Making the Business Case for Agile Finance Practices

Many finance teams rely on outdated traditional and manual methods for forecasting and establishing budgets, leading to frustration, tedium, and more overall effort than they need to exert. Finance teams are integral to an enterprise’s agility, which makes it necessary for them to have processes and tools in place to help them maximize efficacy.

By integrating today’s technological capabilities with finance teams and operations, organizations can benefit from increased agility. An agile organization will be efficient, flexible, adaptable, and, ultimately, profitable. Agile finance can go a long way in helping your enterprise succeed.

What Is Agile Finance?

It’s important to be able to swiftly adapt and change direction accordingly when facing new circumstances. You also need quick and reliable feedback and communication. Through agile finance, you can deliver the best results both internally and to your clients.

Many companies erroneously believe that they have total control over every situation, with strict plans and processes in place, prioritization, and budget allocation, but situations can quickly change or new ones arise unexpectedly, and those existing measures may become obsolete as a result. Ultimately, there’s only so much control that enterprises have, so it’s important to be able to adjust and learn from the situation at hand in order to thrive. Agile finance practices can help ensure you’re prepared to adapt regardless of the situation.

Assuming certain outcomes and failing to plan in the event of unpleasant surprises can leave your enterprise vulnerable to inefficiency and budgeting struggles, among other issues. Instead, you need to maintain a certain level of flexibility and openness that can keep you afloat, regardless of the situation.

What Makes a Financial Organization Agile?

If you want to increase your organization’s agility with agile approaches to planning and processes, the following are some key traits of agile finance teams:

1. They are efficient and scalable regarding accounting.
2. They understand their business model and value drivers and can strategize around them.
3. They can determine which performance metrics to analyze and which goals to set to help measure progress, which enables them to develop and implement new strategies for product and service launches.
4. They maintain transparency across the organization regarding internal operations, successes, and failures.
5. They can identify new opportunities for risk management and innovation, along with ways to redistribute resources based on their specific needs.
6. They are capable of driving informed internal and external decisions and informing others about new tech, business models, and other developments to help develop appropriate responses.

Each of these characteristics is what can help agile finance teams and other departments within an organization overcome the challenges they may face.

Benefits of Agile Finance

There are several ways organizations can benefit from taking an agile approach to finances.

Equalized Data

To help develop strict standards for data, you need to have a reliable central source of data that consists of all approved data sets. Having that one source of data that you can count on will equalize the data, thus helping increase focus on the most effective means to meet business needs. You’ll be able to eliminate confusion over data and collaborate more effectively between finance and IT departments. You can also benefit from more efficient budgeting decisions with equalized data.

More Prepared Finance Leaders

Agile finance leaders are more capable of meeting their organizations’ needs through improved specialization, the implementation of substitutable workforces, and ERP on the cloud. Through agile practices, finance leaders are also able to inform agile performance management, better inform new strategies, and can support agile implementation. In turn, they can further drive growth where other finance leaders fall behind.

Improved New and Existing Skills

Agile finance also leads to the development of new skills along with existing ones to better serve agile enterprises. Some of these new skill sets that could affect the finance team in an agile environment include the use of the internet of things (IoT), mobile data, and advanced automated robotics.

When it comes to IoT, this practice will change the development of business models due to consumers’ use of connected products that submit details about customer usage and preferences. Mobile information will also enable the agile finance team and business partners to instantly access data from any location using mobile devices. To further improve the efficiency of processes, advanced robotics can also play a role in the automation of finance functions.

Better Decision-Making

Compact teams of specialists working cohesively are required for successful, agile finance departments. Your enterprise can develop these small teams and organize regular meetings to help drive decisions. With the right team of agile leaders, you’ll be able to optimize decision velocity and make sure that your teams are focused on the right goals, putting effective strategies in place to help achieve those goals. In addition to consistent meetings, you should also arrange for regular progress reports to make sure that goals are being achieved on schedule and that agility is maintained.

Simplified and Automated Processes

The entire point of agility in finance and other departments to eliminate complexity. If it can be simplified, simplify it with an agile approach. Finance, in particular, involves many people and tasks pertaining to analyzing, developing, and approving budgets, all of which can make processes more complicated than they need to be. Agile finance techniques can help mitigate this by driving smaller and more effective teams for making decisions, which also makes it easier to hold people in your teams accountable.

Efficient Resource Redeployment

With the help of agile processes, you will be able to quickly direct resources to any potential opportunity or issue that puts you at risk. If you can redeploy resources as soon as you need to, you’ll avoid the kinds of problems that could otherwise set you back or even severely harm your organization. With agile finance, you can benefit from a workforce that makes it easy for members of your team to switch positions, along with access to reliable contractors for outsourcing as needed.

