Agile Organization

Non-Agile Budgeting Process: Good for Agile Firms?

By an agile company, people generally think that only the development teams are following an agile methodology. Meanwhile, you are still stuck with a non-agile budgeting process. Does it match the dynamic nature of the current development cycle? In this article at Agile Alliance, Jutta Eckstein, Eric Abelen, and Hendrik Esser share how non-agile budgeting can hurt your agile efforts.

Non-Agile Budgeting Risks

While your team has adopted the agile approach, your non-agile budgeting cycle will demand returns just like it did from the traditional framework. This working style friction between the management and the team could derail your current project. Here is how an agile company can reduce non-agile budgeting issues:

Frame Roadmap Based on Value

An innovative project might take years to provide a tangible result. If you prioritize funding team projects based on that, your company will be running behind trends rather than being the disruptor. Find out the value the project can bring to your company.

Probe Further

Do not stop at that. Ask more questions so that you can provide sufficient information to your sponsor or management. For instance, the risks involved in the project, initial hiccups, customer requirements, etc.

Plan Per Scenario

What are the requirements for your agile team to deliver a successful project? It can be training for the needed skills or required tools for the deliverables. Allocate funds based on the context instead of following the traditional, non-agile budgeting standards. Use the landscape diagram to analyze if your context is ‘stable and uncomplex’, ‘unstable and complex’, or ‘adapting’. For adapting scenarios, also include the trust level and visibility, burn rate, unit cost targets, benchmarked targets, and profit targets as factors.

Though non-agile budgeting is not always wrong, it is also not always practical. You need to modify your budget allocation based on your project needs, and that is how you will be more agile going forward.

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