communication document is the results of all the hard work from middle and lower management to gather all required IBP information for the executives to make decisions in the IBP meeting. This communication makes sure the IBP meeting is not seen as a ‘black hole’ which only sucks up information and doesn’t provide feedback.

Once a company masters these four phases, it tracks and plans on a monthly basis the budget, the strategic intent and strategic capabilities, the company values, and purpose and the emotional attachment of the employees. If a company then links these plans with shorter-term control plans and execution, we might call it real Integrated Business Planning.

Would these four phases be IBP innovation?

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Integrated Business Planning

For integrating functional plans, deploying business strategy, and driving business management, what is integrated business planning (ibp).

Integrated Business Planning (IBP) is a common-sense process designed for effective decision-making and led by your leadership team. True business integration means senior management can plan and manage the entire organization over a 24-36 month horizon, aligning strategic and tactical plans each month, and allocating critical resources, people, equipment, inventory, materials, time, and money; to satisfy your customers in the most profitable way.

Integrated Business Planning represents the evolution of Sales and Operations Planning (S&OP) from the supply and demand balancing process developed in the early 1980s. Today it is a process that drives the alignment of all functions across an organization, models and creates readiness for alternate outcomes, drives deployment of strategy, and enhances collaboration across supply chains.

Oliver Wight Integrated Business Planning

What is the difference between S&OP and IBP?

There are many differences between Sales & Operations Planning and Integrated Business Planning, but firstly it’s important to note that IBP is not a supply chain process ; it has a much broader reach. IBP is the process that connects your strategy and business plan to ensure both are delivered.

The purpose of IBP is not to drive a better forecast with which supply chain can plan. It is the process that brings focus to the deployment of your business strategy and provides a framework for effective decision-making to drive growth.

It's also much more than just a monthly meeting. IBP is a company framework to surface and solve problems and continually re-optimize plans as circumstances change. IBP enables businesses to create an aligned, cross-functional plan for the future, based upon key assumptions. These assumptions, documented and updated each month, are based on insights.

Read our white paper to learn more about what sets Integrated Business Planning apart from Sales & Operations Planning.

Looking for help with IBP software?

Oliver Wight IBP Powered by Board is a holistic solution combining Oliver Wight's industry-leading Class A and implementation change management processes with Board software. Fully align people, processes, and technology and embed IBP and its benefits for years to come.

This offering combines IBP technology and process in one package for rapid time to value. You will benefit from Oliver Wight consulting and education + Board Intelligent Planning Platform + specialist implementation services. 

Find out more.

How mature is your organization's true level of maturity in IBP?

Before embarking on any performance improvement program, it is imperative to identify your organization's true level of maturity. The Oliver Wight Maturity Model characterizes an organization as being in one of four key phases of maturity: Co-ordination, Business Process Control, Automation, or Integration. Assess your business maturity in Integrated Business Planning using our free online self-assessment tool .

Assess your business maturity

How you can benefit from Integrated Business Planning

Early identification of gaps in the business plan and strategy deployment, creating time to close them

An integrated view of performance and projection of your business over a 24-36 month horizon

Alignment of functional operating plans and financial projections with ‘one set of numbers’

Application of scenario planning and modelling to areas of your business where there may be uncertainty or impact

Increased responsiveness to uncertainties and unplanned events to minimize negative impacts and seize opportunities

Creation of transparency and clear accountability across the business/organization

Simplification of the budgeting or annual planning process

Integration of strategy deployment with operational plans

Increased employee engagement and efficiency

Growth in revenue

Reduced costs

Improved customer service

Reduced inventory

Visibility of planned product changes, future demand from sales and marketing, supply chain performance, planned supply chain capability and flexibility, plus bottom-up plans and the actions and decisions required to deliver ‘best for business' outcomes

integrated business planning cycle

You should consider Integrated Business Planning for your business if:

You are constantly in ‘fire-fighting’ mode

You have a misaligned management team

You are continually missing the financial plan

You are experiencing rapid growth and can no longer manage effectively using an informal process

Your budgeting process is ‘painful’

You are struggling to get on top of service issues

You cannot keep up with growth in demand

You have excessive inventory

You are experiencing excessive rework and cost

Departments or sites are working in silos

There is no ‘single source of truth’ or ‘single set of numbers’ to run the business

You feel like you never have time to look at the strategy

There is poor deployment and execution of the strategic plan

You have poor employee engagement

You feel like you are not getting a return on the effort put into your existing S&OP/IBP process

How we can help

A diagnostic assessment of your current S&OP or IBP process, including its effectiveness and identifying any performance issues

Transfer of our knowledge to your people so they can create and manage an effective IBP process

Change management – plan, monitor, and support the implementation of change and its impact on your people

Facilitate the design of an IBP process to best fit your organization and its needs

Scoping of an action plan to address issues and take advantage of the opportunities identified, including resourcing, timelines, and performance improvement expectations

Coach IBP process users as you introduce the new ways of working

Assess and validate that your IBP process has achieved a Class A level of effectiveness – firmly embedded as the ‘way you do things’ and delivering the benefits you wanted

Integrated Business Planning is a cutting edge process which creates cross-functional alignment and enables businesses to re-focus to meet the ever-changing environment. IBP generates readiness for alternative outcomes, enhances collaboration, and ultimately drives deployment of strategy in an uncertain world. The chosen process of some of the world’s most progressive and best-known organizations, IBP is a common-sense process that maximizes profit and enables leaders to manage risk with confidence.

Integrated business planning resources to help you improve.

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Get in touch

Upcoming courses.

16 Apr 2024

Virtual (English)

Integrated Business Planning – Introduction, Overview, and Current Best Practice

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11 Jun 2024

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08 Oct 2024

Virtual (French)

French Integrated Business Planning Workshop

12 Nov 2024

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Oliver Wight Partner, Gary Connors explains the five common failure modes in implementing Integrated Business Planning and how to manage changes through IBP.

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  • my. Inchainge
  • Integrated Business Planning

What is Integrated Business Planning (IBP)? And what are the similarities, but also differences when compared to S&OP? In this article, Inchainge discusses everything you need to know about IBP.

What is integrated business planning (IBP)?

Integrated Business Planning (IBP) is the business planning process that extends the principles of Sales and Operations Planning (S&OP) throughout the value chain . It is to create a bridge between strategy and execution. IBP is a next step for companies that already have an S&OP process in place. It is a next step because it integrates the Financial Planning Cycle. The financial function will become part of this cross-functional process. In most companies the business owner of this process will change as well.

Similarities between IBP and S&OP

Integrated Business Planning and Sales and Operations Planning have several similarities between them. These are as follows:

  • Monthly process
  • Cross-functional approach
  • Driven by business strategy
  • Tactical planning at an aggregated level

Differences between IBP and S&OP

However, Integrated Business Planning includes content on top of Sales and Operations Planning:

  • Financial function involved
  • Integration financial planning cycle, like financial budget and forecast
  • From volume planning to volume and value planning
  • It drives the overall business performance

How does the IBP process work?

Companies have an annual budget cycle, based on their strategic plans and targets. The annual budget projects planned revenues and costs for the year.

In traditional S&OP companies go through a monthly process during which they project for the next 6 to 24 months where demand will go, and what resources need to be available to meet that demand. When gaps are discovered between expected demand and available resources looking this far ahead into the future, this often provides ample time to balance supply and demand, so that by the time real customer orders are submitted, demand can be met.

