Transform Enterprise Finance Functions based on Lean-Agile budgeting Models
We find that as enterprises drive business agility using lean agile methods, it faces friction and quickly hits against wall of rigid traditional budgeting methods and project based cost accounting.
Traditional cost accounting believes in long horizon planning, it values plan accuracy with frequent variance analysis against original estimates rather than accept uncertainty, respond quickly to market trends. We notice frequent delays on re-approvals of changing budgets; a big WASTE. How can we transform finance functions to enable lean agile software and systems development?
We can address this conflict with new Lean-Agile budgeting models that cater to the need of both the worlds: allowing empowered lean agile development programs for rapid decision making that are responsive to market, align with professional accountable management of dollar spends.
Traditional cost center based investment planning is based on deliverables, but the content of such deliverables are changing rapidly that require flexible resourcing across projects.
We all agree that agile portfolios need to execute and deliver value within an approved operating budget which is an outcome of strategic planning process at enterprise level. This paper describes the nuts and bolts around how to establish, administer and govern agile portfolio budgets
Outline/structure of the Session
Highlight key areas that agile software development and traditional cost accounting do not match [ 15 mins – 7 slides]
Understand the mechanics of lean agile budgeting and forecasting, administration and fiscal governance with dynamic budgeting [15 mins – 6 slides]
How to setup a working model between finance functions and lean agile delivery teams that promotes agility over accuracy and trust over controls [10 mins – 4 slides]
How to handle CapEx and OpEx elements of budget in an lean agile development context [10 mins – 4 slides]
Roles and responsibilities for leaner financial planning, content planning and capacity planning for dynamic resourcing needs [ 15 – 5 slides]
Q & A [10 mins]
- Plan roughly for longer time horizon initiatives, and more accurately for short time period which leads to higher throughput, higher morale and less budget surprise
- Abandon cost center or deliverable based approach to budget approvals and controls
- Assess and question the traditional accounting practices, propose changes to finance planning functions to become a true enabler of agile and lean development
- Need for visibility of deliverables and promote culture of transparency
• Program Portfolio Management Leaders, Business Unit Heads, PMO, Budget Planners, and Fiduciary Decision Makers