Steps for Increasing Agility in Finance

To help you begin implementing agile techniques across your finance teams and the rest of your organization, here are some steps you can take. The sooner you can develop agile processes and teams, the sooner you’ll be able to adapt and see the many benefits of agility throughout your enterprise.

Approach Budgeting and Planning with Proven Techniques

Successful companies make sure that funding goes into their resources and proven processes for developing effective solutions, whereas less successful organizations tend to be less focused and invest in quick fixes. Another ingredient for success among agile organizations is their focus on smaller elements that comprise the whole, as opposed to funding things in large quantities. You can test investments in smaller increments, followed by determining what you and your teams learned based on those smaller investments. From there, you can determine if a project is worth more funding or if you’re better off redirecting your focus to another.

Agile finance also entails the use of rolling predictions and feedback loops to help inform new strategies, with brief allocation cycles. While many enterprises focus on the long-term, you’re better off allocating based on the current situation and not based solely on what you want to achieve over a longer period. In addition, it’s important to make sure that your finance team’s goals and operations are aligned with those of your organization as a whole.

Ultimately, the best strategy is to invest only in what’s proving to drive success and avoid directing additional funds for projects that aren’t showing promise. More efficient prioritization will help you adapt and restrategize more effectively as you work toward those long-term goals.

Eliminate Obstacles in Your Way That Hurt Efficiency

Flexibility means being able to overcome myriad obstacles that may block your path to success, particularly when completing projects and tasks. Take the pandemic for example: Strategies and projects that were lucrative before the COVID-19 outbreak may no longer be useful in today’s environment, in which case you need to maintain flexibility in your strategies. The key to overcoming any potential roadblocks in your processes is to have a sufficient number of rules in place, but not enough to hinder flexibility. You need to be able to hold the appropriate people or parties accountable, but too much bureaucracy can slow your efforts.

Having too many rules and regulations in place could actually do more damage than good for your plans if you’re unable to change when change is necessary. This is why you need to do what you can to incorporate only enough rules to keep your teams working the way they should and in alignment with the rest of your organization.

Make More Careful Funding Decisions

Make sure you understand what’s worth funding vs. what’s worth avoiding. Agility will entail being able to fund the right projects at precisely the right time, which means you need to be able to stay away from projects that will only set you back. Good prioritization will be key here, as you analyze each opportunity to determine its value before making the decision to fund it. If you’re not being selective with your funding, you may see it as an experimental means of seeing what sticks and what doesn’t, but you’re simply throwing your funding away when it may be better allocated.

Whenever you make decisions around funding, try to determine the specific value it will bring to both your business and your customers. Oftentimes, businesses will continue to fund incorrectly from year to year simply because a project was worth funding one year, assuming it will be worth it the next. However, this could result in a wasted budget that goes toward products or services that your customers may not even be using. Other businesses may also fund internal projects that don’t actually benefit processes or teams, even if they may have at one point in the past.

Identify only those opportunities that are worth your time and money, and weed out the others when deciding on where to direct your budget. The choosier you are, the fewer resources you’ll waste.

Focus More on the Product Than the Project

Agile is also largely a mindset that teams need to adopt. Businesses often look at the project and what it entails, without necessarily thinking of the overall value it will bring to the consumer or the team. Whenever you’re developing and implementing strategies, it helps to focus on the product or service you’re working toward, along with how it’s used, as opposed to the inner workings of the project alone. For example, a broker/dealer may work to update a legacy platform into a modernized transaction posting system, subsequently encouraging more transactions over a much shorter period while maximizing the longevity of their product.

Drive Innovation Regularly

It’s not enough to have agile processes in place—you also need to incorporate them into your work culture beyond the main team. You can use certain brainstorming events such as ideathons or interactive learning sessions to encourage more innovation among the various departments. In the process, teams can work collaboratively to develop new ideas along with their skills, building flexibility while helping prepare your teams for a multitude of potential situations. You can also further align finance teams and goals with those of the rest of your organization, and vice versa.

Use Agile Finance to Drive Success and Gain a Competitive Edge

Agility among your finance teams can help you get the results you want from your projects while ensuring you aren’t held back by traditional, manual processes. With a combination of agile teams and technology, you’ll have the chance to succeed, overcoming challenges that could otherwise leave you in the dust. At the same time, you’ll be able to give your customers consistent value with your products and services.

If you would like to learn more about how to transform your finance team into an agile powerhouse that’s capable of driving efficiency and success across your entire organization, consider registering for our Agile Finance Boot Camp, or contact us today for additional information about how our solutions can help your business flourish.