Suppose that during this monthly S&OP cycle, one would also look 6 to 24 months into the future where expected revenues and costs will go. And how these financial figures would look compared to the annually budgeted revenues and cost. Most likely gaps will occur here as well between the annually budgeted numbers and the monthly updated numbers. Actions could then be taken to address these gaps. Integrating a financial view. When this happens, we actually practice IBP. In IBP the relationship with the financial performance management cycle is very important. Budget and financial forecasting must be aligned and integrated with the steps from the original S&OP cycle.

The challenges of IBP

IBP is a next step in maturity after companies have implemented a proper S&OP process. Integrating finance sounds simple but is not easy at all. People from the physical supply chain side of the business, often speak a different language than people who operate on the financial side. Supply chain people often speak about units, products, and product families, whereas financial people often speak about money, currencies, etc. That also causes both functional areas to be assessed differently with the KPIs that they use. This calls for other participants in the IBP process, compared to participants in the S&OP process.

The 8 common pitfalls when implementing IBP

Be aware of the following risks related to integrated business planning:

  • Lack of commitment in some of the needed departments
  • If the S&OP process was not yet implemented or stable, IBP is too big of a step
  • Targets and forecasts are mixed
  • Information not available
  • Discussion about numbers instead of the underlying assumptions
  • Discussing only short horizon instead of midterm
  • Too granular plans and discussions
  • Thorough understanding of trade-offs is lacking

Want to know more? Experience IBP!

Because IBP is simple but not easy, a real-life experience creates enormous value for learning about this topic. The participants will feel and recognize the important issues in this process. In our business simulation game, The Cool Connection ,  we have incorporated the most important functions and decisions.

In this business game the team is forced to make a yearly financial budget and quarterly forecasts. The objective is to close the gaps between prediction (the budget and forecasts) on one hand and attained performance on the other. The best performing teams are both profitable and predictable at the same time. In business game The Cool Connection the team is almost experiencing a real-life IBP process.

Besides our business games, you can learn more in our articles about topics such as Total Cost of Ownership (TCO) , strategic alignment and external alignment and collaboration .

Now you know

Now you know that IBP is a next step for companies that already have an S&OP process in place, by integrating the financial planning cycle in this cross-functional process. IBP prompts companies to include planned revenues and costs in their annual budget cycle. Budget and financial forecasting must be aligned and integrated with the steps from the original S&OP cycle. Integrating finance sounds simple but is not easy at all. Supply chain people and finance people tend to speak a different language. Make sure to be aware of the 8 common pitfalls when implementing IBP.

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The Cool Connection

The Cool Connection is an innovative web-based business simulation game. It engages participants in making strategic decisions in the management of a manufacturing company of personal care products. Working in teams of four, participants will represent the functional roles of sales, purchasing, supply chain management and finance. They will be confronted with various real-life, real-time dilemmas.

integrated business planning cycle

  • Total Cost of Ownership

When buying new equipment, the price tag only tells you part of the story. Energy costs, maintenance, and repair fees are often several times higher than the initial price! But often these are left unconsidered and hold nasty surprises further down the line. Calculating the Total Cost of Ownership is an important step when planning new investments.

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  • Strategic Alignment

Understanding what strategic alignment really is and why it is important can make the difference between being a successful company and failing. Due to its complexity, the supply chain often faces challenges in aligning its strategy properly and working as one. In this article, Inchainge discusses everything you need to know about strategic alignment.

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  • External Alignment and Collaboration

In an increasingly global and connected world, companies rarely execute supply chain operations themselves, but must outsource certain tasks. To make sure that supply chains across several companies run smoothly, external alignment is essential. In this article, we’ll discuss everything you need to know about external alignment.

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What is Integrated Business Planning and What Are The Benefits?

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If there is one thing any business analyst can forecast is this: sustained uncertainty. And organizations can’t do much to change this. What organizations can do though, is to prepare to deal with market variability by addressing the business challenges internal organizations may have: disconnected and lengthy planning processes, an insane amount of time collating data, siloed decision-making, lack of forecasting accuracy, poor sight into operational assumptions and what is driving margin. That’s what Integrated Business Planning is aiming for.

What is Integrated Business Planning (IBP)?

Integrated Business Planning aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. A trusted, common view of the numbers provides a robust baseline for agile decision-making and keeps all teams together, collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line is that IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

IBP Process: How Does it Work

The Integrated Business Planning process is a framework to address the C-suite needs and help them implement the business strategy and manage uncertainty to improve decision-making. The secret sauce of IBP is a collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance, that’s how the C-suite gets value from it. Consequently, finance plays a central role within IBP.

IBP typically focuses on 24- 60 months horizons, as opposed to short term: that’s Integrated Tactical Planning or Sales and Operations Planning and Execution. The process must be fully integrated, so it should remove the departmental silos and it must adapt to the organizational construct of every business (it is not a one size fits all type of process).

Figure 1 outlines the five core elements of the IBP cycle with its responsibilities:

Integrated business planning from portfolio review to management business review

The most efficient way to foster this collaboration is by having a unified solution and data model that caters the needs of the various agents involved on each review.  Figure 2 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

Integrated Business Planning Business Strategy, from reporting and analytics to execution

IBP Business Benefits

The benefits an organization can expect from an IBP implementation are diverse. In the big picture, IBP can certainly improve financial and business performance. Figure 3 outlines some of the most remarkable KPI improvements.

Integrated business planning KPIs

Want to learn how you can maximize the benefits of your IBP process and get your CEO onboard, read our blog on the 5 Considerations to Help Your CEO Trust the IBP Process .

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  • Making the Case for Integrated Business Planning

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By: Henry Canitz

Increasingly, company executives are viewing supply chain functions as critical to business success. This shift has driven initiatives across organizations that aim to improve performance, lead to more effective decision-making processes, and balance and align supply and demand.

According to the Aberdeen Group report “Sales and Operations Planning: Strategies for Managing Complexity within Global Supply Chains,” being best in class versus a laggard in these areas can result in a 47 percent increase in year-over-year gross profit margins, a 2.7 percent decrease in year-over-year cash-to-cash cycle time, a 28 percent improvement in orders that are on-time-in-full and a 31 percent better forecast accuracy three months out. Research firms, solution providers, subject matter experts and even end users have difficulty agreeing on an industry standard term for this process. Some refer to it as sales and operations planning (S&OP) or sales, inventory and operations planning (SIOP); in the retail world, you can find merchandizing, inventory and operations execution (MIOE), or simply integrated planning; and others opt for integrated business planning (IBP).

Regardless of the name, its importance to company health is obvious, as it can significantly lower costs, increase agility, improve Customer Relations and boost profits. The industry may settle on a term one day. Until then, three overlapping concepts — executional, tactical and strategic planning — can help clarify the objectives and potential of this methodology.

Executional planning deals with balancing and aligning supply and demand in the near-term, often within the span of a planning cycle. Decisions tend to be prompted by exceptions and disruptions — and thus are made on the fly to ensure customer orders are met and financial objectives are made. This near-term planning horizon involves workflow; exception-based messaging; alerts; and visibility to supply, demand and transportation. Often, specific scenarios are analyzed — for example, if a customer order can be accepted, if people should work overtime or if expedited shipping is the best option.

Tactical planning encompasses just a few months to 18 months or more, depending on the business. The goal is to plan at an aggregated level and then make effective midcourse adjustments in resources and partners in order to respond to changes in demand. Activities include new product introduction planning, decisions about product life cycles, product-family-level demand projections, running high-level capacity analyses, optimizing inventory positions and making any adjustments that are necessary to meet expected demand while aligning with company objectives.

