The role of the financial function in an agile organisation

Agile offers an answer to the demand for agility

According to PwC’s Henk Pieter den Boer, the finance department can also benefit greatly from the Agile method. After starting as a development process within start-ups, this way of thinking has now reached all the other sectors via technology companies. 'This method offers an answer to the demand for agility and so it’s been quickly and widely embraced,' says the PwC expert.

'Over the years, the scope of Agile has become broader. Initially, it was applied mainly within IT but it’s now also being used in change processes without an IT component and within normal operational departments.'

For finance Agile represents both an opportunity and a challenge

'For finance,' says Henk Pieter den Boer, 'adopting Agile represents both an opportunity and a challenge. It really does mean that organisations work differently: in a short-cycle and more integrated. In its business partner role, the finance function can facilitate this way of working with planning, budgeting, and control throughout the organisation. The shorter communication lines and integrated teams also allow finance to have a greater influence on decision-making.’

'Agile can be applied to change processes within the financial function, for example the automation of accounting and reporting processes. And the operational processes of finance can benefit from applying an Agile way of working.'

• Business controlling
  

From within finance, business controllers are closest to the business, so if the business decides to go Agile, the change is biggest for them. Setting up multidisciplinary teams gives them the opportunity to actually be part of such a team, take part in discussions, and have a direct influence on decision-making.

In this kind of team, the financial man or woman can really act like a business partner. He or she can be involved, for example, in making business cases, estimating market potential, organising and drafting reports, and evaluating results.

In terms of content, too, a number of things will change for the business controller. Within Agile, for example, there is generally less capitalisation. On the one hand, that’s because in “sprints” it’s less clear when costs are eligible for capitalisation. On the other, it’s because with constant capacity, cost levels fluctuate less and the need to capitalise is also less.

• Finance change

Technologies such as robotisation, data analytics, AI, and machine learning are increasingly enabling finance to provide valuable insights for strategic business decisions at the right time. It seems obvious that implementation of technical applications in cooperation with the IT department should take place in an Agile manner within the financial function. 

However, it’s important to realise that a large proportion of the changes within the financial function are the result of new legislation and regulations.

Formal deadlines and the risk of reputational damage mean that many companies are still reluctant to tackle such projects using an Agile method. Nevertheless, Agile can also be of value here, perhaps not implemented in full but for certain components or workflows, or with additional checks and balances to deal with any risks that may arise.

• Financial (transactional) accounting

The work of the finance function is characterised by the performance of repetitive processes in which a great deal of data is processed (purchase-to-pay, order-to-cash, record-to-report). Within mature financial functions, these transactional processes are often dealt with in a shared service centre, where, “Lean” thinking is often used to achieve optimisation. Lean is a management philosophy that focuses on the customer. Agile can add to this by allocating decision-making authority as low as possible in the operation and by making self-managing teams responsible not only for performing the operation but also for process improvements.

• Financial reporting

Quarterly and annual financial closings are time-consuming processes that are carried out according to a standard procedure. In that context, financial professionals don’t quickly think of an Agile approach. But a closing can feel like a one- or two-week “sprint” for them. The Agile method can offer pointers for further streamlining the process. For example, a joint start to the day with all the finance staff involved in the closing ensures that you’re always on the ball. Visualising and making transparent all the activities that need to take place around a closing ensures that nothing falls through the cracks. Cross-functional cooperation helps identify and resolve issues more quickly.

Agile is a means and not an end

The Agile method therefore offers clear opportunities within the financial function. 'To an extent, finance can’t ignore it anymore,' says Henk Pieter den Boer. 'Certainly if the department wants to fulfil the role of business partner effectively. Especially where finance change is involved, there are many opportunities to operate in a more Agile manner. But it’s important for organisations to think carefully about the aspects of Agile that are relevant. Agile is a means and not an end in itself.'