In most corporations, planning is done at the department level — leaving disconnects and gaps across different departments. Finance sets revenue and profit goals with minimum validation from Manufacturing that the company has the resources, material, capacity, or demand to reach these goals. On the operations side, Manufacturing is developing plans to balance demand and supply but seldom knows if the resulting "plan" will meet the budgets on which the company's revenue and profit goals are based. The Sales department agrees to quotas that meet Finance's revenue goals without a complete understanding of what manufacturing can deliver.
Integrated Business Planning (IBP) bridges these gaps in corporate planning systems. Integrated Business Planning integrates the financial planning provided by EPM systems with operations planning provided by Sales and Operations Planning solutions. This means that revenue goals and budgets are validated against a bottom-up operating plan, and that the operating plan is reconciled against financial goals. When detailed changes are made to the operations plan, planners can immediately see the big picture impact of the changes.
IBP also addresses one the CFO's big concerns—the reliability of the revenue forecast. Operating plans are updated daily or weekly from a precise forecast based on current market conditions. These updated plans are then made available so that financial analysts are working with data that best represents what is going to happen - not what they projected would happen based on last quarter's data.
For a discussion in more depth, see my article: Improve Reliability of Financial Forecasts with Integrated Business Planning
in Supply & Demand Chain-Executive Magazine