We live in a time of uncertainty, not unpredictability. Planning charts the course of an enterprise through a sea of uncertainties, making fact-based predictions of potential outcomes to inform decision-making by executives and managers. Companies do a lot of planning—some formal but much of it informal. People in companies plan sales, they plan how to produce products and deliver services. They plan for the headcount they’ll need and how to organize distribution and their supply chain. They also produce a budget—which is a financial plan.
The primary goal of business planning is to make decision-making consistently faster and better informed. Software can expedite and refine an enterprise’s forecasting, planning, analysis and decision-making cycles. Technology can improve the productivity of the financial planning and analysis (FP&A) group within the finance department, while improving the performance of executives and managers.
Information Services Group (as Ventana Research) coined the term Integrated Business Planning (IBP) in 2007 to describe a rapid, collaborative, high-participation process that
brings together operational and financial planning using a planning software platform to connect the disparate planning activities of an enterprise. Each business unit plans as appropriate but in a connected fashion that achieves better alignment with strategy and objectives and better coordination in executing the plan and evaluating performance. IBP uses technology to overcome the organizational issues of siloed planning. Artificial intelligence (AI), generative AI (GenAI) and agentic AI also enable faster planning cycles, promoting agility and raising the business value of planning. ISG Software Research asserts that by 2028, one-fourth of FP&A organizations will implement this form of IBP.
Planning should foster structured dialogues between executives and managers around clear operational and financial objectives, rather than just budget line items. People and businesses plan to determine the best way to achieve those objectives. In business, planning is a collaborative process involving a structured dialog about the tactics and resources needed to achieve those objectives. It’s structured because objectives and resources are quantified. The answer to the question, “What are your objectives for next year?” isn’t “Volume and revenue will be up.” It’s “Volume will be up 11% and revenue will grow 9%.” A well-managed planning process sets measurable objectives and quantifies the operational and financial resources required to achieve them. Setting quantitative objectives also makes it possible to measure performance against those objectives. Technology removes the barriers to achieving this, resulting in a shift from explaining what just happened to having a deeper understanding of how to capture future opportunities. Technology also provides actionable, data-driven insights to optimize performance. Ultimately, effective planning software bolsters organizational agility and enhances the value of planning and budgeting across all departments.
IBP uses technology to support a high-participation, collaborative, action-oriented approach to planning built on frequent, short sprints. This promotes more accurate plans because refinements are made at shorter intervals. Short planning cycles enable companies to achieve greater agility in responding to market or competitive changes. An ongoing, collaborative dialogue about achieving objectives brings together finance, line-of-business managers, and executives to promote better ongoing organizational alignment and buy-in.
IBP is distinct from budgeting, or financial planning, because there’s a fundamental difference between planning and budgeting. The two words often are used interchangeably, but they’re separate. Budgeting is a form of financial planning and a core competence for the finance department. At the same time, planning is necessary to ensure the entire enterprise is focused on how to achieve a clear set of objectives.
Planning and budgeting are linked, but they aren’t the same. Budgeting is a type of planning, but it’s financially focused and its main purpose is to impose controls that prevent a company from failing financially. This is essential; however, not failing isn’t the same as succeeding. Budgeting sets limits while planning seeks opportunities; it is the process of creating a detailed action program to achieve business objectives. Budgeting is about income statements and balance sheets. Planning is about the things that departments do and the things they need to do them. So, while planning and budgeting are similar, they have different aims. Successful companies need to budget, and they need to plan. Unfortunately, they often pay too much attention to budgeting and not enough on planning in a way that prevents planning and budgeting from being more useful business tools.
Dedicated software enables enterprises to achieve a higher return on the time invested in planning. When the electronic spreadsheet gained wide adoption in the 1980s, it improved the process by offering a means of automating many budgeting tasks, such as adding columns of numbers, performing analyses and consolidating multiple individual budgets. But they are inherently error-prone and overly time-consuming. They are fine for financial planning because accountants and financial analysts mainly work in two or three dimensions, but businesses operate in multiple ones, beyond money and time, including products, customers, currency and business units.
Planning platforms have the ability to apply a multidimensional structure to business planning and budgeting, making it easier to collect, analyze and report financial and operational information. For example, working with dimensions enables planners to quickly make changes in an assumption and apply it globally to a model. Because the impact or a set can be calculated immediately, it’s possible to explore different scenarios interactively in a meeting rather than having to wait hours or days for an analysis performed using spreadsheets. And a company can save each version of the complete plan and compare them side by side from any desired perspective or level of detail.
AI in all of its forms is transforming forecasting, planning and analysis. The potential use cases for AI in business are vast, and there are already some available today or within the next six months, including accelerated forecasting and planning with less bias, automating analytics production to enable more time for analysis and thought, simplifying budgeting and planning, providing task supervision to spot data and information input errors, adding recommendations to facilitate decision-making, and automating commentary generation to enhance productivity in reporting. AI and GenAI, along with natural language processing (NLP) and agentic devices, are making deeper and interactive self-service reporting widely available, and periodic and ad hoc reports are becoming inherently interactive. As a result, through the remainder of the decade, analysts will spend less time on busywork, while executives and managers will have more effective tools that provide insights and guidance on how to navigate the future, rather than simply illustrating past events.
Another important evolution of business planning platforms is the data store, which is an essential element. Technology for managing data flows to and from source systems (including ERP, customer relationship management and supply chain management) has evolved rapidly over the past decade. Application programming interfaces (APIs) make it possible to automate data extraction, transformation and loading of data from multiple sources on the planning platform, ensuring accurate, timely and consistent data is accessible to all participants of a planning process. This can substantially reduce the significant amount of time spent by analysts on manual data preparation.
Over the past 20 years, software providers have increasingly adopted the structure and language of IBP, even as they and others use different terms. All of them have easier-to-use systems that are far more capable than those that existed in 2007. All are incorporating AI and GenAI technologies to streamline and accelerate planning cycles, make planning more accurate and agile, and transform what started as a strictly administrative burden—budgeting—into a valuable business tool for executives and managers.
I strongly recommend that CFOs and heads of FP&A organizations examine their planning and budgeting processes to see how dedicated planning and budgeting software can enable their enterprise to improve its financial and operational performance. AI-enabled planning and budgeting software can substantially improve the business value of these processes. It’s no longer a matter of the software being as good as spreadsheets—the software is better than spreadsheets.
Regards,
Robert Kugel
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