integrated business planning (IBP) definition

Contributor(s): David Essex

Integrated business planning (IBP) is a strategy for connecting the planning functions of each department in an organization to align operations and strategy with the organization's financial performance.

An effective IBP strategy can help sales and operations balance supply and demand, give human resource (HR) managers the right clues about hiring and training and provide the Chief Financial Officer (CFO) and other C-level administrators with a more comprehensive view of each department's goals so that areas of overlap can be identified and the company can maintain a sustainable competitive advantage. An important goal of every IBP initiative is to help each department within the organization make informed decisions about product market strategy, including new product introductions and capital investments.

IBP evolved from sales and operations planning (S&OP), a multi-departmental process for forecasting demand and ensuring that the necessary supply is available. It is sometimes part of a broader budgeting, planning and forecasting (BP&F) process and relies on information technology to prepare departmental plans and combine them into a single plan. Several categories of software are available to help automate IBP, including the transaction software of such departments as finance, sales and manufacturing, as well as S&OP, corporate performance management (CPM) and analytics software.

See also: Business Planning and Control System (BPCS), business integration

This was first published in February 2013

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