Industrialization of Corporate Planning

Industrialization basically means automation of processes. In case of manufacturing, this means using power driven machines to manufacture products. Its due to industrialization, use of assembly line was possible. But, though there has been lump scale automation in manufacturing area, hardly any automation or so called "industrialization of corporate planning” has happened till date. Corporate plans can be thought of as the most important internal products meant for long term success of the firm. May different divisions and departments of firms generally have different plans to follow and integrating them to form a common corporate plan is difficult. Ideally, after industrialization of corporate planning, we should have one holistic corporate plan meant for strategy execution. Diagrammatically, this problem can be represented as in below: -

As noted before, every single type of plan – be it strategic plan or annual budgets – is considered to be altogether different entity. Though managers agree that these should be integrated into a single product for better applicability and impact, practically many different problems arise. Most notable issue is use of different tools in preparation of the individual plans. Different data sets used also add to the problem of getting the linkages.

Industrial revolution of manufacturing came about with the invention of steam engine. This engine showed a way to do complex repetitive work automatically, thus saving tedious manual labor. Corporate planning is also facing a similar pre-steam engine situation. Here there are actually different “engines" for different plans. For example one tool or engine is to prepare financial plan and an entirely different engine is used to prepare a annual sales forecast. If this was the case in any manufacturing unit, ultimate assembly would have been very costly and would require plenty of manual work. Same is the case here in corporate planning. Integration is so difficult that most often than not, the different plans are left alone or some loose integration is done using Excel functions.

Any organization can go about doing planning integration in the following three degrees.
Plan Data Integration: During planning two types of data are considered – past performances and past plans. Past performances are actual targets the firm has achieved till now. Planning becomes more realistic when past performance data is taken into consideration. Past plans are also important to compare plans with actual achievements. Plan data integration implies integrating the different past performance data and past plans for better results and consistent reports and dashboards.

Planning Platform integration: Before we integrate the planning process we need to synchronize the planning platform. This can be done by leveraging the different tools to access the same database and using similar assessment patterns and ways. Thus we can get a level playing field across unique tools as a step towards an integrated plan.

Planning Process Integration: After data and platforms are integrated, we can integrate the planning processes. By this we mean, that as and when any changes are done in any of the plans in any division or department of the firm, the other departments are informed. Thus changes in other plans are also correspondingly done to reflect the changes across all areas of the planning process.Following diagram represents a ideal integrated planning approach.

Thus, one major issue in corporate planning today is existence of many plans across different divisions in a firm. Integration of these plans is difficult because of multiple tools and data sources used. To make planning more effective we can integrate the data sources, use a common platform and then synchronize the planning processes. This would ultimately create more consistent and effective plan which would be applicable to the whole organization in a holistic way – be it for centralized or decentralized planning system.

Reference :

The Industrialization of Corporate Planning, Rise of the “Planning Factory”,
Dean Tarpley, Palladium Group, Inc, 2008