As agilists, we're often faced with this question. We have to explain what agility is, only to be met with more questions. We've struggled to prepare reports for the Chief Financial Officer justifying where $100,000 went. We've tried to understand why accountants cling to plans that are no longer relevant.
The problem is that we, as agilists, often miss a crucial point: if something goes wrong, the financial experts are the ones who may face legal consequences. How often have we tried to understand their mindset? Why do they stick to the plan?
The key lies in understanding each other's perspectives. Agile teams can benefit from a finance team’s insight into investment strategies, budget constraints, and cost efficiencies. On the other hand, the finance team can leverage the flexibility of the agile way of working to reduce month-end cycles, align with business goals sooner, and be part of real-time decision-making rather than sorting things out after the fact.
Understanding each other's mindset
Many agilists claim they've never worked with financial and accounting teams, despite the potential for significant benefits from collaboration. I recall working for a bank where we constantly faced pushback and regulations from finance. We wanted to innovate, but were continually confined by boundaries.
I decided to reach out to our financial team to better understand how we could collaborate. The first thing I heard was, "You're irresponsible regarding the financial outcomes and impacts of your decisions." Next, they explained how they constantly try to "fit" our changes into the balance sheet, profit & loss statement, etc. I realised that we, as agile teams, needed to learn a lot from these teams. I also understood that these professionals are often buried in routine work and reports, without the opportunity to think about how they could create more value for the entire organisation. There are ways that agility can help them free up space for creativity and add more value to the business.
The agile mindset is: "I can deliver the outcome on time and on budget if I'm allowed to do what's necessary as I confront obstacles and changes. Why do accountants insist on sticking to a budget that's so outdated?"
The financial expert’s mindset, on the other hand, is: "I can't be fired or face legal consequences if I prepare a robust budget agreed upon by all stakeholders and then hold the business to that budget. Why and how are teams so consistently off-budget? Why can't they stick to the agreed plan? We need to account for things according to Generally Accepted Accounting Principles (GAAP). Following these will keep us safe."
Why do we need to collaborate? What are the benefits?
Benefits for agilists
Improved reporting: I can remember numerous times we had to re-do our reports to convince the Chief Financial Officer that we were on the right track and using the budget intentionally. Collaborating with financial accounting can help us craft reports that make sense for everyone, reducing reporting and reconciliation requirements. Detailed reporting and reconciliations often use up over 20 per cent of a team's time, yet have little impact on decision-making.
Budget flexibility: By conveying to financial experts that cost and time are legitimate constraints, while scope is flexible (unless either time or cost are flexible), we can gain more budget flexibility. We need to show them how what we do creates value for the business and how we measure it.
Faster stakeholder buy-in: By demonstrating how our work creates value for the business and how we measure it, we'll be trusted to deliver and gain buy-in from stakeholders much faster.
Better financial forecasts: Leveraging finance expertise can help us make better financial forecasts, understand future outcomes more clearly, and make more informed decisions. For example, we, agile teams, often rely on revenue to make decisions. What if Product 1 has X revenue and Product 2 has X+Y revenue? The obvious answer to many would be to choose Product 2. However, financial experts might advise us to look deeper:
Compare the profitability of each product, not just revenue.
Examine the Balance Sheet to understand the assets associated with each product. Product 2 might have more valuable or more efficient assets that could lead to higher future profitability.
Consider the Return on Assets (ROA) for each product, which measures how efficiently a company is using its assets to generate profit.
Look at the cash flow generated by each product, as cash flow is crucial for ongoing operations and future investments.
Evaluate any intangible assets (such as patents or brand value) associated with each product that might not be fully reflected in the financial statements but could provide future value.
The financial perspective is crucial, but it's all part of a larger decision-making framework.
Benefits for Accountants
Agile values and principles alone don't convince finance teams. We need to focus on the tangible benefits they'll gain from collaboration. Remember, they're busy! They don't have time for collaboration, so simply asking for it won't change anything. Instead, try asking these questions:
How long does it take to close the month-end or the year-end?
Could this be done in one day or less?
How much more value do they provide, or how much more accurate are the financial numbers on day six compared to day one?
How can you be involved in the decisions, rather than sorting it out after the fact?
Here are some ways agility can benefit finance teams:
Reduced month-end cycle time: Break down the month-end process into a clear sequence of tasks, enabling identification of shortcuts and agile working. The team can edit and re-order tasks over time in a series of iterative steps to meet the goal of month-end reporting in less than five days. By reducing time spent on routine work, finance experts and accountants will have more time for value-adding collaboration with agile teams.
Increased added value to the business: Agile ways of working allow finance teams to prioritise work based on business value, develop reports and analyses iteratively, and collaborate closely with stakeholders. This approach ensures that financial outputs align closely with business needs and adapt quickly to changing requirements. Remember, 80 per cent of the value often comes from 20 per cent of the features/work/cost, allowing teams to focus on high-impact activities.
Increased control and predictability through built-in governance and risk management: Contrary to common misconceptions, agile ways of working actually provide financial experts with more control and predictability. Short feedback loops reduce risk by allowing quick identification and resolution of issues. Implement clear "Definition of Done" criteria that include necessary control and compliance checks, and use visual management tools (Kanban boards) to make risk and compliance status visible to all team members. This approach ensures that governance and risk management are built into the process, rather than being mere afterthoughts.
Common Ground: Stories and Numbers
To break through barriers, we must recognise that both teams bring crucial elements to the table. Agile teams often focus on the "story" behind the work — the value delivered to the customer. Finance teams provide the "numbers," ensuring that these stories result in a financially sound outcome. When we only have numbers, we risk losing out on creative opportunities. Conversely, if we only focus on stories, we may miss financial risks.
Working together, these two areas complement each other perfectly. Decisions become sharper when financial data supports agile hypotheses and ideas. Finance teams gain more clarity on the impact of strategic moves, while agile teams become better equipped to make budget-conscious decisions.
The Power of a Unified Approach
When agile and finance teams work together, they create a powerful engine that drives both innovation and financial responsibility. By focusing on collaboration, we break down silos, improve decision-making, and generate more predictable, value-driven outcomes.
The future of work isn't about choosing between agility and control; it's about finding ways to harness the strengths of both.
Share Your Story and Make an Impact
If you have practical case studies on how you've intentionally aligned your finance, contracts, and procurement with agile principles and practices, or have included those areas in wider agile transformations, why not share your stories and apply for the Agile Business Consortium’s ‘Agility in Finance, Procurement, and Contracts Award 2025’?
You can find the application details here: Agility in Finance, Procurement, and Contracts
