The Fidenda Guide to IBP Terminology

A forecasting algorithm which generates predictions based on past observations and forecast errors. It removes non-stationary trends through differencing (I) and models temporal dependence using autoregressive (AR) and moving average (MA) components. 

When used in Manufacturing, this essentially means maximising the use of the available resources (e.g. machines, labour, space, materials) to meet production goals efficiently.

A structured approach for evaluating and prioritising investment opportunities across the business in order to optimise returns and strategic value creation. This involves ranking potential investments by criteria such as NPV per dollar invested, strategic importance and risk profile, while considering constraints like available capital, management capacity, and timing dependencies.

Demand Planning is a process in which retailers and manufacturers forecast customer demand to ensure products are available when and where they’re needed. Over-forecasting can result in waste, and under-forecasting might mean missed sales. Anaplan’s Demand Forecasting engine is called Forecaster. See also S&OP.

A financial planning methodology that builds forecasts based on key business drivers and operational metrics rather than historical financial line items. Instead of simply growing last year’s revenue by 10%, it models underlying drivers like customer acquisition rates, pricing changes, unit volumes, and market expansion to create more accurate and actionable financial plans.

Enterprise Performance Management is closely related to IBP, but originates from the world of Finance. It describes the processes and systems that organisations use to plan, budget, report on, and forecast – you guessed it – the financial performance of their business. An EPM system helps monitor KPIs and supports budgeting, modelling, forecasting, and financial consolidation.

You may know that while we’re believers in Anaplan, a lot of people here at Fidenda come from SAP backgrounds. This means we speak the language of SAP and understand the concerns that SAP teams may have about connecting to an external platform. EPM FastTrack is a pre-configured tool that Fidenda has created to help our clients who run SAP to connect to Anaplan safely and quickly.

Anaplan’s ML-driven demand forecasting engine. It enables more accurate and automated planning, and can factor in external data (e.g. the weather or sporting events taking place) to predict demand.

FP&A is a function within a business that helps to support financial decision-making. The job of an FP&A team is to:

Create a budget for the organisation

Model financial performance, do scenario planning and risk analysis

Provide the ongoing support to deliver the budget.

The original budget can be considered the “target / contract” to deliver and forecast the ongoing tracking of delivery against the budget. See also XP&A, EPM.

A workforce plan that focuses on numbers, often at the department level, and is often more short-term. It shows hires, promotions, expected attrition, salary increases, etc. Its aim is to forecast the headcount of a department or organisation and the associated cost.

Integrated Business Planning is an approach that brings together all functional, operational, and financial planning into one ecosystem – with aligned systems, processes and KPIs. If you’re thinking “wait, haven’t businesses always done this?” then we’d have to say yes. They’ve always tried hard to plan, model and forecast – but not in a unified way. That’s because in large organisations, planning usually happens at function level, i.e. Finance do their reporting and planning, Supply Chain theirs, and so do HR, Sales, Marketing, Production, etc.

The new thing about IBP as a practice is that it brings all planning activities together across multiple departments and planning cycles, and empowers the organisation to make decisions that make sense for the entire business – not just one or two functions. That’s a game-changer, indeed.

The term IBP is also used to describe the system that helps businesses do the above. Such a tool has to be granular enough to handle all the function-specific activities that users need, while also being able to provide a big-picture view that helps decision-makers to plan strategically. There are a bunch of systems out there that do that (but at Fidenda, we’re big believers in Anaplan).

A framework that helps gauge an organisation’s planning capabilities (across people, processes, and technology). It’s useful for assessing where you are in your IBP journey, what a good next step might be, and which gaps need addressing. Take a look at Fidenda’s IBP Maturity Model here.

This is a financial metric that’s used to assess the profitability of an investment. It’s the expected return of an investment over its lifespan. Sometimes considered the hurdle rate for which an investment is viable. (Technically, it’s the discount rate at which the net present value of an investment is zero).

A strategic process in supply chain planning. Its goal is to optimise stock levels in order to balance availability and working capital efficiency. See also Demand Planning.

A technique that data scientists use to find the ideal solution (e.g. usually cost minimisation or profit maximisation) under a set of constraints (such as capacity or resource). It’s often used in supply chain, manufacturing and financial modelling.

A high-level, multi-year financial plan for the business, typically covering 3-5 years. It’s not really about accuracy but exists to provide a framework for making better decisions about the financial future of the business, including resource allocation, capital investments, and strategic initiatives. The LRP forces the board and executives to align on key strategic goals, assumptions and trade-offs.

A Retail term that describes the process of determining the optimal mix of products to offer, tailored to customer preferences, store formats, and regional trends. It aims to have the right products available at the right time, and at the right price to maximise sales and profitability (as well as meeting customer preferences and needs, of course). Also see Merchandise Financial Planning.

A term used largely in Retail, and especially in Apparel. It’s the process of forecasting sales, and setting and agreeing on targets for sales, margin, and inventory. The goal is to optimise profitability and meet customer demand, especially for promotional periods where demand can be extremely volatile. Also see Merchandise Assortment Planning.

A subfield of Artificial Intelligence (AI) that enables systems to learn from data and improve their performance on specific tasks without explicit programming. In planning, ML powers predictive forecasting and scenario modelling.

Not to be confused with Module. In Anaplan, a model is a digital representation of your business. It’s designed to help make connected planning happen by allowing you and your colleagues to collaborate on budgeting, forecasting, and analysis – and to, you guessed it, model various aspects of your operations.

