Technology and Finance: Partners in Agility
“We can’t create cross-functional teams because that’s not how we fund and monitor spend on projects,” the project manager told me when I expressed that multi-disciplinary teams were part of the secret sauce of Agile. This statement quickly made me realize that adopting Agile is something that calls for “a holistic approach that takes the organization in its entirety into consideration.” Now that the technology group was embracing Agile principles and changing their approach to software development, it meant that our Finance colleagues were drawn into examining the ways that those efforts are funded.
But would the Finance team participate in the change? How great would the resistance be? Was the funding model really a blocker in our transformation in bringing agility to our technology group as well as to the organization as a whole?
Agility – the ability to react quickly to change and discovery — may not be the first thing you think of when creating and monitoring your technology budget. The following likely spring to mind:
A complex process of creating budgets per cost center, and rolling those up into one budget per project
Spending money on software development phase gates without seeing anything tangible for long periods of time
Focusing a great deal of effort reporting on budget variances, or spending time on how to game the system to hide variances
Withstanding a long budget re-approval process when changes occur
Moving Finance from Fragile to Agile
Technology teams embrace Agile principles to improve their ability to deliver the right products to customers. Some of these include:
Focusing on delivering working software in periodic increments
Working as a team empowered to make decisions because they are closest to the work and understand the priorities set forth by stakeholders
Limiting their work in progress, which in turn allows them to focus on quality
Prioritizing their work so that they devote time to the most important things
Inspecting and adapting at regular intervals
Finance teams can integrate the approaches above to build flexibility into their practices. Some approaches include:
Funding how much it would cost to deliver value holistically, rather than focusing too narrowly on the individual parts of the process
Creating budgets and timelines based on teams’ labor costs and their historical velocities
Limiting the number of efforts in flight so as to not commit funds to endeavors for which we might not know enough about at the moment
Combining the power of reviewing working software periodically with creating financial plans in shorter cycles. This practice allows for organizations to quickly shift funds to the highest value projects when necessary
Placing financial ownership into the hands of business owners who can decide if enough value has been built to release, or to shift funds to other high priority initiatives if needed
Bracing for Change
Even starting a conversation about making the changes described above seemed daunting. But, like Agile teams who face impediments and take steps to remove them, we met with the Finance team to tell the story of what the world might look like if Agile concepts were folded into the company’s funding practices. We expected the team to cling to using phase gates to trigger when work was expensed or capitalized, which of course would be a huge blocker to our push for cross-functional teams frequently delivering working software as our primary measure of progress. We braced for resistance.
We were not prepared for the Finance team’s reaction.
They were onboard! As it turned out, the team had a sense that the Agile transformation would affect how they worked. Having felt the pain of the long, drawn-out process of creating budgets based on cost centers, of living through long re-budgeting efforts, and not connecting the money spent to the value delivered, they were eager to explore new ways of working.
We were fortunate that the team could easily see how business agility could benefit them. Ultimately, the Finance team was not an impediment at all. As a matter of fact, they are leading the charge toward agility. Many of the team members have close relationships with senior leaders in the organization and are using their influence to gain executive support for changes to be made not only in Finance, but in the Project Management Organization as well.
So, adopting Agile in technology brings with it the need to re-examine how technology efforts are funded. Others may point to Finance as a barrier to an Agile transformation for whatever reason: because they perceive that to be the case, because they do not understand the benefits of change, or because they have their own objections to change. But, it is worth the time to partner with the Finance team to explore the possibility of change and how it can make their lives easier. Who knows, they could be your best advocate.