It’s no secret that Agile innovation revolutionized information technology. It has evolved into the gold standard for software development. What is less obvious is the effects the Agile philosophy has had on the rest of the C-Suite and operations of the companies it already exists in. We know how Agile has changed the way we think about and create software, but how have these tactics changed how companies approach Agile spend and executive leadership?
When Forbes asked more than 500 senior executives from around the world about Agile philosophies, 92% said they believe organizational agility is critical to business success. Yet, only 27% “consider themselves highly Agile.” This identified an appetite for Agile culture but idle inaction from the very same offices. It’s clear that we’re in a transitional period of various organizations still understanding where new processes and tools can fit into the administrative ways of the past.
The negative associations that come with traditional, administrative processes are all too familiar: reacting to projects with urgent deadlines, as opposed to assigning priority and dedicating focus in priority. Or, scheduling frequent and unessential meetings taking up the time of your most capable staff.
While these neglect the Agile way, some methods are more covert and embedded discreetly across your organization’s departments. Try these on for size:
- Are you still reliant on one company credit card?
- Is your approval process unwittingly arduous?
- If you needed a new software subscription to aid your work (and your looming deadline), how fast could you get it?
Spending Fast and Slow
We’ve hopefully all heard the adage “You’ve got to spend money to make money” by now. For business and operations in general, this rings entirely too true. But it’s only when you consider the rate of agile spend for rapidly scaling companies and what the spend is actually going towards that you can understand how Agile plays into it. Any company in a hyper-growth stage or in any kind of growth stage for that matter will tell you, when they need something, they need it yesterday. Spending money is no different.
These issues that impede the Agile framework aren’t by accident, they’re by design. Forbes deduces that the biggest roadblock to implementing Agile for these executives are too many projects per team member, lack of company vision, & unclear project scope, which go hand in hand and support the historical behavior listed above.
The backbone of Agile philosophy is adaptive planning, iterative development, strategic deadlines and early delivery, and constant evolution. It’s a system that inherently encourages flexibility and response to change. In today’s unpredictable landscape of operations and finance, there’s a lot to learn from the Agile philosophy. And, there’s a convincing amount of companies that are already taking charge.
If most of the Finance team in your own company has a “rather be safe than sorry” attitude towards purchasing, and if most financial decisions, budgets and spend approvals come from the top, you’re likely still set in an administrative approach to your processes.
In such a case, there are likely only a few key stakeholders approving purchases and signing off on expenses. Conversely, finance teams under an agile spend culture are all about the accessibility of data and the technological tools needed to make strategic decisions.
For instance, Planet Fitness leveraged an approval routing system put in place to put orders through an assistant manager, then to the branch manager, all before it even gets to the Purchasing Manager, Anne Bard. “I still have that final say if something looks really off but now the clubs have so much more control and visibility into budgets and spend,” she explains.
The Components of Agile
This manifests itself in flexible budgets and departmental control and access to determine how to spend the allocated funds. Think deeply about the various components of Agile, these include:
- Scrum: which emphasizes creative and adaptive teamwork in solving complex problems.
- Lean development: focusing on the continual elimination of waste.
- Kanban: which pinpoints reducing lead times and the amount of work in any given process.
Ask yourself these questions, is your team as agile and as adaptive as it can be with a four or five-step approval process and paper purchase orders? How often does your finance team chase receipts and requests in the name of month-end reconciliation?
Your team should be early adopters of new tools and always looking for a better way. To be agile in finance is to scrutinize inefficient processes. Automating as much manual work as possible with a variety of tools at your disposal. You likely won’t see paper invoices or expense forms lying around in the offices of an Agile team.
An Agile organization’s contemporary advantage is in its structure. In procurement, rather than sorting your team based on category-specific management, Agile organizations have a working group of managers. They handle communications and organization based on variables such as the timing and required expertise. This allows multidisciplinary professionals to be able to work and coalesce with defined processes, clear ownership, and flexible strategy.
Agile procurement team members value consolidating and interpreting data. They often have a set vendor list to reference to get competitive pricing and maintain relationships. They most often have an approval chain set up. This has multiple parties glazing over a purchase request before it goes through to accounts payable. Because teamwork is essential in agile organizations, the procurement team should work closely with the finance team. They need shared goals and KPIs to improve the spend culture of the organization together. These will include things such as cycle time and requisition time.
Embracing Operational Challenges
Figuring out how these new technologies are incorporated is a challenge. As well as, what the impact is on staffing and business processes for operations, finance and procurement. A top-down approach won’t do. Agile leaders must embrace change and innovation and view calculated risks as an opportunity. They see the opportunities in collaboration, cross-functional learning, and allowing their team members to create their own goals.
In monitoring and sustaining performance across these goals, the agile organization must do the following:
- Plan their consumption of resources
- Track spending and revenues collaterally
- Refine the process
Finally, with technologies in the cloud and SaaS enabling all departments from a variety of possible locations, it’s incredibly convenient to function and collaborate in real-time.