Watch out – this is different from a model in Anaplan. Modules are building blocks that represent a specific function, such as margin calculation, employee expense planning, or profit and loss. Modules are key components of an Anaplan model.

A Retail term that describes the smallest quantity of a product that a supplier is willing to sell. MOQs have an impact on inventory levels, working capital, and supply chain flexibility. As the smallest available unit of a product, they’re a key consideration when building supply chain models.

The process (and also the software system) for calculating the materials and components that are needed to manufacture a product, based on demand forecasts and inventory levels. It can also help with production scheduling, inventory control, and the management of the production process. See also Rough-cut Capacity Planning.

A method for evaluating an investment opportunity by calculating the present value of its projected return. Essentially, it helps determine if an investment’s future returns, when brought back to their present-day value, exceed the initial investment cost. See also Internal Rate of Return.

The name of Anaplan’s next-generation calculation engine. It’s designed to support large, complex models and offer actionable insights that help drive business outcomes.

A term used by manufacturers to describe the scheduling of production activities to meet demand (while minimising costs and bottlenecks).

A dynamic budgeting method where a company continuously updates its financial outlook by dropping the most recently completed period and adding an equal period in the future, thus maintaining a consistent planning horizon (e.g. always looking 12-18 months ahead). This provides finance teams with real-time visibility into cash flow, performance trends, and enables faster decision-making compared to static annual budgets.

In Manufacturing, this is a high-level assessment of whether available capacity can meet demand. This is used early in the planning cycle to make sure that production plans are feasible in terms of labour, machines, and materials. Rough-cut Capacity Planning helps to identify potential bottlenecks or surpluses before detailed production planning kicks off. Also see MRP and Capacity Optimisation.

An important supply chain management process. S&OE focuses on short-term execution and responsiveness (often daily or weekly, as opposed to the long-term strategic planning perspective in S&OP).

The function (and the process) that brings together demand, supply, and financial plans at a strategic level. S&OP focuses on long-term strategic planning, often for periods of up to 18 months (as opposed to S&OE which responds to short-term needs).

This is a huge deal in an organisation’s journey to fully integrated business planning (IBP). It’s a cross-functional forum where the key stakeholders from Sales and Operations come together and agree on a single, aligned plan that balances demand, supply, and financial targets. It’s an important step that improves communication and collaboration between functions, and gets organisations closer to achieving strategic goals, such as customer satisfaction and efficiency.

A model in which software is made available in the cloud rather than installed on a company’s on-premises servers. The benefit of a SaaS platform like Anaplan is that companies can deploy it quickly, scale easily, and benefit from any updates to the software immediately. The other key thing to know about SaaS has to do with cost: On-premises software is usually a capital expense (CapEx), whereas SaaS shifts the software cost to the operational budget (OpEx).

Pretty much what it says on the tin. It’s a process where planning teams create and analyse several plausible future scenarios based on different assumptions (about key business drivers and external factors). Instead of relying on a single forecast, Scenario Planning develops base-case, best-case, and worst-case scenarios to help management understand potential outcomes, and prepare contingency plans for different business conditions.

A financial modelling technique. It tests how changes in key input variables impact the model’s outputs. By systematically varying one assumption at a time (e.g. “What if sales growth is 5% instead of 10%?”), it identifies which factors have the greatest influence on financial performance, and helps draw the attention of management and the focus of risk mitigation efforts to these priorities.

We talk about this a lot. The idea is simple: at its heart, IBP is really about bringing together disconnected (or siloed) teams, systems, and data and getting them to collaborate on planning. It’s the core principle of connected planning and a prerequisite for better business decisions. We’ve written about Silo-breaking in this blog.

A term used by retailers and manufacturers. It’s a unique identifier for each distinct product. Planning at SKU-level helps achieve granular visibility into inventory, demand, and sales performance.

A long-term (e.g. 3 years) and proactive plan to align the size and skills of the workforce with an organisation’s strategic goals. It involves forecasting the demand for skills and using it to calculate the number of employees needed in different positions and locations. It also includes recruitment planning, training/up-skilling and promotion to meet that demand, while having to factor in attrition and absences. Also see Headcount Planning.

A detailed, rolling cash flow projection for the next 13 weeks (one quarter). It’s typically updated weekly. This provides finance teams with visibility into medium-term liquidity and gives them enough time to identify and address potential cash shortfalls. It’s essential for treasury management and becomes critical during periods of uncertainty or rapid business change. Also see Rolling Forecast.

The systematic comparison of actual financial results against budgeted or forecasted figures. Finance teams do this to identify and understand the reasons for differences. This analysis also helps maintain financial control because it highlights performance gaps, operational issues, or assumption errors. Variance planning is an important process that enables management to take corrective action and improve future planning accuracy.

A short-term plan at a granular level (in some cases, down to the quarter hour) that uses ML/statistical forecasting to predict demand over the coming weeks and align it with staff rotas to see where there is the ability to reduce or increase capacity. This helps to optimise the cost of the workforce, while ensuring your business can meet customer needs.

A Retail planning tool that dynamically tracks sales, inventory, and intake on a weekly basis. It’s essential for managing stock levels and reacting to changing demand. It’s often used collaboratively alongside suppliers and helps retailers make informed decisions about what to buy, when to buy it, and how much to stock.

XP&A uses the basic principles of FP&A – continuous planning, forecasting, and performance monitoring – but applies them further into the organisation, with additional data points to include operational planning as well.