I will be agile also with my pennies

Today projects follow on projects rapidly. New demands repeatedly create costs such as for new tools. Although many alternatives are free, it is often easy to justify the cost to pay licenses with the underpinning need of functionality, stability and swift support. The introduction of agile practices with fast moving sprints made me aware a budget once a year fitted poorly with the dynamics of scrum teams. The budget process is not agile or lean because this historical method of controlling costs requires you to know everything about the year before the year has even started. But how can I be agile also with my pennies?

I have searched for this crystal ball of truth of what important will happen to my pennies during the future year but miserable failed. Self-organized teams in accordance with agile methods will complicate matters in that everybody requests to take also more initiatives for their expenditures. Jurgen Appelo has discussed the level of empowerment of employees and writes, ”Things that are easy to set up can be easy to mess up” [1] These circumstances for me inquired a search on how to manage costs and remain agile.

The proposal for a substitute for budgeting has been an object for study by Bjarte Bogsnes. His investigation has included organizations with agile development. “Scrum can demonstrate significant improvements in time, cost, and quality in system development projects. The Statoil-Hydro IT function is fully embracing the concept” [2]. His investigation has included control by using forecasts. To use financial prognosis in corporate management is anything but new. Elin Dölerud & Helena Nilsson describe that there are major corporations with five-year financial prognosis [3]. In the real world few things are static. Cost and cash-flow are rarely (never?) static for several years. Bogsnes message is that shortening the prognosis-period to rolling 5 quarters has the benefit of obsoleting the budgeting. One of the reasons is that the prognosis for last quarter of this year and all of next year is same as a yearly budget if we accept that the next prognosis replaces the old one. With management by prognosis we in the management accept that “people need room to move” [4]. Today we in Knowit Technology Management have successfully implemented the use of rolling prognosis with improved dynamic and flexibility in financial management absolutely in accordance with the manifesto for Agile Software Development: “Responding to change over following a plan” [5].

We have to respond to change. – And we want to.

Max Korkkinen, Senior Konsult, Knowit Technology Management i Stockholm

[1] Jurgen Appelo, Management 3.0, 2011, Pearson Education, page 125

[2] Bjarte Bogsnes, Implementing Beyond Budgeting, 2009, John Wiley & Sons, page 185

[3] Elin Dölerud & Helena Nilsson, Evaluating the contribution of an organizational level in the strategy process, 2012, Chalmers University of Technology, page 34, retrieved 2013-02-28, http://publications.lib.chalmers.se/records/fulltext/159360.pdf

[4] Bjarte Bogsnes, Implementing Beyond Budgeting, 2009, John Wiley & Sons, page 112

[5] Kent Beck, Manifesto for Agile Software Development, 2001, retrieved 2013-02-28, http://agilemanifesto.org/


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