Monday, September 6, 2010

Bridging the planning silos

What are "planning silos"?

If you work in a large organization you are probably familiar with the phenomena we call "planning silos". "Planning silos" occur when different staff functions in an organization all drive their own planning cycles. In typical cases we find Finance running a financial planning cycle, HR running a personnel planning cycle and Sales running an account planning cycle. All these cycles are in the real world closely interconnected but in the planning world they run in the best case loosely coupled.

So what's so bad about these silos?

Well first of all they require a lot of management attention. The average line manager is confronted with three or four planning processes in which he has to participate and has to submit information. In some organizations we find mangers submitting data for headcounts in four different planning processes. Each plan cycle uses its own definitions and terminology so it is not a straight forward copy-and-paste-action for these managers. Time spend in uncoordinated planning silos is a waste of time. Time that could be spend on serving customers or paying attention to employees.

Second, the multiple parallel planning processes create multiple versions of the planning truth. FTE's in the HR plan don't match up to the FTE's submitted three weeks earlier in the financial budget. It is not uncommon that a lot of time is spend on discussions explaining the differences between different plan versions. These discussions hinder a lot of organizations to pay attention to the big picture and the real signals that can be read from the planning data.

Third the uncoordinated planning processes take away organizations a rare chance to see the bridges between the different functional area's in an organization. Being able to see the impact of increasing sales volumes of beer throughout the brewery's value chain is a key value of the planning process for such a brewery. The same goes for new headcounts that enter an operations function as a result of a planned recruiting effort. The earlier those interdependencies are visible the better they can be managed to deliver the value of planned actions to the organization.

What to do about the planning silos?

Bridging the planning silos is not so much something that is done in one big project. Bringing all the functions to one table, the different interests and definitions, corporate politics, they all complicate the building of the necessary bridges.

We have had the best results to integrate one planning process after another. The financial planning & control cycle can be a fine starting point for the integration process. From this starting point different functional area's can be linked into an integrated planning model. Realizing an integrated planning model as a bridge between the planning silo's requires careful considerations of timelines of the different planning processes, definitions to be used and a clear organization of the integrated planning process. Typically such an integrated planning model requires a specialized software platform to handle of the interdependencies. We find that a lot of large organizations have these platforms in one of their function area's but the usage is often limited to that specific function area.

Is it worth the effort?

Yes it is! The benefits of bridging the planning silos are numerous. Integrating the planning processes often delivers new valuable insight and makes planning processes more efficient. Imagine line-managers that submitted their HR-plan that now will find their financial budget already be populated with headcounts or even salary expenses coming from their own HR-plan. Sales-managers find their revenue line items being fed from the volumes and price plans from their account plans. For all of them more consistency, more insight with less effort.

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