A multitude of scenarios can be run, including optimistic versus pessimistic plans, inventory postponement trade-offs, whether to add suppliers or production capacity, transportation and warehousing alternatives, and more.

Strategic planning describes high-level balancing and alignment over a long time horizon. Companies may look out three, five or 10 years to plan for new category introductions, moving a plant or warehouse, or entering new countries or regions. Some call this IBP, while others also include tactical and strategic activities under the IBP umbrella. Alternative scenarios are used to make financial projections, plan investments and compare potential strategies through volumetric and financial metrics.

With these three concepts in mind, consider the following breakdowns of the different tactics:

  • S&OP is an integrated business management process through which an executive team continually achieves focus, alignment and synchronization among all functions of the organization. In practice, S&OP processes rarely stretch far enough to cover all the bases of integrated, tactical and strategic business planning and tend to focus on developing a demand consensus or tactical volumetric supply and demand balancing. 
  • SIOP is, frankly, a superfluous attempt to emphasize the importance of inventory. It’s unnecessary, but if you need to use this term to move your program forward, please continue to do so. Like S&OP, most SIOP processes focus on tactical volumetric balancing, rather than delivering true integrated planning capabilities.
  • MIOE aims to establish a periodic planning process that meets the requirements of each business function, integrates company strategy with execution activities, and balances supply and demand while exceeding customer expectations. Retail planning activities — including merchandize planning, allocation, replenishment, and distribution and transportation — parallel the elements of what manufacturers call S&OP.
  • IBP focuses on ensuring continuous alignment among demand, inventory, supply and manufacturing plans on the one hand, and between the tactical and strategic business plans on the other, in an effort to maximize operational performance and meet financial objectives. IBP is a fairly new competitive weapon for supply chain leaders in the battle to accelerate, direct and optimize business decisions for both near- and longterm planning. IBP encompasses S&OP, SIOP and MIOE across all time horizons.

Whether key stakeholders hail from sales, inventory, marketing, purchasing, production or finance functions, they are all from the same business and engaged in planning activities that are closely integrated. In this way, IBP is the best term to describe the regular actions, behaviors and processes that heighten performance, bring about better decision-making, and optimize supply and demand.

Ensure IBP success

The following step-by-step checklist comprises the main capabilities necessary to maximize IBP:

  • Smoothly integrate S&OP and strategic planning under one comprehensive process. Align and synchronize your strategic and tactical planning, including S&OP, annual operations, and financial and strategic business planning. IBP should encompass strategic plans, initiatives, activities, and regional and multidivisional operational plans.
  • Perform fast simulations, comparisons and what-if scenarios. You need unprecedented global visibility in order to drive a higher level of proactive decision-making. Make sure your team can model the entire supply chain, including plants, suppliers, storage facilities, partner capabilities, customer locations and lanes of transportation, so you can identify any disconnects between supply and demand months or years in advance.
  • Compare actual performance to the plan. Global supply chains are always in motion. You need to quickly detect the differences between plans and actuals and then respond in an efficient manner. The ability to sense and highlight shifts in the extended supply chain — particularly as they relate to the agreed-upon plan — is vital. Then, you should be able to suggest an optimal solution while adhering to predetermined company goals and objectives through multiple scenario comparisons.
  • Develop plans that evaluate both financial and volumetric performance. Establishing one comprehensive plan that spans strategic and tactical horizons reveals the true merits of multiple alternative paths. Break away from silos, and combine information from sales, marketing, production, procurement, transportation, finance and external partners in a single system to keep your team aligned while streamlining planning processes and responding effectively to supply chain disruptions or new opportunities. A good question to ask is, In addition to balancing financial criteria against constraints, demand prioritization and Customer Relations objectives, can we analyze alternative scenarios based on revenue, profit, capacities, Customer Relations and other critical business metrics?
  • Plan across global, regional and multidivisional organizations. Although global supply chains continue to increase in complexity, often the biggest opportunities for cost reduction and Customer Relations improvements lie in the ability to manage the entire supply chain as a system. It’s important to be able to adapt to regional differences in business processes, currencies, objectives, metrics and supply chain structures in order shift regional plans into a consolidated strategy and identify previously hidden opportunities.
  • Assess timing, impact and risk of new product introductions. With the number and frequency of launches on the rise, the need to address this area is critical because the most difficult planning problems often occur here. New product planning often takes place across multiple functions or even organizations. IBP can help facilitate this process through collaborative workflow and active messaging. In addition, the ability to compare the performance of a new product to the agreed-upon plan, quickly identify deviations and provide rich what-if analysis plays a major role in determining appropriate actions.
  • Visualize operational risk and develop mitigation plans. Disruptions happen more often in today’s globally complex supply chains. For many, it’s only a matter of when, where and how often disruptions will affect Customer Relations and company profitability. The ability to visualize operational risk with enough detail, accuracy and lead time to successfully mitigate the potential hazards is a key business capability. You must sense disruptions and highlight data to enable management by exception. Again, powerful what-if analyses, network scenarios and graphical comparisons help identify an optimal response.
  • Model your business over multiple time horizons. Most organizations perform both short-term tactical and long-term planning, at least in some form. In many cases, these processes land on conflicting paths forward because the planning is disconnected and run by different sets of people using different data, assumptions and supporting systems. Effective IBP requires all business-planning efforts across all time horizons to be synchronized. IBP is an effective tool in this regard because it supports the needs of all planning efforts and makes it easier for changes made in one plan to be reflected in others at the appropriate levels of aggregation and in suitable units and time horizons.
  • Evaluate alternate product aggregations. Every business function needs to plan at different levels of aggregation to support its goals. Purchasing considers data by supplier; manufacturing views data by what is produced; transportation is concerned with optimizing lanes and loads; sales strategizes by region, customer and account; finance plans by business; and executive management reviews data on company performance. The plans of the various functions have unique purposes, but they all must be coordinated and based on uniform data. A flexible IBP data hierarchy enables simple, real-time changes to data aggregation.

Moving forward together

IBP is powerful because it brings together the often-fragmented worlds of strategic and tactical planning. In this way, the methodology can provide continuous alignment among supply, demand, inventory, manufacturing, tactical and strategic business plans in order to maximize operational performance and meet financial objectives. Now is the time to drive change in your organization.

About the Author

Henry Canitz Product Marketing & Business Development Director, Nulogy

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  • Many companies are eager to develop better plans and forecasts, so they are trying to integrate the planning process across the organization. More and more, they are turning to AI-driven IBP platforms.
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By  Lana Klein ,  Aneesh Saxena ,  Tristan Mallet ,  Abhijeet Shetty ,  Olivier Bouffault ,  Daniel Sack , and  Rachel Wegman

Key Takeaways

It’s an issue that’s increasingly vexing CEOs as the world becomes more uncertain and complex: Why haven’t digital technologies made business planning better, faster, and easier? Why don’t plans survive the first contact with reality?

The COVID-19 pandemic and its long aftermath exposed numerous gaps in business planning. Many companies have been trying to strengthen their planning capabilities—with decidedly mixed results. Functions and business units often continue to plan in silos, and the assumptions behind most forecasts still aren’t transparent. So top management teams continue to find it tough to reconcile plans across organizational levels and time horizons.

To tackle these challenges, companies are increasingly turning to integrated business planning (IBP) platforms that are driven by artificial intelligence (AI). Traditional IBP used enterprise resource planning platforms that were supplemented by data from other systems, and it was mostly a manual process in terms of data aggregation and forecasting. Difficult to coordinate, IBP was hampered by a lack of trust in the data and opacity. It also had few predictive or optimization capabilities.

