In order to be able to understand agile controlling, the concept of (organisational) agility first needs some clarification. If you look for the term ‘agility’ in the dictionary, you can find the following definition from BusinessDictionary.com:
The capability of a company to rapidly change or adapt in response to changes in the market. A high degree of organisational agility can help a company to react successfully to the emergence of new competitors, the development of new industry-changing technologies or sudden shifts in overall market conditions.
In summary, agility can therefore be characterised by the flexibility and adaptability of structures and processes. The idea of agile working has been around since the 1950s, giving rise to three distinct stages in the development life cycle. Since the beginning of the 21st century, the concept of agility can be found once again in the likes of agile software development, which forms the basis for agile controlling.
In agile software development, projects are divided into different phases, with regular meetings penned in to discuss new requirements or tasks. Customer focus plays a major role in this, as the aim of the regular meetings is to present results to the customers at an early stage so that feedback can be obtained promptly. In this way, work steps in the project life cycle can continuously be improved.
A guiding action plan for agile software development is the so-called Manifesto for Agile Software Development. In it is defined which principles in (financial) software development should be lived out in order to make software development a truly agile undertaking and, at the same measure, to reap the benefits this way of working can provide.
Once agility in an organisational context and in the realms of software development has been understood, it is no longer difficult to get a clear picture of the concept of agile controlling. In this vein, agile controlling represents the attempt to free oneself as a FP&A Manager from often constricting and inflexible processes in favour of fast and customer-oriented product development. In the field of controlling, the customer (i.e. the main stakeholder) can, more often than not, be found in the boardroom. Since the main task of controlling is to manage and plan business areas, the goal of agile controlling is to provide more room for flexibility to financial planning and controlling.
Introducing agile controlling to financial reporting generally has a positive effect. For the most part, reporting is a routine and standardized task. Agility, however, means that elements that can change at short notice can be rapidly considered and integrated into work processes, which tends to have a positive impact on the accuracy of financial reporting.
An example of this is the design of a reporting app to enable greater proximity to internal departments. With this app, needs can be determined faster and changes can be adjusted more quickly. Since constant changes are to be expected, dynamic processes to react to such changes are essential.
Agile controlling should be increasingly used, especially in times when the coronavirus has been dominating the headlines. COVID-19 came as a jolt to numerous FP&A Managers in their daily work, as some working relationships have (suddenly) had to be terminated. Regular operations were, in some cases, halted or put on hold and some financial plans could not be properly reconciled. Especially during this time, it has become apparent for many finance teams how important flexibility in processes can truly be. Therefore, now is exactly the right time to introduce agile controlling to your work processes!
Through agile methods, such as “Scrum” or “Kanban”, new objectives are set every one to four weeks. In this way, FP&A Managers learn to react better to any changes that may arise.
Agile methods particularly promote collaboration within the controlling team, as deliverables are viewed and considered in regularly scheduled meetings and new requirements are added as necessary. The big advantage of agile working is the reprioritisation of requirements and tasks in regular catch-up meetings. The continuous exchange improves communication within the team.
With the changes in structures brought about by agility, such as changes to particular workflows, the finance team is obliged to restructure as small-scale planning is eliminated in order to handle situations in both a reactive and proactive manner. Instead, controlling has to support other company departments with intrayear targets during the year, which are not just defined in advance of the creation of an annual plan: a juggling act that poses a challenge for FP&A Managers.
In order to effectively implement an agile work style in organisations, a basic framework must already exist in the corporate structure. This means that other company departments should already be using an agile style of working so that the implementation of agile controlling can go smoothly. This of course also presents challenges. However, introducing agile controlling is by far and large a worthwhile investment. Projects can enter the market faster and are more profitable due to a fully implemented agile way of working.
A professional Financial Performance Management (FPM) software solution helps to make financial planning and reporting agile. Read more about how agile controlling can be implemented with flexible software on our information page: