Agile For Finance
At AgilityHealth®’s EBA Summit, Evan Campbell shared an overview of Agile/Lean Finance and how it’s critical to business agility.
Evan’s presentation and slide deck can be found here.
Evan explained that when working with other departments within a company besides IT, in this example Finance, there are two phases of focus.
Phase 1 – What Finance Does
The first phase includes diving deep into what finance actually does & revisiting the basic principles within – asking ourselves are we working on the right work at the right time? Do we have the right portfolio structures in place?
- Portfolio – are we aligned on objectives, breaking work down to get the maximum return?
- Goals – increase value, balance capacity and demand, increase business leader accountability
- Incorporate change
Agile Portfolio Management (APM)
The most important concept in APM is the return on teams. This is achieved by creating dedicated, persistent high performing teams, decoupling supply from demand, planning quarterly with defined tangible outcomes, and funding technical excellence.
For effective Portfolio Management:
- Transition from projects to products
- Decompose work into smaller chunks that finish earlier
- Support constant re-prioritization and injecting new ideas/info
- Implement flow, then pull to reduce WIP and balance capacity with demand
- Align demand into portfolios and investment sectors
- Allocate capacity according to strategy
- Give sponsors control of value assignment and prioritization – hold them accountable to demonstrate outcome and impact
Problems with traditional budgeting
- Targets do not equal forecasts
- One resolution/one horizon – accordion effect
- Short shelf life
- Expensive and distracting – big batch
- Not revised easily/often
- Resists/delays agile responses
- Long feedback loops resist continuous improvement
- Can’t keep up with dynamic business
- Absolute, not relative/balanced
- Disconnected from strategy
A forecast is what is most likely to happen, and an unbiased expectation setting/management. Whereas a target is an ambitious goal for what you want to happen while being directional and inspirational.
Phase 2 – Who Finance Becomes
Evan continued to define Phase 2, which includes:
- Key roles for the new CFO
- New roles for the Finance Team
- Shifting focus to the edges
- Digitization in Finance
- The re-imagined operating model
- Re-imagining the work & the workforce
He concluded with defining how to get started: harnessing the power of data, leading the enterprise through new ways of working & re-imagining the evolution of talent.