Today’s AI-driven IBP platforms help companies create a rich data fabric, an automated planning process, and algorithm-based decision support. Available as software as a service (SaaS) packages or as an orchestrated solution, investing in AI-driven IBP can result in a 2 to 4 percentage point annual increase in revenues, a 2 to 3 percentage point decrease in costs, and a 15% to 30% reduction in inventories, on average. Besides, using IBP increases job satisfaction by making work more systematic, which frees up time for strategic tasks and innovation.

But an AI-driven IBP system isn’t easy to design or deploy. It’s also a major investment. The cost can run into tens of millions of dollars, often exceeding $100 million for large corporations—and that doesn’t include the time and internal resources needed for its implementation. In our experience, many companies that have implemented AI-enable IBP platforms say that they didn’t realize as much value as they had hoped to, mainly because of a poor adoption rate, misaligned processes, and the lack of connectivity between IBP tools.

Modern IBP solutions must seamlessly integrate people, processes, and digital technologies—the trinity of effective end-to-end planning. In this article, we focus on the role of technology.

The Power of AI-Enabled IBP

AI-driven IBP platforms help companies improve business planning in several ways. Chiefly, they create a planning process that extends from end to end in an organization. The platforms connect upstream planning, such as supply chain planning , with downstream planning, such as demand forecasts, commercial planning, and financial forecasting. (See the exhibit.)

integrated business planning cycle

At a minimum, these platforms also automate planning, and they potentially enable planners to make better decisions with predictive and prescriptive analytics. Companies can migrate from manual to automated forecasting and gain the capabilities for scenario planning as well as real-time simulations. The latter shift the planners’ focus from numbers to identifying the key risks and opportunities. As a result, the planning process becomes faster, easier, and better.

Faster. AI-driven IBP platforms use automated data feeds and AI-driven forecasting models, shortening the time needed to develop forecasts. Automation minimizes the number of planning iterations, while the use of objective parameters for data eliminates the need for endless discussions. Migrating to an automated IBP platform enables companies to cut planning cycle times by 30% to 40%, while the ability to use signals-driven forecasting ensures that companies can prepare for and execute faster organization-wide responses to change.

Easier. AI-driven IBP solutions also ensure that companies can align—in real time—demand, supply, and financial plans using common data sources. The process works across functions, business units, and teams, so companies can resolve the risks involved in not fulfilling commitments as well as identify opportunities to bolster growth. And since the process is usually automated, there’s little need for using Excel spreadsheets or crunching numbers anymore.

Better. By connecting demand forecasts and supply scenarios, AI-enabled IBP provides better visibility into operating constraints, allowing companies to close gaps either by increasing supplies or reshaping demand through promotional and marketing efforts. And end-to-end visibility reduces supply chain costs by ensuring more efficient logistics, lowering warehousing expenses, and improving order management. As a result, IBP platforms improve the accuracy of forecasts by as much as 25 percentage points and typically by at least 10 percentage points.

Getting AI-Driven IBP Right

Implementing an AI-enabled IBP platform is a challenging journey that requires building a data foundation and using AI-powered analytic models to automate planning. An implementation also necessitates orchestrating technology across systems and upskilling the organization. Companies should take five steps to be successful.

Harness all data. An AI-driven process demands large quantities of data that is as fresh as possible. It also needs different kinds of data, which could take the form of standard inputs as well as early-warning signals. Smart companies draw on a variety of data; the leaders use as many as 15 to 20 data sets for demand planning alone. An end-to-end IBP solution also involves hundreds of internal and external signals, which makes data one of the key challenges in automating planning.

Creating an IBP process requires merging, harmonizing, and automating inputs from many sources, both internal and external. Some internal sources will be easy to integrate; however, a lot of the data may not be centrally stored, let alone automated. Promotion data, for instance, often exists only in spreadsheets on sales teams’ laptops, so it can be tough to access it in a timely fashion. If data sources haven’t been centralized, an organization should use manual workarounds in the short term and automate the data flows in the long run. The challenge with externally sourced data is identifying the right signals and finding reliable data sources.

While many SaaS IBP platforms boast of data integration capabilities, being able to use multiple sources of data isn’t enough. Planning becomes better only because of the systematic cleaning, understanding, and enrichment (through manipulation) of the most important data sets. Raw data fed into machine learning models will marginally improve the performance of business planning models, but data transformation boosts accuracy by at least 10 percentage points. That’s why when implementing a SaaS platform, wise companies deploy more systematic and rigorous data governance systems, and they build data capabilities to analyze and extract results from data sets.

As the first step of its migration to IBP, for example, a beauty products player created an integrated data foundation for demand planning. It found, aggregated, and harmonized data from 14 sources: shipments, orders, and inventory databases; three sell-out databases; two databases for historic and planned marketing efforts; distribution and promotional databases; a weather service; and sources for COVID-19 incidences, macroeconomic data, and consumer price trends. Many sources didn’t have owners and the data quality was dubious, so the company created and applied governance standards to ensure that the data was reliable. By using quality data and developing algorithms to forecast demand for different time horizons and granularity levels, the company was able to boost its bottom line by 2% per year.

Orchestrate the solution. Many SaaS IBP platforms promise to eliminate planning-related problems; CEOs, chief technology officers, and chief information officers would do well to carefully evaluate prospective solutions to find one that addresses their specific challenges.

Using a single out-of-the-box package as the basis of an IBP solution sounds good in theory, but it is usually problematic in practice, especially for large companies since the implementation can be complex and time consuming. Moreover, business units and functions typically have invested in systems that don’t talk to each other. For these reasons, SaaS IBP platforms will have to be orchestrated solutions that connect existing systems, close the gaps, and integrate them into an end-to-end platform.

A large company whose sales exceed $15 billion bought a supply planning platform, a trade planning system, and a financial planning solution, each from a different vendor for a total investment of about $100 million. None of the solutions were set up to integrate with each other. While the supply plans and demand forecasts were drawn up in terms of volumes at the SKU level, the financial plan projected income and expenses at the business unit level. The trade planning solution went largely unused by the sales teams, which continued to rely on the plans they built in spreadsheets. The only way forward was to evaluate each system, identify the problems and gaps, and develop fit-for-purpose software to integrate them.

Customize algorithms and scenario and forecasting models. Although most out-of-the-box IBP systems come with some forecasting capabilities, off-the-shelf algorithms are far from optimal and will often be less accurate than customized ones. We find that using custom algorithms improves the accuracy of forecasts by 5 to 20 percentage points.

Rapid scenario planning—one of the most desirable features of an integrated planning system—increases the value of demand planning exponentially. In complex and connected industries, the ability to quickly understand the tradeoffs while making decisions is a major benefit that IBP provides.

Forecasting transparency is another desirable. Most planning forecasts are still black boxes, providing only basic insights into the relative weight of different inputs or making simple attributions to their drivers. That doesn’t foster trust among decision makers; only customized forecasting models can provide a level of transparency that is in line with the expectations of decision makers. Such models offer more visibility into the inputs used for drawing up forecasts, the assumptions made about execution, and the level of uncertainty in the forecasted numbers. This level of visibility not only builds trust but also provides actionable insights about the levers that executives can use to deliver better results.

