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.

 
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Outline/structure of the Session

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]

 

  • The goal of the talk is to highlight and gain awareness around current challenges and conflicts apparent between budget planning office following traditional rigid deliverables based cost accounting practices vs lean agile program teams that welcome uncertainty and constantly re-prioritize the deliverable contents to maximize customer value

  • My primary goal is to trigger the thought within the PPM community and financial budget planners within an enterprise, where there is big mismatch between how budget cycles are estimated, approved and allocated based on long time horizons, where focus is more on planning accuracy and variance analysis rather than quick response and increasing value to customers in constantly changing market landscape

  • It will contain some slides with case study based examples

  • It will be an interactive talk, welcoming questions around real life situations faced by attendees in their current roles

Learning Outcome

Learning Outcome

  • 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

Target Audience

Program Portfolio Management Leaders, Business Unit Heads, PMO, Budget Planners, and Budget Approvers

schedule Submitted 1 year ago

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