Adaptive Lean and Agile Financial Planning

Agile SW development and traditional cost accounting don’t match. When you scale your agile practices to portfolio level, you will need to tackle corporate wide processes on target setting, resource allocation, project approvals and finance & control. These might be counter-agile by nature: expecting annual high confidence objectives for your unit/project; or pose rigid approval processes delaying work redirecting.

Role of the management accounting is to ensure that resources are allocated correctly and that resources are spent efficiently. Role of the bonus systems is to ensure that corporate goals are met. Role of the balanced scorecard is focus employer effort also to leading indicators. Role of the cost center budgeting is to allocate predetermined amount of resources to specific team, and control that budget is not exceeded.

Above mentioned systems might remain as second control system. Second, as your primary system – Agile management – is just implemented and is defining what each team should do at any given time. Any of these systems might reduce the agility that you try to achieve with your team and portfolio level Agile implementation.

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Companies that digitalize their process with new modern Agile software methodologies often find traditional budgeting, planning and controlling functions as impediments.

I have changed that. I have modified how the financial planning works in order to match with Agile software development environment. I have changed how the management thinks about the uncertainty, about the excessing project planning and about the changes in software development.

I can help you also. I can identify items that are preventing Agile software development to show its full potential. I speak the languages of the finance guys AND the software developers. I can define management principles that respect the agility and removes waste from the process.

Core idea I have is simple: “as work is guided through the agile methodologies, no other guiding mechanism should exist.” Against this fact I have transformed Finance Function, Planning Function as well as HR Rewarding systems. (Agile methodologies understood here tools like SAFe, Scrum, Kanban,  prioritized backlog.  Mechanisms to review are like cost center planning, project planning, annual budgeting, rewarding.)

 

Yours, truly

Rami Sirkiä

Pls find me in LinkedIn or contribute to Lean Agile Planning group


 

References:

  • Our contribution is now part of the Scaled Agile Framework 3.0.
  • Ongoing projects with Finnish companies. Details are not public.
  • Research paper presented in HICSS48 Hawaii International Conference of System Science on January 2015.

 

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