Customized generative AI systems will turbocharge AI’s role in IBP in the future. A generative AI system could near-instantly scan through thousands of data points and provide insights, in natural language, about past changes in sales trends, the outliers in historic data, the reasons for sales acceleration or deceleration, and new growth opportunities. The technology could also be used to enhance data quality and enrich it with product attributes (from, say, photographs), as well as tune and update AI-based planning models. Generative AI may also help executives envision novel human-machine interfaces for planning, such as conversation-based ones.

Manage the transition patiently. Shifting to an AI-driven IBP platform will require extensive employee training across functions and organizational levels. Employees have to get used to the new ways of working and learn to trust the new process, and that will take time. Companies should start small, generate value early, and give their nascent capabilities the time they need to mature. Transitioning to an IBP process can be executed in sprints, but institutionalizing it is a marathon that requires the top management teams to stay the course.

Managing IBP-related change poses two key challenges. The first is fostering collaboration between previously unconnected functions, which requires redesigning the planning process as well as better aligning goals across functions. Stakeholders need to understand how the new process will benefit them and what implications it will have on their day-to-day work to make the transition. The shift also demands redistributing power and accountability that, in turn, needs careful management and constant communication by business leaders to the entire organization.

The second hurdle is getting business planners to adopt AI-driven IBP. Planners, who often have been in their jobs for decades, may have reservations about shifting to AI-driven models. In addition, many don’t have an analytics background, so they may not understand how the new models work. Like employees in other sectors, many may feel threatened by the technology, believing that it will sooner or later make their jobs redundant.

Explaining how AI models function when training business planners is a crucial first step. Companies also need to communicate that analytics and automation won’t replace them but will augment their power. Technology can take on the routine, calculation-intense parts of forecasting so that planners can shift to reviewing exceptions and adjusting for critical parameters, such as hero SKUs (products whose volumes or profits are crucial to the business), important promotions and campaigns, and new product introductions. Consequently, business planning meetings can shift from a my-number-versus-your-number debate to identifying fresh opportunities and developing risk mitigation strategies.

By way of illustration, a multinational company with three main product lines wanted to shorten its seven-week planning cycle, adjust to demand signals more quickly, and have a rationale for allocations at times of shortages. It therefore invested in an AI-enabled IBP platform that it could customize by product line, distribution channel, and region. The company piped in data from more than 40 sources and created a data management and governance system for which it trained more than 100 employees. To ensure that the platform would be used, the company conducted 15 training sessions across the globe for more than 200 users at a time. After it had completed the transition to the new system, the company reckoned that using IBP had increased revenues by about $50 million and reduced working capital requirements by $100 million a year.

Ensure top management teams’ support. Shifting to AI-driven IBP platforms can noticeably improve both the top and bottom lines. That’s why smart business leaders treat IBP not just as a new planning process but as a company-wide initiative to boost performance.

Top management teams’ involvement is critical to help create the vision, draw up the objectives, and ensure that the organization is aligned around them. Business leaders’ support will also be needed to break down the barriers between functions and business units, rethink business processes, and change the way executives have traditionally developed business plans. They must demonstrate their commitment to an IBP platform by sponsoring capability-building efforts and agreeing to own the decisions to which the new planning process leads them—regardless of the consequences for their function or unit.

A consumer products company recently transformed its planning by unifying its sales, demand, supply, and financial planning processes into a single process. Led by the chief operating officer (COO), the initiative’s main objective was to unlock growth opportunities by creating a planning process that focused on each business unit’s performance, rather than on the objectives of each function. This overhaul required shifting some responsibilities, roles, and authority in each of its businesses. The COO’s involvement was critical to set planning goals and to ensure alignment across the organization about the use of IBP. Partly as a result, the business units that implemented the new system boosted revenues by 2%, improved forecast accuracy by up to 15%, and shortened the time taken to finalize business plans by more than 30%.

As uncertainty shrouds the global economy and technological change accelerates, business planning will become more relevant—and complicated. To stay ahead, CEOs have to invest in developing planning capabilities that seamlessly integrate people, processes, data, and technology across functions. Only such a transformation will enable companies to adapt rapidly to changing demand and supply conditions, gain visibility into risks and opportunities early, and ensure that every part of the organization is striving to achieve the same goals. After all, a company without an integrated business plan will find that every road it takes leads it nowhere.

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Inspired Economist

Integrated Business Planning: A Detailed Exploration of Strategy and Execution

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integrated business planning

Integrated Business Planning Definition

Integrated business planning is a management process that synergizes sales, marketing, finance, operations, and logistics to drive an aligned operational plan and business strategy, balancing demand and supply while also considering financial objectives and the allocation of critical resources. It embraces short, medium, and long-term business planning and assists in decision-making, reducing risks, and increasing profitability.

Importance of Integrated Business Planning

The crucial role of integrated business planning.

Today’s businesses exist in a world that is, to say the least, complex and full of rapid changes. In these circumstances, integrated business planning plays a pivotal role in navigating through the turbulent times by bridging the gap between the company’s strategic ambitions and their operational constraints.

As a unifying framework, the process provides a link between the top-level strategic planning and day-to-day operational activities. It eliminates silos between departments providing a holistic, transparent and real-time view of the business. By mapping all operations to strategic goals, it ensures that all decisions and actions are pulling in the same direction toward the fulfillment of those goals.

Aligning Strategic, Operational, and Financial Planning

With integrated business planning, synchronization becomes achievable at an elevated level. It enables businesses to align their strategic objectives with operations and finances, thus ensuring a smooth flow of processes. When strategy, operations, and finance harmoniously work together, it eliminates any disconnects, resulting in effective and efficient decision-making.

From a strategic perspective, the approach aids in prioritizing goals and developing responsive and realistic plans to achieve them. On the operations front, it identifies bottlenecks, assesses risk, and ensures that all operations are in line with strategic objectives. Lastly, the integration with financial planning leads to accurate financial forecasts, effective cash management, and robust financial control.

To put it another way, this integrated view of business planning is akin to a well-conducted orchestra. Each section of the orchestra, be it strategic, operational, or financial, knows its role, its tasks, and how it contributes to the overall performance of the melody; which in this case, becomes the successful completion of strategic goals.

The Outcome: A Resilient Business Model

In the face of evolving markets and shifting customer demands, integrated business planning empowers businesses to quickly identify, adapt, and respond to changes efficiently. The approach supports timely and informed decision-making, improves communication and collaboration, and nurtures a proactive business culture focused on future growth.

The process also provides a robust system that facilitates scenario planning and risk mitigation. It promotes informed and rational decision-making, thus creating a resilient business model capable of withstanding market uncertainties and disruptions.

In summary, integrated business planning offers a comprehensive, more intelligent approach to business management—one that aligns strategy, operations, and finance towards a common goal while driving performance and sustainable growth.

Core Components of Integrated Business Planning

At the epicenter of integrated business planning is demand. Understanding current customer needs and predicting future ones is key to running a profitable operation. This involves market research, analysis of historical data and forecasting. By getting an accurate approximation of demand, businesses can take proactive measures to efficiently meet those needs.

Supply Management

It’s not just enough to understand the demand. A business must have a competent supply management system that can meet the anticipated demand. This is achieved by coordinating all elements of procurement, production, and logistics to effectively fulfill customer needs. A successful supply chain management strategy incorporates everything from sourcing raw materials, managing inventory, production planning, to eventual delivery.

Product Management

Product management is a very significant part of integrated business planning. It’s the process by which a business decides what products to offer and how to position them in the market. Product managers work cross-functionally with other teams like marketing, sales, and engineering, to ensure that the product aligns with company goals and customer requirements. They also analyze market trends, competitive landscape, and customer feedback to inform product features and enhancements.

