How to Establish an Agile Finance Team

Much like companies in the financial services industry, finance functions and the CFOs who lead them are facing social, economic, and technological change, and regulatory pressure at an unprecedented scale. As a result, many finance teams are finding themselves with less capacity to keep up with — much less improve — day-to-day activities like reporting, compliance, planning, and forecasting.

Even more, finance teams are finding that adopting Agile ways of working helps solve these ongoing challenges. Consequently, organizations that transition to embrace agility enjoy many benefits, including:

• Increased revenue, brand recognition, and market share
• Shorter turnaround times and high-quality offerings
• Improved relationships with customers
• Greater transparency and higher employee engagement

Surprisingly, according to the 15th annual State of Agile Report from Digital.ai, finance and accounting have some of the lowest adoption rates compared to other corporate functions, such as IT, marketing, operations, and HR.

Is your organization among the growing minority that’s prioritizing this increasingly necessary skill set and wanting to apply it to the finance function? If so, you’ve come to the right place. In this article, we’re going to dive into what Agile finance is and how to go about establishing an Agile finance team.

What is Agile finance?

To start with, we need to differentiate Agile finance from Agile budgeting or funding. Although the finance department will obviously be involved in budgeting and funding functions, Agile budgeting and funding are more tactical topics that are generally addressed as part of a complete organizational Agile transformation. It is important to note that Finance teams can adopt Agile methodology without the organization adopting Agile budgeting protocols.

For more information about product funding and participatory budgeting, start with this primer.

Agile finance defined

Put simply, an Agile finance function is a finance team that is approaching their work following the same Agile principles IT and software development teams have been using for over thirty years.

These principles include:

• A focus on the delivery of value over the completion of pre-planned tasks
• The breaking down of work into small chunks to facilitate quick and continuous delivery of value
• A focus on continuous improvement through iterative delivery and continuous feedback
• Strong collaboration within teams and between business units
• An effort to keep processes and deliverables as simple as possible while delivering optimal value

How Agile principles apply to finance teams

The Institute of Management Accountants (IMA) report, An Agile Approach to Finance Transformation, summarizes an agile finance function’s focus on creating value through the following characteristics:

• Scalable, efficient operations
• Transparent, accessible data and metrics
• Frequent inspection to ensure fit-for-purpose insight
• Quick, responsible adaptation to change
• Empowered, capable, and multidisciplinary teams

Oracle notes three common traits of an Agile finance function:

1. Operational Excellence – Agile organizations achieve operational excellence in finance with integrated cloud applications and streamlined processes to meet rising expectations for speed, accuracy, and control. 86% of agile finance leaders have a digital-first and cloud-first mindset. Technology allows agile leaders to gain efficiencies and utilize intelligent process automation.
2. Digital Intelligence – Agile finance teams understand how to generate insights leveraging cloud and advanced technologies to drive decisions that create business value, uncover hidden patterns, make accurate planning and forecasting recommendations, and learn continually from the non-stop flow of business data.
3. Business Influence – Leading finance teams adopt the skills and organizational factors to move beyond reporting and use data-driven insights to influence the direction of the business. Finance leaders have the authority necessary to partner with the business, recommend new courses of action, and influence business strategy.

Tactically, this means nimble, multidisciplinary finance teams will frequently engage with internal customers (business and operational teams) to take an iterative, incremental approach to delivering projects and carrying out recurring activities. As a result, the processes they adopt internally will focus on delivering value often and well to these customers.

Examples of finance deliverables through the Agile lens

Loreal Jiles of the IMA outlines how common finance and accounting processes like accounts receivable, accounts payable, reconciliations, and month-end close can all easily adapt to Scrum or another similar Agile framework. To summarize:

• Monthly activities like processing invoices, closing the ledger, and reconciling accounts could be assigned to a common backlog on a digital or physical Scrum board that remains visible to all finance and accounting team members.
• If delivered using Agile and Scrum, internal audits could yield more regular delivery of findings, opportunities for teams to close gaps quicker, and greater stakeholder engagement. That’s because an Agile or Scrum-based approach to the internal audit wouldn’t reserve the audit report drafting for the end.
• The work to be performed can be arranged in weekly or biweekly sprints (time-boxed periods of regular delivery throughout the project), and the conclusion of each sprint would naturally deliver value because these activities contribute directly to organizational value delivery.
• As teams seek to normalize continuous improvement, improvement initiatives could also be added to a central backlog to be addressed by the team in priority order while still having time to carry out their regular operational tasks or responsibilities. Consequently, one or more initiatives, or increments of the final product (backlog items), would be delivered after each sprint.

