Agile Finance

More and more organizations are taking strides towards greater agility. Finance has a key role to play in this change.

There are clear opportunities for operations and finance to cooperate more closely. Budgetting and reporting can become more effective and realistic, which will help deliver the right outcomes and more customer value, as well as increase employee satisfaction. A true agile finance transformation requires fundamentally reinventing how you do forecasting, targeting and how you measure performance. We are happy to assist you on this path. If your organization is not at this point yet, we are happy to help you take the first steps.

 

What would we like to achieve?

Many components of the traditional planning and reporting cycle do no longer serve their purpose. Organizations have built highly complex structures and processes which keep us extremely busy, but do not necessarily contribute to customer satisfaction. The goal is to bridge this gap. We want to make conscious decisions, and allow empowered employees to jointly allocate resources to the right initiatives. The boundaries we set need to enable flexibility: if we need to rapidly reallocate resources based on new insights or developments there should be no impediments to do so. This way you do not only control damage and risk, but you also make sure resources are leveraged where they make the greatest contribution to strategic goals. IT is important to have a clear vision on the role finance and reporting play in your organization. This vision will provide you with a clear north star to guide the steps in your agile finance transformation.

 

The choice: evolutionary transition or revolutionary transformation

There are two basic approaches to reinventing finance. You can take the revolutionary road, in which you completely reinvent the whole system, structure, ways of working, and principles. A full transformation of the finance division. Or you take a more incremental approach. Gradually optimizing towards a more agile finance division by adapting the rules, ways of working, and tools within the existing structures and boundaries. This transition can lay the foundation for a full transformation.

The transition path is aimed at improving a number of things such as data collection, structuring, analysis and making this available to teams. At the same time the cultural and behavioral aspects associated with an agile organization also require attention. One of the key principles therein is cooperation over contract negotiation. This implies a fundamentally different relationship between finance and operations. Business and key processes benefit from closer cooperation with finance and reporting. The benefits are clear to them, it is not simply a trick to keep the board, the accountant, or other stakeholders happy.

The (subsequent) transformation path is about structurally doing things differently. It is not just about a new structure, or speeding up existing processes or delivering existing finance products more rapidly, the key here is a different mindset. A great finance team helps the organization excel in terms of effectiveness. This means stepping away from over and under utilization of budgets. It means reallocating budgets based on the latest insights. It means de-siloing the organization and continuously adjusting course based on the latest and the right figures.

For many organizations this is a sea change that affects both system and culture. It is worth the investment: not only are we better able to serve the customer, it also means more job satisfaction for finance employees as they are increasingly seen as a partner, rather than a stumbling block.

 

Finance in flux

How can finance and reporting start its agile journey? The follow three principles will help you take the first steps:

  1. Transparency
  2. Shorter cycles
  3. Closer proximity to the customer

Transparency: To most people in an organization finance is a black box. Complicated products are delivered using a hard to fathom process, and then there’s the politics involved. By stepping out of the shadows finance can clear a lot of the fog, for instance using visual management techniques such as Obeya. Not only will finance be more in sync with the rest of the organization, quality will also be raised as bottlenecks and impediments are surfaced at an earlier stage.

Shorter cycles: most organizations deliver financial products such as budgets and annual reports using a long and complicated process after which there is a single launch event. This makes for a long lead time and makes it very hard to make changes at a late stage or after the fact. By working on these products in a more incremental way in short cycles we are able to significantly reduce the lead time for delivering these products as well as ensure the product is more in line with the wishes of (internal) customers, reducing the need for rework.

Closer proximity to the customer: by using the principles above and cooperating more closely with the rest of the organization and the customer we are able to deliver a more relevant product of a higher quality. We can reduce the risk of delivering the wrong product by ensuring constant contact, rather than submerging and going off the grid only to appear again when the product is done.

 

Your first foray into agile finance

Several agile practices can help you in the execution of these principles. Would you like to take your first steps into agile finance? We are happy to support your journey. Some examples of how we can assist you:

  • Support the writing of management reports and budgeting using agile practices
  • Facilitate conversations between organization, management and other stakeholders
  • Training in agile planning and reporting/control
  • Optimization of the finance and control function using agile portfolio management
  • Consulting services with regard to renewing the planning and control toolset
  • Connecting finance and strategy using Obeya

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