Financial Planning

Lastly, financial planning provides the fiscal framework for integrated business planning. It involves budgeting, revenue projection, expense tracking, and monitoring financial performance against these predictions. A detailed financial plan enables a business to execute its strategies within available resources, capitalize on opportunities and respond timely to market changes. Financial planning is indispensable for a sustainable long-term business growth.

Each of these components works seamlessly with the others in integrated business planning. While demand, product, and supply chain management ensures that the business retains a competitive edge in the market, financial planning provides the necessary oversight to ensure the business remains profitable while doing so. This alignment across all the key functional areas is what makes integrated business planning so critical to the success of a business.

The Role of Integrated Business Planning in Corporate Decision Making

In a dynamic business environment, integrated business planning helps corporations quickly adapt and respond. It operates as a navigational tool, guiding decision-making processes at various levels of an organization, from operational to strategic.

Operational Decision Making

At the operational level, integrated business planning aids in managing immediate and short-term decisions. It provides a detailed view of the current business operations- from sales forecasts, customer demands, supply chain management to available resources.

For instance, consider a rise in demand for a product. An operational decision might involve assessing the production capacity and inventory levels, which integrated business planning can readily provide by unifying data from multiple business functions. This allows the organization to react swiftly and efficiently to unexpected changes.

Tactical Decision Making

Tactical decisions contributing towards achieving short-term goals also benefit from integrated business planning. It aids in providing a firm ground that aligns operational decisions with corporate strategy.

Key functions like marketing campaigns, collaborations, or prodigious investments often hinge on the insights captured through integrated business planning. It not only allows companies to seize up-to-the-minute market opportunities but also helps in mitigating potential risks.

Strategic Decision Making

At a strategic level – where decisions have long-term implications and contribute directly to the achievement of an organization’s mission – integrated business planning is instrumental. It provides organizations with forward-thinking views, predicting future scenarios, and laying out a roadmap to achieve the desired goals.

For instance, making decisions about entering new markets, launching new product lines, or obsoleting older ones are all powered by the insights from integrated business planning.

Thus, integrated business planning is central to decision-making processes, underpinning them with a clear, synchronized view of business functions. It enables corporations to respond effectively and swiftly to business environment changes, maintaining their competitive edge.

Integrated Business Planning and Risk Management

Integrated business planning (IBP) plays a crucial role in managing business risks. It enables organizations to align strategic, operational, and financial plans to achieve overall corporate objectives.

Assessing and Managing Risks with IBP

With IBP, an organization can continually assess potential risks and adjust its plans based on a comprehensive and timely understanding of possible implications. This process reduces the likelihood of sudden impact from unanticipated events and enhances the resilience of the business.

For instance, IBP can help in foreseeing economic downturns and prepare for them by diversifying income streams or increasing savings. Similarly, if a company anticipates a shortage of raw materials, it may use IBP to develop contingency plans such as seeking alternate supply sources, redesigning products, or adjusting manufacturing schedules.

Identifying Opportunities

On the flip side, integrated business planning also plays an essential role in identifying opportunities. This comprehensive approach can uncover potential synergies, efficiencies, and strategic initiatives that would otherwise go unnoticed. Leveraging integrated data, businesses can identify market trends early, allowing them to deploy new solutions or services ahead of their competitors.

Consider an organization that notices an increase in the use of sustainable materials via integrated data analysis. With IBP, the company can assess the possible financial and operational implications of shifting to eco-friendly materials, then devise strategies to capitalize on this trend.

Holistic View of Business Landscape

Furthermore, the holistic view provided by integrated business planning assists businesses with identifying both threats and opportunities. By providing viably comprehensive, cross-functional views of the business landscape, IBP allows companies to anticipate changes, react effectively, and seize the opportunities these changes bring.

In conclusion, integrated business planning’s role in risk management is immense. It promotes resilience by enabling organizations to anticipate potential risks and build strategies to navigate them. It also encourages innovation by highlighting emerging opportunities, leading to improved competitiveness and sustainability.

Tailoring Integrated Business Planning to Different Business Models

Applying integrated business planning (ibp) to service-based businesses.

The successful application of Integrated Business Planning (IBP) in service-based businesses can prove to be unique due to the nature of service delivery and customer expectations. Unlike in a product-oriented business where the primary goal is to manage the supply chain, service-based businesses encounter market variability and require a flexible planning process.

IBP helps these businesses by providing a platform to align their operational plans with strategic goals. For instance, the nature of the service can dictate the planning horizon and the frequency of revising plans. A healthcare provider may need a more immediate planning horizon compared to a consultancy firm due to the unpredictable nature of medical emergencies. Hence, IBP can be tailored to accommodate these different planning horizons.

Adapting IBP for Product-Oriented Businesses

Product-oriented businesses, on the other hand, often have tangible inventory and a visibly structured supply chain. Here, IBP comes in handy to integrate various components like sales, operations, and finance to ensure the business stays on track to achieve its strategic goals.

By synchronizing all critical business units, the company can ensure demand forecast accuracy, reduce stockouts and overstocks, and optimize cash flow. For instance, in a manufacturing business, the use of IBP can be pivotal in decisions ranging from raw material procurement to production planning to order fulfillment.

Implementing IBP in Hybrid Business Models

A hybrid business model, a mix of service and product-oriented business, calls for even more flexible application of IBP. Hybrid businesses need to balance the complexities of both models, and this can be achieved by integrating decisions about service delivery and product supply.

The outcome is a more harmonized strategic plan that accommodatively factors in both the intangible and tangible aspects of the business. For instance, a software company that offers both software products (product-oriented) and software services (service-oriented) may use IBP to synchronize the timeline for product development and service delivery.

In conclusion, while the fundamental elements of IBP remain the same, its implementation can and should be tailored to the unique needs of specific business models. The flexibility of IBP lies in its ability to adapt and accommodate the diverse patterns of businesses, ensuring alignment of strategic goals with operational plans. This is what makes IBP not just an effective planning tool, but an innovative business methodology.

The Relationship between Integrated Business Planning and Corporate Social Responsibility

In the application of integrated business planning, it’s important to consider its impact on a corporation’s social responsibility (CSR) practices. Integrated business planning has direct implications, as it can form a strategic platform for organizations to proactively manage their social and environmental responsibilities, in addition to driving financial performance.

When considering a business’s social and environmental responsibilities, it’s clear that these elements can significantly influence planning processes. This is because businesses, especially those operating in sensitive sectors such as mining or manufacturing, must account for the potential social and environmental impacts of their operations.

Effect on Planning Process

Understanding this, the planning process under an integrated business planning model needs to not only focus on traditional economic factors, but integrate CSR into the heart of their business strategies in a structured and systematic way. This might involve predicting potential social and environmental risks and planning appropriate mitigation strategies, or identifying socio-environmental initiatives and integrating them into the business’s operating model.

Asset Utilization and ESG Compliance

Moreover, integrated business planning can allow businesses to better utilize their assets in the service of both financial objectives and CSR. For instance, a manufacturing facility might plan to use more energy-efficient technologies, demonstrating commitment to environmental sustainability, while also potentially reducing operational cost.

Furthermore, a solid integrated business planning can enhance a company’s efforts in Environmental, Social, and Governance (ESG) compliance. It allows the business to consistently align its operational activities and financial planning with its CSR policies and governance standards. This, in return, may improve the public image, customer trust, and overall market reputation of the company.