Why is Agile finance important?

As noted earlier, modern finance teams can mitigate the pressures by adopting an Agile mindset. Additionally, with so relatively few finance teams currently practicing Agile, doing so can offer a significant competitive advantage.

Finally, a stat from the Oracle research mentioned above makes the importance of Agile finance strikingly clear: “businesses supported by Agile finance leaders are considerably more likely to report positive revenue growth (89% vs. 63%) and increasing profitability (95% vs. 70%).”

How to establish an Agile finance team

Hopefully, you now understand what Agile finance is and why it’s so valuable to modern organizations. Now, let’s quickly look into how to take the first steps toward transforming your finance team into an Agile finance function.

Learn Agile Principles

Agility, at its core, is a mindset, not just a set of procedures and terminology. So, the first step toward building an Agile practice in your finance team is to adopt that mindset by learning and embracing the principles the practice is based on.

Loreal Jiles elaborates on the five characteristics listed earlier:

1. Scalable, efficient operations: Leveraging automation and other digital technologies that can be applied widely, across multiple persons or teams, enables greater standardization, a strengthened control environment, and sustainable time and cost savings.
2. Transparent, accessible data and metrics: Granting relevant team members access to real-time data and metrics (in compliance with company policies) leads to more informed decisions, greater confidence in results, and fewer surprises.
3. Frequent inspection to ensure fit-for-purpose insights:A culture that allows for regular inspection by end-users fosters constant communication with stakeholders and ensures that the insights or project outcome delivered is tailored for current needs.
4. Quick, responsible adaptation to change: Streamlined processes and a culture that enables timely adjustments to new developments empower the delivery of relevant insights when needed and without increasing the organization’s risk profile.
5. Empowered, capable, and multidisciplinary teams: Diverse teams with the autonomy and space to shape how they deliver results, along with the skills and capabilities needed to meet current and future demands, best position finance functions for innovative value delivery.

More ways Agile finance teams can apply Agile principles:

• Aligning work with long-range business strategies: Even if the entire organization is not yet set up to function with Enterprise Agility, the finance team can maintain visibility into the overarching business strategies established by leadership and use those as guideposts when building and grooming backlogs and defining success.
• Adopting an iterative cadence (perhaps two-week sprints?): The iterative approach to work allows the team to deliver value quickly and consistently, and to regularly take the time to review the quality of the work itself as well as the efficacy of the process. This supports continuous improvement.
• Embracing simplicity: Any deliverable or new initiative Finance undertakes can follow the software development concept of a Minimally Viable Product (MVP). The goal is to focus on the delivery of value to the customer while moving as quickly and efficiently as possible. Once an MVP is complete, the next step is to collect feedback and iteratively improve and expand the product as necessary.
• Working and collaborating visually: The team’s ability to quickly and easily see the work — such as on a Scrum or Kanban board — greatly improves collaboration and productivity, both of which are vital to agility.

Consider tooling

The right software tools can offer your team powerful shortcuts to agility. Accordingly, these tools can facilitate many of the functions and practices you’ll be adopting as you undergo your Agile transformation. For example:

• Intake
• Planning
• Backlog refinement and prioritization
• Automating manual processes
• Monitoring production
• Reporting
• Reviewing activity

Click here to see how a finance team took advantage of Atlassian Jira, one of the most popular Agile solutions available today.

Crawl, walk, run

The key to a successful Agile transformation is approaching the transformation itself using the same principles. That means starting small and iteratively improving upon what you’ve accomplished.

1. Train your team members in basic Agile principles and processes
2. Start by scheduling routine work using an appropriate Agile-friendly tool
3. Establish an iteration cadence that makes sense for your team
4. Build planning and retrospectives around that cadence
5. Work closely with your internal customers to add ad hoc requests to the backlog and prioritize them
6. Rinse and repeat, continuously improving the process

Importantly, don’t feel that you have to go it alone. Many others have already succeeded in doing what you’re attempting to do, and many experts in the field are ready and willing to lend a hand in getting you started and guiding you along the way.

Speak to an Agile transformation expert today to learn more!

Dan Weikart, Executive Coach