Working in a company with a long tradition on long-term and rigid planning and that now should “go agile”, can be challenging. Especially for a CFO.
To successfully convert to an agile way of working, one must accept the unknown and be able to iterate quickly. The CFO is not the only one facing the challenges of transitioning to Agile. All senior management roles are affected.
CFOs may struggle with embracing agile methodologies. This is because traditional financial practices and accounting methods were created for linear, foreseeable business models. Agile development, is iterative, flexible and often involves a more collaborative approach to decision-making. Let’s break down the challenges and come to a solution that will make you an Agile CFO.
Difficulty predicting costs
Agile development involves a high degree of uncertainty and change, making it challenging to predict the costs of projects accurately. It can be hard to tell when the project is finished. As a result, nobody is sure when they will start to receive money. This can make it difficult for CFOs to plan and allocate resources effectively.
Project scope changes
Agile development prioritizes delivering value to the customer over following a predetermined project plan. This iterative approach often leads to changes in project scope that can be challenging for CFOs to manage and track.
Lack of visibility
Agile teams are self-organizing teams. The project team members are responsible for the entire life cycle of the product they are building.
The team decides on a daily basis what to do in order to deliver the objectives in the 2-week sprint. This can be difficult for CFOs to monitor. They may have trouble understanding how resources are being used and what to expect from the team.
Accounting challenges
Agile planning involves breaking work into smaller parts. This can be hard to reconcile with traditional accounting practices. These practices are designed to track costs in broad, general categories.
For example, a CFO may not be able to tell which costs are associated with a particular feature or project. It can be hard to decide which projects or features are profitable and to plan for future projects. This is due to the difficulty in determining the upcoming profit.
CFOs must become more involved in the Agile process to address these challenges. They must understand the team’s objectives and be able to track and monitor the project’s progress. They must track changes in scope, budget, and timeline. This helps to ensure the project is on track and delivering the expected value.
Solution : flexible budgeting
Adopting flexible budgeting means creating a budget that can adjust to changes in business needs and priorities. In agile development, priorities can change rapidly as new information and feedback become available. A flexible budget allows the company to shift resources and priorities quickly to adapt to these changes.
Traditional budgeting processes usually require detailed budgeting for the entire year, or even multiple years. Such budgets can be challenging to alter once they have been approved. This can lead to inefficiencies and delays in responding to changing business needs. In contrast, flexible budgeting allows for more dynamic planning, allowing companies to adjust their spending and resource allocation as needed.
Flexible budgeting may involve setting aside a portion of the budget for unexpected or emergent needs. It may also involve allocating funds to specific projects or initiatives rather than to departments or teams. This enables more efficient spending. It ensures resources are directed to the areas of the business that require them the most.
This can be challenging for CFOs who are used to more traditional, static budgeting processes.
Two ways Copyl can help your business
1. Copyl’s software with planning and budgeting
Copyl has both cloud-based tools for Agile Project Management and for Budgeting. The agile planning process includes workforce planning, which automatically updates the budget from the resouces planned.
Copyl offers project management tools, such as kanban boards, story points, estimated time needed, product backlog, and release plan. These tools provide everything needed to support agile software development.
Copyl’s Budgeting software is constructed with micro-budgets for each element within Copyl. These elements include planning, contracts, time reports, and CRM deals. The budgeting tool aggregates all data into one big budget for the CFO.
2. Copyl’s Professional Services
Our senior consultants help companies go from traditional project management to agile project planning. We introduce Design Thinking and UX Research to get more user-centric, innovative, efficient and competitive. It usually ends up in an agile project that marks the start of the change.
It’s common that we start with a quick review of how you are working today, with growth in focus.
Summary of how a CFO can meet the challenges of an agile planning
CFOs may struggle when adopting agile methodologies. This is because they need to be more flexible and work together when making financial plans and decisions.
CFOs plays a key part when a company is turning towards agile methodology. They can help to ensure their company’s financials are aligned with its strategy and goals. But to do this, they must understand the challenges and work closely with the agile development teams and product owners.
This feedback should be used to improve their budgeting and planning processes. This will give them the ability to make an agile financial plan. This plan can quickly adjust to changes in the market and company.
Contact our CEO, Rolf Bäck, if you want to get more information on how we can help you reach higher growth.
If you are running a company with a long-term and rigid planning, including budgeting, it can be really difficult to figure out how to convert to an agile way of working were everything is iterative.
We meet a lot of Cheif Financial Officers that has been planning their budgets several years ahead. And now they are told that the company is turning agile, customer-centric and .