Aligning Business Goals with Societal Values

Ultimately, a key aim of integrating CSR into the business planning process is to ensure that an organization’s business goals are well-aligned with societal values and environmental sustainability. Doing so not only helps businesses to fulfill their moral and civic duties, but is also increasingly recognized as a powerful driver of long-term financial performance.

Software Tools for Integrated Business Planning

In order to successfully implement integrated business planning (IBP), businesses need to make use of a variety of software tools. These tools not only make the complex process more manageable, but they also increase accuracy, improve collaborative efforts and provide meaningful insights for better decision-making.

Popular Software Tools

One popular tool is SAP Integrated Business Planning (SAP IBP) . This tool is lauded for its real-time supply chain management features. SAP IBP offers features for demand planning, supply and inventory planning, sales and operations planning, and response and supply control.

Another widely adopted software is Anaplan . Anaplan’s platform helps businesses model and visualize their data, and is known for its capability to handle extremely large data sets, making it ideal for large organizations.

Oracle Demand Management Cloud is also worth mentioning. It provides predictive analytics to understand and manage demand, and it integrates well with other Oracle applications, making it an attractive choice for businesses already using the Oracle ecosystem.

Kinaxis RapidResponse stands out for its scenario planning features, allowing businesses to simulate and compare various situations and their outcomes.

Role of Technology in IBP

Technology plays a pivotal role in IBP, simplifying and enhancing the process. With the vast amount of data businesses deal with today, manually managing such processes would be time-consuming and prone to human errors. Software tools automate most of these tasks, ensuring accuracy and efficiency.

Moreover, these tools often provide data visualization features, converting complex data into easy-to-understand charts and graphs. This not only makes data more accessible to all stakeholders, but also aids in quicker decision-making.

One significant advantage of using these tools is the ability to collaborate in real-time. Multiple users can work together on the same data sets, breaking down silos within the organization. With everyone on the same page, the alignment between different business functions improves, boosts the overall business performance.

Lastly, with features like predictive analytics and scenario planning, businesses can better anticipate future scenarios and prepare accordingly, reducing the risk associated with unforeseen changes in the market or supply chain.

Thus, with the help of software tools, integrated business planning becomes a more streamlined, accurate, and collaborative process.

Implementing Integrated Business Planning

Essential considerations for successful implementation.

To ensure a successful transition to using integrated business planning, several key aspects must be considered.

Employee Training

A central aspect of this change-over is the training of employees. Your employees need to understand the principles of integrated business planning and how they can apply these principles in their day-to-day activities. This training could be delivered through workshops, seminars, or e-courses, depending on what’s most effective for your employees.

Ongoing mentorship and support are also beneficial, helping employees adjust to the new system over time. By providing continuous learning opportunities, you keep your employees engaged and motivated, thus enhancing the adoption of integrated business planning.

Technological Requirements

The transition to integrated business planning is not only about changing mindset, but also about updating your technology stack, as this approach often relies on advanced software solutions. The exact technology needed may vary depending on the scale of your business and the nature of your operations, but a comprehensive business planning software suite is usually a baseline requirement.

Additionally, you would need to evaluate your current IT infrastructure to check if it can support the new systems. It might be necessary to upgrade certain components to ensure seamless operation. Remember, your new software should be user-friendly to promote ease of use among your employees.

Embracing Cultural Change

Implementing integrated business planning can bring about a significant shift in your company culture. As an approach that emphasizes collaboration and transparency, it requires a shift away from organizational silos. Employees at all levels need to get used to sharing information and making collective decisions.

Promoting this cultural shift can be challenging. Clear, effective communication will be crucial. Explain the advantages of the new system, engage employees in the planning process, and make sure everyone understands their responsibilities. Celebrating small victories can also help to promote positive feelings towards the change.

By paying attention to these critical aspects – employee training, technology, and culture change – you can lay the foundation for a smooth transition to integrated business planning.

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Moscow major projects

Since launching modern Russia’s largest construction program in 2011, Moscow has more than doubled its territory. To catalyze the full potential of this rapidly-growing metropolitan area of 19.5 million people, the City of Moscow’s government pays significant attention to infrastructure as one of the key pillars of urban development—with a current focus on projects that create livable and comfortable urban spaces for both citizens and tourists.

Following its first five years of projects, Moscow was given special recognition for “demonstrating outstanding strategic commitment and ambition” by the International Association of Public Transport (UITP). That period saw 50 million square meters of real estate developed, 370 social infrastructure objects built, and the metro expanded by 30 percent—including 101 kilometers of metro lines and 55 new stations. Innovative finance solutions, necessitated by the city government’s debt-free approach to development, enabled all this whilst maintaining a budget surplus and remaining a net donor region within Russia.

On 30-31 May 2018, the City of Moscow and Mosinzhproekt—a large Russian engineering, construction and project management company—hosted an Innovation Site Visit to showcase Moscow’s major projects to the Global Infrastructure Initiative (GII) community. Through roundtable discussions and site visits with project executives, participants explored where innovation and technology have enabled the step-changes that have allowed Moscow to deliver major projects on a short timeline—and how to apply these lessons to other cities and major projects.

The following insights emerged during GII’s Innovation Site Visit in Moscow:

  • Establish a structure for citizen involvement. Major urban infrastructure projects are an extremely visible expenditure of taxpayer funds while also often being large disruptors of daily life. A foundation of citizen support is essential for success and requires a thoughtful engagement program. In Moscow, citizens are encouraged to participate in the planning process by steering major initiatives through the “Active Citizen” application—a portal for online referendums on topics appropriate for democratic decision-making. To date, almost 2 million citizens have cast more than 90 million votes on over 3,000 issues through the platform. The purpose of this structure is to increase the opportunity for citizen engagement and involvement with their city’s major investments.
  • Manage the disruption ‘cost’. Major urban projects cannot be delivered without disrupting daily life. While citizens can be enrolled to accept the disruption as a necessary investment for a better outcome, equal attention needs to be given to managing the disruption ‘cost’ as to managing real expenditures. For example, MyStreets, a project to upgrade and enhance Moscow’s urban environment through reconstruction of streets and building façades, was disruptive to many citizens and commuters. However, through staging and swift execution, the disruption was minimized and the intended lifestyle improvements were quickly delivered to Muscovites and tourists who traverse newly styled pedestrian streets every day.
  • Invest in technology to optimize sequencing. Moscow’s cohesive vision for urban transformation has allowed early investments in technology to assist future delivery. One of the first projects completed was the centrally-controlled traffic management system which can monitor traffic conditions and urban movement through more than 2,000 traffic cameras and 160,000 CCTV cameras installed across the city. Data collected on current conditions, and knowledge of planned activities, allows real-time rerouting of traffic through the city’s dynamic signage. It also allowed identification and analysis of permanent traffic flow changes that could further ease disruptions like those created by the major construction projects.
Moscow traffic speed increased over 13% in 201.
  • Maximize utility of brownfield sites. A key reason the Moscow Central Circle (MCC), a new light-rail system integrated into the Moscow Metro, was completed in a record four-year period was the repurposing of existing brownfield networks which allowed the installation of modern technology on existing rail transport routes. The MCC’s 31 new stations will revitalize formerly abandoned industrial areas when its next stage of development builds an expected 300,000+ square meters of hotels, 250,000+ square meters of retail, and 200,000+ square meters of offices. This will give districts with historically poor infrastructure access a chance to develop at the same pace as the rest of the city.
  • Leverage PPPs to enhance basic services. To manage public cost and investment while delivering world-class infrastructure, municipalities need access to additional financing tools. Based on a structure that took an act of federal legislation, the MCC is an example of enhancing publicly developed foundations with private services. The tracks and land are owned by the Moscow Metro, with the rolling stock subcontracted to Russian Railways under a life cycle contract with a guaranteed buyback. The innovation is that Moscow Metro is licensing the development rights of its individual stations to private investors. Though all stations will exist under the same covenants, individual investors will assume their station’s construction cost and operational risk and rewards.
  • Create citizen-centric spaces. In addition to serving as open spaces, today’s city residents expect their parks to provide for entertainment and consumer services too. Many modern parks offer architectural features, charismatic vistas, and social, educational, and artistic spaces for all ages. When Zaryadye Park, an area of prime real estate next to the Kremlin was converted to parkland, an international contest resulted in 10 hectares being densely designed for this multi-function purpose. The outcome was two concert venues, restaurants, a parking garage, an entertainment complex, and a biological education center, all neatly camouflaged into a natural landscape that represents Russia’s ecological diversity.
  • Innovate where needed but not excessively. Moscow’s planners and builders did not shy away from technological innovation. The MCC used weldless joint rails to create a smoother and quieter system that is easier on riders and less disruptive to residents living near the railway tracks. The retrofit designs for Luzhniki Stadium were fully modeled in building information management (BIM)—a step which identified more than 100,000 conflict points before they could escalate into project delays. However, the project teams were also careful not to force innovation where it could create unnecessary risk and complications. Instead, they delivered the massive project portfolio by tactically melding innovations with highly-proficient execution of well-known and proven methods.

