On April 13 and April 20, during our Agile Mondays Talks Series John Mark Williams (CEO at Agile Business Consortium, UK) and Maria Cenusa (Innovation & Change Consultant at Integrated Consulting Group, Romania) discussed the topic of Agile Finance. Olena Gryniuk (CEE Regional Manager, SME Banking Club) moderated the discussion, and took the notes, which you can find below.

What does it mean to be agile in Finance?

Agility is quite a challenge, in banking in particular. For two main reasons. First of all, banks are huge organizations with very long-lasting legacy systems, meaning not only computer systems but also processes and procedures within the banks. The second reason is that the banks are a very highly regulated industry, and agility in a very highly regulated industry can be a challenge particularly. And Agile Finance is a valuable consideration for the banks right now, and agility is a quiet characteristic of each organization in today’s situation. 

Finance is one of the core elements of the Agile Business Strategy, which consists of People (watch the episode on Agile People), Finance, Operations, and Marketing. 

If we think of the agility in the organization as the power to adapt and respond rapidly, it’s important for the organization to be agile in all of those areas. We will be covering all these areas on Agile Mondays.

So, how to define Agile Finance? It’s not probably about the definition itself, but the role Agile Finance plays within the organization. Agile Finance is the power to use strategy, tactics and technology for competitive advantage. And the way we deploy strategy, tactics and technology in the organization, is it effective or not, depends on how we spend the resources the organization has. And those two vital resources are People and Finance. We looked at the Agile People in the previous episode (watch it here). Agile Finance is the thing that enables organization to use strategy tactics and technology for competitive advantage. And if we look at the finance this way, Finance should be embedded into each part of the organization. It’s important to understand when finance data is important to support the business. Finance departments should have the same commitment on sales targets as business departments have in the organization.

We always need to think about agile as a generic condition. When you as a person want to become agile, you can’t say we want to start to be agile from our feet, let’s say, the whole body should become agile. The same is in the organizations – the whole organization needs to become agile. And that doesn’t mean that every part of the bank needs to become agile in the same way and in the same time. Because the agility means different things to different parts of the bank. However, we should always think of it as a generic condition. Finance is important because finance is the one part of the organization that reaches to every single other part. None of the organizations can possibly perform without finance. And this is why Agile Finance is so important.

The characteristics of Agile Finance are embedded in The 12 Beyond Budgeting Principles. The Principles outline the Leadership Principles and Management Processes of organizations that embody an agile finance approach. The Principles belong to the Beyond Budgeting Institute, who have been promoting them, and helping major organizations to implement them, for many years. For more information, visit the Beyond Budgeting website at https://bbrt.org.

For the Agile Mondays sessions on Agile Finance, we distilled the 12 Beyond Budgeting Principles to three areas: Timescale, Trust and Transparency”.

 

If we look at Timescale element in the context of annual budgeting processes in the banks, so Agile Finance does not have annual budgets. It has rolling forecasts (2-3-4 months forecasts). The important is that as it bases on the principles of agility, we recognize that it’s not possible to forecast a year ahead. Si if we have 3-4 months forecast, we can immediately alter our financial behavior in response of what is happening on the market.

Trust – the people that are close to the customer to determine how mach they actually need to be spent to doing, e.g., sales.

Transparency – instead of having 3-months reports, we have real time visibility of what is going on in the bank. And also, this is about the transparency in the whole organization, including HR. e.g. instead of having 30-pages expenses policy, just to say – travel responsibly! And then making everybody’s expenses transparent within the organization, so that everybody can see what everybody is spending. So, we trust, and we make transparent.

Are you interested in getting more details? Watch the full episodes below and join the next Talks on April 27 to learn about Agile in Risks.