Posted: 29 Nov. 2018 4 min. read

Short term Finance agility for long term success

We previously explored tribal culture and planning, where the move towards ‘Agile Finance’ was seen as a move towards a ‘do it once and do it right’ environment. Pivoting our focus now to agile budgeting and the tools that support flexible forecasting, we first observe the process of costs estimation for IT projects (the birth place of agile). Exploring these examples helps to distil the ingredients that enable cost preparation and forecasting flexibility, and then explore how these can be applied to bridge the current IT Finance gap.

For CFOs looking towards change, the questions remain: How do we best prepare the organisation for the future? How do we derive value and create benefits?

There are no easy answers and the change for each organisation is unique. Essentially, the organisation’s design must be sufficiently robust to manage the known challenges of today, and the unknown challenges of tomorrow. To achieve this from a budgeting and planning perspective, it is important to address the perceived tensions between strategic long-term planning and short-term agility, as well as the relevance of shorter budget cycles for seemingly long-term commitments.

The first point to make is that, within the right structure, an agile finance function allows an organisation’s longer term vision, planning and budget forecasting to be shared more effectively through teams and in ways that create alignment and resonance.

Agility in Finance can and should include an increased understanding of ‘cost cycles’. Relatively fixed BAU costs (such as rent) can be managed using agile ‘zero’ budgeting, which is similar to the idea of zero-based budgeting. This involves keeping certain ‘core’ (fixed) blocks budgeted in the traditional way, while the variable blocks are budgeted through an agile ‘zero’ methodology. The advantage of maintaining both is that, in time, the so called fixed blocks of costs may become increasingly flexible as organisations further integrate agile ways of working and change their perceptions of ‘fixed’ costs.

The combination of a shared vision and an agile organisational structure leads to more efficiently structured teams over the long term, where the use of shared responsibilities can optimise and reduce resource requirements. This increases the available options to customise team structures by making Finance a ‘present and accessible’ part of organisation-wide teams. From here, organisations could consider supplementing, or supporting this flexible team structure through additional agile methods such as Flow to Work (F2W). The Flow to Work (F2W) methodology is the concept of where pools of resources can be moved in a nimble ways to address volume challenges over peak periods. For example, moving resources to Finance Guilds where agile teams of specialists in a particular area (e.g. a ‘payment’ Guild with a deep knowledge of EFTs or cash) work across multiple business chapters or ‘tribes’.

As an example, the illustrated below uses a customised value chain, where team structures are based on tribes across functions.

Short term Finance agility for long term success
Figure 5: Increased collaboration and customisability through operationalising Agile
  • Control – The agile working model makes Finance an active participant in projects. This enhances and informs reporting from the bottom-up and places greater control in the hands of tribes to support Finance and the CFO. Shorter term views of actuals to budget, and a purpose lead tribe/chapter Finance member, allows financial controls to be dynamically added, removed or flagged more often and more accurately. This allows precision in current and future planning.
  • Insight – The organisation is more informed through greater clarity from iterative 3-month budget-to-actual views. These iterations can incorporate insights for ‘scrums’ and ‘sprints’, enabling teams to plan and detect variance from budget quickly. This can also increase the accuracy and granularity of measuring Return on Investment (ROI).
  • Preparation and Reporting – An agile ready organisation with an integrated Finance function can unlock the data and capitalise on the insights promised by new cloud-based Planning, Budgeting and Forecasting (PBF) tools. Organisations that achieve this will be able to make faster and more informed Finance decisions. Through leveraging software as a service, such organisations are better able to focus on what their organisation does best, doubling down on areas of competitive advantage, while at the same time reducing wasted space, technology and legacy systems.

Being ‘transformation-ready’ and educating staff on the key roles of modern Finance functions embeds a more commercial mindset, a strong customer-centric culture, and nurtures the necessary workforce flexibility to achieve evolving goals. A truly Agile Finance function can help transform organisations of whatever size or sector, being a steward into the future.

New Finance workers should be empowered to drive delivery individually, while also contributing to cross-functional teams. This added dynamic will have flow on considerations for both recruitment, training and development initiatives.

Meet our authors

Caleb Williams

Caleb Williams

Consultant, Consulting

Caleb is a Consultant in Performance (Finance) at Deloitte Consulting Australia. He has completed an undergraduate degree in Economics and a Master of Business Economics degree at Monash University, with a focus on economics, statistics and finance. He has interests rooted in delivering value to companies by identifying future performance-driven opportunities while achieving the CFOs agenda. His focus is on transformation projects with the aim to improve strategic alignment and performance accountability.