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Moscow's High Rise Bohemia: The International Business District With No Business

integrated business planning cycle

  • Written by Dario Goodwin
  • Published on March 17, 2015

The Moscow International Business Center (Also known as Moskva-City ) was meant to be Russia ’s ticket into the Western world. First conceived in 1992, the district at the edge of Moscow’s city center is intended to contain up to 300,000 inhabitants, employees and visitors at any given moment and, when completed, will house over 4 million square meters of prime retail, hotel and office space to create what the Russian government desired most from this project: an enormous financial district that could dwarf London’s Canary Wharf and challenge Manhattan . Twenty three years later though, Moscow-based real estate company Blackwood estimates that as much as 45% of this new space is entirely vacant and rents have plummeted far below the average for the rest of Moscow. The only press Moskva-City is attracting is for tenants like the High Level Hostel , a hostel catering to backpackers and other asset-poor tourists on the 43rd floor of the Imperia Tower , with prices starting at $25.50 for a bed in a six-person room. This is not the glittering world of western high finance that was envisioned back in the post-Soviet 90s; but what has it become instead?

integrated business planning cycle

As one might expect from a project of this sheer ambition, Moskva-City has a troubled past. The economic crash in 2008 hit Russia hard enough to evict the previous Mayor of Moscow , Yuri Luzhkov, who had been a cheerleader for the district, and replace him with the considerably more austere Sergei Sobyanin, who famously declared that the whole idea was an “urban planning mistake.” But as recently as 2013, the Wall Street Journal was triumphantly claiming that Moskva-City had risen from the dead, citing 80% occupancy rates and glowing quotes from industry insiders claiming that Moskva-City was the "place to be." Driven by record highs in oil prices, Moscow looked poised to become the next Dubai .

Instead, Moscow is now in the grip of an economic winter prompted by western sanctions and drops in the price of oil. The large financial groupings that Moskva-City was meant to shelter have been warned off by their inability to issue credit to international markets, for example - but Moskva-City isn’t just an Empire State Building left empty by the Great Depression.

A fundamental problem that is holding Moskva back compared to the rest of Moscow is the simple fact that currently, getting to Moskva-City is nigh-on impossible at peak hours. Moscow has long been plagued with transport problems, ever since the government failed to match the dramatic expansion of the city with a dramatic expansion of the transport system after the Second World War. Despite being only 2.5 miles from the Kremlin , Moskva-City is only just inside the ring road that bounds the city center and which acts as the only real transport link to it (and as a result, is clogged by construction vehicles.) A railway and metro hub has been finished, but so far only runs a one-stop shuttle service to the closest Metro station that is actually integrated with the rest of Moscow Metro. The isolation of the outer districts is a large, negative part of the Moscow psyche, and it’s not surprising that this is driving away the globetrotting financial elite this project was meant to attract.

integrated business planning cycle

The project is managed by architectural practice No.6, which is a constituent part of the large Moscow based practice Mosproject-2 , which is itself a public corporation headed up by Mikhail Vasilyevich Posokhin, who is apparently the “People’s Architect of Russia.” Despite all this state involvement, the project has still managed to become bogged down in bureaucratic infighting - each lot is managed and developed individually, which has led to developers competing for occupants by slashing rates.

Much has been written about the way modern financial districts and towers that inhabit them can be unwelcoming, forbidding or even hostile by design, but the skyscrapers of Moskva-City seem even less friendly than usual. The site - a former stone quarry, chosen out of necessity as the only place in the city center where a new district could be plausibly constructed - is isolated both physically and visually, leaving the cluster a stark anomaly on the city skyline. Even the names seem more imposing than optimistic now: Imperia, City of Capitals , Steel Peak.

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The Mercury City Tower , so far the tallest completed building on the site, is officially “a strong reference to Russian constructivism, [which] gives the tower a strong vertical thrust similar to the one found in New York's Chrysler building .” It would be easy to criticize the Mercury City Tower for picking ‘inspirations’ that are so totally opposed to each other - The Chrysler building the defining emblem of American pre-crash confidence and Constructivism created with the express purpose (especially architecturally) of extending the Bolshevik revolution into a social revolution - but the way they smash those two inspirations together is almost beautifully ironic.

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Even though the High Level Hostel is less an asset to a financial district than it is a PR problem, it’s been a huge success since opening in September, already ranked 27th out of 766 hostels in Moscow by TripAdvisor. According to the management agency for Moskva-City , 58% of the new occupant signings this year have been non-financial, including a number of small to medium size businesses. Other areas of office space have been occupied by a restaurant and a culinary school, while another space has been redeveloped into a 6,000 seat theater.

While Moskva-City is failing to be a financial district that could take on the world, it’s inadvertently becoming a humanized space catering to the very groups that the Russian economic miracle left behind. Taking advantage of rents lower than the rest of Moscow , the world class facilities and the sheer desperation of the developers, the humanization of Moskva-City could well create the world’s first high-rise bohemia.

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Of course, these are not spaces designed for a community, or even for people: these are spaces designed for money, and there’s little scope for changing something that seems so baked into the design of Moskva-City . The High Level Hostel is trading off of the irony of being a hostel in a banking tower, but it’s perfectly possible that at some point people will no longer find this joke funny (especially in a building that seems hostile to the very idea of humor). The isolation of Moskva, even though it allowed this community to spring up in the first place, is just as detrimental to a humanized district as it is to a financial one: even bohemians need to move around the city, or the district risks becoming a black-spot instead of a hot-spot.

Moskva-City’s isolation won’t last forever. The end of construction will open the roads up to traffic, and plans to properly integrate the spur lines of the Metro in this area into the wider system are well under way. The integration of the district will inevitably push up rents, and the Russian economy will eventually boom once again. When that happens, Moskva-City is prime territory to be reconquered by the giants of international finance, and it seems unlikely that the municipal or national governments would want to step in to protect this accidental district. For now, though, the towers capture perfectly this moment of Russia ’s schizophrenic understanding of its place in the world.

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