Dean Sorensen is a management consultant engaged in helping manufacturers improve planning, managing, and governing. He previously worked for Jonova, Inc., a predictive-analytics and integrated-planning-and-forecasting software company. His article, “Beyond S&OP and IBP to Enterprise Planning and Performance Management,” appears in the Winter 2016 issue of Foresight.  What follows is his Forecaster-in-the-Field interview, from the same issue.

Dean, you started your career in accounting, and I take it you then began reaching across functional areas.

Yes, my career began in auditing with a global public accounting firm. I worked primarily with manufacturing clients, often advising on strategic, financial, and operational matters. So I quickly transitioned into strategic consulting, helping clients select and implement ERP systems and processes for planning and managing performance. These processes included sales and operations planning, supply chain optimization, activity-based costing, project and portfolio management, balanced scorecard and financial planning, budgeting, and forecasting – pretty much everything across the board.

How did you get involved with integrated planning?

I was introduced to integrated planning through cost and performance-improvement projects. A key component of this work involved the integration of financial models with operational planning and costing models. Our goal was to help companies understand how they could improve the profitability of their product, customer, and project portfolios. These same types of models provide the foundation for the enterprise planning and performance-management processes that I describe in my article.

My appreciation for the value of integrated planning grew when I worked for an IBP software company. What differentiated this company from S&OP software is that it supported highly sophisticated models and complex scenarios by simulating an entire business, from financial and operational perspectives.

What primary insight have you gleaned from your experiences?

One flaw is common to many complex organizations: they lack a shared understanding of the economics of their business, which leads to decisions that erode profitability. The underlying problem is that planning and decision-support models aren’t sophisticated enough to cope with the complexities of their business. Poor financial and operational integration lies at the center of this flaw. It’s also a key culprit of ineffective S&OP and IBP processes.

What does the future have in store for S&OP and forecasting in general?

We’re at a turning point now in both financial and operational planning and performance-management processes. New and innovative technologies provide the means to fundamentally transform these processes. Doing so, they provide the basis for new sources of competitive advantage, and early adopters will benefit most.

The processes enabling these technologies will have a significant impact on organizations. Planning and forecasting will transition from separate financial and operational processes and functions to enterprise-wide activities. To fully support them, those involved in planning and forecasting will require broader financial and operational skills.

Maximizing the value of these processes will require organizational changes that affect governance, decision rights, rewards, and leadership development. These changes will enable the type of speed, transparency, and cross-functional alignment required to fully capitalize on the new capabilities.

What do you do to relax?

I really enjoy anything outside. My wife and I do a lot of golfing and hiking together. One sport that I continue to play and watch is ice hockey. I played a lot, growing up in Toronto. And I’m an avid fan of the Maple Leafs.

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