World Class Integrated Business Planning Blue Print

1. World Class Integrated Business Planning Blue Print Markets that 21st century organizations compete in are increasingly dynamic, complex battlefields. Financial success in such battlefields hinges on developing new levels of planning, execution, and continuous improvement capabilities. With this basic principle in mind, and building on lessons learnt from helping hundreds of global corporations deal with operational complexity and variability, we have formulated a unique set of process & technology innovations. We call this set of innovations the mPower system for Integrated Business Planning. What are the capabilities that mPower provides to help an organization become world class at IBP? A typical global corporation is competing in multiple market segments simultaneously (multiple product categories, different market regions). Let us consider each “market segment” that the corporation competes in as a battlefield. The objectives for the market segment can be different at different points of time, ranging from share growth to profit harvesting. Each market segment has different needs and requires specific strategies around product (features, variety, cost, time to market), marketing (launch, advertisement & promotion vehicles, pricing), sales (different channel types, distribution reach), and supply chain (cost, order lead times, flexibility and product configurability). The mPower approach calls for a management system that drives the decision making across R&D, Marketing, Sales, Supply Chain and Finance to be synchronized in a way that achieves the enterprise’s goal as a whole in the battles for every market segment. The mechanism to drive this synchronization is the Integrated Business Plan. The Integrated Business Plan is the financial plan for the enterprise made up of the detailed battle plans for each Market Segment. The detailed battle plans comprise of sub-plans (functional plans) for Product development, Marketing, Sales, Supply Chain and Finance with clear ownership established. As battle conditions change, the system creates rapid synchronization across all the sub-plans to still achieve the objectives of the overall financial plan and the objectives of the battle plan for each Market segment.

2. For example, let us say that the battle plan for a particular market segment has been drawn up with a product sub-plan calling for certain features to be delivered in the upcoming launch of a product. However, marketing has come up with intelligence that a competitor is bringing in a couple of features that might change the nature of the battle. Going after these new features could: delay the launch of the product add additional component cost delay other product launches by diverting critical R&D resources What is the right decision? To make an “Optimal” fact based decision the following questions need to be answered rapidly: How much additional revenue (units times price) is sales willing to commit to if the new features are added (or) how much of current revenue plan is at risk for that market segment if these new features are not added?  Can supply chain support additional supply of current version of product to cover the delay? At what incremental cost? How much extra cost would it take for R&D to deliver the product on time? Making the above decision clearly requires a rapid dialog between Product Development, Supply Chain, and Sales & Marketing & Finance. Once the decision is made, it has to be reflected in the changed sub- plans of sales, marketing, product, supply, and finance organizations, with clear accountability. For another example, let’s assume that the finance organization recognizes the need for a 10% reduction in the budgeted costs because revenue is not trending to plan for a market segment. What is the best place to make the cost cuts across R&D, Sales, Marketing, Supply Chain, or a combination if the goal is to minimize the impact on the objectives in the financial plan? How such decisions are made by the various functions in their sub-plans and rapidly synchronized across the other functional sub-plans in the enterprise will be the key to winning in the battlefields that are 21st century markets. With that context, the key elements of the mPower system for IBP are the following: A.) End-to-End Visibility – Available at the fingertips of management Market Intelligence (Customer needs, demand drivers, competitive positions against demand drivers , size and share positions) Supply Base Intelligence (Supplier prices, price plans, capacity issues, distressed suppliers…) Plan Status(Execution states against plans B.) Plan Creation Process – Aligning Market Opportunities, Strategies, Resources, and Initiatives Market Segment Battle plans oMarket Segment Opportunity Forecasts, Strategy & Objectives Product Portfolio Plans Marketing Plans Sales/Channel Plans

3. Supply Chain Plans Financial Plan (Roll up the Market Segment Battle Plans and the supporting functional plans, resources and spend) oCorporate financial objectives oAll Market Segment Battle plans, functional plans to support the battle plans rolled up oFinancial objectives vs. Segment Battle plans reconciliation oFinancial budgets allocation oShared services plans and allocation C.) Plan Execution & Plan Adjustments – Quick, Optimal Response to Variations, and Rapid re- synchronization of plans Visibility to Market Intelligence (risks & opportunities relative to plan assumptions) Visibility to execution deviations for each sub-plan(threats to plan) Visibility to all options/levers available to course correct (playbook) Ability to do rapid trade off analysis for each option with financial objectives (scenario planning) Consult/collaborate with other sub-plan owners in real time where necessary before decision to change plan (reduce variability across system) Notify all other sub-plan owners of changes (early warning, synchronize) Ability to move budgets to where the money is needed most to win the most important battles D.) Post Game Analytics – Driving Accountability & Continuous Improvement Scoreboard KPI Metrics that show the performance against plan in each market segment, and each functional area. Post-game storyboards that establish clear accountability for the scoreboard – who is playing the team game and who is playing a silo game that is hurting the team. Continuous Improvement Programs/actions authorized and value delivered against promised tracked. Mechanisms to broadcast the Storyboards to broad organization to help drive and sustain right behaviors.